Low Interest Rate Loans

Sometimes, the old savings account comes up short when we need to fund something special, or even something essential.

It could be a holiday we’ve been dreaming about for years, a new car that actually functions and doesn’t make concerning noises every few seconds, or maybe a jet-ski if ‘wet’n’wild’ is in your vocab.

Or perhaps you just want to get started on some long-awaited home improvements.

In these cases, you might like to compare low rate personal loans before you make these new additions a reality.*

A low interest personal loan is typically granted for applications on smaller loan amounts. The loan repayment terms are typically within a period of one to seven years, and interest rates are typically very low – around 4 to 8 percent.

You can normally borrow from $2,001 to around $100,000.

Of course, the loan amount you can borrow depends on your unique situation, which includes factors like your credit rating, income stream, and your residential status. (Eg: you need to be living at your home address for at least three months before applying for some personal loans.)

You might be planning a holiday sometime soon, or even thinking about going through home renovations or adding something like a swimming pool or a spa. In these cases, taking out a personal loan could be really helpful.

You might also want to get started on home improvements and renovations or buy new furniture. A small, low interest personal loan could also be worth considering for expenses like these.

And if you’re not ready to spend big or make massive repayments, a personal loan with low interest rates could be suitable for you.

When you decide to take out a low interest personal loan, you can choose between a secured or unsecured loan.

• Secured loan: This means you need to provide an asset that’s used as collateral in case you are unable to meet loan repayments (this is a worst-case scenario).
  This is usually what people do when they’re buying something like a car, where the interest rates are low as the risk is perceived as lower to the lender.

• Unsecured loan: This could be a good option if you’re looking for a small loan for a short period of time. In this case, you won’t need to offer up any assets as security for your lender.
  The interest rates for unsecured loans are typically higher, as the risk to the lender is perceived as higher. You might also need a guarantor on your application if this is your first loan.

The amount you borrow from your bank or financial lender depends on your unique situation, your credit history, and your ability to make repayments.

When it comes to repayments, there’s also fixed interest rates and variable interest rates.

• Fixed interest rate: This means your loan repayments are set at a fixed amount for an agreed period of time, which is usually a minimum of 12 months.

A fixed interest rate could be a great option for you so that you can avoid increases in your repayments, as the markets tend to fluctuate. But it could also mean you might miss out on lower interest rates on your repayments when interest rates drop.

• Variable interest rate: means your repayments depend upon the fluctuating interest rate, so when rates rise, so could your repayments. But if interest rates decrease, so could your repayments.

You would typically be required to make repayments every fortnight or every month. This depends on your bank or your financial lender, the type of personal loan you choose, and the amount of money you borrow.

It’s important to discuss these things with a financial advisor to work out a monthly or fortnightly repayment plan that works for you. Ultimately, you need to be confident that you’ll be able to make your repayments on-time and without stress.

If you have a solid and secure income stream, then it’s likely you’ll be able to make your repayments without any major issues.

It is possible, but it’s a lot harder to do so. The big banks might not be as willing to grant this type of loan to people with bad credit ratings, but there are lenders out there who can.

But because of a bad credit rating, lenders might consider approving a loan with a higher interest rate. The loan amount will typically be on the lower side, and the application process will also be stricter, so make sure you do your research to compare low rate personal loans.*

Read through Moneysmart’s guidelines to find out how you can check your credit rating.

No-interest loans are small loans that are offered by banks or lenders under the No Interest Loan Scheme (NILS) to get yourself in order in case you’re struggling to make ends meet. It’s ideal for individuals or families on low incomes who need to access safe, fair and affordable credit.

Check the NILS resource for more information on how you can apply.

You can typically borrow up to $1,500 to pay for essential goods and services. Loan terms are usually between 12 to 18 months, and there are no credit checks, no interest, and no fees or charges.

The Australian Government’s Moneysmart resource on no-interest loans is a useful resource to get you started with more information on this particular type of loan.

If you’re having a hard time making ends meet, no-interest loans could help you cover paying for things like:

• household items and expenses like a new fridge, a washing machine, a computer or other furniture or appliance;
• educational materials or schoolbooks;
• some medical or dental services; and
• car repairs and new tyres.

Moneysmart explains what you need to do to qualify for a no-interest loan:

• have a Health Care Card, a Pensioner Concession Card, or be receiving an income less than $45,000 each year after tax;
• have lived at your current address for more than three months; and
• show that you can repay the loan.

There’s now also a Household Relief Loan that you could apply for if you’ve been negatively financially impacted by COVID-19.

These loans are offered up to amounts of $3,000, have no interest fees, and are typically repaid over a 24-month period. This sort of loan is offered to help people pay for rent, utilities, and household expenses.

To see if you’re eligible, check out the Household Relief Loan resource.

If you’re ready to compare low interest 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.