When you’re looking at personal finance options, finding competitive loan rates is usually at the top of your agenda. The fact is – personal loans can have better interest rates than credit cards, but they still tend to be high. We all want to get the best deal in life and your interest rate is going to have a huge impact on the overall cost of your loan. So, how do you find the best loan rates?
In this article, Safrock will run you through all things interest-related. From the basics, like how it works and what it means – to the nitty-gritty details, like what makes for a good personal loan rate. So, keep reading to find out how to find the best loan rates to suit your needs!
When it comes to loan rates, you’ve got to understand what you’re looking at. Interest is calculated as a percentage of the loan amount and included in the cost of your repayments to a lender. For personal loans, the interest rate is usually quoted as an annual percentage rate (APR) but it can be calculated for periods shorter than a year as well.
Working out your interest has never been easier, thanks to the internet. There are countless personal loan interest calculators available online. A lot of the time, lenders themselves will even have loan calculators you can use to get an estimate. It’s always best to look into your lender first to ensure you get the most accurate estimate of your interest.
Otherwise, a good resource to use is MoneySmart’s personal loan calculator. This basic calculator will help you work out your potential repayments in just a few simple clicks. You could also try to calculate loan rates yourself, but the formulas can be complex. Since interest rates are entirely set by the lender, you’re more likely to get a good estimate from your lender’s own loan calculator.
Credit providers and lenders set their own loan rates, so interest payments can vary greatly between institutions. Generally, there are four different types of interest rates you’ll encounter when looking for a personal loan:
|Types of Loan Rates||Short Definition|
|Variable Rate||The interest rate changes over time, due to fluctuations in cash rate and other factors set out by your credit provider.|
|Fixed Rate||The interest rate is set and does not change over the life of your loan.|
|Partially-fixed Rate||For a certain period of your loan, the interest rate is fixed and then it becomes a variable rate.|
|Introductory Rate||Also known as ‘honeymoon rates.’ Some credit providers will offer low interest rates for the first few years of your loan.|
The most common forms of interest you’ll see attached to personal loans usually come in the form of variable or fixed rates. As their names suggest, a variable interest rate changes over time while a fixed interest rate remains set over the lifetime of a loan. Fixed and variable loan rates each have their pros and cons. While fixed-rate personal loans offer predictability by letting you know exactly what your repayments will be over time, variable rate loans may offer lower interest over time, reducing the overall cost of your loan.
Ultimately, deciding which one is better for you will come down to the lender’s proposed agreement and your loan needs.
There are so many factors that impact interest rates, so it’s difficult to say what a ‘good personal loan rate’ would be. While you might think that the lower the interest, the more affordable – that’s not always the case either. Associated loan costs, like fees and charges, may undercut any savings you could make from a lower interest rate.
The best loan rate for you will depend entirely on your individual circumstances. That said, there are some key things you’ll want to keep in mind when you’re searching.
Here are our top three recommendations for how to find the best loan rates:
Even the smallest variation in loan rates can quickly add up over time. As a result, it’s paramount you shop around when looking for a personal loan. In your searching, you might also find that there are other features that are actually more important for you than you thought!
While super attractive in theory, low interest rates aren’t always the best value. Fees and charges attached to a loan can easily drive up the cost. If repayments are your biggest concern, make sure you look at the comparison rate to get a good deal.
When you take out any personal loan, you’ll be asked to sign a loan agreement. It’s always good practice to check the terms and conditions of your contract before you sign. The contract will include details like the:
If you’re concerned about loan rates, you’ll want to be looking closely at the proposed interest, fees and repayments in particular.
Sometimes, if it seems too good to be true – it is. Unfortunately, loan scams happen all the time. So, make sure you stay vigilant and don’t be tempted by promises of crazy good interest rates. One of the easiest ways to check a lender’s legitimacy is by ensuring they have the right licences.
In Australia, all credit providers and credit assistance providers (such as brokers) must be licensed with ASIC. You can search ASIC Connect’s Professional Registers to check your lender is properly accredited.
Take the hassle out of applying for finance and let us do the hard work for you! Safrock is an online lender-finder that can help you locate reputable Aussie lenders offering personal loans between $2,500 and $50,000. How does it work? Simply scroll up now to submit a free online application. We’ll then get to work finding you an online lender capable of offering you the finance you need. If we’re successful, we’ll be in touch and put you through to your new lender for final approval. Simple as that!
To be eligible for a loan with a lender, you just need to meet the following criteria:
If you meet these requirements, then you can apply for a personal loan through Safrock.
Fortunately, Safrock is 100% online so you don’t have to worry about any paperwork when completing your online application. Before you get started, just make sure you have the following information handy:
If you have all these details with you when you apply, you’ll breeze through your application.
Think you’re ready to apply? Scroll up now to begin your application!
If you’d like to learn more about our loan products get in touch.
Get more finance news from Safrock. Learn more about collateral loans.
Safrock is a lender-finder. We do not offer financial advice when it comes to small loans. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented on this website relate to your unique circumstances.
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
The Australian Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.*This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.