Variable Rate Personal Loans

Take advantage of potential drops in market rates across your loan by comparing variable interest loans with Savvy.

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on July 3rd, 2024       

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Wondering whether a variable interest rate is right for your personal loan? It’s important to understand how they work and how to compare your personal loan options before you apply, which you can do right here with Savvy. Consider a variety of deals, variable rate or otherwise, with us today to help you secure the best product available for your needs.

What are variable rate personal loans and how do they work?

Variable rate personal loans are a type of personal finance where your interest rate isn’t locked in at the beginning of your term, meaning it can change during your repayment period. Interest rates can be adjusted by your lender in line with the Reserve Bank of Australia (RBA) or independently.

In terms of the loan product itself, though, this type of finance is the same as any other personal loan. Loan amounts can reach as much as $75,000 or be taken out for as little as $2,001, with terms ranging from one to seven years (though some lenders will offer higher minimum or lower maximum loan amounts and terms).

What are the differences between variable and fixed rates?

There are several key differences between variable and fixed interest rates when it comes to personal loans. These include:

  • Rate stability: fixed rates are set at the beginning of your term and remain the same until the end of your repayment period. This is in contrast to variable rates, which remain open to change.
  • Repayment flexibility: fixed rate loans are more likely to come with fees related to early repayments, though some lenders may offer these loans with free settlements ahead of schedule.
  • Potentially higher (depending on rate climate): in circumstances where rates are expected to rise, fixed rates may be higher than variable. However, when rates are predicted to fall, they may be set at lower ranges by lenders.

What are the pros and cons of variable rate personal loans?

There are many benefits of variable interest rates on personal loans, but there are also drawbacks to consider. The main pros and cons are as follows:


  1. Potential to save: because variable rates remain open to market movement, you can benefit from lower interest if your lender drops their rates during your term.
  2. Repayment flexibility: most lenders will give you the freedom to repay your loan ahead of schedule without incurring potentially costly fees for doing so. This can save you plenty on interest in the process.
  3. Rates may be lower than fixed: whether a lender sets their fixed or variable rates higher will provide some indication of their expectation for interest movement over the coming months and years. This means you may secure a variable finance agreement at a lower rate than fixed finance if they’re expected to rise.


  1. Not as effective for budgeting: fixed rates bring stability and certainty to your repayments. Variable rates aren’t as suitable for budgeting, as they don’t offer the same certainty.
  2. Vulnerable to rate rises: the flip side of saving on interest if rates fall is that you remain open to paying more if they move in the opposite direction.
  3. Fewer options available: the final factor is that, simply, there aren’t as many options available today in terms of variable rate personal finance compared to fixed. This may mean the quality of comparison isn’t as great given that you have fewer options to choose from.

How can I compare different personal loans?

There’s a range of different factors which should be considered when comparing personal loans, whether variable or fixed rate. These include:

How high your rate is

Perhaps the most important part of your loan to get right is your interest rate, as lower interest can help you save hundreds (if not more) over your repayment term. For example, applying for a loan of $50,000 at a rate of 8.00% p.a. over five years would cost you $10,829, but opting for a 7.00% p.a. loan instead would save you over $1,400.

Secured or unsecured

Some lenders will offer you the option of either unsecured or secured loans. Unsecured are more common, enabling you to apply without worrying about using a valuable asset as collateral. However, if you want to increase your borrowing power and lower your rate, using your car or another asset to secure your loan could be the way to go. Secured finance could extend your borrowing to as much as $100,000 (depending on your lender and the value of your asset).

Your borrowing range

Not all lenders are willing to approve loans for the same amount. Depending on who you apply with, you might be required to borrow a minimum of $5,000 or a maximum of $50,000. However, there are lenders in the market willing to approve you from as little as $2,000 up to a maximum of $75,000. Make sure you double-check your lender’s site to be certain that they can approve the amount you’re looking for.

Your loan term

In the same way as potential loan amounts, you should also ensure you can take as much or as little time as you need to repay your loan. While the general range is from one to seven years, different financiers will have different restrictions when it comes to how long their loans are. For instance, some cap their terms at five years or require you to repay your loan over a minimum of two to three years.

What the eligibility criteria are

Of course, you should know whether you’ll be able to qualify for your lender’s loan offers before you apply. These can differ slightly from lender to lender, but the broad strokes will remain the same regardless of who you apply to. You’ll have to meet the following general criteria:

  • You must be an Australian citizen or permanent resident (or an accepted visa holder)
  • You must be at least 18 years of age
  • You must be employed and earning a stable income of at least $20,000 annually (multiple sources are accepted and minimum income requirements may vary)
  • You must have a positive credit history without any prior defaults or bankruptcy (though options exist for those with bad credit)

Fortunately, you can compare personal loans right here with Savvy, where you can find easily accessible comparison information for each loan which matters most to you. Get a free, no-obligation quote today!

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Further variable rate personal loan questions answered

What other costs will I need to budget for on my variable rate personal loan?

There are fees that you’ll likely need to account for as part of your personal loan in addition to your interest costs, including (all costs are guides):

  • Ongoing fees from $0 to $10
  • Application fees from $0 to $595
  • Late fees from $15 to $35
  • Early repayment fee dependent on time left on the loan (but is often not charged)
What can I use a personal loan for?

Personal loans are designed to be used for a wide range of purposes. Whether you need financing to buy a car, pay for your wedding and honeymoon or even to cover your pet’s medical expenses, you can do it with a personal loan.

How much will my personal loan cost?

The cost of your personal loan will depend on a range of factors, including the following:

  • Your interest rate
  • Your fees
  • Your loan amount
  • Your loan term
  • Whether you pay weekly, fortnightly or monthly
  • Whether you make additional repayments
How quickly can my variable rate personal loan be approved?

You can apply for your variable rate personal loan with Savvy today and receive an instant outcome in just 60 seconds. From there, if you’re approved, you can receive formal approval and funding within 24 hours.

Am I able to work out the cost of my variable rate personal loan before applying?

Yes – you can use Savvy’s personal loan repayment calculator to work out the estimated cost of financing. Because the calculator doesn’t include fees, running it with its comparison rate instead of variable rate helps give you a clearer picture of what you’ll be paying each month and overall. If you don’t have your personalised rate yet, you can add 2% to the minimum rate shown above to represent an average interest cost on your loan.

Can you refinance a variable rate personal loan?

Yes – because many variable rate loans come without early repayment fees, it’s easier to refinance them than some fixed rate loans. Refinancing involves taking out a loan to cover your outstanding debt, essentially replacing it with a new agreement. You may do this to access a better rate, change your loan term or even remove a co-borrower or loan guarantor.

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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.