Here’s how much that personal loan will cost you

Here’s how much that personal loan will cost you

Want to go on an epic holiday? Got a wedding to pay for? Been hit by a sudden medical bill?

If so, you might be thinking about taking out a personal loan – and wondering who’s offering the cheapest personal loans in Australia are right now.

But it’s not that simple.

First, the cheapest personal loan won’t necessarily be the best personal loan for your situation.

Second, you might not qualify for the cheapest personal loan.

Third, it might actually be better not to get the personal loan in the first place.

Smaller lenders have the lowest-rate personal loans

There are dozens of personal loan lenders in Australia, so it can be tough to keep track of who’s offering what.

The good news is that we’ve crunched the numbers for you. The average interest rate for all the personal loans listed on RateCity was 11.89 per cent at the end of February.

Here are some of the personal loans with the lowest interest rates in Australia:

Lender Product Advertised rate Comparison rate
Catalyst Money Online Personal Loan Package 5.25% 5.89%
Illawarra Credit Union Online Personal Loan Package 5.25% 5.89%
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%
Summerland Equity Plus 6.22% 6.82%
Cairns Penny Secured Personal Loan 6.25% 12.07%
First Option Bank VIP Personal Loan 6.44% 6.68%
Police Bank Green Loan 6.49% 6.63%
Newcastle Permanent Building Society Personal Loan Secured 6.69% 8.41%

Stronger credit history equals lower rate

Time for a reality check: a lot of borrowers aren’t able to qualify for low-rate personal loans.

Lenders are allowed to discriminate on the basis of credit history, which means they tend to offer the lowest interest rates to borrowers with the strongest credit history.

By contrast, you’re likely to be charged a higher interest rate if you’ve got a weaker credit history.

You can use the Personal Loan Marketplace to check your chance of approval and get personalised rate estimates. Don’t worry – it won’t affect your credit score.

Should you take out a personal loan?

Before comparing personal loans for holidays, weddings or medical bills, it’s worth asking whether a personal loan is in your best interests.

There’s no right or wrong answer: it all depends on your individual situation.

Remember, though, that when you take out a personal loan – even a low-rate personal loan – you’re effectively buying money.

For example, here’s how much a two-year, $10,000 personal loan would cost you:

Interest rate Monthly repayments Total repayments
6.00% $443 $10,637
8.50% $455 $10,909
11.00% $466 $11,186
13.50% $478 $11,466
16.00% $490 $11,751

With that in mind, it might be worth considering other options:

  • Could you delay your holiday so you can pay for it out of your savings?
  • Could you find ways to reduce the cost of your wedding?
  • Could you ask your medical provider to extend the deadline for your bill?

If you’re still interested in exploring your personal loan options, click the Personal Loan Marketplace button below.

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Learn more about personal loans

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.

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 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.

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.

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 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.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

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.

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.

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.

If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.

Can I get guaranteed approval for a bad credit personal loan?

Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application. 

It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit because there’s a higher likelihood that the personal loan will be repaid. 

So a borrower with good credit is more likely to have a loan approved and to be approved faster, while a borrower with bad credit is less likely to have a loan approved and, if they are approved, may be approved slower.

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.

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

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.