Compare Australia's top fixed rate personal loans

A fixed interest rate is where you lock in the rate on a loan for an agreed-upon period of time, typically one to five years. The interest charged on your loan principal will not change during this fixed period, meaning neither will your personal loan repayments.

Budgeting is typically a lot easier with a fixed interest rate, as your personal loan repayment amount will not change over the fixed period. This financial stability may offer you peace of mind, as you'll know exactly how much you’ll be paying each month. 

Additionally, a fixed interest rate can act as a shield against potential interest rate hikes in the market. If interest rates rise during your fixed term, your locked-in rate remains unaffected, potentially saving you money over the life of the loan. However, the trade-off for this stability is typically less flexibility compared to variable rate loans, where you might benefit from falling interest rates and get more access to flexible repayment features. 

Variable interest rates on personal loans can fluctuate monthly, as determined by the lender and influenced by the Reserve Bank of Australia's cash rate. This could make budgeting challenging, as your monthly repayments may increase or decrease unexpectedly, unlike a fixed rate personal loan. 

While you could benefit from reduced interest rates if the cash rate were to fall, remember that lenders often act out of cycle with the RBA. If you’re considering a variable rate with the expectation of cash rate cuts being swiftly passed on to your personal loan, you might need to be patient, as this could take longer than you expect.

When you’re looking for a good deal on a fixed rate personal loan, it makes sense to start narrowing down your available options by looking for the most competitive interest rates. 

However, once you take ongoing fees and other charges into account, low interest personal loans may not actually be the cheapest options available. Low interest personal loans with high fees may even end up costing more over the life of the loan than higher-interest personal loans with lower fees.

Some fees you may be charged include:

• Application fees
• Establishment fees
• Early repayment fees
• Redraw fees
• Late payment fees
• Ongoing monthly fees
• Other account keeping fees

To get a more accurate idea of a personal loan’s total cost, consider its comparison rate, which combines the loan's advertised interest rate with many of its fees and charges. This may help some borrowers better understand a loan’s potential ongoing costs. For example, if a personal loan has a low advertised rate, but much higher comparison rate, you may assume there are costly fees involved.

Not every cost associated with a loan is included in its comparison rate, so look into additional fees, features and any benefits before making your final choice. Lenders may charge higher ongoing costs, such as an annual fee, if the personal loan includes extra features. If you prefer to minimise fees as much as possible, a no-frills basic personal loan may better align with your budget.

It is possible to refinance a fixed rate loan, but the process may be expensive. Fixed rate personal loans tend to charge costly break fees if you try to leave the fixed period early and refinance, or even pay off the loan early. These costs can be substantial and are designed to compensate the lender for the interest income they would lose if you break the loan early.

Before making any decisions, request a break cost calculation from your lender. This will give you a clear picture of the financial implications of breaking your fixed rate loan.

When deciding whether it may be worth it to make the switch, consider using RateCity’s personal loan switch and save calculator, and be sure to factor in all the fees and charges. Sometimes it may be more cost effective to simply pay the personal loan off in full over the loan term than to refinance to a lower rate.

One risk when you refinance is that you can often end up extending your loan term. For example, if you only had 12 months left to repay your loan, by increasing the loan term another 2-3 years you could end up paying thousands more in interest charges. 

Repayments on a personal loan

To demonstrate the impact of a personal loan interest rate on your overall repayments, RateCity has crunched the numbers on the total interest payable for a 5-year, $30,000 personal loan at two different interest rates. 

Personal loan interest rate comparison: impact on repayments

Source: RateCity.com.au. Note: Hypothetical example for demonstrative purposes of 5-year, $30,000 personal loan on two fixed interest rates of 7.00% and 12.00%. Does not factor in fees. 

As you can see, while a 4% difference in interest rates does not seem that significant, by paying a higher interest rate, you could end up paying $4,398 more in interest charges. 

There is no one 'best' fixed rate personal loan for all Australians, but you can find the best personal loan for you by carefully comparing your options. 

Your best personal loan may come with a low fixed interest rate and few fees, reducing the overall cost of borrowing. For others, the best personal loan comes with helpful features, such as making extra repayments without penalty and a redraw facility. Some Australians may prioritise a Big Four Bank, while others prefer online-based competitor lenders. You ultimately need to decide what personal loan features best suit your financial needs and budget.

You can start by using a comparison table to compare offers from different lenders. You'll be able to filter down your personal loan preferences to easily compare options side by side and create a shortlist. Then, sort your results by the lowest interest rates or highest Real Time Ratings™ scores to view the most competitive options first. 

Real Time Ratings™ is RateCity’s world-first rating system that ranks personal loans based on cost and flexibility. Looking at the Real Time Ratings™ score may be one way to help you narrow down your shortlist of best personal loan options.

Some of the eligibility requirements that borrowers typically need to meet to secure a fixed rate personal loan include: