Find out whether switching loans can save you money.
There are a range of personal loans available in Australia, and if you’re already repaying one you may be wondering whether it’s worth switching to a more competitive option.
There are several different ways to switch loans, which can involve splitting one larger loan into multiple smaller ones, consolidating smaller loans into one larger one, getting a new product from the same provider or moving to a different financier entirely.
Find out what you need to know about switching loans to see if it’s right for you.
Use the comparison calculator below to find out how much you could save by switching loans.
Compare personal loans you can switch to
Is switching personal loans worth it?
A lot of people can save money, receive better interest rates or take advantage of more flexibility by switching personal loans, but it’s not always worth it. Compare the terms and rates of a new loan with your existing one, and factor in any extra fees or other costs.
You can work out whether switching your personal loan is a good idea or not by directly comparing your old loan to a new one and entering each of their details into a loan calculator to see exactly how much you could save.
Subtract any fees and related costs from this, and you will clearly see the total amount you can save and find out whether or not it’s worth switching loans.
What costs are involved in switching personal loans?
The two costs you may encounter when switching or refinancing your personal loan are fees from your old provider and fees from your new provider.
Your current lender may charge:
- Early repayment fees. You must completely pay off a loan before you can switch away from it. This is often done with money from the new loan. Paying the total balance early may incur early repayment fees, which are usually a percentage of the total amount. Early repayment fees tend to be charged on fixed rate loans rather than variable rate loans.
- Administration fees. If you want to adjust your personal loan in any way, including switching it, you may incur an administration fee. This is usually a flat fee of around $10-30.
- Break, cancellation or exit fees. Many lenders will reserve the right to charge additional fees if you cancel, exit or otherwise break the loan agreement before expected. These may take the form of one or more flat fees.
Your new provider may charge fees for:
- Opening an account or taking out a new loan. You will have to pay the usual costs associated with taking out a new personal loan, such as loan establishment fees.
- Administration costs. If you’re refinancing a loan then your new provider may liaise with your old one on your behalf. This, as well as other account management or additional work, usually comes at a cost.
- Account management fees. Sometimes your lender will charge ongoing account management fees on a monthly basis. These should be taken into consideration.
Calculate your switching costs
Switching loans can be an effective way to manage debt and save money, but it can also carry its own expenses.
Use the comparison calculator below to find out how much you could save by switching loans.
Factors to consider when switching personal loans
- Switching your loan for a different product from the same provider often means you can only switch “like for like”, such as going from one low doc loan to another, or from one secured personal loan to another. Switching companies entirely might give you more choice and more access to competitive rates.
- If your circumstances have recently changed or are set to change in the near future, you need to keep your eligibility for the new personal loan in mind.
- When switching or refinancing loans to take advantage of special offers and temporary deals, remember to consider how these policies will apply in the long run once the promotional period has ended.
- For the ease of refinancing in the future, you may wish to consider looking for loans with lower cancellation or early repayment fees.
How to compare your refinancing options
Refinancing is when you take out a new loan with a preferable interest rate and conditions and use it to fully pay off and close down your current loan. When comparing your refinancing options keep the following in mind:
- Do you want to combine credit card debt, store debt and other types of debt as well? Make sure your new lender will allow you to consolidate the different types of debt you have.
- Your repayments are listed on your credit file and can be taken into account when switching personal loans. If you’re already having trouble managing one loan a lender will not approve you for another.
- Find a new loan that works with your long-term goals. This is not necessarily the one that’s cheapest or the one that has the lowest minimum repayments. You may wish to select a loan that can be repaid more quickly, has flexible terms or has a fixed interest rate.
The easiest way to compare your refinancing options is by using the personal loan comparison calculator, and get started by comparing your personal loan options on the page above.
