Compare the top variable rate personal loans^
If you’re looking to take out a personal loan and are considering an option with a variable interest rate, then you’ve come to the right place to compare the rates on offer from Australian lenders.
A variable rate means that the amount of interest you pay on your personal loan will not be fixed in advance, but may instead be raised or lowered by your lender in accordance with the current economic conditions.
By using RateCity to compare the different variable rate personal loans that are available, you can get a better idea of which lenders have offers that will best match up with your household’s unique financial situation.
Unsecured Personal Loan - (Excellent Credit)
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Advantages and disadvantages of a variable interest rate
When you compare the advertised interest rates for variable rate personal loans, keep in mind that what you see may not end up being what you get. If your lender cuts its interest rates, you may end up with lower monthly repayments than you initially budgeted for, leaving you with some surplus cash available.
While you may want to put these savings to use somewhere else, many variable rate personal loans also offer the flexibility to pay extra onto your loan, allowing you to get ahead of your repayment schedule, bringing you closer to fully paying off your personal loan and making an early exit.
However, it stands to reason that if interest rates on your personal loan can fall, they can also rise in the right economic conditions. Increasing interest rates can lead to more expensive monthly personal loan repayments, which can leave you short if you haven’t budgeted accordingly. This can make variable rate personal loans a bit more high-maintenance to look after than their fixed rate counterparts.
While it’s worth comparing the advertised interest rates when choosing a lender for your personal loan, it’s also worth remembering that the lowest advertised interest rate doesn’t guarantee that you’re getting the cheapest personal loan deal available. Even if your lender doesn’t raise its rates, a low interest personal loan that charges high fees could be ultimately more expensive overall than a personal loan with higher interest rates and lower fees and charges.
One alternative is to look at each personal loan’s Comparison Rate, which combines its advertised interest rate with its standard fees and charges, to provide a more accurate guideline of the approximate costs of different personal loans.
It’s also worth keeping in mind that the each lender may charge nonstandard fees that aren’t included in the personal loan’s Comparison Rate. Alternatively, they may offer extra features and benefits that could make their personal loan more appealing to you. It’s worth doing your homework after using the Comparison Rates to narrow down your shortlist of potential personal loans.
If you owe money to a variety of different lenders, then you may find yourself struggling to manage multiple repayments each month, as well as paying interest on each debt, each at a different rate.
A simpler option could be to take out a personal loan to consolidate these debts. Not only would this mean making only one repayment per month, but you’d also be making just the one interest payment per month, which could potentially work out cheaper than the previous arrangement.
Not every variable rate personal loan can be used for debt consolidation, so it’s a good idea to check first when making your comparisons, if that is your goal.
Secured/unsecured personal loans
If you’d prefer to keep your personal loan’s interest rates on the low side, then you may want to consider securing your loan. Secured personal loans guarantee the sum you borrow against the value of an asset that you own, whether that’s a car, equity in your property, or something similar. Of course, to apply for one of these loans, you’ll need one of these assets with enough value to reduce the lender’s financial risk, so you can in turn enjoy a lower interest rate.
Unsecured personal loans are also available, for when you don’t have access to a high-value asset, or if you’d prefer not to risk losing your asset to the lender if you’re unable to make your repayments. However, due to their relatively high lender risk, these personal loans tend to have higher average interest rates than similar secured personal loans.
Early exit/extra repayment penalties
One reason why many people love variable interest rate loans is the flexibility they offer.
If your lender chooses to cut interest rates, your monthly repayments could end up going down as a result, which gives you a choice – do you keep the savings from this discount, or do you take this opportunity to pay a little bit extra onto your loan, potentially paying it off early and ultimately paying a bit less in interest?
If this prospect appeals to you, keep in mind that some lenders charge fees for making extra repayments on a personal loan or for making an early exit, to help make up for the interest payments they’d be missing out on. These fees tend to be more common for Fixed Rate personal loans with pre-set repayment plans, though they are sometimes also applicable for Variable Rate Personal Loans.
Don’t end up surprised by extra charges if you try to pay off your personal loan early!
When you have extra money available in your bank account, whether it’s from a bonus, a tax refund, or left over in your budget following a rate cut, you may decide that making an extra repayment on your personal loan would be a great idea to bring you closer to getting your loan fully paid off.
But what if there was an emergency and all of your cash was tied up in your personal loan?
With this in mind, some lenders include a Redraw Facility as part of their personal loans. This nice little feature can be used when you get ahead on your personal loan repayments, and allows you to withdraw the surplus balance, subject to your lender’s terms and conditions.
By providing you with extra flexibility in how you use your finances, you’ll have the option to make extra repayments onto your personal loan with confidence that you can still access this money again if you really need it.
100% Personal Loans
Do you have a deposit all saved up and ready to get your personal loan started? No? Well, that doesn’t mean you have to miss out on your dream wedding or home renovation.
Some lenders offer high LVR (Loan to Value Ratio) personal loans, where your deposit is smaller, and you borrow a greater percentage of your total instead. Some lenders can even provide personal loans where you borrow 100% of the balance, with no deposit required.
If you do choose a high LVR or 100% personal loan, remember that you may find yourself paying a higher than average rate of interest, to make up for increased financial risk to your lender.
It may be worth weighing up whether it would be more affordable for you to make higher monthly repayments, or to save up a full deposit before taking out a personal loan.
Compare variable rate personal loans
By comparing the different personal loans that are currently available, you can work out which lenders offer the features and benefits that will perfectly match the requirements of your financial situation.
At RateCity, you can compare a wide variety of personal loan providers, so start your search today and enjoy the benefits tomorrow! Or at least, when you get approval from the lender…
Personal Finance Writer
Alex is a personal finance writer and PR professional at RateCity, and has been writing about finance for over three years. She is passionate about closing the gender pay and superannuation gap, and aims to help young Aussies to overcome their financial apathy and better manage their finances. Alex has been published in numerous print and online outlets, including Money Magazine, Lifehacker Australia, and Business Insider.
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If you’re having trouble being approved for a loan of less than $2000 and urgently need to purchase household essentials, there may be emergency loan options available to you.
For example, the No Interest Loans Scheme (NILS) allows low-income borrowers to take out interest-free loans of up to $1500 for essential goods and services.
For further assistance, consider contacting a financial counsellor, or calling the National Debt Helpline on 1300 007 007
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.
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.
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.
When many lenders assess a borrower’s income to determine whether they can afford a loan’s repayments without ending up in financial stress, they may not count Centrelink payments as income for this purpose.
Before applying for an emergency loan, it may be worth contacting a potential lender to find out if they accept applications from borrowers on Centrelink.
Many borrowers use quick loans to cover short-term or urgent costs, such as paying for car repairs, medical bills, or replacing broken appliances or electronics. Quick loans often have high interest rates compared with regular personal loans.
Before applying for a quick loan, consider your other available options, such as working out a payment plan or applying for an advance or extension.
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.
If more than half of your income comes from Centrelink benefits, it may be more difficult to have a $2000 loan application approved. Many lenders will check if you can afford a loan’s repayments on the income from your job before they’ll approve an application, and many won’t count Centrelink payments when assessing your income for this purpose.
Some lenders may offer $2000 loans to borrowers on Centrelink – consider contacting potential lenders to check before applying.
It’s unusual for a lender to provide a personal loan of above $100,000, although there is no formal limit. As with all lending products, each lender sets its own policies, while each borrower is assessed on a case-by-case basis.
The Australian personal loans market contains dozens of lenders offering several hundred different products. Personal loans are available through a range of institutions, including:
- The big four banks (ANZ, Commonwealth Bank, NAB and Westpac)
- Smaller banks (such as Bank of Queensland, Bendigo Bank and MyState)
- Mutual banks (such as Heritage Bank, Greater Bank and Newcastle Permanent)
- Credit unions (such as People’s Choice Credit Union, BCU and Community First Credit Union)
- Non-bank lenders (such as Pepper Money, Liberty and RACV)
- Peer-to-peer marketplaces (such as Harmoney, SocietyOne and RateSetter)
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.