Personal loan interest rate ranges
What are personal loan interest rate ranges and how is your rate calculated?
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
If you’re shopping around for a personal loan, you may have noticed that some lenders advertise their loans with interest rate ranges rather than a set interest rate. This means that if you apply and get approved for a personal loan, you’ll receive a rate somewhere in that range.
So, why do lenders use interest rate ranges and how can you qualify for the lowest possible rate? Let’s take a closer look.
Risk based personal loans you can apply for
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
What are interest rate ranges?
A personal loan interest rate range sets out the minimum and maximum rates you could get on a loan from a specific lender.
For example, if Lender X advertises a personal loan interest rate range of 7.5% to 20.15%, if you apply and are approved for a personal loan from this lender, the interest rate that applies to your loan could be anywhere within the range quoted.
However, the rate you get will be determined by a number of factors including your credit score, your overall financial situation and the loan repayment terms.
Does every lender have an interest rate range?
No. While some lenders use interest rate ranges, others have a set rate. If a loan is promoted with a set rate, everyone who applies and is approved for that loan will get the rate quoted.
Just like loans with interest rate ranges, personal loans with set rates are clearly advertised as such. This allows you to accurately compare loans with the same type of interest rate structure.
Why do lenders set interest rate ranges with their loans?
There are a number of reasons why some lenders offer interest rate ranges for their personal loans, such as:
- They can tailor the loan to suit the borrower. Rate ranges give lenders the flexibility they need to tailor their personal loans to meet the unique financial needs and repayment terms of a wide variety of borrowers.
- They can approve a wider range of borrowers. By offering a set rate, lenders limit the number of borrowers that will meet the necessary lending criteria and be able to afford to repay the loan. But if they introduce an interest rate range, they can make their loan accessible to a much wider range of borrowers with varying financial circumstances.
- They can set the interest rate as per the level of risk. Different borrowers come with different levels of risk for lenders – for example, a high-income earner with a perfect credit history is a much less risky lending prospect than someone on a lower income with a low credit score. Interest rate ranges allow lenders to set a rate that reflects the risk profile of each individual.
How is the interest rate determined?
The difference between the minimum and maximum figures in an interest rate range can be quite large, so how does the lender determine the exact rate that will apply to you? Well, there are a number of factors that affect how your rate is calculated, and the process will vary depending on the lender you choose.
Some lenders determine your rate based on your credit score or credit history, while others calculate rates according to your risk profile. This means a lender may consider the following factors when deciding which rate in their personal loan interest rate range will be right for you:
- Your credit score. Your credit score is a figure that represents your credit worthiness, and lenders use it to decide whether or not they should offer you a loan. The higher your credit score, the more likely you will be to make on-time repayments – which can help you qualify for a lower rate.
- Your credit history. Your credit score is based on an analysis of the information in your credit file, and many lenders will also consider your file when determining your personal loan interest rate. Black marks in your file, such as missed repayments or debt agreements, could cause the lender to offer you a higher rate.
- Your financial situation. You’ll also need to provide details of your financial circumstances when you apply for a personal loan, including details of your income and employment, your assets and liabilities and your ability to save money and make on-time repayments. The lender will use this information to determine your capacity to repay the money you borrow, and therefore work out your interest rate.
- The loan repayment terms. The lender will also look at the specifics of your loan, such as the loan term and the frequency of your repayments, when deciding where to set your interest rate.
How do I know what rate I will receive?
If you apply for a personal loan advertised with an interest rate range, you won’t know for certain what rate you will receive. This can be frustrating for borrowers who prefer the peace of mind that comes with certainty, but there are a few simple steps you can take to get a rough idea of the rate you’ll be given.
Checking your credit score is a great place to start, as a good credit score will help you receive a better rate. By taking steps to improve your score, such as consolidating debt and disputing incorrect listings on your credit file, you could soon be able to access a lower interest rate.
It’s also important to read the fine print for more information on how each lender calculates their rates. Once you know the process involved and the factors to be considered, you’ll be able to formulate a clearer picture of the rate you may receive.
Finally, many peer-to-peer lenders can give you an interest rate estimate for your desired personal loan, and you can apply for an estimate without affecting your credit score. This is a very useful tool to help you figure out where you sit on the lender’s personal loan interest rate range.
More guides on Finder
Westpac Flex Card
This 0% interest credit card from Westpac offers a $1,000 limit and a flat monthly fee that can be waived – plus you can use it as soon as you’re approved.
Westpac’s no interest credit card: How does it compare to CommBank and NAB?
The Westpac Flex Card is coming soon, with no interest ever and a $10 monthly fee that's waived if you don't have an outstanding balance.
Citi Rewards Card – Purchase and Balance Transfer Offer
With 0% interest for 14 months on purchases and balance transfers, is this Citi Rewards Card offer right for you?
ANZ SME Business Loan
This ANZ business loan aims to help businesses recover from the Coronavirus pandemic with a special, low interest rate. Rates will vary based on your situation. Find out if you're eligible to apply.
Westpac SME Recovery Loan
This loan from Westpac has secured and unsecured options to help your business recover from the Covid-19 lockdowns. Its variable rates are based on your circumstances and can be repaid over 10 years. Find out if you're eligible to apply.
NAB Business Recovery Loan
This business recovery loan from NAB lets you choose between secured and unsecured options to help your business after the Covid-19 lockdowns. Interest rates will vary based on your situation. Find out if you're eligible to apply.
CommBank SME Restarter Loan
You can borrow up to $5 million to help your business recover from the coronavirus pandemic or the March 2021 floods.
BOQ SME Recovery Loan Scheme Business Loan
This business loan from BOQ has secured and unsecured options to help you recover from the Coronavirus pandemic. Interest rates vary based on your circumstances and can be repaid over 10 years. Find out if you're eligible to apply.
Victorian Homebuyer Fund
The Homebuyer Fund allows Victorians to buy homes with 5% deposits in exchange for a share of the property.
Shares vs commercial property: Are you missing out on serious cash flow?
Both shares and commercial property can deliver huge returns – but both have their risks. Here's how to decide which suits you best.
Personal Loan OffersImportant Information*
You'll receive a fixed rate between 5.35% p.a. and 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 of 8.99% p.a.
Apply for up to $50,000 to use for a variety of purposes without needing to add security. Available to self-employed applicants.
You'll receive a fixed rate between 6.99% p.a. and 18.99% p.a. ( 7.91% p.a. to 19.83% p.a. comparison rate) based on your risk profile
Borrow from $5,000 to $55,000, with 1 years to 7 years loan terms available. This loan comes with no fees for extra repayments and no early exit fees.
You'll receive a fixed rate between 5.95% p.a. and 19.99% 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.
Ask an Expert