Compare Personal Loans*
Save time and effort by comparing a range of Personal Loans, including features like interest rates, comparison rates, fees, and loan terms with iSelect. Using our handy filters you can easily sort between different features, such as fixed and variable interest rates, to find a loan which suits you.
Showing personal loans based on a borrowing $20,000 over 3 years, showing both secured and unsecured loans, with fixed and variable interest rates
What is a Personal Loan?
A personal loan is a loan offered by lenders to cover purchases which are significantly less expensive than a home, such as an overseas holiday, home renovation, or new car, as well as to consolidate debt. You’re typically required to repay the loan with interest over a fixed period.
What are the different types of Personal Loans?
How your personal loan works can depend on the type of loan you take out. Some of the types of various personal loans offered by lenders include:
Unsecured personal loans:
This loan type doesn’t require an asset to be used as collateral. Because of this, unsecured loans could be perceived as higher risk to lenders, and could attract higher interest rates.
Secured personal loans
This loan type requires an asset to be used as collateral for the loan, meaning that if you default on payments, the lender can repossess the asset to recoup losses. An example of a secured asset could be a car.
Low interest rate loan
This is a personal loan with a lower interest rate offered by the lender. However, it’s worthwhile to use the comparison rate to compare it to other loans, which factors in other fees and charges to get a more accurate view of whether a low interest loan is still a good deal*.
Debt consolidation personal loan
This is a loan which allows you to pay off other existing debts (such as multiple credit cards or loans) and consolidate them in one place, which could make your debts easier to manage, and even could save you money in fees.
Fixed Rate Personal Loans
This loan comes with a static interest rate which could give you certainty on exactly what your repayments will be over the life of the loan. The fixed rate offered by lenders can change depending on your credit history, and whether the loan is secured.
Variable Rate Personal Loans
This loan comes with an interest rate which could change over the course of the loan term, meaning your repayments could increase or decrease over time depending on the changing interest rate. Variable rate loans can come with a redraw facility, allowing you to make additional payments without extra charge, helping to potentially offset some of the increase in repayments you’d need to make if interest rates rose.
What are the pros and cons of personal loans?
Personal loans come with a range of benefits and disadvantages. Whether or not a personal loan is suitable for you depends on a range of factors, so here are a couple of pro’s and con’s that are worthwhile to consider as you compare available products:
- Access more funds than a credit card: Personal loans can allow you to access larger amounts of funds than a credit card, which often come with limits.
- Lower interest rates than a credit card: Personal loans typically come with an interest rate between 5% to 7%, whereas credit cards can range anywhere from 12% to 21% depending on the product and lender.
- Build a positive credit history: Making all your scheduled repayments and making those payments on-time over the life of your personal loan could help building a positive credit history, and potentially increase your chance of securing credit in the future.
- Ability to consolidate debt: If you’ve got debts across a range of products, such as credit cards or another smaller personal loan, taking out a larger personal loan could allow you to repay those other debts, and consolidate your debt in one place, potentially making it easier to manage and even reduce the amount of additional fees you’re paying.
- ** Fixed or variable interest rates**: With personal loan products, you have the option of choosing one with a fixed or variable interest rate. Both come with different features, so it’s beneficial to weigh up which is most suitable for you. Fixed rate products typically offer more stability and consistency with interest repayments, whereas with a variable rate your interest repayments can change. That said, variable rate products can come with a redraw facility, which could allow you to offset increases in interest rates. Neither is ‘better’ than the other, it just depends what’s suitable for you.
- No interest-free days: Unlike a credit card, there are no “interest free days” as interest for a personal loan is calculated on the outstanding principal each billing period. In short, there is no way to avoid interest payments on a personal loan.
- Potentially lose an asset: If your personal loan is secured, meaning that one of your assets is being used as collateral (such as your car), then you might risk losing that asset if you default on the loan.
- Negatively impact your credit score: Missing repayments or defaulting on the loan could impact your credit score, and potentially lower your chances of being able to successfully obtain credit in the future.
How to compare personal loans and their features
When comparing personal loans on offer to see if you can find a good deal, there’s a variety of different products features to consider*. Here are some of the key ones to get you started:
This is the rate of interest the lender can charge on the outstanding balance of your loan. A higher interest rate and outstanding balance generally leads to increased minimum repayments. . Typically, the more you’ve repaid, the more your repayments contribute to the loan principal, rather than interest. Interest rate: This number is stated as a percentage and takes into account the lender’s advertised interest rate, as well as other fees and charges to give you a more complete view of the loan cost. Whilst looking at a product’s interest rate is important, the comparison rate is typically more helpful when it comes to comparing products in a more ‘like for like’ fashion, because as mentioned earlier, the comparison rate takes into consideration the overall cost of the loan (including interest rates, fees, and charges). This is important as one loan could have a lower interest rate than another loan but cost more in fees. The comparison rate would reflect this additional cost and potentially help you avoid unnecessarily selecting a more expensive loan. Comparison rate: Whether you choose a fixed or variable interest rate product can have a significant impact on your overall interest repayments over the life of the loan. A fixed rate loan can help you map out what your repayments could look like with more accuracy, whereas with a variable rate loan, your interest payments could increase or decrease depending on changes in the interest rate. Fixed or variable: This is the agreed period of time in which you’re required to repay the loan. For example, five years. The loan term could play a key role in determining how easy it is for you to manage your repayments. Loan term: Including sign-up fees, monthly fees, late payment fees, early repayment fees Fees: Most loan products come offered as secured or unsecured, however you may be able to offer a security in order to negotiate a lower interest rate. Secured loans simply require an asset to be used as collateral for the loan, such as a car. Secured or unsecured: Most lenders offer the flexibility of either weekly, fortnightly, or monthly repayments. Consider which arrangement suits you before making a decision. Payment flexibility: Whether you can make additional payments over and above the minimum required payments, and whether or not you’ll incur an additional charge to do so. Additional payments: Some lenders offer the ability to have a redraw facility, and this is more typical across variable rate loans. A redraw facility allows you to withdraw any additional contributions you made towards your loan, over and above the minimum required payments. Redraw facility: Whether or not there are any conditions on how or what you spend the funds on. Loan condition: Frequently Asked Questions
With iSelect you can compare personal loans available from a range of products and providers, and select the one which suits you*. Once you click out to your chosen lender, you can begin the formal process of applying for a personal loan.
The lender will typically require more information, such as your employment status, income, and whether you have any dependents. As part of the process of applying for a personal loan, the lender will also perform a credit check to get an impression of your credit history. Depending on the contents of your credit report, the lender may accept or decline your application, or there may be some additional changes to your loan agreement, such as the interest rate and whether or not the loan needs to be secured, before the agreement is signed and funds settled.
Unfortunately, there is no “best” personal loan or even a “cheapest” personal loan. Finding a loan that’s suitable for you can depend on a range of factors, which is why it’s beneficial to compare products from different lenders*.
Additionally, a product which looks “cheap” because it has a lower advertised interest rate, could actually end up being more expensive than another product with a lower advertised rate, due to other hidden fees and charges. So it’s always worthwhileto review the comparison rate, additional fees , as well as the terms and conditions of the product before making a decision.
As with any financial product, it can pay to compare different lenders, products, and offers to ensure you find a good deal*. However, it’s worthwhile to really understand the product you decide on, as sometimes a great ‘introductory offer’ might not come with the features and flexibility that suits you over the life of the loan.
Here are some additional tips for finding a good deal on your personal loan:
- Compare products: Use a comparison service like iSelect to compare different products from a range of providers at no added cost to you*
- Look at the comparison rate: As this figure could give you a more accurate view of loan costs, including both the interest rate and additional fees
- Consider the loan term: The length of the loan term can also give you an idea how long you’ll be required to make ongoing loan repayments. Whether you select a loan with a longer or shorter term can impact the size of your regular repayments, which could in turn affect your ability to comfortably meet your repayment obligations.
As part of your application process, lender’s will perform a credit check to understand your level of credit risk. A licensed credit agency will provide the lender with a list of any loans or credit products you’ve taken out in the past, including unsuccessful applications, and how you managed repayments on those products.
If the lender sees that you’ve defaulted on loans, declared bankruptcy, are currently managing several credit products, have made a large number of applications to different credit products in a short period of time, or have a history of failing to make repayments, then this could negatively affect your application for a personal loan. In short, a poor credit history could result in a rejected application, a higher interest rate, or the lender requesting an asset to be used to secure the loan.
Personal loans can be used for a number of different purposes, such as financing a new car, funding renovations, or having the funds to purchase that dream boat! However, some personal loans may come with a contractual agreement that the funds are used for a specific reason.
For example, secured personal loans typically require that the asset being purchased (such as a new car, boat, or motorcycle) is also used as collateral to secure the loan. Some of the common examples of what personal loans are used for can include:
- Purchasing new or used car
- Purchasing a motorcycle
- Purchasing a boat
- Paying student loans
- Debt consolidation
- Financing home renovations
- Funding a holiday
- Buying shares
- Paying medical bills
- Paying for a wedding
Interest payments on personal loans work more like home loans than say, a credit card. That is, interest is typically calculated on the total outstanding balance of the loan. Generally, your monthly, fortnightly, or weekly loan repayment includes the minimum repayment plus interest (which is expressed as a percentage of the total outstanding balance), as well as any included fees or charges.
Additionally, personal loan interest rates can either be fixed or variable.
- Fixed interest: this means that your agreed interest rate won’t change over the life of the loan, allowing you to more easily plan what your repayments could look like over the loan term. Typically with this type of loan, you’ll incur charges if you want to make early or additional repayments towards the loan.
- Variable interest: this means that your interest rate could change over the life of the loan. For example, if you started on a 5% interest rate, then over the loan term if could potentially reduce to 4% interest or below, but it could also rise to 6% or above at the lender’s discretion. Typically with this type of loan, you’re able to make early and additional repayments at no extra charge, and you may even be able to access a redraw facility.
- Credit Score: It’s important to note that some lender’s can vary the offered interest rate depending on the nature of your credit history. Whilst processing your application, lender’s typically request a credit report from one of several licensed credit reporting agencies. In some cases, an excellent credit history can attract a lower interest rate, and vice versa.
Some personal loans can come with a redraw facility, depending on the product and lender you decide on. A redraw facility works by allowing you to make payments towards your loan over and above your minimum obligations, whilst also allowing you to withdraw (or ‘redraw’) those funds back for your own use if needed. This can have the added benefit of reducing the amount of interest you’ll have to repay over the life of the loan, and also give you the flexibility to potentially pay your loan off faster, or even withdraw the funds if you require them.
However, a redraw facility could also come with additional fees, so it’s beneficial to understand the terms and conditions before selecting a product. It’s also worth noting that redraw facilities are typically more common across variable interest rate products as opposed to fixed interest.
When comparing personal loans, you’ll likely come across loan products which are either secured or unsecured.
- Secured personal loan: this loan type which requires an asset to be provided as collateral for the loan. For example, if you’re using the loan to purchase a new car, then the lender may require the purchased vehicle be used to ‘secure’ the loan. One of the benefits is that secured loans typically come with a lower interest rate because they’re viewed as lower risk to lenders, however you run the risk of losing the asset if you default on your loan.
- Unsecured personal loan: This loan product does not require an asset to be used as collateral to secure the loan. Because the lender doesn’t have an asset which they can repossess to recoup losses if you default, unsecured products tend to be viewed as riskier by lenders, and can oftentimes attract a higher interest rate than secured loans
Personal loans can come with a range of different fees and charges. These fees are at the lender’s discretion, and can vary considerably across both products and lenders. It’s worthwhile to weigh up all of the fees, as well as interest rates, to ensure you understand the full cost of the loan. Alternatively, you can look at the comparison rate to get a better view of the overall cost of different loans you’re comparing.
Some of the potential fees include:
- Sign-up or application fees
- Missed or late repayment fees
- Early repayment fees
- Monthly fee
What are some of the risks of taking out a personal loan?
Finding a good deal on your personal loan by comparing a range of products, and ensuring you select a loan amount with repayments you’re able to comfortably manage along with your other expenses is a good way to lower the financial burden you’re taking on. That said, personal loans, like any credit product, are not without their risks.
Some of these risks include:
- Increased debt
- Potentially losing an asset if the loan is secured and you default on payments
- Negatively impact credit score, and potentially decreased chances of being able to obtain credit in the future if you miss repayments or default on your loan
When comparing personal loan products, it’s worthwhile to select a product with terms and conditions that aren’t going to stretch you financially. Not only can missing repayments or even defaulting on your loan lead to increased debt, but they can hurt your credit score, potentially making it even more difficult to secure credit in the future.
However, if you do find you’re struggling to make repayments, you might consider speaking to your lender as soon as possible. They may be able to take action to provide financial hardship assistance such as by arranging changes to your agreement that make it easier for you to manage repayments.