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What’s the difference between a fixed and variable rate personal loan?

Trying to choose between a fixed rate personal loan and a variable rate personal loan? If you’d like to work out which one might suit your needs, it helps to know the various pros and cons of each.

Fixed rate personal loans

As the name implies, a fixed rate personal loan has an interest rate that stays the same for the whole loan term.

What are the pros?

  • Fixed repayments – your repayments stay the same every month, which can give you more certainty throughout your loan and make it easier to budget.
  • Automatic repayments – you can choose to set up automatic repayments for the life of the loan, so it’s one less thing to think about.


What are the cons?

  • Repayment costs – if you want to pay off your loan sooner, keep in mind you may pay break costs and early repayment fees.
  • Future rate reductions – another thing to consider is that if interest rates actually go down, you could miss out on a low rate in the future.

Variable rate personal loans

With a variable rate personal loan (such as the Westpac Flexi Loan ), the interest rate may go up and down during your loan term.

What are the pros?

  • Fewer repayment costs – you can make earlier repayments or pay off your loan sooner without paying break costs.
  • More flexibility – some variable personal loans act like a continuous line of credit. That means you can access any available funds if you need money for something else later on (there may be fees for this).

What are the cons?

  • Potential interest rate rises – your repayments fluctuate with the rate, so you don’t have as much certainty and may end up paying more interest than you planned for. (Of course, the rate may go down as well so you save money).

Which should you choose?

Everyone’s different when it comes to personal loans, so you might want to think about what will suit your financial situation and weigh up your priorities – do you want predictability or flexibility? Either way, there’s an option for you.

If you’d like to get started, read more about Westpac personal loans.

Things you should know

Personal Loan Contract Terms and Conditions (PDF 394KB) - for customers approved before 18 March 2024.
Personal Loan Contract Terms and Conditions (PDF 210KB) - ​for customers who apply, or are approved, on or after 18 March 2024.​

Credit criteria, fees and charges apply. Terms and conditions available on request.