low interest personal loans

Low Interest Personal loans

The lower the interest rate, the cheaper your repayments. Depending on the amount of money you need to borrow, and the time period you're prepared to pay it back in, a low interest loan could be a sensible way to finance anything from a car to your wedding. We can help you search for and compare low interest personal loans from a wide range of trusted lenders, including banks and peer-to-peer lenders. Start now.

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Low interest personal loan comparisons on Mozo - last updated 24 May 2022

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  • Home Improvement Loan

    Fixed, Unsecured

    interest rate
    comparison rate
    Monthly repayment
    5.75% p.a.
    5.96% p.a.based on $30,000
    over 5 years

    Handypay offers flexible home improvement loans for Excellent Credit or better. Handypay is a specialist home improvement plan provider and offers loans up to $75,000.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 5.75% would cost $34,840.18 including fees.

    Compare
    Details
  • Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.35% p.a.to 19.09% p.a.
    6.14% p.a.to 19.99% 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 5.35% would cost $34,832.61 including fees.

    Compare
    Details
  • Green Loan

    interest rate
    comparison rate
    Monthly repayment
    5.79% p.a.
    6.36% p.a.based on $30,000
    over 5 years

    Handypay offer flexible green loans up to $75,000 for Excellent Credit or better. Handypay is a specialist home improvement plan provider.

    Repayment terms from 1 year to 10 years. Representative example: a 5 year $30,000 loan at 5.79% would cost $34,873.55 including fees.

    Compare
    Details
  • Personal Loan

    Variable

    interest rate
    comparison rate
    Monthly repayment
    5.75% p.a.to 25.99% p.a.
    6.68% p.a.to 29.2% p.a.based on $30,000
    over 5 years

    Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 5.75% would cost $35,370.18 including fees.

    Compare
    Details
  • Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.75% p.a.to 25.99% p.a.
    6.68% p.a.to 29.2% p.a.based on $30,000
    over 5 years

    Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 5.75% would cost $35,370.18 including fees.

    Compare
    Details
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FAQ

Comparing low interest loan options

When you're weighing up different finance options to make a major purchase like a new car, or your dream holiday, you'll want to find the most affordable option for your budget and lifestyle. As a lower interest rate means smaller repayments, a low interest personal loan could be one of the cheapest financing options for you.

So that you're across all the info you'll need to consider when comparing loans and lenders, we've answered all the most common questions we are asked here at Mozo about cheap loans in one easy-to-read guide below, allowing you can make an informed personal loan choice.  

What you can use a low interest personal loan for?

Have you been putting off upgrading the family car or making some much-needed
renovations to your home? Well, the good news is that a low interest personal loan could be that little extra help you need to make things happen.

Depending on the amount of money you need to borrow, and the time period you're prepared to pay it back in, a personal loan with a low interest rate could be a cheap option to fund many big expenses, including: 

With an unsecured loan, generally, you won't need to provide the bank with proof of your purchase but you will need to prove that whatever amount you borrow, you will be able to pay it back. 

If you're wondering how much this will be, head over to our loan repayments calculator to do some number crunching.    

What types of low interest personal loans are available?

Before you settle on a low interest loan option that looks appealing, it's important to get to grips with some of the different types of loans that could be available to you:  

  • Secured: In essence, this is a loan for which you need to put up an asset as collateral. For instance, your car or home - giving the bank or lender some assurance that it will be able to recoup the money lent to you. Given that the lender has a lower level of risk, a secured loan will generally offer a cheaper interest rate compared to an unsecured loan.
  • Unsecured: This is the opposite of a secured loan, meaning you won't need to put up anything against the loan as security. However, you'll still need to be able to prove you can meet the repayments - whether that's through providing payslips as proof of your income or having someone that is willing to be your guarantor. Unfortunately, the lack of collateral often means you will get a higher interest rate.
Picture of JP Pelosi
JP Pelosi
Managing editor

Jean-Paul (JP) Pelosi is an experienced journalist and editor who has contributed to many of Australia's leading media outlets including The Guardian, News.com.au, Domain.com.au, Investment Magazine and ANZ's Bluenotes. He has also edited news and communications for large financial services companies such as CommBank, Suncorp, Allianz and Amex. He loves a well told story and applying his editorial experience to content that readers both care about and enjoy. JP heads up our writing team.

More FAQs about low interest personal loans

Are fixed or variable rate loans cheaper?

When it comes to paying interest on your loan you'll have two different options: fixed or variable. But given you're probably after the most affordable loan possible, which type of loan is actually cheaper? The answer is that it can be either, as it depends on the movement of the RBA's cash rate, but here's a simple explanation of the differences:  

  • Fixed: Love the idea of stability? Well, this is exactly what a fixed loan will give you. Because the interest rate is fixed you'll have exactly the same interest rate over the life of the loan. Opting for a fixed rate loan also means you'll be immune to any fluctuations in the cash rate - which can be good if rates go up, but you might also end up paying more than with a variable rate if there is an RBA rate cut.
  • Variable: Variable rate loans can go up and down based on the RBA cash rate, which means your repayments could fluctuate up or down. On the plus side, if the RBA cuts rates during the life of your personal loan, you could actually end up getting a better (and cheaper) deal than a fixed rate. These loans also often have flexible features, so you can make extra repayments at any time to lower the cost and shorten the loan term.

What is a peer-to-peer lender? Are their rates lower than banks?

Peer-to-peer (P2P) lenders are becoming an increasingly prevalent, alternative option for Australians looking for low rate personal loans, but who are they? Providers such as Harmoney, Plenti and SocietyOne are online lending platforms that pair everyday investors with borrowers. Best of all, because they have lower overheads than some of the traditional players, P2P providers are generally able to offers loans with lower interest rates.

So is there a catch? Yes. While many of the minimum interest rates offered by peer-to-peer lenders are towards the lower end of the scale, the maximum rates can be very high. This is because P2P lenders will assess you on an individual basis based on factors such as your credit history and employment status. If you're considered a borrower who is likely to pay back their loan (ie. you have an excellent credit rating), then you may be offered a considerably lower interest rate than someone who is judged to be more risky.

Do big banks and lenders offer low interest rate personal loans?

They sure do. Some of the leading low interest loan options in the Mozo database are from credit unions and banks, so it's always important to compare a range of options before taking the loan plunge.

Opting for a personal loan with a with a major bank over an online lender could mean you'll have access to benefits such as customer service at a bricks and mortar branch, and even greater choice when it comes to the loan amount and the loan term.

Credit unions and mutual banks could also be a great option, as not only do they generally have low interest rates, they are also well-known for providing a level of customer service you may not be able to get with an online provider.

Could I be missing out on any features by choosing a low interest loan over a standard personal loan?

The key draw of a low interest personal loan is in the name - the low interest rate! So if paying the lowest interest possible is number one on your priority list, then a personal loan with a low rate is probably going to be the most attractive option. With this in mind, because you're paying a cheaper rate of interest, your provider may not offer all of the features you would expect from a standard personal loan.

Some of the features you might not have access to with a low interest personal loan include:

  • Extra repayments: Some personal loans will give you the option of being able to make extra repayments at any time which means you'll be able to pay off the loan faster.
  • Redraw facility: If you've made extra repayments on your loan in the past, some providers will provide you access to this money down the road if you need to redraw it again.
  • Repayment frequency: Want to sync your personal loan repayments with your pay cycle? Some personal loans will give you the choice to make your repayments on a weekly, fortnightly or monthly basis.

Not concerned about any of these features? Well there's no need to worry then. Even if you are, you may still be able to find a low interest personal loan provider that offers these handy features - it may just take some shopping around to see what's out there.

Are there any fees I should look out for?

Like any loan, a low interest personal loan could come with a number of different fees. Here are some of the main ones you'll want to look out for:

  • Upfront fee: Also known as an application fee, this is what you'll be charged upfront when applying for your loan. While some providers will waive the fee altogether, they can often be as high as $600.
  • Late payment fee: It's as straightforward as it sounds - if you don't make your repayments on time you could be slapped with a late payment fee. These can vary in cost, but will generally be around $30.
  • Break cost fee: If you've opted for a fixed low rate personal loan, you may be required to pay a break cost fee if you choose to pay the loan out early. These aren't applicable to variable rate loans.
  • Ongoing fees: One of the features you'll want to look out for when applying for a loan is any ongoing service fees. A monthly or even yearly fee could really add up over the life of the loan, which is why it's important to look at the comparison rate when comparing loans as it takes into account the interest rate and fees.

How much could I end up saving by opting for a low interest loan over a standard loan?

There are a number of different factors that will ultimately decide how much you could save by choosing a low rate loan, including whether the loan has a fixed or variable interest rate, or if the loan is secured or unsecured. But as as example, let's have a look at this scenario:

Mark decides to take out a $20,000 loan over a four-year term in order to help fund some renovations to his kitchen. Mark can use his house and car as collateral against the loan, so he's decided to opt for a fixed secured personal loan which has a low interest rate of just 4.99% (currently the lowest rate in the Mozo database as of May 10, 2022). According to the Mozo Personal Loan Comparison Calculator, Mark will end up saving $1094 in interest over four years by opting for the low 4.99% interest rate option compared to the current average fixed secured personal loan rate in the Mozo database of 7.47% (assuming no application or ongoing fees). It just goes to show that even a slightly lower rate could potentially net you a heap of savings over the life of a loan.  

How do low interest loans compare to other options like a low interest credit cards?

A low interest personal loan isn't necessarily going to be the right financing option for your own situation, with a number of other potential borrowing options, including credit cards, on offer. With a credit card, you may be able to take advantage of a range of features such as an interest free period as well as bonus point or rewards point offers - features that aren't available with personal loans. This mean a credit card could be a handy, and potentially more rewarding option for everyday spending.

However, if you know you're going to have to pay interest then a personal loan with a lower interest rate may be the better choice for you, especially with larger amounts. The average rate for all unsecured personal loans in the Mozo database is currently 9.4% (as of May 10, 2022), which compares to the average credit card interest rate of 17.00% - meaning you could be saving some serious interest by opting for a personal loan.

Personal Loan Reviews

St.George Personal Loan
Overall 8/10
Not bad but could be better

The interest rate does seem higher than other banks. I would love it to be more competitive

Read full review

The interest rate does seem higher than other banks. I would love it to be more competitive

Price
6/10
Customer service
7/10
Convenience
9/10
Trust
8/10
Less
Liza, New South Wales, reviewed 22 days ago
Commonwealth Bank Personal Loan
Overall 4/10
Beware: They sold me Junk Insurance

Took out a $10,000 personal loan for a medical procedure. I’ve been a lifelong customer of Commonwealth Bank and thought they’d offered me a good package as this is the first and only loan I’ve had. Was unknowingly sold junk insurance and am now part of a class-action suit for a refund of the insurance and interest they charged. Here’s hoping they do the right thing!

Read full review

Took out a $10,000 personal loan for a medical procedure. I’ve been a lifelong customer of Commonwealth Bank and thought they’d offered me a good package as this is the first and only loan I’ve had. Was unknowingly sold junk insurance and am now part of a class-action suit for a refund of the insurance and interest they charged. Here’s hoping they do the right thing!

Price
4/10
Features
3/10
Customer service
7/10
Convenience
7/10
Trust
2/10
Less
Stephanie, New South Wales, reviewed 27 days ago
Bendigo Bank Unsecured Personal Loan
Overall 10/10
The bank who cares

They are very transparent with their fee's and we were able to get an unsecured loan to pay off our credit card and pay for a trip to England when my father died. We only had one person who was on a permanent wage and don't live in a home we own. No mortgage and we've managed to have it almost paid off in 4 years

Read full review

They are very transparent with their fee's and we were able to get an unsecured loan to pay off our credit card and pay for a trip to England when my father died. We only had one person who was on a permanent wage and don't live in a home we own. No mortgage and we've managed to have it almost paid off in 4 years

Price
10/10
Features
10/10
Customer service
10/10
Convenience
10/10
Trust
10/10
Less
Michelle, New South Wales, reviewed about 2 months ago

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