How much could you save with a 5-Star Rated personal or car loan?

Are you thinking about getting a personal loan to help fund home renovations or buy a car? Find out how much you could save with a 5-Star Rated personal or car loan.

Many Australians have been keen to spruce up their homes during the coronavirus pandemic. While some people have been making small changes around the house, others have launched into full-blown renovations. According to data from the Australian Bureau of Statistics (ABS), the value of home alterations and additions rose by 7% in August from the previous month to $784.3 million, the highest level it’s been since April 2016.

The pandemic has also presented an unique conundrum for those looking to buy a car. Due to global trade disruptions, there are currently fewer imported new cars available in Australia. This has driven up the price of used cars, with CommSec data showing a roughly 30% increase in used car prices since September last year. Higher prices may mean some buyers need to reassess their finance options.

If you are looking to take out a personal or car loan, Canstar’s 2020 Personal and Car Loan Star Ratings could help. Our Research team has analysed 293 products from 72 providers on our database. Loans were assessed based on their price and features. Price was the main driver of the overall score. As part of this, the Research team looked at the total cost of each loan it rated, including the interest rates, upfront fees and ongoing fees involved. For the features score, the team considered a range of factors including the application process and management of the loan.

How much could you save with a 5-Star Rated loan?

To give you an idea of the difference a top-rated loan could make, Canstar Research looked at the cost of a 5-Star Rated unsecured personal loan versus the average unsecured personal loan on our database. In this example, the Research team compared the average total cost of a $15,000 loan with a three-year term.

5-Star Rated product average Database average Difference
Interest rate 7.56% 11.82% 4.26 percentage points
Upfront fee* $121 $207 $86
Ongoing annual fee* $5 $33 $28

Source: www.canstar.com.au – 22/10/2020. Based on products rated in the Unsecured Personal Loan profile of the Canstar Personal Loan Star Ratings (October 2020). Average interest rate calculations use the midpoint of the rate range where applicable. *Average calculations for fees based on all applicable products, including those that don’t charge a fee.

As you can see, the average interest rate was significantly lower on a 5-Star Rated product. Where lenders charged upfront and ongoing fees, these were also lower on average.

So, how much could you save over the life of a personal loan? According to Canstar’s research, in this scenario, you could save over $1,200 by going with a 5-Star Rated product.

For a $15,000 unsecured personal loan repaid over 3 years
5-Star Rated product average Database average Difference
Monthly repayment $467 $497 $30
Total interest paid $1,812 $2,889 $1,077
Total cost including fees* $1,948 $3,195 $1,247

Source: www.canstar.com.au – 22/10/2020. Based on products rated in the Unsecured Personal Loan profile of the Canstar Personal Loan Star Ratings (October 2020). Average interest rate calculations use the midpoint of the rate range where applicable. Total cost includes total interest paid plus the applicable upfront and ongoing fee(s), which are assumed to not be capitalised (i.e. not added to the loan). *Average calculations for fees based on all applicable products, including those that don’t charge a fee.

Which loans received a 5-Star Rating?

In total, 55 personal and car loans on Canstar’s database received a 5-Star Rating across the consumer profiles considered. The winning loans in each profile are listed in the tables below, sorted in alphabetical order by provider name, then by product name.

New car loans

To fall into the new car loan profile, a loan must be available to buy a motor vehicle of at least $25,000 in value, with a loan term of up to five years.

Institution Product
Australian Military Bank Car Loan – Excellent Credit
Bank First Green Car Loan Fixed
Bank First Green Car Loan Promotion Variable
Beyond Bank Low Rate Car Loan Special Offer
Credit Union SA Online-Only Special Fixed Rate Personal Loan
Credit Union SA Special Fixed Rate Personal Loan
G&C Mutual Bank Fair Rate Personal Loan Diamond
Greater Bank New Car Loan
Horizon Bank New Car Loan Fixed
Hume Bank Secured Personal Loan
Illawarra Credit Union Online Secured Personal Loan
Illawarra Credit Union Secured Fixed Personal Loan (new)
loans.com.au Car Loan (New)
loans.com.au Green (Low emission) Car Loan
MOVE Bank New Car Loan
Northern Inland Credit Union Brand New Car Loan – Fixed
Northern Inland Credit Union Brand New Car Loan – Variable
OurMoneyMarket Car Loan
People’s Choice Credit Union Discounted Personal Loan (Car Loan)
Plenti New Car Loan (Excellent Credit)
Queensland Country Bank New Car Loan
RACQ Bank Fixed Rate New Car Loan
Suncorp Bank Secured Car Loans
The Mac Car Loan New

Used car loans

For used car loans, the loan must be available to buy a motor vehicle of at least $15,000 in value, with a loan term of up to five years.

Institution Product
Australian Military Bank Car Loan – Excellent Credit
Auswide Bank Car Loan – Fixed
bcu Car Loan
Bendigo Bank Green Sec Personal Loan
CUA Secured Fixed Car Loan
G&C Mutual Bank Fair Rate Personal Loan Diamond
Geelong Bank Affinity Car Loan
Greater Bank Secured Personal Loan
Hume Bank Secured Personal Loan
Hunter United A Cracking Car Loan <5 yrs
Illawarra Credit Union Secured Fixed Personal Loan (used)
loans.com.au Car Loan (Used – Dealer Only)
OurMoneyMarket Car Loan
Plenti Used Car Loan (Excellent Credit)
QBANK New Car Loan (up to 5 years old)
Qudos Bank Car Loan <5 yrs old
RACQ Bank Fixed Rate Used Car Loan
Summerland Credit Union Equity Plus Secured
Summerland Credit Union Equity Plus Unsecured
Suncorp Bank Secured Car Loans
Teachers Mutual Bank 5 Year Fixed Rate Car Loan
UniBank 5 Year Fixed Rate Car Loan
WISR Secured Vehicle Loan – Excellent Credit

Unsecured personal loans

For unsecured personal loans, the loan must be available for either debt consolidation or to fund a holiday. It must be at least $15,000 in value over a loan term of three years. With an unsecured loan, you do not have to provide an asset (such as a car) as security.

Institution Product
Alex Unsecured Personal Loan – Excellent Credit
Endeavour Mutual Bank Personal Loan Unsecured
G&C Mutual Bank Fair Rate Personal Loan Diamond
G&C Mutual Bank Fair Rate Personal Loan Emerald
Liberty Financial Unsecured Loan A – Excellent Credit
MoneyPlace Unsecured Loan A – Excellent Credit
OurMoneyMarket Low Rate Fixed Personal Loan A
OurMoneyMarket Low Rate Fixed Personal Loan A+
Plenti Personal Loan – Excellent Credit (Fixed)
Plenti Personal Loan – Excellent Credit (Variable)
SocietyOne Unsecured Loan – Excellent Credit
Summerland Credit Union Equity Plus Unsecured
Sydney Mutual Bank Personal Loan Unsecured

Secured personal loans

To be considered in the secured personal loan profile, the loan must be available for either debt consolidation or to fund a holiday. It must be at least $20,000 in value over a five-year term. Secured personal loans require you to provide an asset as security for your loan (meaning that if you don’t repay the loan, the lender can repossess your asset).

Institution Product
Credit Union SA Online-Only Special Fixed Rate Personal Loan
Credit Union SA Special Fixed Rate Personal Loan
Endeavour Mutual Bank Term Deposit Secured Loan
Illawarra Credit Union Secured Fixed Personal Loan (new)
MOVE Bank New Car Loan
Sydney Mutual Bank Term Deposit Secured Loan

For more information about how our Canstar’s Personal and Car Loan Star Ratings were calculated, you can read the methodology. If you’re considering taking out a car loan, you might also like to check out our 2020 Car Insurance Star Ratings and Awards.

This article was reviewed by our Sub Editor Tom Letts and Finance Editor Sean Callery before it was published, as part of our fact-checking process.

Main image source: Jacob Lund (Shutterstock).

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