Home > Personal Loans > Low-Cost Personal Loans
Low-Cost Personal Loans
Compare personal loans with low fees with Savvy and save on your finance.
Author
Savvy Editorial TeamFact checked
How can I get a low-cost personal loan?
When shopping around for personal loans, there are many ways you can look to lower the cost of your deal. It’s important to be aware of these before applying, as doing so can enable you to save hundreds, if not thousands, on your personal loan. Some of the things you can do to help you receive a lower rate (and potentially lower fees too) on your personal loan include:
Maximise your credit score
Entering the personal loan application process with a good credit score is one of the best ways to help your chances of being offered low interest rates. Your credit score is an indication of your ability to borrow and repay debts in the past, so the higher it is, the more it reflects on you in a positive light from a lender’s perspective. You can boost it by paying off any outstanding debts, lowering the limits on your credit cards and removing any you don’t need or use as much.
Ensure you have a stable income
Lenders want to be sure that their money will be repaid as part of the loan agreement and unstable or inconsistent income flow can cast doubt on that. Being permanent in your job and earning enough each pay cycle to comfortably service your loan will increase your lender’s confidence in your ability to repay it in full without any issues, bringing the risk and rate down in the process.
Build up your savings
Similarly, lenders prefer to play it safe when it comes to the savings you have in your account. These can serve as a back-up plan if your income is unexpectedly interrupted, providing you a way to continue paying off the loan through that period. Overall, though, more substantive savings provide lenders with an indication of your financial discipline and ability to commit to a plan over an extended period. As such, these can lower the cost of your loan.
Avoid fees where you can
A simple way to cut down on your personal loan cost is to look for loans which don’t charge certain fees. The most prominent fees to look out for when choosing your low-cost personal loan are establishment fees and ongoing fees, with the former costing up to $600 and the latter up to around $20 per month. These can add up over time, so sidestepping them completely will be highly beneficial for you.
Make free additional repayments
While these won’t reduce your fees or interest rate at the start of your loan, making additional repayments throughout its term will cut down on your overall spend significantly. Additional repayments shorten your loan, cutting down on the amount of time you’ll be paying interest and fees, thus lowering the cost of your personal loan.
Compare your options with Savvy
By surveying the market as thoroughly as possible, you can give yourself the best shot at finding the personal loan with the lowest rate and fees. You can compare loans from our lending partners based not only on their cost, but other handy features as well, right here with Savvy. We can redirect you straight to your chosen lender’s site so that you can complete your application and receive an instant outcome.
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?
100% free
There's no need to worry about forking out to compare offers. Our service is free, so you can come back whenever you like.
Paperless applications
You won't need to worry about sifting through documents and visiting the post office, as they can all be submitted online.
Reputable lending partners
We've partnered with personal loan companies you can trust to ensure your comparison is a high-quality one.
How do I compare low-cost personal loans?
Interest rates
Interest rates are perhaps the most important aspect of a personal loan to compare, as they can be the difference between paying hundreds or thousands of dollars more for your financing. It’s useful to understand how much you can save by reducing your personal loan only slightly. For instance, on a $30,000, five-year personal loan, you could save over $800 by dropping your interest rate from 7% to 6%.
Fees
Like interest rates, fees also shape the cost of your personal loan. As mentioned, you should always try to prioritise loans that won’t set you back much in fees, as this can dramatically lower the cost of your loan overall. For an indication of how much you’ll be paying in fees, you can look to your personal loan’s comparison rate, which provides a combined percentage based on the interest rate and cost of some of your fees.
Loan term
Lenders may differ when it comes to the minimum and maximum term for personal loans. This will generally range from one to seven years, but lenders can alter this to minimums of up to three years and maximums as low as five. It’s usually the most cost-effective to repay your loan over a shorter term, which reduces your overall time spent paying interest and fees, but rates will increase with the decrease in duration.
Loan amount
While loan amounts range from around $2,000 up to $75,000, this will also change depending on the lender. Smaller amounts are quicker and easier to pay back, which directly correlates to a lower cost of loan. However, larger amounts come with lower rates, so if you’re able to pay them off promptly, you can benefit even more so.
Loan features
Personal loans can often come with added features that can make the repayment experience simpler for you, but they can sometimes cost you extra to use. Additional repayments and redraw facilities are both useful to have (the former in particular), but an added fee can negate their usefulness. If you do have features on your loan, ensure you’re not paying for them.
Frequently asked questions about low-cost personal loans
You’ll be able to borrow as little as $2,000 all the way up to $75,000 on an unsecured personal loan. The amount you’re actually approved for, though, will depend on a set of variables including your income, credit score and past borrowing.
You’ll need identity documents such as a driver’s licence and passport, bank statements, payslips, proof of employment, information on existing assets and debts and any other relevant documentation your lender may need.
Not really – again, temporary residents are seen as a higher borrowing risk, given their inherently less certain residency which could (in theory) be cancelled, and come with increased rates and fees as a result.
Not really – bad credit borrowers will always attract higher interest rates and fees on personal loans than standard applicants. There are still plenty of avenues open to you, just not at a hugely low cost.
Both fixed and variable rates have their advantages when it comes to personal loans. Fixed rates enable for more accurate budgeting into the future and provide stability, as they remain the same throughout your loan. Variable rates leave you open to taking advantage of decreases in your lender’s interest rate, although they start at a higher initial base rate than fixed interest does. We’re partnered with diverse lenders to provide you a selection of fixed and variable rates to compare.
Most likely, yes – applying with your partner adds a second income to your repayments, which will lower your lender’s perception of risk on your application and open you up to lower rates and fees. It can also expand your borrowing power beyond what you could initially manage on your own, which makes it useful for larger shared expenses like home renovations or debt consolidation.
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.