If you are looking for a way to finance a large purchase, a holiday, or even an investment such as home renovations, consider a three-year fixed rate personal loan. These loans are suited to a wide range of needs. Find out what these loans are, how they work, how to compare them and if they are right for you.
When you apply for a fixed rate personal loan, the rate applied to the loan when you sign the contract will remain the same throughout the entire loan term. Typically, these loans have a loan term of three years, but some lenders offer a loan with a fixed rate term of three years but a total loan term of up to seven. The remainder of the term has a variable rate applied.
These loans can be secured or unsecured and fees and restrictions differ depending on the lender. However, they usually attract early repayment fees and fees for making additional repayments.
What types of these personal loans are available?
Three-year fixed rate loans can be used for various purposes and there are a few different types available:
Three-year fixed rate car loans. If you are looking to buy a new or used car you can find various options for three-year fixed loans. As the loan is secured you will be able to lock in a competitive low rate, depending on the lender.
Three-year fixed rate secured loans. Even if you aren’t purchasing a vehicle, you can still consider a secured personal loan. If you hold equity in your home, have money in a term deposit or own a high-value asset such as fine art or jewellery, you may be able to use it to guarantee the loan.
Three-year fixed rate unsecured loans. You can use funds from an unsecured loan to go on a holiday, consolidate debt, buy big-ticket items, or for another purpose and not risk a secured asset.
How you can compare your three-year fixed rate options
If you are considering a three-year fixed rate loan as a financing option, it is best to compare your options to find the right loan for you. Here are some features to look out for when comparing:
The interest rate. You will be locked into this rate for three years, so ensure it is competitive. When comparing your options on finder.com/nz you can sort them using comparison tables like the one above by clicking on the column heading. Remember, secured loans tend to have better rates than unsecured loans.
The upfront and ongoing fees. Are there any application fees? Will you be charged monthly or annual fees? The comparison rate will give you an idea of the true cost of the loan, as it incorporates the rate and fees.
The other fees you may be charged. Fixed rate loans often attract fees for making additional repayments, accessing redraw facilities (if available) and repaying your loan ahead of time. Be sure to check these before you apply.
Weighing up the benefits of fixed rate loans
You can lock in a competitive rate that stays in place for three years
A three-year term can help keep your repayments low, depending on how much you borrow
>A range of lenders offer three-year fixed rate personal loans so you have many loans to compare
If market conditions improve, you won’t benefit from lowered repayments
You will usually be charged a penalty to pay back your loan early or make additional repayments
If your situation changes and you want to switch to a loan with a longer loan term, you may need to pay a fee
Frequently asked questions
Your eligibility will depend on a variety of criteria set by each individual lender. Usually, you will need to be over the age of 18 and a New Zealand citizen or permanent New Zealand resident, but there are loans available for temporary residents.
Fixed rate personal loans are available for terms of anywhere between one and seven years.
This depends on your financial situation and the amount the lender is offering. Work out a budget and only apply for an amount you think you will be able to afford.
Elizabeth Barry is Finder's global fintech editor. She has written about finance for over five years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at The Lizzies. Elizabeth has found writing about innovations in financial services to be her passion (which has surprised no one more than herself).
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