Compare low interest personal loans

What is a low interest rate personal loan?

A low interest rate personal loan is a personal loan that comes with a low rate of interest compared to other products available. Personal loans can be used to help pay for big expenses like buying a car, renovating your home or consolidating debt. But there can be a big difference between the lowest and highest interest rates on offer from lenders.

By choosing the lowest interest rate personal loan available to you, you can potentially lower your repayments and reduce the amount you will have to pay in interest on top of the amount borrowed. However, remember that the loan with the lowest interest rate may not always be the cheapest. Make sure to check for any fees associated with the loan to understand its real cost. It’s also worth comparing the features you get with a loan that may boost its overall value.

How can I get a low interest personal loan?

There are a few different ways you may be able to get a lower interest rate on a personal loan:

• Consider a secured personal loan. With a secured personal loan, you need to provide the lender with an asset (such as a car) as security. If you don’t make the agreed repayments, the lender can possess the asset and sell it to recover the money borrowed. Because of this added level of protection for the lender, secured personal loans typically have lower interest rates than unsecured ones.
• Have a good credit score. Many lenders offer risk-based personal loans, where your interest rate will be higher if you are seen as a riskier borrower. Borrowers with ‘excellent credit’, on the other hand, are usually offered the lowest personal loans rates. You can check your credit score with Canstar or via the Canstar App.
• Consider a loan guarantor. A loan guarantor is someone who guarantees the loan for you, such as a family member or friend. Guaranteeing the loan means agreeing to make the repayments if you cannot. According to ASIC’s Moneysmart, some lenders will offer you a lower interest rate if you have a loan guarantor. However, it’s important to be aware of the risks involved.
• Shop around. Another way to find a low interest personal loan is to make sure you are comparing loans from a range of lenders.

How can I compare low interest personal loans?

You can compare a wide range of personal loans by using the comparison tool at the top of this page. You can tailor the results by changing the filters to suit your requirements. When choosing a personal loan, a low interest rate is just one factor to look for. Other factors to consider include:

• Is the interest rate fixed or variable? With a fixed rate, the interest rate and your repayments will stay the same during the loan. With a variable rate, the interest rate can go up or down during the loan, and your repayments will vary as a result.
• What is the comparison rate? The comparison rate on a personal loan takes into account both the interest rate and most upfront and ongoing fees and charges. It’s designed to give you a better idea of the total cost of the loan per year.
• What are the fees? It’s also important to look at the fees charged on the loan. For example, personal loan fees can include an establishment fee, monthly service fees, missed payment fees, extra repayment fees and early repayment fees.
• What is the loan duration? By choosing a loan with a longer duration, you will typically get lower repayments each week, fortnight or month. But, you will usually pay more interest in total.
• What features are available? Some lenders offer different loan features which may suit your needs when it comes to managing your finances. For example, can you make extra repayments on the loan and is there a fee for doing so? Is there a redraw facility so you can access extra repayments if you need to?

You can also view Canstar’s expert Personal and Car Loan Star Ratings, which compare loans based on cost and features.

How much can I borrow with a low interest personal loan?

The amount you can borrow will depend on the provider, the type of loan you take out (for example, whether it is secured or unsecured) and your financial situation. To work out how much you can borrow, providers will typically consider your income, expenses, personal details (including if you have any dependents) and any other financial commitments you have (such as other loans or credit cards) as part of assessing your loan application.

Remember, though, that even if a lender is prepared to lend you a certain amount of money, it’s important to consider carefully if borrowing the maximum amount is the best option. For example, while you may be able to afford the repayments now, what would happen if your circumstances changed? 

It is important to note that personal loan interest rates can typically be more expensive than other forms of finance, such as home loan interest rates. However, personal loans often have lower interest rates compared to credit cards. It could be a wise idea to consider other forms of finance available to you and weigh up your options carefully.

How do I apply for a low interest personal loan?

You can apply for a personal loan online with most lenders. You may also be able to apply in person with some banks and credit unions. When applying for a personal loan, the lender will ask you to provide various pieces of information and documents to demonstrate that you are eligible for the loan. You may be asked to provide evidence of the following:

• That you are over 18 years of age and an Australian citizen or permanent resident
• That you have sufficient income to cover the repayments
• That you you have a reliable record as a borrower based on your credit history
• That you’re overall in a good financial position based on the other assets you own and any other debts you have

Before applying for a personal loan, it’s important to read the loan documentation carefully, including the Target Market Determination (TMD). Understanding what you are signing up for will help you to decide if the product is suitable for you.

Who offers low interest personal loans?

A wide range of banks, credit unions and other lenders offer low interest personal loans in Australia. You can compare the low rate personal loans on Canstar’s database using the table at the top of this page. You can tailor the results according to your preferred loan amount, loan duration and whether you want to provide security.

Please note that the results do not take into account your credit history and other factors specific to your loan application, which may affect whether you are eligible for the loan or not and what interest rate might apply. Some of the loans shown may be limited to particular purposes, such as ‘green loans’ which are generally restricted to the purchase of certain environmentally-friendly products or home improvements.

Remember, too, that no interest loans are available to eligible low income borrowers to cover the cost of essential goods and services through the No Interest Loan Scheme (NILS).