Benefit from stable repayments when you lock in your rate for your loan term.
Fixed rate personal loans let you set a rate at the beginning of your term, keeping your repayments set for the duration of your loan. This type of loan comes with a lot of benefits, but also a few added restrictions when compared to its variable rate counterpart. We break these down for you in this guide to help you decide if a fixed rate loan is right for you.
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RateSetter Unsecured Personal Loan - 3yr Fixed
RateSetter offers this unsecured personal loan with a fixed or variable rate. Receive a tailored interest rate from 8.11% p.a. based on your risk profile.
- Interest rate from: 8.11% p.a.
- Comparison rate: 8.71% p.a.
- Interest rate type: Fixed
- Application fee: $89
- Minimum loan amount: $2,001
- Maximum loan amount: $45,000
Fixed rate personal loan comparison
Compare fixed rate personal loans
- Harmoney Unsecured Personal Loan: 7.69% p.a. comparison rate. A personal loan with a competitive rate based on your credit score.
- Pepper Money Unsecured Personal Loan: 9.99% p.a. comparison rate. An unsecured personal loan with flexible repayment options and no monthly fees.
- SocietyOne Unsecured Personal Loan: 9.51% p.a. comparison rate. A SocietyOne personal loan offers lower rates for good credit borrowers.
- HSBC Personal Loan: 9.06% p.a. comparison rate. Interest rates range from 8.5% p.a. to 16.99% p.a. based on your credit history.
How do fixed rate personal loans work?
Fixed rate personal loans are just standard personal loans, but the main feature of these loans is that the interest rate will not change during the loan term. You can usually choose a loan term of between one and five years for a fixed rate loan.
Having your repayments remain fixed for the life of a loan is a big benefit, but it's important to understand fixed rate personal loans generally come with restrictions. These mostly have to do with repayments. For example, you may not be able to make additional repayments or you may only be able to make repayments up to a set cap. You may also not be able to repay the loan early. However, not all fixed rate personal loans come with these restrictions which makes it important to compare your options.
What features come with fixed rate personal loans?
Fixed rate personal loans come with a number of benefits, but also a few restrictions. Here are the typical features you can expect:
- Loan term. Lenders offer varying loan terms depending on the type of loan it is (secured or unsecured) as well as a number of other factors, but you can usually expect a term of between one and five years, with some lenders extending up to seven years. With some loans, part of this term may be fixed, with the other part of the term having a variable rate attached.
- Repayments stability. The interest rate is fixed, and that means your repayments stay the same for the entirety of your loan term. This is no matter what happens to rates in the market.
- Early payment penalties. Fixed rate personal loans usually come with fees for paying your loan back early or for making additional repayments. These differ between lenders, but generally, because you are considering ending the fixed term early, you will be expected to pay a fee. You might also find some lenders only charging fees if you repay your loan within a certain period, for example, in the first year.
- Upfront and ongoing fees. Look out for fees for establishing the loan or ongoing monthly fees. These aren't standard for fixed rate personal loans, so remember to compare what's available.
Should you get a fixed rate or variable rate personal loan?
Personal loans that come with a fixed interest rate can be suitable to help you finance a range of different purposes:
Fixed rate personal loans
- Your repayments remain the same each month, making it easy to budget
- Some loans still come with repayment flexibility, such as allowing early and additional repayments
- Many loans come with repayment restrictions such as penalties for early repayments
- Loan terms generally only extend up to five years.
Variable rate personal loans
- Flexible repayments such as no penalty for early and extra repayments
- Loan teams can extend up to seven years
- Your rate may change over your loan term
- Loan terms generally only extend up to five years.
Variable or fixed rate? The questions to ask
- Do I want flexibility with my repayments? Generally speaking, variable rate loans offer more flexible repayments. This includes the ability to make extra repayments, repay the loan and access a redraw facility. Some fixed rate personal loans may also offer these features but not all will. If you want flexible repayments, just make sure to find a loan that offers you the ability to do this without charging you a penalty.
- Which type of loan offers me a lower rate? Both fixed rate and variable rate personal loans can offer competitive rates, so it pays to compare both to find a good deal. Also look out for risk-based personal loans if you have a good credit history. These loans reward good credit borrowers with better rates.
- Does the loan type offer me the features I need? While fixed rate loans generally come with certain features, there are no hard and fast rules that lenders need to play by. This means that you could find a loan offering all of the features you want and it could have a fixed or variable interest rate. So, decide what features you want from your personal loan, whether it be repayment flexibility, a long loan term or a redraw facility, and find a loan that offers what you want.
How do I compare fixed rate personal loans?
Keep the following in mind when comparing your fixed rate personal loan options:
- Is the loan secured or unsecured? If you're looking to buy a vehicle or own a property you can consider a secured fixed rate loan and use the asset you own or are looking to buy as a guarantee. Secured loans come with lower interest than their unsecured counterparts because they're less risky for lenders. If you fail to make your repayments, the lender is able to repossess your asset and sell it to recoup its losses.
- What's the interest rate? Comparing interest rates is important as this is the rate you will be paying for the whole term of your loan. Compare the loan against similar offerings to get an idea if it's competitive.
- How long is the loan term? This ultimately comes down to what you need. You can expect most lenders to offer repayment terms of between one and five years for fixed rate loans, but some lenders extend their offerings up to seven years. You can lower your repayments with a longer term but you will ultimately pay more interest.
- What fees and penalties will I be charged? Look out for upfront charges such as establishment fees, any ongoing costs in the form of monthly or annual fees, and what you will be charged if you repay the loan early or make extra repayments. Other costs to watch out for include penalties for late payments.
Is there anything to avoid with fixed rate personal loans?
- Taking on a longer loan term than you need. While your repayments might be lower with a longer loan term, you will end up paying more interest. Budget your repayments before you apply and work out a repayment period you can afford.
- Taking a loan you can’t afford. Establish your ability to repay the loan before you fill in the application. While this is especially true if you take out an unsecured loan, as you stand to lose your collateral, defaulting on an unsecured loan can mean a bad credit rating for the next fives years.
- Not reading the fine print. Go over your loan contract so you're aware of all fees, charges and conditions.
How do you apply for a fixed rate personal loan?
- Compare + Click. Use the table above to compare your fixed rate personal loan options. Once you find a loan that's right for you, you can click on the lender's name to read a more detailed review or click "Go to Site" to start the application process.
- Eligibility + Application. You can confirm your eligibility on the Finder review page or on the lender's website. You will need to meet minimum age, income, employment and credit requirements before submitting your application. Online applications differ, but generally, you will need your personal, financial and employment details.
- Approval + Funding. You can usually find out if you're approved or conditionally approved within a few minutes, but some lenders may take longer. You can check back with the lender to find out about the status of your application. If you're approved, your loan can be funded any time from that same day to a week later. Check with the lender for details on a timeframe.