5-Year Personal Loans

Find and compare from personal loans over five-year terms to help you save on your deal with Savvy.

Written by 
Savvy Editorial Team
Savvy's content writing team are professionals with a wide and diverse range of industry experience and topic knowledge. We write across a broad spectrum of finance-related topics to provide our readers with informative resources to help them learn more about a certain area or enable them to decide on which product is best for their needs with careful comparison. Meet the team behind the operation here. Visit our authors page to meet Savvy's expert writing team, committed to delivering informative and engaging content to help you make informed financial decisions.
Our authors
, updated on October 4th, 2023       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

Personal Loans Banner

The benefits of taking out a five-year personal loan

Enjoy affordable repayments

A five-year term is one of the best options for cheap repayments, with even a loan one or two years shorter potentially costing hundreds more per instalment.

Save on interest and fees

Compared to a six or seven-year personal loan, the total cost of interest and fees for a five-year term is substantially less expensive, often in the thousands.

Access low interest loans

You can compare flexible loan options with competitive interest rates from a wide range of trusted Australian lenders to further reduce the cost of your loan.

Borrow up to $75,000

Applying to borrow an amount up to the $75,000 maximum over five years is often more achievable than a shorter loan, making it a versatile option.

Flexible usage

Speaking of versatile, you can use your personal loan for just about anything you like: covering medical expenses, building a swimming pool, paying for a wedding and everything in between.

Set your repayment frequency

You’ll be able to repay over the five years on a monthly, fortnightly or weekly basis, giving you the option to choose based on which suits you the most.

Freedom to make extra contributions

You won’t be forced to stick to your schedule, though. Most of our lending partners will allow you to make additional payments, or pay above the minimum, free of charge.

Available to self-employed workers

Five-year personal loans aren’t exclusive to standard PAYG employees. If you can submit your last two years of tax returns, you can apply as a self-employed worker.

Types of personal loan

Why compare personal loans through Savvy?

Frequently asked questions about personal loans

What are the documents I’ll need for my personal loan application?

As part of your personal loan application, you’ll be required to supply the following:

  • Photo ID, such as a driver’s licence or passport
  • Your last two payslips (and potentially 90 days of bank statements)
  • Any applicable Centrelink income statements
  • Online banking details
  • Information on current assets and liabilities
  • Any further forms as required by your lender
How do I work out my monthly repayments?

Fortunately, you don’t have to do any mental maths: our personal loan repayment calculator does all of the hard work for you. You can use this to work out the cost of your loan per instalment, and indeed the cost of your loan over the full five years, based on different loan amounts, interest rates and repayment frequencies. It’s a useful tool for finding out the types of loans and rates that you can afford to repay.

Is my personal loan interest rate fixed or variable?

You’ll have the choice between both fixed and variable rate products on a personal loan. Fixed rates are better if you’re looking for certainty around your loan commitments and more accurate budgeting (and are far more common), whereas variable rates afford borrowers the opportunity to take advantage of lowered interest rates if they fall during their term.

How quickly can my personal loan be approved?

When you apply for a personal loan, you can receive an instant outcome within 60 seconds. If this outcome is a positive one, you can then proceed with your application and, provided everything passes your lender’s criteria, you can have the money transferred to your account in as little as just 24 hours.

Am I able to take out a personal loan over five years as a temporary resident?

Yes – however, they’re more difficult to be approved for than smaller loans over shorter terms. This is because lenders view temporary residents and visa holders as a greater risk than someone with permanent residency or citizenship.

Whether you’re accepted for a five-year term is also contingent on the length of your visa, as lenders will always require some breathing room between the end of the loan and the end of your time in Australia. There are fewer lenders in the market who can approve temporary residents, too, so you’re likely to find that there’s less choice overall.

More about five-year loans explained

When should I look at taking out a five-year personal loan?

Five-year terms sit on the longer end of the scale when it comes to the different lengths borrowers have access to for their personal loans. Many view five years as somewhat of a middle-ground between shorter terms of one to four years and longer periods of up to seven. There’s a range of reasons why you might look to secure a loan over this term length, including:

More manageable repayments

The longer your loan term, the lower your repayments will be. This is because you’re taking more time to repay your debt, meaning you won’t be required to pay as much over each instalment. This is the primary benefit which long-term finance offers borrowers, as they may not have enough money left over after paying their bills and other debts to support the larger repayments which come with paying down a loan more quickly.

For example, paying off a $30,000 loan at 8.5% p.a. over five years instead of three would save you over $300 per month. Being comfortable while repaying your loans is one of the most important aspects of the loan process to ensure, so opting for a five-year term instead of a shorter one may help you do that.

Cheaper overall than seven-year terms

While your repayments will be lower with each year you add to your term, this will also add to the overall cost of your agreement. Interest is calculated daily based on your outstanding loan principal and is paid either weekly, fortnightly or monthly. This means that if your loan principal is decreasing at a slow rate due to a long loan term, the same will be true of the amount of interest you have to pay.

This is why, wherever possible, you should opt for a five-year loan over seven, as it can make a significant difference overall. Using the same example, a $30,000, seven-year loan at 8.5% p.a. would cost you $9,908 in interest. However, shortening your term to five years slices just under $3,000 off your bill. It’s important to note, though, that five-year terms are more expensive than three-year terms in equal measure.

Freedom to make extra payments

For many, though, a five-year loan term serves only as a guideline of the maximum time they can take to repay their debt. Most loans these days come with the flexibility to repay them ahead of schedule without incurring any extra costs for doing so. By paying more than the minimum required amount each week, fortnight or month, you’ll be able to not only shorten your term but also reduce the overall cost of your loan.

For instance, your $30,000, five-year loan at 8.5% p.a. would cost you $6,930 in interest throughout the agreement, with monthly repayments of $616. However, by contributing just $75 extra each month, you’d save just under $950 and have your loan repaid in full seven months sooner. You should always compare loans on this basis to give you the flexibility to save a substantial amount on your loan.

What types of personal loan can I choose from?

There are a few types of personal loan which you can choose from as a borrower when considering your options, so it’s important to compare as many different loans and lenders as possible before deciding on the best one for your needs. Your main options for personal finance are:

Unsecured personal loans

The most common and accessible type of finance, unsecured personal loans are the preferred option for many Australians for a variety of reasons. Because there’s no need to attach any security to your loan, borrowers whose proposed security doesn’t meet their lender’s criteria can become eligible. Additionally, these loans are faster to process due to the fact that there’s no need for lenders to assess the suitability of any assets. In terms of borrowing power, you can borrow as much as $75,000 with certain lenders.

Secured personal loans

Secured finance, as the name suggests, does require you to put forward an asset to be used as collateral for the loan. This means that in the event you become unable to support your repayments, your lender has the option to sell your asset to recoup any lost funds. However, there are two key benefits which come with secured loans: interest rates and fees are generally lower and you can access up to $100,000 (depending on the value of your asset and your borrowing power). These loans aren’t as widely available, though.

Lines of credit

If you’re looking for an option with more flexibility in how you can manage your funds, a personal line of credit might be the finance type you’re looking for. Unlike the two types of loan mentioned above, lines of credit work similarly to credit cards: you can withdraw funds up to a set limit whenever you like, only paying interest on the balance you use. While flexibility is the main positive of this type of loan, they can also remain open indefinitely, provided it’s a sustainable arrangement. Interest and fees are often higher, however.

Green loans

Another way to reduce the rate you’re offered is by choosing a green loan. These are personal loans designed for funding the purchase or installation of eco-friendly systems and appliances. Lenders encourage borrowers to reduce their impact on the environment by offering these loans at lower rates and fees than standard personal finance on the condition its strict usage criteria are met. You might take out this loan for any of the following purposes:

  • Installing solar panels
  • Installing a rainwater harvesting system
  • Installing energy-efficient air conditioning
  • Funding further insulation in your home or double-glazing your windows
  • Buying energy-efficient appliances like washing machines and dishwashers.

How else can I save on my five-year personal loan?

There are many ways you can go about maximising your loan savings, particularly over a five-year term. Some of the main ways to go about this include:

  • Improve your credit score: Before you even apply, making the effort to improve your current credit rating can go a long way towards saving you money on your loan. This is because lenders reward borrowers with good credit scores with lower-cost loans, as they’re seen as a safer investment than borrowers with average or bad credit. There are several ways that you can do this: paying off your outstanding debts, continuing to pay for regular bills and other finance repayments on time and in full and lowering the limits on your credit card/s can all assist in increasing your credit score.
  • Compare loans with low or no fees: Another simple way to maximise your loan savings is to find a lender who charges less in fees overall. These fees will vary from lender to lender, but they’ll fall within these general ranges:
    1. Establishment fee: $0 to $595
    2. Ongoing fees: $0 to $10
    3. Early repayment fee: depends on time left on the loan
    4. Late payment fees: $15 to $35
  • Apply with your partner: Submitting your application with a partner is another way of reducing your interest rate. This is because the risk factor is lowered by adding a second income to the loan repayments, ensuring that your lender doesn’t need to take as many precautions surrounding your application. Because both you and your partner are contributing to the loan, you can also work together to pay it off early and save a significant amount of money. Making a joint application is also a way to expand your borrowing powerif you’re looking to take out a more sizeable five-year loan.
  • Make more frequent repayments: Increasing the frequency of repayments from monthly to fortnightly can actually result in you paying less for your loan overall. This is because lenders count a month as two fortnights, meaning that the 26 fortnights in a year essentially equate to 13 months. A $30,000, five-year personal loan at 7.5% comes with monthly repayments of $601.14. However, contributing slightly extra to pay exactly half of this ($300.57) each fortnight could save you just under $600 overall and shorten your loan by almost 6 months.
  • Compare your options with Savvy: Finally, knowing where to look and taking the time to compare your options thoroughly can lead to a substantial overall saving. By considering a range of offers from online lenders around Australia right here, you can choose the best loan for your needs with more confidence. Savvy takes the guesswork out of comparing loans by giving you all the information you need to make the right call on whether your loan is right for you.

What are the eligibility criteria for personal loans?

Another area to always consider when comparing different loan offers is each lender’s eligibility criteria. There’s little point in applying for a personal loan which you already can’t qualify for because you don’t meet each of your lender’s points. These will change slightly depending on who you apply with and the loan you apply for but, for the most part, lenders will follow the same broad strokes when it comes to qualification. The base criteria you’ll likely need to meet are:

  • You must be at least 18 years of age at the point of application
  • You must be employed and working consistently
  • You must be earning at least $20,000 annually from stable sources
  • You must be an Australian citizen, permanent resident or valid visa holder
  • You must have a good credit history without any record of defaults or bankruptcies

Helpful personal loan guides

Still looking for the right personal loan?

Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.