Low Interest Rate Loans

A personal loan could come in handy for many of us, especially as we navigate our way through a global pandemic and into a precarious job market. Read on for our tips about low interest personal loans, and how to 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 and variable interest rates
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Low interest personal 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.*

What is a low interest personal loan?

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.)

What could I use a low interest personal loan for?

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.

What options do I have?

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.

What features are worth considering when comparing low-interest personal loans?

There are a few different factors to take into consideration when you want to compare low rate personal loans.* Check out the table below for an overview, and visit Moneysmart for more information:

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 much can I borrow?

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

What are the repayments like?

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.

Can I get a low interest personal loan with bad credit?

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.

What about no-interest loans?

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.

What sorts of things could I pay for with a no-interest 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.

How do I qualify for a no-interest loan?

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.

What about the Household Relief 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.

Ready to compare?

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.

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