Personal Loan Interest Rates

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Personal loan rates are one of the main indicators of how much you'll pay over the lifetime of your loan. When you’re looking for the cheapest personal loans, there are a few things you need to know about interest to make sure you get the best possible deal.

Personal loan interest rates

Personal loan interest rates

It’s always best to shop around before applying for a personal loan, to make sure you’re getting the best deal for your unique financial circumstances. With personal loan rates, you can:

  • Visit loan review sites to get an idea of what’s available
  • Visit lender websites and read reviews of their available loan products
  • Speak to a personal finance broker

Most lenders will display personal loan interest rates on their websites and other advertising material. When looking at personal loan rates, there are a few things to keep in mind:

Like with like

Before you look at personal loan rates, you should decide what type of loan you want - secured or unsecured, fixed or variable rate. When looking at multiple personal loan products, make sure you’re only using the same type of rate for both loans.

Risk-based interest rates

Personal loan rates that lenders advertise aren’t necessarily the rates you will be offered, largely due to how lenders use risk-based interest rates when assessing individual applications. 

If a lender finds you a high risk borrower, they may offer you a higher interest rate. If you have a bad credit history, have been bankrupt, or have an irregular income, this is something you may have to look out for.

True cost of your personal loan

Try to find the true cost of your loan (interest plus fees) as a simple percentage. When looking at various loan offers from multiple lenders, try to find this inclusive rate to ensure you are accounting for all fees and potential charges.

Types of personal loan interest rate

Types of personal loan rates

Personal loan rates are usually either fixed or variable. The type of rate you choose will depend entirely on the available options and which is best-suited to your financial circumstances.

  • If you plan to pay your loan off early to save on interest, a variable rate personal loan will generally not include extra charges or fees when making additional, early repayments. 
  • If you plan on repaying the minimum amount over the entire loan term, a fixed rate personal loan may be more suitable. Fixed rates are often a little lower than variable rates, and they provide a certainty which makes budgeting and meeting repayments easier. 

Fixed rate personal loans

Fixed rate personal loans

Fixed interest rate personal loans have the same interest rate for their entire term, or a set portion of the term. With a fixed interest rate, you know that your repayments will stay the same during the fixed period, which makes budgeting easier. You’re also protected against interest rate increases. 

On the other hand, fixed interest rates can be restrictive. If you have a fixed interest rate, you may be charged fees if you make extra repayments, as well as a break fee if you pay your loan off earlier. Plus, if market interest rates decrease, yours will stay the same and you may miss out on savings. Fixed interest rates also tend to have shorter loan terms.

Fixed rate personal pros and cons

Pros Cons
  •  Interest rate stays the same
  • Repayments stay the same 
  • Provides certainty for budgeting 
  • Protects against market interest rate rises 
  • Can be inflexible 
  • Fees may be charged for extra or early repayments 
  • If market interest rates decrease you’ll miss out on savings 
  • Shorter loan terms 

Variable rate personal loans

Variable interest rates increase or decrease in relation to the market, and can change at any time throughout your loan term. Variable interest rates will generally offer greater flexibility in making extra repayments or repaying the loan early without incurring fees. 

However, variable interest rates can bring uncertainty with repayment amounts. Your repayments could change at any time and, if market interest rates increase, you could end up paying more interest.

Variable rate pros and cons

Pros Cons
  • Flexibility to make extra repayments without fees 
  • May have the flexibility to pay the loan off early without fees 
  • Rate will stay the same if market rates increase 
  • May allow a longer loan term 
  • Uncertainty. Your interest rate could change at any time
  • Your repayment amounts could change 
  • Rate will increase if market rates increase 

How to reduce your interest rate

Low interest personal loans

Reducing the amount of interest you pay is one of the easiest ways to reduce the total cost of a loan. Whether you're choosing your first loan, or looking to refinance an existing loan, there are a few simple things you can do to find a low interest personal loan.

  • Shorter term. The shorter your loan term is, the less interest you’ll pay. So if you can afford it, going for a shorter loan term could save you hundreds or thousands of dollars in interest over the life of a loan. 
  • Extra repayments. If you have spare cash left over in your budget, or come into a windfall like a bonus at work, consider putting that amount toward your personal loan. Making extra repayments when you can will help reduce interest charges on your loan and help you become debt-free faster. 
  • Low-fee personal loans. Paying fewer - or lower - personal loan fees can free up cash to make extra repayments. Always make sure you look closely at all fees and the inclusive rate before applying. 

Use the Personal Loan Calculator to estimate interest repayments on a personal loan.

Personal loan interest rates summary


Interest is almost always the biggest cost of any personal loan, so when you’re shopping around it should be at the front of your mind. Take the time to look at rates from non-bank lenders, brokers, banks and credit unions to make sure you’re getting the best deal possible. 

You’ll also need to consider what type of personal loan rate is right for you:

  • Fixed: more certainty, less flexibility. 
  • Variable: less certainty, more flexibility.

Personal loan interest rates FAQ

How can I decide on personal loan rates?

The best way to look at personal loan rates is to shop around. Use review sites, speak to a broker or visit the websites of lenders you’re considering and check for yourself. Find a rate that expresses both the interest and fee charges to get a true cost of your loan.

Is a fixed or variable rate personal loan better?

Whether a fixed or variable rate is better for you depends on your circumstances and your goals. If you want to pay your loan off early without incurring extra fees a variable rate loan may be the best option. If you want to pay the minimum amount and keep your repayments the same a fixed rate may be better.

How can I pay lower interest on my personal loan?

To pay less interest on your personal loan, pay the loan off faster, make extra repayments and make sure you secure a loan with low fees.

Which personal loans have the lowest interest rates?

Generally secured personal loans have lower interest rates than unsecured personal loans. That’s because lenders consider them to be lower risk.