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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).

LenderProductAdvertised rateComparison rate
NABVariable Rate Loan10.69%11.58%
Commonwealth BankFixed Rate Personal Loan (5 years)11.99%12.87%
ANZFixed Rate Loan12.45%13.32%
WestpacUnsecured Personal Loan12.99%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.

LenderProductAdvertised rateComparison rate
G&C Mutual BankFair Rate Personal Loan Diamond5.99%6.20%
Credit Union SASpecial Fixed Rate Personal Loan5.99%6.26%
Community First Credit UnionHome Improvement Loan6.12%6.39%
Cairns Penny Savings & LoansSecured Loan6.25%12.07%
Police BankGreen Loan6.49%6.63%
Newcastle Permanent Building SocietyPersonal Loan Secured6.69%8.41%
Queensland Country Credit UnionReno Loan6.79%7.31%
Service OneEco Personal Loan Secured6.79%7.39%
IMB BankSecured Personal Loan6.89%7.24%
Regional Australia BankEnviro Loan6.95%7.83%

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

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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