Compare some of Australia's best personal loan rates

There is no one 'best' personal loan in Australia. There are a wide variety of loan options available to suit a range of Australian needs and goals. Some borrowers may define their best personal loan option as the one charging the lowest interest rate, while some may favour personal loans that offer specific value-adding features and benefits.

The best-fit personal loan for you and your situation may be one that: 

• Aligns with your present and future financial goals; 
• Charges a competitive interest rate; 
• Charges little to no fees; 
• Is with your preferred financial institution; 
• Offers helpful loan features (if this is important to you); and 
• Is best suited to your financial situation and budget. 

The easiest way to figure out what personal loan may best suit you is to do your research, shop around, and compare your options carefully.

For many people, the search for a personal loan begins by looking for the cheapest personal interest rates available. However, don’t let that be the only step in your journey.

Finding a personal loan that suits you and your situation isn’t limited to just securing a low rate. Besides searching for a competitive rate, consider comparing features and other benefits associated with a loan to determine which option may best suit your needs.

To help you get started, we have listed some competitive personal loan interest rates on RateCity. Below, you'll find the options organised by comparison rate.

Here are some of the lowest rate secured personal loan options for October 2024

Bendigo & Adelaide Bank Ltd Secured Green Personal Loan at 5.49% (comparison rate 5.84%)

Illawarra Credit Union Limited Online Personal Loan Package at 6% (comparison rate 6.64%)

Bank of us Secured Residential Estate Personal Loan at 6.29% (comparison rate 6.57%)

Bank of Melbourne Secured Personal Loan Fixed* at 6.49% (comparison rate 7.69%)

OurMoneyMarket Services Pty Ltd Low Rate Personal Loan Secured at 6.57% (Excellent Credit) (comparison rate 7.19%)

Here are some of the lowest rate unsecured personal loan options for October 2024

Harmoney Australia Limited Unsecured Personal Loan (Excellent Credit) (Amount > $5000) at 5.76% (comparison rate 6.55%)

Credit Union SA Ltd Tesla Powerwall Loan (HL members) at 5.84% (comparison rate 5.84%)

Police Credit Union Solar Eco Loan at 6.24% (comparison rate 6.24%)

Gateway Bank Ltd Eco Personal Loan at 6.44% (comparison rate 7.45%)

Horizon Bank Green Personal Loan at 6.49% (comparison rate 6.63%)

360 Finance Unsecured Personal Loan at 6.52% (comparison rate 7.76%)

*Same offer for BankSA and St.George

Source: RateCity.com.au. Data accurate as of 02 October 2024.

To find the best personal loan for your financial situation, you’ll want to do your research around the different features that make up a loan. Comparing each feature carefully may assist you with finding the right product for you. 

Interest rate 

Interest is applied to the loan amount (principal owing) throughout the personal loan term. The lender determines the interest rate, and the lower the rate, the less interest you'll be charged, resulting in lower ongoing repayments. 

Interest rate type 

There are two personal loan interest rate types: 

• A fixed interest rate means your interest rate is locked in and your repayments will not change. This may offer you greater stability in your budget and protection from rate changes. 
• Variable interest rates may fluctuate according to market conditions, meaning your rate could increase or fall, depending on the lender, the Reserve Bank of Australia’s cash rate and the economy. Loan features, like a redraw facility, are generally offered more with variable rate loans. 

Secured vs. Unsecured 

There are two types of personal loans based on the security provided: 

• With a secured personal loan, any asset (car, jewellery, etc.) offered up as security could be seized to cover the personal loan amount if you default on your repayments. 
• An unsecured loan is not secured by an asset, but this represents a greater risk to the lender. With no security on your loan, they cannot recover their losses if you fail to meet your repayments. 

Lenders typically charge higher interest rates on unsecured personal loans to reduce the lender’s financial risk. These types of loans come with strict criteria, to ensure borrowers can meet their repayments. 

Fees 

Lenders may charge you fees on your loan, including: 

• Upfront fees - establishment fees or application fees.  
• Ongoing fees - annual fees, service fees/monthly fees, late payment fees, early repayment fees, redraw fees, and more. 
• Exit fees - A break fee may be charged if you leave a fixed rate loan before the term finishes. 

If your personal loan includes features, it's possible that the lender may charge you higher ongoing costs, such as an annual fee. Opting for a no-frills, basic personal loan could be a more suitable choice if you're trying to minimise fees and align with your budget. 

Loan term 

The duration of your loan repayments, typically ranging from 1 to 5 years, will affect the loan’s total cost and the overall interest you'll pay. A shorter loan term (1-3 years) might result in higher repayments, but you’re likely to pay less overall interest. In contrast, a longer-term loan (4-7 years) may lead to lower ongoing payments, but is likely to accumulate more interest over its life. 

Additionally, some lenders provide flexibility in choosing your repayment frequency—monthly, fortnightly, or weekly. It's important to select the option that aligns best with your household budget, and consider syncing it with your pay frequency for added convenience and financial planning. 

Loan features 

Personal loan features may include: 

• Extra repayments – Making additional repayments on your personal loan may help you chip away at your principal owing, so you pay off your loan faster and are charged less interest. 
• A redraw facility – A personal loan with a redraw facility offers you the flexibility of being able to withdraw extra repayments you’ve made for whatever reason, such as an unexpected bill. 
• Flexible repayments – Some lenders may allow you to change your repayment frequency to align with your salary cycle. You could choose between weekly, fortnightly or monthly repayments, enabling you to better manage your finances. 
• Prepayment facility – Prepayment refers to repaying your loan ahead of the scheduled term. Some lenders may not charge you a penalty if you choose to settle your loan early. 

The lender 

The lender itself is also important to carefully consider. For example, online-based lenders may offer easy-to-use account management tools and mobile apps, whereas larger institutions with branches near you may provide more convenient customer service availability.

Competitor lenders to the big four banks may be more likely to offer lower interest rates and fewer fees with their loans. However, you may miss out on that added security and stability of being with a major institution. It may be worth comparing the lender as carefully as you would compare the loan itself. 

Now you have a deeper understanding of what features you want for your personal loan, it’s time to shop around and compare your options. There are a range of tools that may help you to filter down and narrow your personal loan search until you’ve created your ideal shortlist of options. This includes: 

You may qualify to apply for a personal loan in Australia if you meet the following criteria: 

• You are over the age of 18. 
• You are an Australian citizen or a permanent resident. 
• You are employed or have a regular source of income sufficient to cover the loan repayments. 

To get a personal loan, you will generally need to provide the lender with the following in your application: 

• Proof of identity (driver’s license, passport, etc.) 
• Bank statements or utility bills to prove your address 
• Income statements or pay slips to prove your income 
• Bank or credit card statements to show your spending habits 
• Recent tax returns or financial documents 
• Details of current outstanding debt 

Then, you simply need to hop online or visit your nearest branch to begin the application process. 

Lenders typically offer lower interest rates to borrowers who: 

1. Pose a low risk of default; and 
2. Have stability in their personal finances. 

The eligibility criteria of a personal loan lender will differ for each provider. However, generally speaking, to qualify for some of the best personal loan rates, you need to meet the following requirements as a less-risky borrower: 

• Your credit score is in the 'good' to 'excellent' range 
• You have a deposit of at least 20% (an LVR of 80% or less)  
• You are employed full-time 
• You have been working for the same company for 12 months  
• You have little to no outstanding debts 

The lender will analyse your personal information against their eligibility criteria to help determine not only whether you are qualified for loan approval, but can be offered a more competitive rate. For example, if you’re still in the probation period of a job or you have existing debts, you may want to hold off on applying until you’re in a more “stable” financial position in the eyes of the lender. 

Since the lowest interest rates are often reserved for the most 'ideal' borrowers, you may face difficulties securing these rates if: 

• You are self-employed 
• You are a pensioner 
• You’re a young Australian and have little or no credit history 

In such cases, having a family member or friend guarantee your personal loan could increase your chances of approval. This could also potentially help you secure a competitive rate of interest, by making it less risky for the lender to loan you funds. 

To further enhance your chances of approval: 

• Check your credit score to understand your eligibility for a personal loan. 
• Avoid applying with multiple lenders simultaneously, as this could negatively impact your credit score. 
• Only borrow what you need to make the loan more manageable and affordable. Using a personal loan calculator to estimate your repayments can help ensure you can comfortably afford the loan.