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How do I compare low interest rate personal loans?
The benefits of a low interest rate personal loan are quite attractive – you’ll be looking at lower overall interest payments while making more manageable interest repayments each instalment. However, low interest is not the only thing to consider when you’re looking at taking out a low interest personal loan. Like other lines of credit and financial products, these will often come with fees and restrictions that are worth looking into. We’ve listed a few of the common features to consider when you compare low interest rate personal loans.
Additional personal loan repayment fees
In lots of cases the ability to make additional repayments is generally only offered if you’re taking out a personal loan with a variable interest rate. Sometimes, additional repayments are penalised and you might be charged a fee by your lender. In other cases, you may be allowed to make additional repayments but only up to a certain amount. Definitely look into these things closely when you compare low interest rate personal loans.
Restrictions or flexibility around loan repayments
The majority of credit providers will be fairly flexible about whether you make your repayments each week, fortnight or month. It’s not unheard of, though, for some lenders to have restrictions around this. If you’re considering trying to pay your personal loan early you may want this flexibility and freedom from fees if you wish to change your repayment schedule. Additionally, you might want to check out whether your lender will allow you to pay online or by direct debit- not all do.
Personal loan term and amounts
Check whether the amount that you require for your purchase, is available for the period of time you’ll need to pay it back. Not all lenders offer the same standard loan terms, again your ability to repay your personal loan early might be hampered if your provider has restrictions around additional payments.
Check the fees again!
It’s also fairly standard for personal loans to come with set-up and ongoing fees. If you’re looking at a personal loan with a high ongoing fee that’s charged monthly or annually, this can make a big difference in the amount you’ll pay overall for the loan.
How do I find a low interest personal loan?
Secured loans
Secured loans offer pretty low interest rates most of the time, because they require you to put up a personal asset as collateral. They also tend to come with greater restrictions on what you can spend the borrowed funds on. For example, when you take out a secured car loan your loan amount may be capped at the value of the car you use as a guarantee.
Unsecured loans
Unsecured personal loans are not too different from secured loans, however they require no collateral on your part and can often have higher loan amounts. Unsecured personal loans are not often going to be the first place to find low interest personal loans, but you should still compare available offers. There are low interest unsecured personal loans out there, and if you find one that suits you, they come with fewer restrictions than secured loans.
Debt consolidation loans
Debt consolidation loans are unsecured personal loans, and with these you should definitely compare available deals to find a low interest personal loan that suits you. A debt consolidation loan could be just the ticket if you’re looking to roll all your existing debts under one low interest personal loan.
Can I improve my chances at the lowest interest personal loan?
Actually, yes you can. Three things you can do to improve your chance at getting the lowest interest rate personal loan are:
- Re-check out your credit rating- there are many online tools for checking whether your credit rating is good enough to apply successfully for a low interest personal loan
- Organise all the required documents in advance- we’ve mentioned some the documentation you’ll typically need below, which can vary with different lenders
- Compare personal loans online and apply- always compare carefully and look out for the things we’ve mentioned to find the best personal loan for you. The table we’ve provided is a good starting point.
What else do I need to think about?
There are several things to think about to ensure you’re really getting the personal loan that suits you best. Besides searching for the lowest interest rate possible, you should also consider loan type, flexibility, features and your eligibility for the personal loan. We’ve written helpful guides on these factors in our articles on finding the best personal loan and what you can use your personal loan for.
Are low interest personal loans as great as they seem?
It’s tempting sometimes to go with the lowest interest personal loan you can find, but it’s important that you consider the comparison rates. Comparison rates incorporate the interest rate of the personal loan with the other regular fees you might encounter once signing up. In some cases, you’ll be better off with a slightly higher interest loan if it has fewer fees like establishment fees, additional repayment fees or early exit fees.
Repayment amounts may also vary with lenders that provide an interest rate based on your credit score. Low credit scores may result in a higher interest rate than what you may have expected.
Who’s eligible for the loan?
More often than not, personal loans in Australia have eligibility criteria that mean you need to be:
- over 18 years old
- have a good credit history
- an Australian Permanent Resident or Australian citizen
Different low interest personal loans will have different eligibility criteria, so you’ll want to check this out beforehand to avoid rejection.
How do I apply for a low interest personal loan?
We’ve put together some of the low interest personal loans that are on the market right now for you to compare. If you’ve done your research and have decided which deal interests you most, simply click on the site link to make your application. Again, all lenders will require different documentation from you, but some standard things that credit providers ask for are:
- Personal information such as name, proof of identity and contact details
- Your employer’s contact information and name
- Proof of employment such as income from a payslip, and whether your contract is full or part time.
- Financial information on your assets and liabilities, any other debt you might owe including credit cards
As we’ve mentioned, there are many low interest personal loans out there, so you’ll want to compare a variety of deals and offers to select the most suitable loan for your financial situation.
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