What are the interest rates on a personal loan?

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When shopping around for a personal loan, consumers will often look at the interest rate as a means of determining how competitive a loan is. The representative interest rate will also allow the lender to provide an example of how much a borrower will pay back overall during the course of the personal loan.

Understanding Personal Loans

A personal loan is finance given to an individual by a lender for personal expenditure. People are usually free to use their personal loan for whatever purpose they wish, although the lender may ask the purpose for the loan in order to decide whether the level of borrowing being applied for is really needed.

Some lenders, including ourselves at [name], may also offer specific loan products based on the reason for needing the personal loan.

What are Interest Rates?

An interest rate is the rate of interest that is payable on a sum of borrowed money. Interest is calculated based on an annual rate, and will be charged on the outstanding value of the principal amount of the loan. The interest is effectively the amount you’re paying for the loan, which you may see quoted by lenders as the cost of borrowing.

How is My Interest Rate Calculated?

A number of variables will determine your interest rate and actual comparison rate.

These include:

  • The current base interest rate set by the Reserve Bank of Australia.
  • The amount of money you are looking to borrow.
  • The time you wish to borrow the money for.
  • Risk factors determined by carrying out a credit check.

When you receive a personal loan quote from a lender, the interest will be included in the repayments based on the loan period you specify.

Understanding Interest Rates vs. Actual Comparison Rates

Within our personal loan calculator, you will see both the interest rate and the actual comparison rate quoted within the calculation.

The comparison rate is a figure designed to encompass the total cost to you for the loan, including all of the interests, fees and charges which you will be required to pay.

The actual comparison rate allows us to demonstrate to you what the true cost of the loan will be. This also helps us to be transparent towards our customers while also easily allowing you to compare the cost of a loan from [name] against that of other borrowers.

An example calculation is below.

If you were accepted for a $10,000 personal loan from [name], repayable over 60 months with weekly repayments, it would work out as follows:

Fixed Interest Rates and Variable Interest Rates

While [name] offers only fixed interest rate personal loans, variable interest rate personal loans are also available from other lenders.

Read our blog on the difference between fixed rate and variable rate loans.

We have summarised the differences in the table below.

Fixed Rate Loans

Variable Rate Loans

Interest Rate

Your interest rate is fixed to that quoted when you accepted your loan. Your interest rate may vary periodically in line with market rates.


Your repayment amount will remain the same throughout your loan period. Your repayment amount will differ in line with changes in the interest rate.


Consistency of repayments means you’re always certain of what you’ll pay and when, enabling you to budget easily. May offer a lower overall interest rate in the long-term.
If interest rates remain low then the overall repayment amount may be lower.


Fixed interest rates may be higher than variable rates in the long-term. Unpredictability of interest rate means it can be hard to plan and budget personal finances effectively.
A fixed interest rate loan may lead to repaying more than you would with a variable rate loan. Potential for interest rate to increase and remain high (although these will often be capped for variable rate loans).

Choosing Your Personal Loan

When choosing your personal loan, ensure you take the time to compare interest rates carefully and consider the different options that are available. Ensure you compare using the actual comparison rate to get a true picture of what your loan will cost.

To get started with your loan application you can contact us now to speak with an expert, who will also answer any questions you may have relating to your interest rate or other factors.

Disclaimer:  This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs.  Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.

Categories: Articles, Interest Rates, Personal Loans

Things you should know

Applications for finance are subject to NOW Finance’s lending and approval criteria. Terms and conditions may apply.  No establishment, account keeping or early repayment fees will apply. Charges such as default or enforcement costs may apply if you do not comply with the terms of your loan. Settlement times may vary depending on individual circumstances. Loan repayment terms range between 18 months to 7 years.  For unsecured loans you can borrow between $5,000 to $50,000 with interest rates ranging from 5.95% p.a. (5.95% p.a. comparison rate*) to 17.95% p.a. (17.95% p.a. comparison rate*).  For secured loans you can borrow between $15,000 to $100,000 with interest rates ranging from 4.45%p.a. (4.45% comparison rate*) to 15.45% p.a. (15.45% p.a. comparison rate*).

*About Comparison Rates

The Comparison Rate is designed to help you understand the overall cost of the personal loan. It combines the amount of the loan, loan term, repayment frequency, interest rate, fees and charges into a single rate to show the total true cost of the loan. The comparison rates for the NOW Finance loans are based on a loan of $30,000 over 5 years. WARNING: The comparison rates given are true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Due to the fact NOW Finance does not charge any establishment, account keeping or early repayment fees, the true cost of the loan or Comparison Rate will always equal the interest rate quoted.


our confirmed guaranteed personalised rate may change if you provide NOW Finance with incorrect personal information or security details.  In some circumstances, NOW Finance may require further information from you in order to provide you with your guaranteed personalised rate.

NOW FINANCE is a trademark of Now Finance Group Pty Ltd ACN 158 703 612 Australian Credit Licence number 425142, as agent for NF Finco 2 Pty Ltd ACN 164 213 030