The features and benefits of a fixed rate personal loan
Find a great rate for your personal loan and keep it that way all throughout your loan term by locking in a great deal with fixed interest.
The beauty of this is that you can choose how long you take to repay your personal loan, with terms available as short as one year up to seven to suit your capabilities.
Because your interest rate remains the same across your loan period, you can more easily budget around your repayments month-to-month knowing what they’ll cost.
Part of the stability that your fixed rate brings is protection against any increases in market rates; this means you’ll never pay more for your loan than your current instalments.
Each applicant will receive a personalised interest rate built to reflect their financial position and loan, so you won’t simply receive a generic rate that doesn’t reward your strong position.
We’re partnered with lenders who offer you the option to make extra payments above the minimum, to help you pay your loan off early and save money, without any fees.
Types of personal loan
With an unsecured personal loan, you can potentially borrow as much as $75,000 without the need to attach any valuable assets, such as your car, as security. These loans are the most widely available and often the quickest, with same-day approval possible.
Secured personal loans, on the other hand, make use of collateral. This lowers your risk profile in the eyes of a lender, potentially lowering your interest rate and expanding your borrowing power beyond what you may be able to get through an unsecured loan.
Variable interest rates remain open to fluctuation during your term. This means you can benefit from decreasing rates and save on your loan if the market heads in that direction, although you’ll also pay more if rates start rising.
Fixed interest rates are locked at the beginning of your loan and remain constant throughout your repayments. This acts as a valuable protection against interest rate increases, as your loan will be unaffected, but you’ll miss out on potential drops as well.
If you’re paying off multiple debts at the moment, particularly those with high interest (such as credit card debts), consolidating them into one payment can not only make them more convenient to manage but also potentially save you money overall.
Looking to take off on a holiday with your family but want to pay it off at your own speed? Travelling can be expensive, so you can distribute the cost of your next trip over a period you’re more comfortable with by taking out a personal loan to pay for it.
There are so many costs that go into making your dream wedding a reality, from venue hire to catering to dresses and suits and so much more. By taking out a personal loan, you can start planning the big day you want, even if you can’t pay for it upfront.
Home improvements are desirable for a range of homeowners to help keep their living space fresh and interesting, not to mention increase its value. You can get past the financial hit of renovations with a personal loan paid in instalments.
Personal loans aren’t limited to PAYG employees, though. If you’re running your own business, you can still be approved for financing by submitting tax returns and other alternative documents instead of payslips and utilise your funds however you wish.
There’s a variety of expenses which come with being a student, ranging from the cost of your courses, textbooks and computer to your accommodation. Taking out a personal loan can make these costs more manageable by spacing them out.
Some lenders offer green personal loans, which are designed to be used for energy-efficient appliances and products such as solar panel and air conditioning installation in your home. You can qualify for lower interest rates and fees with this loan.
Why compare personal loans through Savvy?
How to apply for a personal loan
Common fixed rate personal loan questions answered
Fixed rate personal loans explained further
What is a fixed rate personal loan?
A fixed rate personal loan is one of two types of interest rates which can apply to personal finance agreements, the other being variable rates. Under this type of loan, the interest rate offered at the beginning of the loan is locked in and remains the same throughout your repayment period, regardless of whether that be as short as one year up to as many as seven. This means the cost of your repayments will remain consistent, the primary advantage of which is that budgeting around your repayments is simpler and more accurate. You’ll know to set aside a certain amount each pay cycle to dedicate to your loan repayments.
Aside from this, though, the product itself is essentially identical to any other personal loan, as the interest rate is the only real thing which sets it apart. You’ll still be able to borrow between $2,000 and $75,000 without the need to provide security and space out your repayments over one to seven years on a weekly, fortnightly or monthly schedule. With all of this customisability, you can tailor your loan and repayments to align with your needs and not have to worry about the cost of your instalments increasing across your term.
What’s the difference between fixed and variable interest rates?
There’s a variety of key differences to consider when comparing fixed and variable rate offers. Fortunately, by comparing your options with Savvy, you can simplify the process and find all the key information you require to make an informed call on which loan is best for your needs. The key areas to consider when determining the most suitable finance deal for your needs are:
Performance across the loan
Before all else, it’s important to understand the difference in how these two types of rates work. While fixed interest rates are locked at the start of the loan and remain the same throughout the term, the same cannot be said for variable interest. These are left open to potential fluctuation across your loan, a factor which brings with it both advantages and disadvantages to borrowers. The most significant potential benefit of variable rates is that they can open you up to savings if market conditions are right, but you may end up paying more for your loan in equal measure if rates increase during your loan term.
Whether fixed rates offered by lenders are higher or lower than variable rates at the point you apply for your loan will depend on the state of the Australian finance market. Lenders will generally set their minimum fixed rates at a higher level than variable rate minimums when they expect rates to increase, as they won’t receive the same benefit from their customers paying at a rising rate across their term. If rates are set to fall, fixed rates are often lower to encourage borrowers to lock their interest in and lessen the impact of lost revenue from variable loans.
One of the primary benefits of a fixed rate is its accuracy when it comes to budgeting, as mentioned, but the opposite can be true for variable rates. If you take out a personal loan during a particularly turbulent period in the market for rates, your repayments could, in theory, experience change with every instalment. If you value certainty when it comes to making repayments, fixed rate finance is the best option for you.
Whether you’ll enjoy savings under either a fixed or variable interest rate is contingent on how your lender’s rates perform throughout your term. Taking out a loan with a fixed rate when the market is at a low point and rises thereafter will protect you against having to potentially pay hundreds of dollars more, while a variable rate established just prior to a fall in rates could help reduce your overall outlay significantly.
Most personal loans in Australia, regardless of the type of interest rate they offer, enable borrowers to make extra payments on top of the minimum required amount. However, while this is essentially always the case with variable rate loans, some fixed rate offers will either charge borrowers for doing so or cap it at a certain limit each year (such as $1,000). As such, when comparing fixed rates, you should always consider whether they allow you to do so.
Making additional repayments can help you save a significant amount throughout your agreement. For instance, by contributing an extra $100 each month to your $25,000, four-year loan at 9.5% p.a., you’d save $857 and have your loan repaid seven months earlier.
How else should I compare fixed rate personal loans?
It’s not just the type of interest rate you should consider when thinking about your loan options. There are a variety of other factors which should be considered when finding the ideal loan for your needs, including:
- Loan amount: of course, you’ll need to ensure that you can actually borrow the amount you’re looking for as per your lender’s requirements. There’s no use entertaining offers from lenders who set their maximum loan amounts at $50,000 if you’re looking to borrow an amount closer to $75,000, for instance. These differ between financiers at both the upper and lower ends of the scale, so you’ll need to make sure your loan deal is suitable for your needs.
- Loan terms: similarly, you shouldn’t compromise your optimal comfort level when it comes to repaying your debt. You should always stick to lenders who can accommodate your preferences in terms of your repayment period, as it’s important to ensure you give yourself the best chance of paying off your loan without any issues. Some lenders will require minimum three-year terms instead of one, so you should avoid these deals if you only need 12 months so you can save on interest and fees.
- Fees: while there isn’t as long and detailed a list of personal loan fees as other types of finance, it’s still important to compare what different deals might set you back in this space. For instance, you could pay as little as nothing at all when setting up your loan, but some lenders will charge up to $595 for this. Similarly, you may incur an ongoing monthly fee of up to $10, but some lenders won’t charge for any administration costs.
- Comparison rates: one quick way to compare both your loan’s interest rate and fees at once is to look at the comparison rate. This is a percentage which reflects the combined total of both of these cost factors, resulting in a more accurate and truer reflection of what you’ll have to pay for the privilege of borrowing from your lender. These don’t include conditional fees which may not apply, such as late payment fees ($15 to $35) and an early repayment charge.
- Eligibility: one of the most important things to be sure of prior to submitting your application is whether you’re eligible for the deal. Your application could be sunk before you even begin if you don’t read through your lender’s criteria properly, so you should always do so. Generally, the key points to meet are in relation to your age (18 or over), residency (citizen, permanent resident or eligible visa holder), employment and income (earning $20,000 p.a. from stable sources) and credit (no defaults, bankruptcy or court judgments).
What can I use a fixed rate personal loan for?
The beauty of personal loans is that they’re designed for whatever private use you may need. Unlike home or car loans, which are required to be used for the asset they’re purchasing, you can make use of your loan funds for a variety of different purposes. Some of the more common reasons people take out personal loans include:
- Consolidating outstanding debts into one payment, especially those which come with varying schedules and high interest rates
- Covering the cost of your dream wedding
- Helping out with planning your next holiday, regardless of whether it’s a trip up the coast or an expansive overseas getaway
- Giving you the funds you need to pay for any unexpected medical expenses, both for your family and your pets
- Paying for home improvements and renovations around your property
- Purchasing a vehicle which may not qualify for standard secured car finance, such as one which is older than 25 years
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.