If you have a personal loan, you may be wondering if you should transfer it to another bank. There may be several reasons for refinancing your current personal loan, including saving on interest payments. The good news is that switching loans is easy, but there are a number of things you have to keep in mind.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Yes, you can transfer your personal loan to another bank. This is called refinancing and it involves taking out another loan to pay off your current one. Refinancing can have several advantages. It can help you save money if you switch to a lower interest loan. You may also stand to get a loan with better features or a higher loan amount. But there may be a downside. Some personal loans come with penalties if you exit the loan early – which you will have to do to refinance. You should take into account all these additional costs and see whether you stand to gain if you refinance.
Finder survey: How satisfied are Australians of different ages with their experience with personal loans?
Response
75+ yrs
65-74 yrs
55-64 yrs
45-54 yrs
35-44 yrs
25-34 yrs
18-24 yrs
Somewhat satisfied
4.26%
3.64%
3.18%
8.93%
10.33%
7.89%
8.57%
Very satisfied
2.42%
1.91%
1.19%
1.09%
1.05%
Neither satisfied nor dissatisfied
1.82%
4.46%
3.57%
4.89%
4.21%
5.71%
Somewhat dissatisfied
0.64%
1.19%
1.09%
3.16%
2.86%
Very dissatisfied
0.64%
0.6%
1.09%
1.58%
Source: Finder survey by Pure Profile of 1016 Australians, December 2023
Why do people refinance their personal loans?
There are several reasons people choose to refinance. These include:
To consolidate debt. These loans are called debt consolidation loans. With these loans, you can pay off all your current debts by taking out a personal loan. You then pay off all those debts and close those credit accounts. You will be maintaining a single loan account, ideally with a lower interest rate. This can help you manage your repayments and potentially save on fees and interest.
To save money. There's a chance there may be another loan on the market offering lower rates and fees. By refinancing to a lower cost loan, you get to save money and lower your monthly repayments.
Access more funds. If you need more funds after taking out a personal loan, you could refinance. You could apply for a higher amount and pay off your existing loan with the funds. However, some lenders may allow you to increase your personal loan amount. In that case, you should consider whether it's cheaper to stay on or switch loan providers.
To get a longer term. You may find that you want a longer loan term to pay off your loan. In that case, you could switch to a personal loan with a longer loan term.
What should I consider when switching personal loans?
If you're switching loans or refinancing, there are a number of factors to consider. These include:
Cost. There may be costs associated with closing your current credit account. There is also the cost of opening a new loan account with your lender. You need to ensure that your savings are more than these costs. Switching loans may not work out for you if it ends up costing you more.
Consolidation. Do you want to combine credit card debt, store debt and personal loan debt? Make sure your new lender will allow you to consolidate the different types of debt you have.
Repayment history. Your repayments are listed on your credit file. Lenders may look at your repayment history to determine the kind of borrower you are. If you're already having trouble managing your current loan, a lender may not approve you for another.
Long-term suitability. Find a loan that works with your long-term goals. Sometimes this may not be the cheapest option. But it may allow you other perks like flexible terms, fixed interest rates or free extra repayments.
Like for like. If you're switching to a different product with the same lender, you may only be able to switch "like for like". This means switching, say, from one secured personal loan to another. While this may have its advantages, switching to another lender entirely may give you more choice and better rates.
Eligibility. Your circumstances may have recently changed or are set to change in the near future. If so, you need to ensure you're eligible for the new loan you wish to apply for.
Temporary deals. When switching loans, you may be tempted by temporary deals. Make sure you consider the cost of the loan after the promotional period has ended.
Low or no cancellation fees. For ease of refinancing in the future, you may wish to look for loans with low or no cancellation fees or early repayment charges.
What costs should I watch for?
The main costs you may encounter are fees from your old provider and fees from your new provider.
Your current lender may charge:
Early repayment fees. You must completely pay off a loan before you can switch to another provider. This is often done with funds from the new loan. Paying the total balance may incur early repayment fees. These fees are usually a percentage of the total amount. Not all loans have these fees. They are more common with fixed rate rather than variable rate loans.
Administration fees. There may be an administration fee for adjusting or switching your personal loan. This is usually a flat fee of around $10 to $30.
Break, cancellation or exit fees. Some loans may come with exit fees if you pay off your loan early. This may be a flat fee you have to pay when you close the loan account.
Your new provider may charge you for:
Establishment fees. Some lenders charge establishment fees when you open a credit account with them. This is standard and is part of the cost of taking out a new loan.
Administration cost. Your new provider may liaise with your old one on your behalf. It may charge administration fees for this.
Account management or service fees. Some loans come with monthly or annual account management fees. This fee is standard.
How can I compare personal loans?
By comparing loans, you can find the right product that best fits your needs and budget. Here's what you need to look out for when comparing:
What does the loan cost? Comparing interest rates is important, but you should also consider fees and the comparison rate. A loan could have low interest but high fees. This will increase the cost of your loan and may offset any gains you make with low interest. Check the comparison rate, which includes interest and fees. This will give you an idea of how much the loan actually costs.
How much can I borrow? You may have multiple debts you need to pay off, or wish for a higher borrowing amount. Each lender will have maximum and minimum lending amounts. Does the lender offer the amount you want?
What's the loan term? The loan term is how long you have to repay the loan. Loan terms will affect your repayments. Shorter terms will mean higher monthly repayments in the short run. With a long term, you'll have smaller monthly repayments but the loan could cost you more on the whole. This is because you'll be paying interest for the entire time, the cost of which can add up. Look for a loan that can give you the terms you want.
Am I eligible? Do you meet the lender's minimum requirements to qualify for the loan? This can include income requirements and your credit score. Your application could be rejected if you don't.
What's the repayment schedule and is it flexible? Can the repayment schedule be tailored to suit your cash flow? Can you make free additional repayments to pay off the loan early, or will you face a penalty?
How does it compare to my current loan? Once you've compared loans based on the criteria above, you need to compare it to your current loan. How does your current loan stack up? What will it cost you to switch loans and will the new loan still be cheaper after you switch?
What should I avoid with personal loans?
A more expensive or inflexible loan. If you're refinancing, you need to make sure you're getting what you need. If the new loan works out to be more expensive, it may be better to stick to your current provider. Likewise, if you want flexibility and the loan doesn't provide it, you should reconsider.
Multiple applications. Every loan application shows up on your credit report. Several applications within a short period can have a negative impact on your credit score, making it harder for you to get a loan in the future. Select a single loan that you're eligible for and that suits your needs, and apply with that lender.
Long-term repercussions and legal issues. Once you sign a loan agreement, you are bound to its conditions. You will have to pay the loan and all the fees. Keep in mind that for unsecured loans, the lender can initiate legal proceedings against you if you don't repay the loan. It can also report the debt to a credit reporting body like Equifax and use the services of a debt collector. For secured loans, your asset could be repossessed if you default.
How can I switch personal loans?
🔎 Compare loans. Before you decide to switch, you need to compare loans and lenders. This can help you find a loan that works best for you, in terms of cost, flexibility and features. By comparing, you can also work out where your current loan stands. Don't forget to compare interest rates, fees and eligibility criteria. You can use the comparison table on this page. 🖨️ Apply for the new loan. Organise and prepare the required documentation. This will make the application process easier. Most lenders have applications online. 🔐 Close your old loan account. Once you've been approved for the loan, you can work towards repaying your previous loan. Your new lender may be able to facilitate this. Once the loan has been paid off, you need to ensure your old account has been closed. ✅ Repay your new loan. You've switched to a new and better loan. You can now focus on making your repayments.
Why compare personal loans with Finder?
We're free
Our personal loan comparison is completely free to use. There are no costs at all for you to use our database to find a better deal. Better still, we regularly run exclusive deals that you won't find on any other site.
We're experts
We've researched and reviewed hundreds of loans as part of our Finder Awards. Our database and tables are always up-to-date and our in-house experts regularly appear on Sunrise, 7News and SBS News.
We're independent
We are independently owned and have a mission to help Australians make better financial decisions. That means our opinions are our own and you can compare nearly every personal loan in Australia (and find a better deal).
We're here to help
Since 2014, we've helped 300,000+ people find a personal loan by explaining your options simply. You don't need to give us any details to use our comparison. We're here to help you make a decision.
Elizabeth Barry is the lead editor for Finder. She has over 10 years' experience writing about a range of topics with a focus on personal finance. You’ll find her writing and commentary in a range of publications and media including Seven News, the ABC, MSN, the Irish Times and Singapore Business Review.
Not sure how much you can borrow based on your income? If you're looking for a personal loan, find out how lenders determine how much you can borrow and how to see if you're eligible based on your income.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We are committed to our readers and stands by our editorial principles
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan and read any disclosure documents (such as any Target Market Determination (TMD) and/or Product Disclosure Statement (PDS)) issued by the provider before making a decision.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
