Fixed Rate Personal Loans

As there are different types of personal loans that you can choose from, this time we’ll go through a fixed rate personal loan. We’ll cover what it is, how it works, how you’d get one, some pros and cons, and how to compare fixed rate personal loans so you can find one that suits you.

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Advertised ProductProduct Image For OurMoneyMarket - Personal Loan - Unsecured | Fixed

OurMoneyMarket - Personal Loan - Unsecured | Fixed

Advertised Rate

From 6.57% p.a. to 18.99% p.a.

Comparison Rate

From 7.19% p.a. to 21.78% p.a.
An Unsecured loan with an advertised rate from 6.57% p.a. and comparison rate from 7.19% p.a.
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Showing personal loans based on borrowing $20,000 over 3 years, showing both secured and unsecured loans, with fixed rates
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What is a fixed rate personal loan?

A fixed rate personal loan typically lasts between one to seven years with fixed interest rates throughout the loan period.

With this type of loan, you won’t need to worry about the interest increasing in your repayments. Nice.

What could I use a fixed rate personal loan for?

A fixed rate personal loan is quite a common personal finance option, and many people choose to take one out from their chosen lender for many different things.

You might be at a stage in your life where you need to make a purchase that could hit your wallet harder than you’d like.

In this case, many people take out these loans in order to cover the hit of these costs. So, if you’re planning a holiday, or you need to buy a new couch and a rug, or perhaps you’re just treating yourself to a high-end record player, then you might like to consider the extra help at hand.

What are the pros and cons of a fixed rate personal loan?

The good thing about a fixed rate personal loan is that you won’t face any variation in interest rates, so your repayments will be consistent, and you won’t generally have any unexpected surprises. Nice!

For those of us who are more risk-averse, these types of personal loans can help alleviate concerns about fluctuations or sudden rises in repayments. You can enjoy the stability of consistent repayments and pay off your loan at a consistent rate.

However, the downside is that you might not be able to take advantage of lower interest rates if they do drop at some point, and they usually do go up and down.

And even if you find yourself in a position where you might like to make an extra repayment to pay off your loan faster, many lenders actually charge extra for early or additional repayments, because it basically makes up for the interest they would accrue on payments they’d miss out on if you were to pay off your loan earlier.

How do I choose a fixed rate personal loan that’s suitable for me?

There are several factors that come into consideration when you’re comparing fixed rate personal loans. Check out the table below:

Comparison rate- This is the whole cost of the loan, which includes the interest rate and most of the fees.
- When you compare loans, make sure you’re looking at the same loan amounts and terms.
Interest rate- This is the rate of interest you’ll need to pay based on the amount you borrow.
Application fee- Many banks and financial institutions have application fees.
Additional fees- Check if there’s a monthly service fee.
- There might also be a default or missed payment fee.
- Check the T&Cs to see if there are any other fees.
Extra repayments- Some lenders charge a fee if you’d like to make extra repayments, so check this with your lender.
Loan use- Ask what your loan is limited to be spent on, as some loans are only to be used on certain things such as buying a car.
Loan terms- A shorter loan term typically offers a lower interest rate.
- A longer loan term usually offers lower repayments, but you’d typically end up repaying more interest.

How long can I fix a personal loan rate for?

You can expect the interest rates on this type of personal loan to be fixed for one to seven or so years.

But the loan term will depend on your financial circumstances, your ability to make repayments, and the lender you decide to choose.

Can you refinance a fixed rate personal loan?

There are a few ways you could do this.

You might want to consolidate your other existing debts or credit cards under one loan. Or, you might like to borrow more money and therefore increase your total loan amount.

You might even want to change lenders or lower the amount of interest you’re paying if you come across a more suitable loan.
But these options can vary between lenders and may come with their own additional costs.

If you do come to the position where you want to refinance your fixed rate personal loan, it’s important that you choose an option where the benefits of refinancing your loan for a lower interest rate will outweigh any potential refinancing costs.

How would I apply for a fixed rate personal loan?

Once you’ve compared from a range of available lenders, you might be ready to apply for a particular loan*.

In your application, you might need to provide things like recent bank statements, payslips, phone or energy bills, or rental or mortgage repayments to prove you’re responsible and a low-enough risk for your lender to bank on you (pun intended).

Your lender may then perform a credit check before they approve your loan.

You might also need a guarantor, but this is only if your lender won’t give you a loan on your own. It’s important that you and your potential guarantor know exactly what’s involved in this process. For more information, check out the Australian Government’s Moneysmart page on guarantors in loans.

This process all depends on your unique situation, which includes your circumstances and personal financial goals.

Ready to go?

If you’re ready to compare fixed rate personal loans, you can start here online with iSelect*. See the range of providers and simply click on an option that suits you to begin your application.

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