Personal loans with no early repayment fee

Personal loans with no early repayment fees: What to know

Some personal loans don’t charge early repayment fees, allowing you to pay off the loan balance entirely whenever you want at no extra cost. That’s important as many lenders charge a fee if you exit a personal loan agreement early, as they'd miss out on the interest that you’d no longer have to pay.

While free early repayment features are usually saved for variable rate loans, plenty of fixed rate loans also offer this feature. This can offer a win-win–you get certainty that your repayments won’t change and the ability to pay off the loan early.

Loans without early repayment fees, as well as other no-fee personal loans, may come with higher interest rates to compensate for the lack of fees. It’s important to look at both the interest and comparison rates when shopping for a loan, as the comparison rate factors in the cost of both interest and fees.

How do personal loans with no early repayment fees work?

Personal loans that don’t charge early repayment fees typically work much the same as those that do. That is, unless you repay the funds earlier than promised, as then you won’t have to pay an early repayment or break fee.

• Before getting your loan of choice you’ll need to apply for it, supplying the lender with information about your financial circumstances.
• If you’re approved, the lender will send you the borrowed funds.
• You’ll then make regular weekly, fortnightly, or monthly repayments. These repayments go towards paying back the principal (the original amount borrowed) and cover the interest charged by your lender.
• You may also be charged certain application and ongoing fees, depending on the loan.
• You’ll continue to make repayments until you completely repay the amount you initially borrowed, plus interest.
• You’ll also be able to pay off the loan early without being charged a fee.

What personal loan options are out there?

You can choose how you’re charged interest

You can usually choose between a fixed rate or variable rate loan. A fixed rate will stay the same throughout the loan term, while a variable rate can go up or down, impacting your repayments.

Fixed-rate loans offer certainty, as your regular repayment will be the same over the life of the loan. 

Repayments on variable-rate loans can change, so they may be harder to budget for. Though, these loans can make up for the uncertainty by offering useful features, like redraw facilities or the ability to pay down the loan faster without being penalised.

You can choose whether or not your loan is secured

You’ll also usually be given the option to secure your personal loan.

Unsecured personal loans, like those shown on the table above, don’t require an asset as a security and may come with higher interest rates as a result. If you’re unable to pay back your unsecured loan, your credit score will take a hit and your lender could take you to court to recover the money still owed.

When taking out a secured personal loan, you’ll need to provide an asset as security. For example, new car loans are often secured by the vehicle being bought. If you take out a secured loan but find yourself unable to repay the debt, your lender can repossess the security to recover the remaining loan balance.

Who has the best personal loan with no early repayment fees in Australia?

There’s no one ‘best’ personal loan provider. The best loan for you will depend on your financial situation, needs, and goals.

To work out what the best personal loan with no early repayment fee is for you, ask yourself:

• What do you need the loan for?
• How much do you need to borrow?
• How soon do you need the money?
• How much can you afford in repayments?
• How long would you be willing to be in debt for?
• Can you fulfil a lender’s eligibility criteria (minimum income, residency status, credit score threshold)?
• Are there any alternative credit or finance options available to you (like using your savings or accessing equity in your home)?

You can also use Canstar's personal loan calculator to get a better idea of what your repayments could be and how the interest rate, loan amount, or term length could affect them.

Once you know what you’re after, you can use the comparison table above to view a variety of personal loans with no early repayment fees from our Online Partners. Use the table’s filters to narrow down the available options to those that best suit your needs. 

You can also click the ‘GET RATE ESTIMATE’ button at the top of the page to find loan products you’re likely eligible for. Simply provide information on how much you want to borrow, your ideal loan term, the purpose of the loan, your employment, residency, and residential status, and either link your credit score or estimate your credit band. If you’re unsure of your credit score, you can check it for free with Canstar or via the Canstar App.

Am I eligible for a personal loan with no early repayment fee?

Personal loans that don’t charge early repayment fees have similar eligibility requirements to regular personal loans. You’ll have to be:

• At least 18 years or older
• An Australian citizen or permanent resident
• Employed or have a steady source of income to repay the loan with
• Able to show a good credit history

Some providers may have additional eligibility requirements, such as a minimum annual income or particular credit score.

How to apply for a personal loan with no early repayment fee

Most lenders have an online application form on their website. To apply for a personal loan with no early repayment fee, you’ll need to provide information such as:

• Photo ID like a driver’s licence or passport and supporting documents like your bank or Medicare card.
• Proof of income, typically in the form of payslips from your employer or your annual tax return.
• Proof of savings, typically in the form of bank statements.
• Your employment details for the past three years.
• A list of any assets you already own, including vehicles and property.
• A list of debts you already have, such as other personal or home loans, credit card debts, and outstanding buy now pay later (BNPL) balances.
• A list of your general living expenses, including groceries, utilities, streaming services, rent, medical and transport costs, and education fees.

You may not need to provide all of this information, but it’s good to have on hand just in case.