Fixed rate vs variable rate personal loans

Find out whether you should lock your rate.

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Choosing the right personal loan is key to managing your credit effectively. As well as selecting a lender, deciding on your loan term and between secured and unsecured, you also have to determine if you want a fixed or variable rate. These two options offer different benefits and drawbacks. Explore the differences between fixed and variable interest rates to help you decide which one is right for you.

Key differences between fixed and variable interest rates on personal loans

Fixed rates Variable rates
Description Your interest rate remains the same throughout the specified term. Your interest rate may fluctuate throughout the loan term.
Typical rates 9.95 – 29.95% p.a. 13.95 – 18.95% p.a.
Main benefit
  • Your repayments remain the same despite what’s happening in the market.
  • You can usually make additional repayments and repay the loan early without penalty.

What are fixed and variable interest rates on personal loans?

Personal loans come with two types of interest rates: Fixed or variable. Fixed interest rates remain the same throughout the specified term, which may be for the entire loan term or an introductory period. If you opt for a variable rate personal loan, you receive the advertised rate, but this may change throughout the loan term depending on the interest rate movements in the market.

What are the benefits of each type of interest rate?

Fixed rate personal loans

  • Your repayments remain unchanged throughout the specified term.
  • You may be able to secure a lower rate.

Variable rate personal loans

  • You can usually make additional repayments without penalty, and repay the loan early without any fees.
  • You can find more loan options, with longer repayment periods (up to seven years).

interest rate choice

What are the drawbacks of each type of interest rate?

Fixed rate personal loans

  • Typically, you can’t make additional repayments or pay off the loan early.
  • If you can make additional repayments or pay the loan off early, the lender may charge you a fee. The loan provider may also cap extra repayments.
  • Some fixed-rate loans come with shorter repayment periods (up to five years).

Variable rate personal loans

  • Your interest rate could increase and make your loan unaffordable.
  • You may find less competitive rates.

How do I work out which rate type is best for me?

The right type of interest rate for you depends on a few factors. Here are some questions you can ask yourself, to help you decide:

  • Do I want the option of making additional repayments or repaying the loan early? If the answer is yes, you’re much more likely to find a variable rate loan that will let you do so.
  • How affordable are my repayments? If your payments are only just working with your budget, a fixed-rate loan ensures they do not increase.
  • What interest rate can I get? The most competitive rate is going to make your loan repayments more affordable.

Compare a range of personal loans

Harmoney Unsecured Personal Loan

Harmoney Unsecured Personal Loan

From

6.99 % p.a.

rate

  • Borrow from $2,000
  • 100% online
Security Logo

100% confidential application

Harmoney Unsecured Personal Loan

Apply today to get approved within minutes for up to $70,000.

  • Max. loan amount: $70,000
  • Loan term: Up to 60 months
  • Turnaround time: 99% of approved online applications funded in 24 hours
  • Fees: Establishment fee of $200 for loans from $2,000-$5,000 and $450 for loans from $5,000-$70,000
  • No early repayment fees
  • Personalised interest rates based on your circumstances
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Promoted
Updated November 18th, 2019
Name Product Interest Rate (p.a.) Min. Loan Amount Max. Loan Amount Loan Term Monthly Service Fee Application Fee
6.99% - 29.99%
$2,000
$70,000
Up to 60 months
$0
$200-$450 depending on loan size
Apply for an unsecured personal loan up to $70,000 with no early repayment fees. Eligibility: Be a NZ resident/citizen and have a good credit score.
6.69%-18.20%
$2,000
$200,000
3 or 5 years
$0
$250-$1,450 depending on the amount borrowed
A secured personal loan from $2,000 to $200,000 with repayment instalment options. Eligibility: Be an 18+ NZ permanent resident, earn $30,000 or more, have a good credit history and collateral/security.
9.15% - 22.95%
$1,000
$25,000
Up to 7 years
$0
$250
An unsecured personal loan up to $25,000 with personalised repayment options. Eligibility: Be an 18+ permanent NZ resident or non-resident on a working visa, earn $500+ weekly.
8.90% - 20.95%
$1,000
$50,000
Up to 7 years
$0
$250
A secured personal loan up to $50,000 with personalised repayment options. Eligibility: Be an 18+ permanent NZ resident or non-resident on a working visa, earn $500+ weekly.
13.95% - 23.95%
$1,000
$50,000
Up to 60 months
$12
$125-$595 depending on loan size
A secured loan from $1,000 to $50,000 with a quick online application process. Eligibility: Be an 18+ permanent NZ resident, have collateral/security, earn at least $400 per week.
9.95% - 23.95%
$1,000
$20,000
Up to 60 months
$12
$95-$595 depending on loan size
Borrow up to $20,000 and apply online within 5 minutes. Eligibility: Be over 21, hold permanent NZ residency, have collateral/security, earn at least $450 per week.

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