What does another rate cut mean to those looking for a personal loan?
The Reserve Bank of Australia (RBA) has just announced another rate cut, lowering the cash rate by 25 basis points to 3.25%, the lowest it has been in three years.
The RBA attributes the rate cut to a worsening outlook for the global economy, signs of a weakening local labour market, and a high exchange rate.
So what does this mean for borrowers?
While some lenders will be quick to take up the rate cut and lower their interest rates, there will be other lenders who refuse to make a change. Lenders are also under no obligation to pass on the full rate cut to their customers either.
However, if you have a variable rate personal loan and your lender decides to cut its interest rates, then it could be extremely beneficial. Depending on the rate cut, the loan amount, and the loan length, you could save a fair amount of money.
For those looking to take out a new personal loan, the rate cut could also mean good news. Lenders offering both fixed rate and variable rate personal loans could decide to cut their interest rates to attract new customers. This could mean cheaper loans for borrowers.
The key to finding the right personal loan at the right price is research.
Take a look on comparison sites and lenders’ sites for their advertised rates for personal loans. Bear in mind, not all lenders will be quick to cut their rates – it could take a few days.
Think about whether a fixed rate or a variable rate personal loan is the better option for you. Think about whether there may be other rate cuts and whether you can benefit from them. If you think the rates are at their lowest, perhaps a fixed rate loan would be a good option, to lock in the lower rates before they rise again.
The main thing to remember when choosing a personal loan is to find out as much as you can. While searching for the perfect personal loan can take a while, you should see results at the end of it. Find out as much as you can about what each lender is offering, compare your options, and find the best loan for your situation.
If you are unsure about rate cuts and how they will affect your current loan, or even if you want to know more before you sign up for a loan, speak to your lender or a financial expert for more advice.