Customer-owned banks vs the big banks: which offer cheaper personal loans and bigger savings in 2021?

man facing camera sitting at a bar at a cafe with an empty iced coffee looking at his laptop comparing personal loan rates

According to 2019 Mozo research, in a side-by-side comparison, Big 4 banks could have cost borrowers up to 20% more in personal loan interest fees than customer-owned banks.

But now, in 2021, it seems the big players have caught up and could be real contenders when it comes to low rates.

For example, in 2019, if you took out a $10,000 unsecured personal loan over 5 years, you could save $733 in total interest just by switching from the Big 4’s average rate of 13.40% p.a. to the average rate for customer-owned banks of 10.99% p.a.

While in 2021, on the same loan with the same terms, you can save $227 in total interest by switching from the average customer-owned bank rate of 10.12% p.a. to the average Big 4 rate of 9.35% p.a..

Unlike two years ago, today, going off of average rates, you can see a saving in interest costs from switching from customer-owned to the Big 4.

It is also of note that the savings amount has decreased from $733 to $227, showing that although the personal loan market has grown in the number of options and providers, there is greater concentration around rates.

But that does not mean that the Big 4 definitively offer the best personal loan rates compared to customer-owned banks.

There are over 40 financial institutions in the Mozo database that qualify as customer-owned; therefore, there is a larger spectrum of rates with far more data points to average than there are the Big 4 - which only have four.

With that in mind, if we’re talking about bigger bang for your buck, you can still count on customer-owned banks.

If you place the lowest-rate unsecured personal loan from a customer-owned bank in Mozo’s database - Police Bank Variable Unsecured Personal Loan at 5.79% p.a. (5.92% p.a. comparison rate) - besides the Big 4’s lowest rate - NAB Unsecured Variable Personal Loan at 6.99% p.a. (7.91% p.a. comparison rate), you will see an interest cost saving of $337.

So as all types of lenders enter the market and offer more competitive rates, it’s a matter of shopping around and finding which suits you best - whether it’s from a big bank or a customer-owned bank or even an online lender.

Make sure you’re educated on the personal loan features that will suit your lifestyle. A great starting point is the Mozo personal loan hub for comparisons from over 70 lenders.

Check out these top low interest personal loans:

Low interest personal loans - last updated 29 March 2024

Search promoted personal loans below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    6.75% p.a.to 26.95% p.a.
    6.75% p.a.to 26.95% p.a.based on $30,000
    over 5 years

    Borrow up to $50,000 unsecured. Perfect if you earn more than $22,100 p.a. and have good to excellent credit. Multi-year winner of Mozo’s Experts Choice Unsecured Personal Loan Award, 2021, 2022, 2023 & 2024^'

    Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 6.75% would cost $35,430.23 including fees.

    Compare
    Details
  • Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.76% p.a.to 24.03% p.a.
    6.55% p.a.to 24.98% p.a.based on $30,000
    over 5 years

    Fast, easy and 100% online, this is a low cost loan with no ongoing fees or extra repayment penalties. It's perfect for savvy borrowers with great credit. If you’re over 18 and earn above $30,000, you could qualify (other eligibility criteria may apply).

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 5.76% would cost $35,173.52 including fees.

    Compare
    Details
  • Debt Consolidation Loan

    interest rate
    comparison rate
    Monthly repayment
    5.76% p.a.to 24.03% p.a.
    6.57% p.a.to 24.99% p.a.based on $30,000
    over 5 years

    Roll multiple debts into one loan to streamline your finances with one set of repayments and one interest rate. Competitive fixed interest rates with no monthly or early repayment fees and flexible repayment options. Easy online application and funding in as little as 24 hours (subject to approval).

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 5.76% would cost $35,173.52 including fees.

    Compare
    Details

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

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