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How to get a quote for your personal loan interest rate
Find out your personal loan rate without applying (and without it affecting your credit score).
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Personal loans can be a way for you to make large purchases, pay off debt or invest in projects when you don't have available funds. However, as it involves borrowing large amounts of money for a number of years, you want to make sure you're applying for the best possible deal.
That's why getting a quote for what interest rate you're likely to get can help you make a more informed decision.
This guide will take you through how you can get an interest rate quote for your personal loan without submitting a full application. That way, your credit score will not be affected.
What personal loan lenders offer quotes before application?
Why would I need an interest rate quote for my personal loan?
Recently, many Australian lenders have been adopting risk-based pricing. This means that the advertised interest rate is likely not going to be the rate you receive when you apply for a personal loan. Rather, the rate you receive will be calculated by the bank using your credit score and credit history, your income and assets and your current liabilities (debts).
That is, the risk you pose to the bank will help them calculate a personalised interest rate for you.
By receiving a quote before submitting a full application to the lender, you will be able to see an interest rate close to the one you're likely to receive if you apply. Because receiving a quote does not affect your credit score, you can get a few rate quotes and select the most competitive offer.
Guide to risk-based personal loans
How do I get an interest rate quote from a lender?
The most important thing about getting an interest rate quote from a personal loan lender is ensuring your credit score will not be affected in the process. Most lenders offering interest rate quotes for personal loans call it something along the lines of a "Rate Estimate" or "Rate Quote" but will clearly state that it will not affect your score. You will usually need to provide some of the following information:
- Personal details such as your name and address
- Information regarding the loan, such as how much you want to borrow, for how long and the purpose of the loan
- Your credit score (if you don't know your credit score, you can find it out for free here)
- Details about your employment situation and whether you have dependents
- Your financial details such as your annual salary
When does an interest rate quote affect my credit rating?
As helpful as it is to get an indication of what your interest rate may be when you apply for a personal loan, it's important to know when it will affect your credit rating. Here is when your credit score will be affected:
- When you submit a full personal loan application. A full application is when you supply all of your financial and employment documents to a lender to assess your situation and suitability for a loan. At that point, the lender will check your credit report to give you a finalised interest rate and final approval.
- If the lender does a "hard pull" on your credit history. There are two types of "checks" that can be done on your credit history, hard and soft. A soft pull, like what is done when you use finder's free credit score service, does not affect your credit score. This remains true no matter how many soft pulls are done. A hard pull, on the other hand, will be listed as a credit inquiry on your credit report and have an effect on your credit rating.
Questions we've been asked about getting interest rate quotes for personal loans
Is a personal loan interest rate quote the same as pre-approval?
No. Pre-approval is usually tied to a loan amount and is more of a common feature of car loans. That is, a lender will agree to pre-approve you for a car loan of X amount so you can have an amount in mind when you are shopping around for a vehicle. These loans allow you to get an indication of the interest rate you'll receive if you apply for the loan amount and terms you indicated.
How do I compare personal loans if I don't know what interest rate I'll receive?
Lenders will show an interest rate range for their personal loans that you can look at. For example, one lender may offer personal loans from 11% p.a. - 15% p.a. and another lender may offer personal loans with rates ranging from 13% - 18% p.a. While you are not guaranteed a lower rate, the first lender offers interest rates in a lower range. You can also compare the fees that are charged on personal loans (both upfront and ongoing) as well as features that are offered (redraw facilities, repayments flexibility, etc.).
What can I do to get a better interest rate?
First, check your credit score and credit report so you know what position you are in. You can do this for free with finder. If your score isn't as high as you think it could be, look at ways of improving it before you get your interest rate quote.
Picture: Shutterstock
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