Understanding interest rates
Personal loans are a great way to fund a major life expense such as a car, wedding, or home renovation. You can also use a personal loan to consolidate existing loans or debt.
If approved for a personal loan, you'll need to repay the amount borrowed, plus interest over an agreed timeframe, usually between one and seven years. The interest is part of the cost of taking out the loan and is charged as a percentage of the total amount borrowed (i.e., the interest rate).
Comparing interest rates
It’s safe to say that most people looking for a personal loan are on the lookout for a low interest rate. You may have noticed that the advertised interest rate can vary, depending on the lender you choose and whether you’re applying for a secured or unsecured loan.
How does my credit score affect my rate?
Your credit score is a number used by lenders to assess your ability to repay a loan. Your score is based on the information in your credit report, including:
- How you've managed previous loan and credit card repayments.
- How many loan applications you've made in the past.
- The age of your credit file.