Big banks pricing personal loans much higher than smaller rivals

Big banks pricing personal loans much higher than smaller rivals

A range of customer-owned institutions is significantly undercutting the big four banks, according to a new analysis of personal loan interest rates.

Focusing solely on personal loans, rather than car loans, the big four banks all have double-digit interest rates (see table below).

NAB offers the lowest big four personal loan interest rate, with its Variable Rate Loan starting from 10.69 per cent (comparison rate 11.58 per cent).

Lender Product Advertised rate Comparison rate
NAB Variable Rate Loan 10.69% 11.58%
Commonwealth Bank Fixed Rate Personal Loan (5 years) 11.99% 12.87%
ANZ Fixed Rate Loan 12.45% 13.32%
Westpac Unsecured Personal Loan 12.99% 14.14%

By contrast, there are various mutual banks, credit unions and building societies offering low-rate personal loans (see table below).

For example, G&C Mutual Bank’s Fair Rate Personal Loan Diamond is priced at 5.99 per cent (comparison rate 6.20 per cent).

Credit Union SA’s Special Fixed Rate Personal Loan also goes as low as 5.99 per cent (comparison rate 6.26 per cent).

Cairns Penny Savings & Loans, Community First Credit Union, IMB Bank, Newcastle Permanent Building Society, Police Bank, Queensland Country Credit Union, Regional Australia Bank and Service One all offer personal loans with a ‘6’ in front of them.

There are even lenders that offer personal loans with interest rates under 5 per cent, although these have to be connected to a home loan or a term deposit.

Lender Product Advertised rate Comparison rate
G&C Mutual Bank Fair Rate Personal Loan Diamond 5.99% 6.20%
Credit Union SA Special Fixed Rate Personal Loan 5.99% 6.26%
Community First Credit Union Home Improvement Loan 6.12% 6.39%
Cairns Penny Savings & Loans Secured Loan 6.25% 12.07%
Police Bank Green Loan 6.49% 6.63%
Newcastle Permanent Building Society Personal Loan Secured 6.69% 8.41%
Queensland Country Credit Union Reno Loan 6.79% 7.31%
Service One Eco Personal Loan Secured 6.79% 7.39%
IMB Bank Secured Personal Loan 6.89% 7.24%
Regional Australia Bank Enviro Loan 6.95% 7.83%

Please note that the cheapest home loans aren’t always the best home loans.

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Learn more about personal loans

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.

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.

Where can I get a personal loan?

The Australian personal loans market contains dozens of lenders offering several hundred different products. Personal loans are available through a range of institutions, including:

There are three main ways to access personal loans. You can go through a comparison website, such as RateCity. You can use a finance broker. Or you can directly contact the lender.

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 are the pros and cons of debt consolidation?

In some instances, debt consolidation can help borrowers reduce their repayments or simplify them. For example, someone might take out a $7,000 personal loan at an interest rate of 8 per cent so they can repay an existing $4,000 personal loan at 10 per cent and a $3,000 credit card loan at 20 per cent.

However, debt consolidation can backfire if the borrower spends the extra money instead of using it to repay the new loan.

Can I get a fast loan with bad credit?

Some lenders offer fast loans to borrowers with bad credit. Providers of small payday loans of up to $2000 or medium amount loans of up to $5000 may have no credit checks, though these lenders will usually want to confirm you can afford its loans on your income.

How long does it take to get a $5000 loan?

Depending on the lender, personal loans and medium-amount loans for $5000 can sometimes be approved in under an hour, and give you access to the money the same day. Other loans may take 24 hours or longer to assess your application, and you may not get the money for a few days.

What do I need to get a fast loan?

Most lenders will need to you provide the following information in your application for a fast loan:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of any assets you own (e.g. car, home etc.)
  • Details of any liabilities you owe (other personal loans, credit cards, mortgages etc.)
  • How much you want to borrow
  • Over how long you want to pay it back
  • Purpose of your loan

Are there any interest-free emergency loans?

The No Interest Loans Scheme (NILS) allows low-income borrowers to take out no-interest loans for up to $1500 to purchase essential goods and services.

There are also similar low-interest loan schemes available to borrowers in financial hardship who are having a tough time getting finance approved.

Are there alternatives to $2000 loans?

If you need to borrow $2000 or less, alternatives to getting a personal loan or payday loan include using a credit card or the redraw facility of your home, car or personal loan.

Before you borrow $2000 on a credit card, remember that interest will continue being charged on what you owe until you clear your credit card balance. To minimise your interest, consider prioritising paying off your credit card.

Before you draw down $2000 in extra repayments from your home, car or personal loan using a redraw facility, note that fees and charges may apply, and drawing money from your loan may mean your loan will take longer to repay, costing you more in total interest.

Can I get a self-employed personal loan with bad credit?

It may be much more difficult for a self-employed borrower to successfully apply for a personal loan if they also have bad credit. Many lenders already consider self-employed borrowers to be riskier than those in full-time employment, so some self-employed personal loans require borrowers to have excellent credit.

If you’re a self-employed borrower with a bad credit history, there may still be personal loan options available to you, such as securing your personal loan against a vehicle of equity in a property, though your interest rates may be higher than those of other borrowers. Consider contacting a lender before applying to discuss your options.