The rate you'll get depends on your credit score, income, liabilities and other factors. The lowest personal loan rates are for borrowers with excellent credit scores taking out secured personal loans.
But whatever your personal situation is, there are ways to get a lower rate and save money on a personal loan.
Not every borrower will qualify the absolute lowest loan rate on offer, but there are things you can do to get a lower rate. Here are our six tips:
The best thing you can do to get a lower rate is improve your credit score. This means making regular payments on existing debts, and making sure you don't have any missed payments or defaults. You could also lower your credit card limit and make sure you only have one card. Get more tips to improve your credit score.
Having an asset to back your loan (like a car or house) can get you a lower rate. If you are have an asset you can and are willing to secure, it's worth checking if you can use it even when applying for a loan advertised as unsecured. Just make sure you can comfortably afford the repayments so you don't risk losing that asset.
A smaller loan amount makes you a less risky borrower in a lender's eyes. And it may get you a slightly lower rate. Keep in mind that some lenders might reject a small loan application if the loan is under its minimum loan amount.
Don't just go to your bank, and don't apply with the first lender you see. Compare personal loan rates, fees and features from multiple lenders. The market is competitive and there is little difference between banks and online lenders these days. Make sure you're getting a good deal.
Before you apply for a loan, check the loan's terms and conditions carefully. Make sure you as a borrower meet the lender's requirements. Otherwise you'll get rejected, or end up on a higher rate.
You can sometimes ask the lender for a lower interest rate. If you find a lower rate elsewhere you could ask them to match, for example. This works if you already have a personal loan too.
The above point about negotiating with your lender applies to people who already have loans too. Let's say you've significantly improved your credit score since you took out the loan. Tell your lender and see if they can give you a lower rate.
And you can also refinance to a new low-rate personal loan. This is a good option if you find a better rate but your lender won't negotiate.
While fees are important too, it's the interest rate that has the biggest impact on most personal loans.
A lower rate means lower monthly repayments and means you pay less interest over the life of the loan.
Here are some simple examples of the same loan with a different interest rate:
| Loan amount | Loan term | Interest rate (p.a.) | Monthly repayments | Total loan cost* |
|---|---|---|---|---|
| $15,000 | 1 year | 14.00% | $1,346 | $16,162 |
| $15,000 | 1 year | 19.00% | $1,382 | $16,588 |
| $15,000 | 1 year | 27.00% | $1,440 | $17,283 |
*For this simple example we've ignored loan fees, but it's important to factor in any upfront and ongoing fees.
Graham heads Finder's insights team and specialises in a variety of financial topics, including credit cards, loans, insurance and investing. He regularly appears on TV including ABC News, Sunrise and Today, and edits Finder's Insights column.
Most personal loans use risk-based pricing. This means your individual rate is determined by your credit score, your income, your outstanding debts and the type of loan you're applying for. You can spot these loans as they advertise an interest rate range, for example:
This means the lowest possible rate you can get is 8.49% p.a., if you have an excellent credit score and meet the lender's criteria. But if your credit score falls in a lower range, your rate will be higher. As high as 27.9% p.a.
Before applying for any personal loan you should know what your credit score is. You can check your credit score for free through Finder in just minutes.
Check your credit score for free
The type of personal loan you're looking for has an impact on the rate you can get.
If you don't have anything to offer as security you can still find unsecured personal loans with low interest rates. Often, there's only a couple of percentage points between a lender's lowest secured rate and lowest unsecured rate. Sometimes less than that.
If you search for low rate personal loans you might have seen rates under 6% p.a.. These are often green personal loans or loans secured by homes or term deposits. If you aren’t using your loan for green initiatives, or can’t secure your loan in that specific way, you won’t qualify for a rate this low.
Even a low rate personal loan becomes pretty expensive if it has high fees, a long loan term and isn't the right loan for your needs.
These are the key things to look at in your comparison:
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I need a personal loan up to 20000 I’m unemployed at the moment as I have a broken neck but I have a guarantor
Hi Luke,
Thanks for getting in touch with Finder.
Yes, one of the best ways for you to get approved for a personal loan is to have a guarantor. You may refer to our list of guarantor personal loans. On that page, you will learn how you can apply for a loan using a guarantor. There is also a comparison table that will help you find the lender that suits you.
You can click the name of the lender or the “More info” link to be redirected to our review page and learn more about the lender’s loan offer, rates, and requirements as well as the pros and cons of using their loan service. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
Looking to move and requiring money to leave present area
Hi Max,
Thank you for your inquiry.
You may check out the lenders featured on this page as you can compare the different features that they offer.
You can also click on their names to be directed to their dedicated pages to read further details such as the eligibility criteria and requirements for their loan product.
Once you’ve chosen a provider, you may click on “Go to site” to be directed to their main website where you can start your application.
Before applying, please ensure to read the relevant Product Disclosure Statements/ Terms and Conditions of the option before making a decision and consider whether the product is right for you.
I hope this helps.
Best,
Maria
I am looking for a variable interest rate with no monthly bank charges for a personal loan of $32.500
Hi Yvonne,
Thank you for your inquiry.
Here’s an option of lenders who offers variable rate personal loans. On the page, is a comparison table you can use to see which lender suits you. You can use the calculator on top of the table to know your projected monthly repayment when comparing your options. If you like to see the side-by-side comparison between brands, just click the “compare box” below the brand’s logo.
Please click the name of the lender or the “More info” link to be redirected to our review page and learn more about the lender’s loan offer, rates, and requirements as well as the pros and cons of using their loan service. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.
I hope this information has helped.
Cheers,
Harold
Hi is it usual for the lender to ask for account details, on line.? A bit hesitate to fill this field out.
Hello Sue,
Thank you for seeking clarification on the security of online forms.
I understand that you may be worried about the safety of the personal information you share online.
It is actually now commonplace for companies to ask for account details online. This allows companies to process your application quicker.
Rest assured that these companies are vigilant in keeping your details secure.
Be careful as well to only visit known sites when filling out forms like this to ensure the safety of your details.
Hope this helped.
Cheers.
Gru
Hello. I have a friend who has asked me to help her apply for a personal loan. She would like to borrow 50k over the maximum possible loan term, with the option to repay it early if possible. This would probably need to be an unsecured loan as I don’t think she has any valuable assets to secure the loan against. Are you able to give some general advice for her situation?
Hi Jemma,
Thanks for your question.
You may check our list of unsecured personal loans for possible loan options. You can take advantage of the calculator on top of the table to know which option requires a monthly repayment that fits your friend’s budget. Once you have chosen a particular lender, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with your loan application or get in touch with their representatives for further assistance.
Kindly review the eligibility criteria and the terms and conditions of the loan before submitting your application.
Cheers,
Anndy