What is a personal loan?
A personal loan is a financial product offered by a bank or financial institution that allows you to borrow a lump sum of money that you repay in regular instalments, with interest, over the life of the loan. This type of loan is commonly used for major purchases, consolidating debt, covering unexpected expenses, or funding a special event.
In Australia, personal loans come in two main forms: secured and unsecured. A secured loan is backed by an asset, such as a car, which the lender can repossess and sell if you fail to make repayments. An unsecured loan does not require an asset as security, but because the lender takes on more risk, unsecured loans typically have higher interest rates than secured loans.
The amount you can borrow, the interest rate you pay, and the loan term you choose all affect your regular repayments and the total cost of the loan. Understanding these basics is the first step to comparing offers effectively.
| Option | Category | interest rate | comparison rate | loan term | monthly repayment |
|---|---|---|---|---|---|
| OurMoneyMarket Low Rate Personal Loan Unsecured (Exceptional Credit) ($5k-$100k) (5 Years) | Unsecured Personal Loan | 5.95% p.a. | 5.95% p.a. | 5 years | $386 |
| Harmoney Unsecured Personal Loan (Excellent credit) (5 Years) | Unsecured Personal Loan | 5.76% p.a. | 5.76% p.a. | 5 years | $384 |
| ING Personal Loan (5 Years) | Unsecured Personal Loan | 6.19% p.a. | 7.03% p.a. | 5 years | $388 |
| NAB Personal Loan Unsecured Variable | Unsecured Personal Loan | 7.00% p.a. | 8.41% p.a. | 5 years | $396 |
| Commonwealth Bank Personal Loan Fixed (5 Years) | Unsecured Personal Loan | 7.25% p.a. | 8.65% p.a. | 5 years | $398 |
Sources: InfoChoice
How personal loan interest rates work in Australia
Interest rates on personal loans can be fixed or variable. A fixed-rate loan locks in your interest rate for a set period, providing certainty over your repayments. A variable rate, on the other hand, can be raised or lowered by the lender at any time, meaning your repayments may go up or down.
- Interest rate: the cost of borrowing, expressed as a percentage per year.
- Comparison rate: a rate that includes most fees to reflect the true cost.
- Fixed vs variable rates: fixed rates stay the same; variable rates can change.
Sources: InfoChoice, Moneysmart (ASIC)
Factors that affect your personal loan rate
Your credit score is the single biggest factor in determining your personal loan interest rate. Borrowers with higher credit scores are generally seen as lower risk and are offered lower rates. Conversely, those with lower scores may face higher rates, or may need to provide security to secure a loan.
The type of loan you choose also matters. Secured loans, such as car loans, typically have lower interest rates than unsecured personal loans because the lender has the asset as security. Unsecured loans, which do not require collateral, carry higher rates due to the greater risk to the lender.
Other factors can influence the rate you are offered, including your income, employment stability, existing debts, and the lender's own policies. Additionally, the loan term and the amount you borrow can affect your rate and repayments. A longer loan term generally results in lower regular repayments but more interest paid over the life of the loan.
- Credit score: the most significant factor in rate determination.
- Secured vs unsecured: secured loans generally have lower rates.
- Loan term: longer terms mean lower repayments but more interest over time.
Sources: Money.com.au, InfoChoice, Moneysmart (ASIC)
How to compare personal loan offers
When comparing personal loan offers, it is important to look beyond the advertised interest rate. The comparison rate is a useful starting point because it incorporates most fees, providing a more accurate picture of the total cost. However, you should also examine the specific fees and features of each loan, such as redraw facilities and the ability to make additional repayments.
Consider the following features when evaluating a personal loan: the interest rate and comparison rate, any upfront or ongoing fees, whether the loan allows extra repayments without penalty, whether it has a redraw facility, and the flexibility of the loan term. Making extra repayments can reduce the interest you pay over the life of the loan, but some loans may charge fees for early repayment.
A simple way to compare offers is to create a table that lists each loan's key features, as shown in the example below. This can help you see at a glance which loan offers the best combination of rate, fees, and flexibility for your situation.
- Always compare the comparison rate, not just the interest rate.
- Check all fees: upfront, ongoing, and any early repayment penalties.
- Look for features that add value, such as extra repayments and redraw facilities.
Sources: Moneysmart (ASIC), InfoChoice
Where to find current rates and offers
Current personal loan rates change frequently, and the offers available to you will depend on your creditworthiness and the lender's criteria. You can find up-to-date rates and offers from a variety of sources, including major banks, non-bank lenders, and comparison websites.
Always cross-check information from comparison sites with the lender's own website, as comparison sites may not include every fee or feature. Additionally, government resources such as Moneysmart provide impartial guidance on personal loans and how to compare them.
- Check comparison websites like InfoChoice for side-by-side loan comparisons.
- Visit major banks' websites for their current advertised rates and loan features.
- Use Moneysmart for independent guidance on what to look for.
Sources: InfoChoice, Moneysmart (ASIC), NAB, Commonwealth Bank
Examples of personal loan offers (June 2026)
These examples are provided for comparison purposes only and are not endorsements or current offers. The rates and repayments reflect what is shown in the source; your own rate and repayments may differ.
Use this table to see how the total cost of a loan can include not only the interest rate but also fees, which affect the comparison rate.
Sources: InfoChoice
Are rates different in NSW?
Many borrowers wonder whether personal loan interest rates differ from state to state, particularly in NSW. Based on the available evidence, no authoritative source confirms that NSW residents receive different rates than borrowers in other states. Lenders do not appear to publish state-specific personal loan rates, and the factors that determine your rate—such as your credit score, income, and the type of loan—are the same across Australia.
That said, your personal circumstances, such as where you live and the local lending market, might indirectly influence the lender's assessment, but there is no evidence to suggest a systematic state-based difference. Therefore, when comparing personal loans, you should focus on your own credit profile and the lender's criteria, rather than assuming NSW has special rates.
Sources: Money.com.au, Canstar
Frequently asked questions
How is my personal loan interest rate determined?
Your personal loan interest rate is primarily determined by your credit score, which lenders use to assess your risk. A higher credit score generally leads to a lower rate. Other factors include your income, existing debts, the type of loan (secured or unsecured), and the lender's policies. Secured loans, such as car loans, typically have lower rates than unsecured loans because there is an asset backing the loan.
Sources: Money.com.au, Moneysmart (ASIC)Are personal loan rates the same in NSW as in other states?
No authoritative source suggests that personal loan rates differ between NSW and other Australian states. Lenders do not appear to publish state-specific rates, and the primary factors that influence your rate—credit score, income, and loan type—are the same across the country. While your location might indirectly affect lender decisions, there is no evidence of a systematic state-based variation in personal loan interest rates.
Sources: CanstarWhat is the difference between fixed and variable personal loan rates?
A fixed-rate personal loan locks in your interest rate for a set period, ensuring that your repayments stay the same throughout that term, which provides certainty. A variable rate, however, can be raised or lowered by the lender at any time, meaning your repayments may go up or down. Fixed rates are often preferred by those who want predictable budgeting, while variable rates may offer flexibility if rates fall, but they carry the risk of rising rates.
Sources: InfoChoiceCan I get a personal loan with bad credit in Australia?
Yes, it is possible to get a personal loan with bad credit, but you may face higher interest rates or need to provide security. Lenders view a lower credit score as higher risk, and they may offer smaller amounts or shorter terms. Some lenders specialise in loans for people with poor credit, but you should compare the comparison rate and fees carefully. Moneysmart also advises that if you are on a low income, you may be eligible for no or low-interest loans through specialised programs.
Sources: Money.com.au, InfoChoice, Moneysmart (ASIC)Sources
- Credit Factsheet - Personal Loans — Moneysmart (ASIC)
- Personal Loan Statistics in Australia 2026 — Money.com.au
- Compare Personal Loans from 5.67% — InfoChoice
- Average Personal & Car Loan Interest Rate Ranges | Canstar — Canstar
- Personal loans - Moneysmart.gov.au — Moneysmart (ASIC)
- Car loans - Moneysmart.gov.au — Moneysmart (ASIC)
- Personal loans | Flexible repayments and no exit fees — NAB
- Personal Loans | Flexible Repayments Available With ... — Commonwealth Bank