Variable rate personal loans

Find out how to find the best personal loan for you

Variable rate personal loans

Personal loans can vary depending on what you’re looking to get out of them. Whether it’s for that holiday you’ve been dreaming of or simply to help with household expenses like bills, there’s something for you. Read on to find out more about variable rate personal loans in this comprehensive guide.

What is a variable rate personal loan and how does it work?

A variable rate personal loan is a type of personal loan which, as the name suggests, is not pinned down to the same interest rate throughout its lifespan. Rates are likely to fluctuate over the course of a loan term as the market ebbs and flows, but term durations will remain fixed. This type of loan is different to fixed rate personal loans, which maintain a consistent interest rate during their term. Variable rate personal loans may come as either secured or unsecured loans, meaning that it may or may not be connected to a piece of collateral such as a car or caravan. These may be used to pay for debt should the loanee become unable to do so themselves.

What can I use a personal loan for?

Personal loans provide financial relief for a purpose specific to you. They are broad in nature, hence the word “personal”, and that is by design in order to remain versatile across a variety of uses. Personal loans are most often used to supplement or pay for holidays, help complete household renovations or purchase a vehicle, but its uses are certainly not limited to these examples. You’ll be able to find out more information regarding what loan is right for you reading further on and speaking to potential lenders about their individual policies.

How do I make sure I choose the right variable rate personal loan?

It is important to assess your own personal situation before deciding upon a certain type of loan. Questions such as “how much can I afford?” and “what am I using it for?” should both factor heavily into your decision making. Those seeking out a variable rate loan must be well aware of its mechanisms and understand the way it works, which have been laid out here.

The most essential step in the loan process is to find a lender that suits you. There are countless lenders in the market, so you’re bound to come across some that suit you better than others. As such, it is imperative that you take time to think through your financial decisions and assess a wide variety of options to find the perfect one for you. Contacting different lenders and researching their websites to compare their policies on aspects of a loan you consider important, such as rates, maximum and minimum amount and term duration, are both good places to start. The right loan will ultimately differ from person to person depending on their own financial circumstances, so you may not end up with the same lender as your friends or family. To compare your options you can use our rate table.

Pros and cons of choosing a variable rate personal loan

Weighing up the advantages and disadvantages of a loan is a smart way to assess whether it is going to suit you.


Lack of a fixed interest rate:

as interest rates fluctuate, recipients of a variable rate personal loan can benefit from lowered rates throughout the life of the loan

Increased flexibility: 

variable rates can provide greater freedom for loanees. Some lenders will offer no fees related to early or additional repayments, which can result in less interest paid over the life of the loan

More affordable rates: 

variable rate loans generally start at a lower rate than their fixed counterparts and lenders are more motivated to offer appealing rates due to its competitive nature.


Lack of a fixed interest rate: 

this is a two-sided issue, as rates are also vulnerable to increasing during a loan term which means the starting rate will not remain the same throughout its lifespan

Lack of a fixed interest rate: 

this is a two-sided issue, as rates are also vulnerable to increasing during a loan term which means the starting rate will not remain the same throughout its lifespan

Lack of a fixed interest rate: 

this is a two-sided issue, as rates are also vulnerable to increasing during a loan term which means the starting rate will not remain the same throughout its lifespan

Top tips for getting approval for your personal loan

Here are some of our recommendations for maximising the likelihood of getting your personal loan approved.

Other things to consider when applying for a variable rate personal loan

Find more questions you might be having about variable rate personal loans below.

How quickly are applications processed?

This will vary from lender to lender, as some will be much quicker than others. Generally, banks and credit unions can take anywhere from one to six weeks from applying to receiving the loan, while other online lenders will likely have the money in your account inside seven days. You may seek out a quicker lender due to your own personal financial situation, but ultimately it may not factor into your decision-making.

How convenient will repayments be?

Certain lenders can bring with them the flexibility to tailor your loan repayments to your own situation. This may include altering the frequency and dates of payments to suit you.

Is redrawing on a variable rate personal loan a good idea?

Redraw facilities can serve as a temptation for customers to add more money to their loan, but it can also actively help an ongoing loan should your personal circumstances change during its term. It is important to check each lender’s policies surrounding redrawing and weighing up the cost and convenience.

Can I apply for a variable rate personal loan if I’m unemployed?

It can be more difficult for those without a stable and regular income to be successful in the personal loan application process. Lenders place an emphasis on having a steady income stream in order to pay off the loan.

Will applying for a personal loan affect my credit score?

Securing your personal loan will cause a small dip in your credit score, but that will only be temporary should you be able to make repayments on time throughout its term. Failing to do so will result in your score dipping even further.

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