There are a number of reasons you might consider refinancing your personal loan, and for many borrowers it could be an advantageous move. But as with any financial commitment, it’s a good idea to do your research and carefully consider your decision before jumping ship.

Can I refinance my personal loan?

In most situations, refinancing your personal loan is entirely possible and is a fairly similar process as you would have experienced when applying for your current loan. The way it works is that a borrower will take on a new loan to pay off one or more outstanding debts, and then begin to make repayments on the new loan.

If you are considering refinancing your existing loan, it’s important to keep in mind that the process and any potential restrictions will likely differ from one Australian lender to the next, and may involve fees and charges such as early exit penalties and upfront or establishment fees.

Consider checking with both your current lender and preferred new lender to see what may be applicable to you personally, so that you can do the maths and determine whether refinancing is the right move for you. 

RateCity's Personal Loan Repayment Calculator might come in handy when comparing repayment amounts.

Find and compare refinancing personal loans

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Product
Advertised Rate
Comparison Rate*
Company
Monthly repayment
Loan term
Total repayments
Real Time Rating™
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6.99%

Fixed up to 9.49%

6.99%

SocietyOne

$617

36 months

2 years to 3 years

4.17

/ 5
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6.95%

Fixed

6.95%

Alex

$617

36 months

1 year to 5 years

4.27

/ 5
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6.99%

Fixed up to 25.69%

7.79%

Harmoney

$617

36 months

3 years

3.87

/ 5
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8.99%

Fixed

9.62%

Heritage Bank

$636

36 months

1 year to 5 years

3.60

/ 5
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11.99%

Variable

12.61%

Heritage Bank

$664

36 months

1 year to 5 years

3.15

/ 5
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11.99%

Variable

12.61%

Heritage Bank

$664

36 months

1 year to 5 years

3.09

/ 5
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12.45%

Fixed

13.32%

ANZ

$669

36 months

1 year to 7 years

2.94

/ 5
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12.69%

Variable

13.56%

NAB

$671

36 months

1 year to 7 years

3.04

/ 5
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15.99%

Variable

16.84%

ANZ

$703

36 months

1 year to 7 years

2.58

/ 5
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More details
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Why might I consider refinancing my personal loan?

Some of the reasons a borrower may consider refinancing their personal loan include the following.

To consolidate debts

If you have multiple debts, say for example a personal loan and a couple of credit cards, refinancing to consolidate all of these into a single personal loan could be beneficial. Managing the repayments for one debt could prove to be much easier than staying on top of multiple. Additionally, personal loan interest rates can often be lower than credit card rates, meaning debt consolidation could result in less money spent on interest charges.

To take advantage of an improved credit score

If you have had consistently good credit behaviour since you initially took on your personal loan, there’s a chance your credit history may have improved and in turn more low rate loans may now be available to you. If this is the case, it could be worthwhile making the switch to a loan with a lower interest rate if it means you could save money on interest charges over the life of the loan. Be sure to factor in any fees and charges you may incur by refinancing when doing your calculations in order to get a true understanding of your potential savings.

To access reduced interest rates

It’s no secret that the market tends to fluctuate, and while you may have been given a good deal on your loan when you were initially approved, there could now be more attractive options available. It's important to have a good understanding of the pros and cons of both variable interest rate loans and fixed interest rate loans, particularly if you are considering refinancing for this purpose.

To access better features

Perhaps a redraw facility, or similar, didn’t mean much to you when you first got your personal loan, but now you’ve reconsidered. Refinancing to a loan that offers the extra features that are important to you could improve your borrowing experience and may even potentially save you money.

To extend the loan term

If your financial situation has changed and you are finding it difficult to meet your current repayments, you may consider refinancing to a new personal loan on a longer/different term to lower your fortnightly or monthly repayments. Keep in mind that even though your regular repayments will be reduced, longer loan terms generally mean paying more in interest charges over the life of the loan.

What are the main features to look for when refinancing a personal loan?

  • Interest rate: This will either be fixed or variable and will determine how much you will be charged in interest on the loan amount borrowed.
  • Comparison rate: A combined total estimate of the cost of the loan including the interest rate plus any upfront or ongoing costs. Take note of different comparison rates as well as interest rates when comparing your options.
  • Fees and charges: These can include loan application fees, establishment fees, monthly fees, early repayment fees, redraw fees and other ongoing fees.
  • Secured/unsecured: If the loan is secured, you will need to provide collateral in the form of an asset such as your home or a new car. Unsecured personal loans do not require collateral but often have higher interest rates than secured loans.
  • Extra repayments: This feature will determine whether or not you can make payments on your loan in addition to your regular repayments.
  • Redraw facility: Loans that accept extra repayments may also allow you to redraw this money if you’re ahead in repayments and in need of some cash.

How do I refinance my personal loan?

  1. Search and compare available personal loan options.
  2. Consider checking out whether RateCity's Personal Loan Marketplace could find you a potential deal. This could minimise your chance of being rejected and hurting your credit score.
  3. Weigh up any applicable fees and charges with the benefits and potential savings you’d make by switching your personal loan.
  4. Contact the new lender to make an application to refinance.
  5. The lender will approve or reject your application based on your financial circumstances, your credit rating, and their terms and conditions.
  6. Pay any required exit fees to your old lender and any upfront fees to your new lender.
  7. Ensure your old loan account has been closed and begin making repayments on your new personal loan.

What are the pros and cons of refinancing a personal loan?

Pros
  • You could make your finances more manageable if you are refinancing to consolidate debts.
  • You may save money on interest charges if you refinance to a loan with a more competitive rate.
  • You might be able to access better features that improve your borrowing experience.
Cons
  • Early exit penalties and establishment fees could add up and outweigh any potential savings.
  • If you refinance to a loan on a longer term, you may end up paying more in interest charges over the life of the loan.
  • Refinancing your personal loan can take considerable time and effort, so it’s a good idea to factor this in when deciding whether it’s right for you.

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 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.

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 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 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.

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 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.

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.

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.

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.

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.

Can you pay off a quick loan early?

Many lenders will allow you to make extra repayments onto a quick personal loan when you can afford them, or even exit the loan early, which can help reduce the total interest you are charged. Be sure to check your quick loan’s terms and conditions, as some lenders charge early exit fees for paying off a loan ahead of schedule.

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.

Which lenders offer bad credit personal loans?

Several dozen lenders offer bad credit personal loans in Australia. These are generally smaller lenders that aren’t household names.

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 causes bad credit ratings/scores?

Failing to repay loans and bills will damage your credit score. So will falling behind on your repayments. Your credit score will also suffer if you apply for credit too often or have credit applications rejected.

How long does it take to get a bad credit personal loan?

In the best-case scenario, an application for a bad credit personal loan can be made within minutes and then be approved within 24 hours. However, if a lender needs more information or needs more time to verify the provided documents, the application process may take longer.

How are credit ratings/scores calculated?

Different credit reporting bodies may use different formulas to calculate credit scores. However, they use the same type of information: credit history and demographic profile.

They’re likely to look at how many credit applications you’ve made, which lender the applications were for, what purpose they were for, how much they were for and your repayment record. They’ll also look at your age and postcode. They’ll also look to see if you’ve had any bankruptcies or other relevant legal judgements against you.

Your score can change if your demographic profile changes or new information is added to your file (such as a new loan application) or existing information is removed from your file (i.e. because it has reached its expiry date).

What is bad credit?

A person is deemed to have ‘bad credit’ when they have a poor history of managing credit and repaying debts.

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.