These details can have a real impact on what you pay and how much flexibility you have along the way.
Here’s what you need to know.
What is a fixed-rate personal loan?
A fixed-rate personal loan locks in your interest rate for the entire loan term. Unlike a variable-rate loan, where your rate and repayments can shift with market conditions, a fixed-rate loan stays the same from start to finish.
For borrowers, this means:
- Predictable repayments: you know exactly what’s coming out of your account each week or fortnight.
- Easier budgeting: no need to factor in potential rate rises.
- Peace of mind: your repayments won’t change, even if the broader interest rate environment does.
This can be particularly valuable when you’re managing other financial commitments alongside your loan, such as rent, a mortgage, or regular household expenses.
The hidden cost many borrowers overlook: early repayment penalties
Here’s something that catches many Australians off guard. Some lenders charge a fee if you pay off your personal loan before the agreed-upon end date. These are sometimes called early repayment fees, break costs, or exit fees.
The logic behind them is straightforward. A lender earns interest over the life of your loan, so if you pay it off early, they miss out on some of that income. To compensate, they pass a cost on to you.
The problem is that this can work directly against your interests. If you receive a tax return, a bonus, or find yourself in a stronger financial position than expected, you may want to pay down your loan sooner. An early repayment penalty takes a bite out of the savings you’d otherwise make on interest.
How no early repayment penalties can work in your favour
When a lender doesn’t charge early repayment penalties, as is the case with NOW Finance personal loans, you’re free to make extra repayments or pay off your loan entirely at any point, without it costing you more.
It’s important to note that eligibility criteria apply. To be eligible for a NOW Finance personal loan, you’ll generally need to be at least 18 years old, an Australian citizen or permanent resident, currently employed, and meet minimum income requirements. With NOW Finance, there are no limits on the minimum or maximum amounts you can repay early or as extra repayments. Make sure to review your loan’s terms to confirm whether any specific conditions apply to your situation.
With a fixed-rate loan, every extra dollar you put toward your principal directly reduces the interest you’ll pay over time. Without a penalty standing in the way, you keep all those savings.
To put it in practical terms: if you took out a $20,000 personal loan over five years and received a $3,000 tax return halfway through, you could put that directly toward your loan. No penalty. Less interest. A shorter path to being debt-free.
What to look for when comparing personal loans
If you’re weighing up your options, here are a few questions worth considering:
- Is the interest rate fixed or variable? Fixed gives you repayment certainty. Variable introduces risk if rates rise.
- Are there any early repayment fees? Check the loan contract and key facts sheet carefully.
- How flexible are the repayment options? Can you repay weekly, fortnightly, or monthly? Can you make lump sum payments?
- What are the total fees over the life of the loan? The interest rate alone doesn’t tell the whole story. Establishment fees and monthly account-keeping fees add up.
For example, say you take out a $10,000 loan over three years with two different lenders:
- Lender A offers a 7% fixed interest rate, a $300 establishment fee, and charges $10 per month in account-keeping fees.
- Lender B offers a 7% fixed interest rate, a $0 establishment fee, and no monthly account-keeping fees.
At first glance, both look similar because of the same interest rate. But with Lender A, you’d pay $300 upfront and $360 in account-keeping fees over three years ($10 x 36 months), for a total of $660 in extra costs. With Lender B, those fees don’t apply. That’s hundreds of dollars more, even at the same rate.
Always check the full fee breakdown when you compare your options.
Finding a loan that works for you
Taking the time to compare these details, not just the headline rate, can help you find a loan that suits both your budget today and your goals down the track.
Unlike some lenders who may charge early repayment penalties or offer only variable-rate loans, NOW Finance offers fixed-rate personal loans with no hidden fees. That means you get the certainty that your repayments won’t change, and the flexibility to pay off your loan sooner if your circumstances allow.
Whether you’re consolidating existing debt, funding a home improvement, or covering a significant expense, the aim is simple: a loan that works for you, not just the lender.
Check your personalised rate in two minutes with no impact on your credit score. You only need some basic personal details and an Australian Driver’s Licence or Australian Passport.
