Personal loans

Find the right personal loan and avoid paying more in interest and fees.

Choosing the best personal loan for you

A personal loan lets you borrow money for things like a car, holiday, or home improvement. You repay it with interest over a set time, usually one to seven years.

Shopping around can save you money. Compare loans before you shop for what you want, not after. A lower rate or fewer fees can save you thousands over the life of the loan. However, be careful applying for a lot of loans. This can hurt your credit score.

Fixed or variable interest rate

With a fixed interest rate, your repayments stay the same for the life of the loan. You'll know exactly how much to budget each month.

With a variable interest rate, your repayments can go up or down as interest rates change. If rates rise, you’ll pay more. If rates fall, you’ll pay less. Check whether you could still afford the loan if the rate rises by 2% or 3%.

Variable rate loans often give you more flexibility. Many let you make extra repayments or pay out the loan early. Fixed rate loans may charge a fee if you repay the loan early.

Secured or unsecured loan

With a secured loan, you provide an asset, such as your car, as security. If you don't repay the loan, the lender can take and sell your asset.

With an unsecured loan, you don't provide security. These loans usually have higher interest rates. Some lenders may ask for a guarantor.

If you don't repay an unsecured loan, the lender can take legal action to recover the money.

Loan guarantor

Some lenders may offer a lower interest rate or only be prepared to lend if you have a loan guarantor.

A guarantor agrees to repay the loan if you can't. This can put their finances at risk. Before you ask someone to be your guarantor, make sure you both understand what this means.

How to compare personal loans

Compare loans before you choose one. This helps you understand what you can afford and how much your repayments will be.

Use our personal loan calculator to estimate your repayments and compare how different loans affect the total cost.

The rate you get may differ from the advertised rate. Lenders may look at your credit score, income, expenses and savings when they set your rate.

Compare these features

Comparison rate	Is a percentage you can use as a guide to help you work out the true cost of a loan. It includes interest and most fees. You can use it to compare loans, for example:   Lender A and Lender B both offer loans of $10,000 over 3 years.   Lender A has an interest rate of 3% and a comparison rate of 6% Lender B has an interest rate of 4% and a comparison rate of 4.5%.   While Lender A has a lower interest rate, Lender B has a lower comparison rate. This means the overall cost of borrowing from Lender B may be less than from Lender A.   Comparison rates vary depending on the loan terms and are only accurate for the example given. Lenders must tell you what assumptions they used to calculate the comparison rate.
Interest rate	The rate charged on the amount you borrow, excluding fees.   Check if the rate is fixed or variable. If it’s variable, consider whether you could still afford the loan if rates rise by 2% or 3%. If it’s fixed, check if an early repayment fee applies.
Fees	Look for application, ongoing and missed payment fees. Check the terms and conditions for any extra costs. This may include:   application or establishment fees administration fees missed payment or default fees, and default interest early repayment fees other costs, such as balloon payments (a large lump sum due at the end of the loan term).
Loan use	Some loans can only be used for specific purposes, like buying a car or funding home improvements. Check the loan suits how you plan to use the money.   Also check the loan terms. For example, if you want to pay it off quickly, you may not want a loan with an early repayment fee.
Loan term	Shorter terms can mean less interest overall. Longer terms may lower your repayments but increase the total cost.

Comparison websites can help, but they are businesses and may earn money from promoted links. They may not show all your options. See what to keep in mind when using comparison websites.

Planning to pay off your loan

Make sure you have enough in your account when repayments are due. If you miss a payment, you may pay a fee and fall behind on your loan. You may also be charged default interest.

Doing a budget can help stay on track. It also helps you see where you may be able to make extra repayments.

Paying extra can reduce the total interest you pay and help you pay off the loan sooner. Before you do, check if there are any fees or limits.

If you have trouble making loan repayments, see how to get debt under control for help on what to do.

Looking for a personal loan to consolidate debt? See debt consolidation and refinancing to find out if this is right for you.