Introductory fixed rate personal loans

Find out how personal loans with introductory fixed rates work to see if one might be right for you.

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Introductory fixed rate personal loans can deliver both fixed and variable interest rates to combine the benefits of a variable-rate loan with the benefits of a fixed-rate loan. This guide will take you through how they work and what the pros and cons are, as well as how to compare your introductory fixed-rate personal loan options.

How do the introductory fixed rates work?

To understand how this type of loan works, you’ll first need to understand the differences between variable- and fixed-rate loans.

  • Variable-rate loan. These typically have flexible repayment terms, fewer establishment fees and might be easier to take out with bad credit. However, the downside is that interest rates vary in line with market conditions, so the exact amount you need to repay can change over time.
  • Fixed-rate loan. These deliver predictable and consistent repayments, which make it easier to plan and to find potentially better value for money over extended periods. However, the downside is that someone with bad credit might find it harder to get this type of loan. Also, there might be harsh early-repayment terms as well as stricter fees and conditions.
  • Introductory fixed-rate loan. This type of loan offers the flexibility and ease of variable-rate loans and the consistency of fixed-rate loans. The personal loan will come with an initial period where the interest is fixed, and then the rate will become variable.

With this combination of features, an introductory fixed-rate loan can be very useful when you want the freedom to repay your loan sooner without running into early-repayment fees or are in a situation where money’s tight and you need the predictability of fixed rates in the near future.

What to look at when comparing introductory fixed-rate loans

One of the main features to look at is the introductory fixed-rate period itself.

  • How long is the introductory fixed-rate period? There will typically be a specific, set period of time where you’ll get fixed rates.
  • What are the terms of the introductory rate? What happens after the introductory rate period expires?

You should also consider the same things you’d look at when comparing any kind of loan.

  • Interest rates. What are the initial interest rates, and how will they change after the end of the introductory fixed-rate period?
  • Loan type. You can find many of the usual variations, like secured or unsecured loans.
  • Loan amount. How much can you borrow? Is it enough, and how does this affect your repayments?

What fees should you look out for?

You should always look out for fees. Establishment or application fees might apply, in which case you should factor these into the cost of your loan.

For introductory fixed rate personal loans, you may want to pay attention to the early-repayment fee. This is an extra cost which applies if you pay off your loan ahead of schedule. It’s especially important to look for it in this type of loan because it might impact your ability to cost-effectively pay it all back before the end of the introductory fixed-rate period.

For example, you might find a loan that offers the following:

  • No application or establishment fees, easy approval for bad credit applicants and no security required
  • An introductory fixed rate of 10% for the first three months, after which it reverts to a variable rate of 15%
  • A 12-month repayment period, with fees for early repayment

An easy-to-get loan with a fixed rate of 10% might be tempting, but you will inevitably have to pay more than this. For the remaining nine months, you’ll have to pay the much less competitive variable rate of 15%, or you will have to face the early-repayment fees.

As such, it’s essential that you look at the early-repayment fees and the revert rate. Between the two of these, you’re looking at one of the major potential costs.

What are the benefits and drawbacks of personal loans with introductory fixed rates?


  • Introductory fixed rates can save you interest over the life of the loan.
  • Fixed rates make budgeting for your repayments easier.
  • A loan with an introductory fixed rate means you can take advantage of the low fees and rates of a variable-rate personal loan with the added bonus of a low fixed rate.


  • The revert rate after the introductory period ends may be quite high.
  • There may be certain restrictions regarding the use of the loan.

How you can apply for a personal loan

To apply for a personal loan in New Zealand you will generally need to be above the age of 18, have a good credit rating and be a permanent New Zealand resident. You will need to check the specific eligibility requirements of the personal loan before you apply.

You may also need to provide the following information:

  • Personal details such as name, contact information and proof of identification
  • Your employer’s name and contact number
  • Details of your income, which may require pay slips, bank statements or tax returns
  • Financial details including assets, credit account, debts and liabilities
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