Fixed rate vs variable rate personal loans
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Choosing the right personal loan is key to being able to manage your loan effectively. As well as choosing a lender, deciding on your loan term and choosing between secured and unsecured, you also have to decide whether you want your rate to be fixed or variable. These two rate options offer different benefits and drawbacks. The guide below will take you through the differences between fixed and variable interest rates and help you decide which option is right for you.
The key differences between fixed and variable interest rates on personal loans
|Fixed rates||Variable rates|
|Description||Your rate remains the same throughout the specified term.||Your rate may fluctuate throughout the loan term.|
|Typical rates||8-15% p.a.||10-16% p.a.|
What are fixed and variable interest rates on personal loans?
Personal loans come with two types of interest rates: fixed or variable. Fixed interest rates on personal loans remain the same throughout the specified term, which may be for the entire loan term or for an introductory period. If you opt for a variable rate personal loan you will receive the advertised rate, but this rate may change throughout the loan term depending on interest rate movements in the market.
What are the benefits of each type of interest rate?
Fixed rate personal loans
- Your repayments remain unchanged throughout the specified term.
- You may be able to secure a lower rate.
Variable rate personal loans
- You can generally make additional repayments without penalty.
- You're usually able to repay the loan early without any fees.
- You can find more loan options with longer repayment periods (up to seven years).
What are the drawbacks of each type of interest rate?
Fixed rate personal loans
- You generally can't make additional repayments or pay the loan off early.
- If you are able to make additional repayments or pay the loan off early, you may be charged a fee. Additional repayments may also be capped.
- Some fixed rate loans come with shorter repayment periods (up to five years).
Variable rate personal loans
- Your interest rate could increase and make your loan unnaffordable.
- You may find less competitive rates.
How do I work out which rate type is best for me?
The right type of interest rate for you will depend on a few different factors. Here are some questions you can ask yourself to help you decide:
- Do I want the option of making additional repayments or repaying the loan early? If the answer is yes, you're much more likely to find a variable rate loan that will let you do so.
- How affordable are my repayments? If your repayments are only just working with your budget, a fixed rate loan will ensure they will not increase.
- What interest rate can I get? The most competitive rate is going to make your loan repayments more affordable.
Compare a range of fixed and variable rate personal loans
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Personal Loan OffersImportant Information*
You'll receive a fixed rate between 6.99% p.a. and 25.69% p.a. based on your risk profile.
Apply for a loan up to $50,000 and repay your loan over 3 or 5 years terms.
You'll receive a fixed rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
You'll receive a fixed rate between 6.99% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
You'll receive a fixed rate between 6.95% p.a. and 17.95% p.a. based on your risk profile
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