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Total repayments for a 3-year, $30,000 loan at 5.44%* would be $32,582*. Terms from 1-3 years

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Learn more about personal loans

What is a low-interest personal loan?

A low-interest personal loan is a personal finance option that offers a lower than average interest rate. Personal loans are available for a wide range of different borrowing purposes, and those with low interest rates could save you money on the overall cost of the loan (when compared to those with less competitive rates).

How can I get a low-interest personal loan?

There are four things to do if you want to get a low-interest personal loan:

  1. Decide whether you need a secured or unsecured loan
  2. Check your credit score
  3. Compare a range of low-interest personal loans
  4. Use the comparison rate to check for hidden fees and charges

1. Decide whether you need a secured or unsecured loan

When you take out a loan, you will normally get a choice between a secured loan or an unsecured loan.

A secured loan is protected by an asset such as a car, which the lender can claim if you default on your loan. This makes your debt less risky. In return, you will usually get a lower interest rate than if your loan was unsecured.

An unsecured loan is one that doesn’t have an asset attached to it as a form of security. They are convenient if you don’t own a high-value item, however banks are more likely to charge a higher interest rate to an account for the added risk.

Low-rate personal loans are more likely to be secured than unsecured, but it is always worth investigating the options to find the best deal you can.

2. Check your credit score

Having a good credit score is important when applying for a personal loan. In fact, some lenders offer people with excellent credit history lower interest personal loans. Check your credit score and, if it needs improving, work through our tips on how to build up your credit score before you apply for a personal loan.

3. Compare the low rate personal loans on the market

Personal loan interest rates can vary widely, so it’s worth doing your research before you start talking to a specific lender. Find out which banks offer low-interest personal loans and see if they fit your personal financial needs.

4. Use the comparison rate to check for hidden fees and charges

Looking for a low-interest personal loan can be a good strategy, but don’t forget to check the fees and charges. For example, a low-interest personal loan with a high establishment fee or application fee may ultimately turn out to be more expensive than a higher-interest personal loan with lower ongoing costs.

To get a better idea of the total cost of a low rate personal loan, it’s worth looking at its comparison rate.

The comparison rate on a personal loan incorporates all standard fees and charges attached to the personal loan. The comparison rate is designed to give you a more accurate indication of how much your personal loan will cost over the life of the loan than the advertised rate.

Comparison rates also help you compare low-interest-rate personal loans more accurately. For example, if a comparison rate is significantly higher than the advertised rate, it’s likely that there are high fees or a scheduled rate increase built into that loan.

Just bear in mind that the comparison rate doesn’t take into account any ‘optional’ charges such as late fees, so when you have narrowed down your choice it’s still worth taking a closer look at the fine print before making your final decision.

Low-interest personal loans at a glance

  • Australia has dozens of personal loan providers
  • Loan amounts are usually from $2,000 to $100,000
  • Loan terms are usually from one to five years
  • Interest rates are either fixed or variable
  • Loans can be either secured or unsecured

Fixed vs variable interest rate?

Before deciding on a fixed rate or a variable rate for your low-interest personal loan, you need to weigh up the pros and cons.

Here are some of the pros and cons of fixed-rate personal loans:


  • Pay the same even when rates rise
  • Easy to budget


  • Pay the same even when rates fall
  • Fixed loans are usually inflexible

Here are some of the pros and cons of variable-rate personal loans:


  • Pay less if rates fall
  • Variable loans are often flexible


  • Pay more if rates rise
  • Harder to budget

Fixed-rate personal loans are great for people who like financial stability, as you will always pay the same amount each month. However, you probably won’t be able to make extra repayments and will likely have to pay some sort of penalty fee, such as an exit fee, if you want to refinance or close the loan ahead of schedule.

If you opt for a variable-rate personal loan, your rate might drop if there’s an official rate cut - but it’s also possible your interest rate will rise, making it harder to cover the repayments. Variable loans tend to be more flexible than fixed loans - you’re more likely to be allowed to make extra repayments or to close the loan early.

Which bank has the lowest interest rate on personal loans?

It’s impossible to say which bank has the lowest personal loan interest rates, and generally for two reasons:

  1. Banks change their interest rates all the time
  2. Banks might have lower interest rates for one type of personal loan, but higher interest rates for another type of personal loan

The question of “Which bank has the best personal loan interest rates?” is also problematic. To understand why, take these two hypothetical situations:

  1. A personal loan with a higher interest rate and lower fees might actually cost you less money over the life of the loan than a personal loan with a lower interest rate and higher fees
  2. A higher-rate personal loan might suit you better than a lower-rate personal loan if it offers more flexibility (such as the ability to make extra repayments) and more features (such as a redraw facility)

We all have different priorities and different financial goals, so what might be a good personal loan for you might not be a good personal loan for someone else.

That said, it's always good to get a gauge of what the lowest rates for personal loans are to give you a standard when making a loan comparison. A good way of doing this is by looking through RateCity's comparison tables to see what rates are on offer, and to then use this research to have an informed conversation with lenders.

Helen wins and loses with a fixed-rate personal loan

Helen takes out a $20,000 personal loan to fund her wedding. The lender offers her a choice of paying it off in four years or five.

She chooses four years: even though it means she will have to make higher monthly repayments ($488 v $406), it also means she will pay less in interest over the life of the loan ($23,436 v $24,332).

Helen is offered the choice between a 7.50 per cent variable rate or an 8.00 per cent fixed rate. She is anxious about the thought of interest rates rising during her four-year loan term, so she decides to lock in the (higher) fixed rate. Helen feels vindicated several months later, when her lender increases the variable interest rate to 8.25 per cent.

However, halfway through her loan term, she feels frustrated. Thanks to a tax refund, she now has enough money to close the loan early - but her lender won’t let her unless she pays a hefty early repayment fee.

What can I use a low rate personal loan for?

Here are 10 ways you can use personal loans:

  1. Buying a car
  2. Taking a holiday
  3. Doing renovations
  4. Moving home
  5. Consolidating debt
  6. Funding a wedding
  7. Medical bills
  8. Vet bills
  9. School fees
  10. Legal fees

Personal loans can be used for all sorts of expenses – but just remember that the bank isn't writing you a blank cheque. They will want to know what you need the money for and how you plan to pay it back.

What are some other ways I can save money on my personal loan?

Here are three tips for reducing your interest charges:

  1. Make extra repayments so you can exit early
  2. Consolidate several debts into one personal loan
  3. Play it smart with redraw facilities

1. Make extra repayments so you can exit early

A low-interest personal loan is an obvious way to minimise the cost of your personal loan. But some people don’t realise that you might save even more money by making extra repayments.

Getting ahead on your personal loan repayments can help you pay off your loan ahead of schedule, which can mean ultimately paying less total interest over the lifetime of the loan.

(Please note that, some lenders charge fees for making extra repayments or exiting a low-rate personal loan early, to make up for the interest payments they’d be missing out on. Be sure to check whether getting out of debt with your lender won’t accidentally cost you more than you expected!)

2. Consolidate several debts into one personal loan

Sometimes, people find themselves juggling a range of debts, from credit cards to car loans. Managing all of these repayments can be tricky, not to mention rough on your finances, particularly if they are attracting multiple fees and high interest rates.

One way to manage multiple debts is to consolidate them into one personal loan. By using this personal loan to pay off your other debts, you’ll be left with just the one monthly repayment to budget for. If you’re careful and conscientious, you can find yourself debt-free much faster than you may have expected.

Debt consolidation can also reduce the fees and charges you are paying if you have reduced your debt to just one loan.

When you're looking for the best debt consolidation personal loans in Australia, keep in mind that some lenders may not allow all of their personal loan offers to be used for debt consolidation, so be sure to check the terms and conditions.

3. Play it smart with redraw facilities

Some low-interest personal loans offer a redraw facility, which allow you to ‘borrow back’ money that you’ve paid off ahead of schedule (subject to terms and conditions). As a result, you might feel more comfortable making extra repayments.

That said, redraw facilities need to be used with caution. First, you might be charged a fee to redraw money. Second, every time you use a redraw facility, you’re effectively adding to your loan, which will mean having to pay more in interest.

Who offers low-interest personal loans in Australia?

  • Banks
  • Credit unions
  • Building societies
  • Non-bank lenders
  • Peer-to-peer lenders

Are there instances where a personal loan with higher rates might be better than a low interest loan?

When choosing a personal loan, it’s important to compare not only the interest rate, but the fees and features as well. Reason being, low interest rate personal loans aren’t necessarily going to be the best fit everyone.

For example, the loans with the lowest interest rates could charge high fees and ultimately be more expensive over the life of the loan. Or, the low interest personal loan you have your eye on may not offer the features that could benefit you – such as unlimited extra repayments that could allow you to pay your loan off sooner.

Once you’ve made a comprehensive comparison, you may indeed find that a personal loan with a higher interest rate might be better suited to your needs than one with a lower rate.

What are no-deposit loans?

No-deposit loans, also known as 100% loans, are personal loans where you can borrow the full amount, without having to provide a deposit.

Most lenders prefer you to provide some sort of deposit, but some lenders offer no-deposit personal loans to people who might not have any savings. Just remember, though, that lenders regard these personal loans as riskier, so they tend to charge higher interest rates.

You may want to consider whether it would be better for your finances to make these higher repayments, or to save up a deposit and hopefully enjoy a personal loan with low interest.

What are personal loan interest rates?

The interest rate on a personal loan is the amount the lender will charge you for taking out your loan.

Interest rates are almost always expressed as an annual percentage.

There is no one single set interest rate for a personal loan. With a bit of research, however, you can understand what types of loans are on offer and what kind of interest rates lenders are offering for these personal loans.

What is the average interest rate for a personal loan?

There is no ‘average’ interest rate for a personal loan.

One reason is that lenders change their interest rates all the time, so the average is always changing.

Another reason is that there is no ‘average’ personal loan. Personal loans come in a range of flavours - each of which is priced differently. Examples include:

  • Secured personal loans
  • Unsecured personal loans
  • Variable-rate personal loans
  • Fixed-rate personal loans
  • Deposit personal loans
  • No-deposit personal loans

Secured personal loans usually have lower interest rates than unsecured personal loans. Variable-rate personal loans usually have lower interest rates (at least at the time the loan is taken out) than fixed-rate personal loans. Personal loans that require a deposit usually have lower interest rates than personal loans that don’t require a deposit.

How can I get a low-interest personal loan?

Here are four steps to take if you want a low-interest personal loan:

  1. Compare the market. Look at what interest rates the big four are offering but compare this with smaller lenders.
  2. Look at the comparison rate. If it is more than 0.2 percentage points higher than the advertised rate, have a good look at the terms and conditions to see what the ongoing fees are.
  3. Understand the different rates for secured and unsecured loans. This might help you decide which type of personal loan you want.
  4. Negotiate. No matter who you sign up with, ask for a lower rate or for any fees to be waived. Lenders often give discounts to win business.

John negotiates a personal loan discount

John receives two nasty shocks in the space of a week. First, his beloved dog almost dies after getting hit by a car. Second, the vet charges $10,000 for the emergency surgery. John has almost no money in the bank, so he’s forced to take out a $10,000 personal loan.

After comparing a range of different home loans, he decides to go with Lender X. But before signing on the dotted line, John tells lender X that he will instead take out a comparable loan with Lender Y unless he receives some sort of discount. Lender X doesn’t want to lose John’s business, so it agrees to reduce the loan application fee from $200 to $100 and to cancel the loan’s $10 monthly fee. As a result, John saves $340 over the life of the two-year loan.

Can I get a personal loan from a bank?

Yes, you can get a personal loan from a bank.

If you have a relatively good credit history, a regular income and a decent deposit or security for the loan, you are likely to be eligible for a personal loan. This will vary from lender to lender, so it's important to be prepared before you apply.

  1. Research how much you can afford to borrow. Use our personal loan calculator to work out what your fortnightly or monthly repayments might be and assess whether you could meet these.
  2. Factor in a buffer. Even if you are on a fixed rate personal loan, it is worth including a buffer in your budget. Rates are not the only variable in life – you might be hit with a big expense or temporarily off work, so it is worth making sure you have enough money to cover any sudden expenses. It will also show the bank that you want to borrow responsibly.
  3. Get your paperwork in order. Most lenders will need to see proof of income, proof of age and proof of address.

What is the best interest rate on a personal loan?

There is no definitive “best” interest rate for personal loans, because interest rates change all the time and different personal loan products suit different people.

Lenders will give the best rates to people who have an impeccable credit history, a good, regular source of income and a decent deposit or form of security.

If you don’t quite fit this description, it doesn’t necessarily mean you won’t be able to get a personal loan - but you might have to pay a higher interest rate and/or higher fees.

How is interest calculated on a personal loan?

Interest is calculated as a percentage of the amount you owe. The interest rate that you see advertised is how much your lender charges annually (although this is typically calculated daily).

Compare low-interest personal loans

A low-interest personal loan could potentially save you hundreds or even thousands of dollars compared to a high-interest personal loan.

By comparing the interest rates of different personal loans, as well as any additional features and benefits offered, you can find the product that best suits your unique situation.

Imagine you wanted to take out a $40,000 personal loan over five years. Here’s how different interest rates would affect your repayments:

Interest rate Monthly repayments Total repayments
7.00% $792 $47,523
7.50% $802 $48,091
8.00% $811 $48,663
8.50% $821 $49,240
9.00% $830 $49,820

Start your financial journey by comparing low-interest personal loans at RateCity.

Comparing low-interest and interest-free personal loans

What is an interest-free personal loan?

When you're researching the market for a good deal for a personal loan you may see special introductory offers from lenders that specify interest free. In most cases the offer of an interest-free loan is generally only for a relatively short period of time at the beginning of the loan term. The specific length of the interest-free period will depend on the agreement you have with your lender, but several months or longer of paying no interest on your loan amount could help your cash flow.

It’s important to keep in mind, however, that when you take out a personal loan to make a purchase, you will have to pay interest on the money you've borrowed at some stage of the agreement. Banks and other financial institutions need to make money somehow, and interest charges on financial products are where they earn much of it.

Can I get an interest-free personal loan?

In some cases, only consumers who are low income earners and/or who are facing financial hardship may be eligible for a personal loan with no interest. For example, the No Interest Loan Scheme (NILS) aims to provide individuals and families on low incomes with access to small personal loans to use for specified purchases.

Some lenders, however, will occasionally have special introductory interest-free offers that may be available to those who aren’t necessarily in a challenging financial position. Though they tend to be more difficult to come across compared to low interest loans.

Are interest-free loans better than low-interest loans?

Taking on a personal loan with an interest-free period can save you money on your initial repayments, however it’s important to consider what the interest rate will revert to at the end of this period. Just like credit cards that charge zero interest for a certain number of months, personal loans with an interest-free period can often revert to a higher interest rate than loans without this offer.

With this in mind, ensure you make comprehensive calculations when comparing low-interest personal loans with no-interest personal loans, to figure out which option will help you save more money over the life of the loan.

What are the pros and cons of loans with no interest?


  • Save money on interest charges during the interest-free period
  • Payments will likely be more manageable at the beginning of your loan term due to no interest being charged


  • Potentially higher interest rate than low-interest loans when you reach the end of the interest-free period, which could mean a higher total cost of the loan
  • Repayment amounts will increase after the interest-free period to include interest charges, which can be difficult to manage if you’re not prepared
  • Personal loans with no interest can be more challenging to find than personal loans with low interest

Frequently asked questions

What interest rates are charged for personal loans?

Lenders aren’t allowed to charge interest on loans of $2,000 and under. Instead, they make their money by charging a one-off establishment fee of up to 20 per cent and a monthly account-keeping fee of up to four per cent. Lenders might also ask you to pay a government fee.

For loans between $2,001 and $5,000, lenders can make their money in only two ways: a one-off fee of $400 and annual interest rates of up to 48 per cent.

For loans of $5,001 and above, or for loans that have terms longer than two years, lenders can charge annual interest rates of up to 48 per cent.

Those fee caps don’t apply to loans offered by authorised deposit-taking institutions such as banks, building societies or credit unions, although such institutions are highly unlikely to charge interest rates of anywhere near 48 per cent.

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

What do credit scores have to do with personal loan interest rates?

There is a strong link between credit scores and personal loan interest rates because many lenders use credit scores to help decide what interest rates to offer to potential borrowers.

If you have a higher credit score, lenders will probably classify you as a lower-risk borrower. That means they’ll be keen to win your business, so they may offer you a lower interest rate if you apply for a personal loan.

If you have a lower credit score, lenders will probably classify you as a higher-risk borrower. That means they might be concerned about you defaulting on the loan and costing them money. As a result, they might protect themselves by charging you a higher interest rate.

Do student personal loans require security?

While some personal loans can be secured by the value of an asset, such as a car or equity in a property, student personal loans are often unsecured, which typically have higher interest rates.

Some lenders also offer guarantor personal loans to students. These loans have lower interest rates, as a guarantor (usually a relative of the borrower with good credit) will fully or partially guarantee the loan, taking on the financial responsibility if the borrower defaults.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

What is an unsecured bad credit personal loan?

A bad credit personal loan is ‘unsecured’ when the borrower doesn’t offer up an asset, such as a car or jewellery, as collateral or security. Lenders generally charge higher interest rates on unsecured loans than secured loans.

Are there low doc personal loans?

Self-employed borrowers may be eligible for low doc personal loans, which require less documentation in their application process than many other personal loan options.

It’s important to remember that though low doc personal loans may require less paperwork, you may need to provide additional security, or pay a higher interest rate.

Is it hard to improve your credit score?

It can be hard to improve your credit score, as it usually requires sacrifice and discipline, but hard doesn’t necessarily mean complicated. Some simple ways you can give your credit score a boost include closing extra credit cards, reducing your credit card limit, pay off any loans and make loan repayments on time.

As a general rule, the lower your credit score, the more remedies you can apply and the greater the scope for improvement.

Can I get a bad credit personal loan with a guarantor?

Some lenders will consider personal loan applications from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).

If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the repayments.

What can I use a bad credit personal loan for?

Generally, bad credit personal loans can be used for the following purposes:

  • Debt consolidation
  • Paying bills
  • Buying vehicles
  • Moving expenses
  • Holidays
  • Weddings
  • Education

Some lenders restrict how their bad credit personal loans can be used as part of their commitment to responsible lending – be sure to check before applying.

What documentation is needed for a self-employed personal loan?

Personal loans may require a borrower to provide proof of identity, proof of residence, details of any other outstanding loans (including credit cards), details of assets they own (e.g. savings, car, property), and proof of income.

While borrowers in full-time or part-time employment can often provide payslips and similar documents to prove their income, self-employed borrowers may need to provide other documents, such as bank statements or tax returns, to demonstrate that their income can cover a loan’s repayments.

Can I apply for a quick loan online?

While some lenders will require you to provide paperwork in person, many lenders will allow you to make an application for quick personal loan online. You’ll still need to provide information on your identity, income, and loan purpose in most cases.

Can I get a fast loan if I’m unemployed or on Centrelink?

Even if a lender has no credit checks, they will usually still need to confirm you can afford to repay a fast loan on your income before they’ll approve your application.

If 50% or more of your income comes from Centrelink payments, you may find it more difficult to have a fast loan application approved. Consider checking with the lender before applying to confirm if they lend to people on Centrelink.