Customer-owned banks vs the big banks: which offer cheaper personal loans and bigger savings in 2021?

man facing camera sitting at a bar at a cafe with an empty iced coffee looking at his laptop comparing personal loan rates

According to 2019 Mozo research, in a side-by-side comparison, Big 4 banks could have cost borrowers up to 20% more in personal loan interest fees than customer-owned banks.

But now, in 2021, it seems the big players have caught up and could be real contenders when it comes to low rates.

For example, in 2019, if you took out a $10,000 unsecured personal loan over 5 years, you could save $733 in total interest just by switching from the Big 4’s average rate of 13.40% p.a. to the average rate for customer-owned banks of 10.99% p.a.

While in 2021, on the same loan with the same terms, you can save $227 in total interest by switching from the average customer-owned bank rate of 10.12% p.a. to the average Big 4 rate of 9.35% p.a..

Unlike two years ago, today, going off of average rates, you can see a saving in interest costs from switching from customer-owned to the Big 4.

It is also of note that the savings amount has decreased from $733 to $227, showing that although the personal loan market has grown in the number of options and providers, there is greater concentration around rates.

But that does not mean that the Big 4 definitively offer the best personal loan rates compared to customer-owned banks.

There are over 40 financial institutions in the Mozo database that qualify as customer-owned; therefore, there is a larger spectrum of rates with far more data points to average than there are the Big 4 - which only have four.

With that in mind, if we’re talking about bigger bang for your buck, you can still count on customer-owned banks.

If you place the lowest-rate unsecured personal loan from a customer-owned bank in Mozo’s database - Police Bank Variable Unsecured Personal Loan at 5.79% p.a. (5.92% p.a. comparison rate) - besides the Big 4’s lowest rate - NAB Unsecured Variable Personal Loan at 6.99% p.a. (7.91% p.a. comparison rate), you will see an interest cost saving of $337.

So as all types of lenders enter the market and offer more competitive rates, it’s a matter of shopping around and finding which suits you best - whether it’s from a big bank or a customer-owned bank or even an online lender.

Make sure you’re educated on the personal loan features that will suit your lifestyle. A great starting point is the Mozo personal loan hub for comparisons from over 70 lenders.

Check out these top low interest personal loans:

Low interest personal loans - rates updated daily

Search promoted personal loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Personal Loan

    Unsecured, Fixed

    interest rate
    comparison rate
    Monthly repayment
    4.99% p.a.to 19.99% p.a.
    4.99% p.a.to 19.99% p.a.based on $30,000
    over 5 years

    Excellent credit score needed to obtain this rate. Enjoy no-fuss personal loans of up to $30,000 with Alex Bank. No hidden early repayment penalties. Terms from 6 months to 5 years. Convenient and fast 100% online approval. Must be over 18 to be eligible. Winner of Mozo's Experts Choice Best New Loan Product award 2021^.

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    Details
  • Hot DealA special low rate starting from 5.45% (6.07% comparison rate)
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    Mozo Experts Choice 2021
    Low Rate Personal Loan (Fixed, Unsecured)

    Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    5.45% p.a.to 8.48% p.a.
    6.07% p.a.to 8.84% p.a.based on $30,000
    over 5 years

    OurMoneyMarket offer competitive low rates on loans up to $75,000, plus free extra repayments and fee-free redraw facility. Winner of Mozo's Experts Choice Unsecured Personal Loan 2021 award.

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  • Hot DealNo fees for borrowers with excellent credit
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    Mozo Experts Choice 2021
    No Fee Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.95% p.a.to 17.95% p.a.
    5.95% p.a.to 17.95% p.a.based on $30,000
    over 5 years

    Borrow up to $50,000 with no fees, now and forever. Minimum requirement to earn $22,100 p.a. and have good to excellent credit. Winner of Mozo’s Experts Choice Unsecured Personal Loan 2021 award.

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    Details
  • placeholder
    Personal Loan

    Unsecured, Fixed, Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    6.39% p.a.to 7.49% p.a.
    6.39% p.a.to 8.19% p.a.based on $30,000
    over 5 years

    With low rates for borrowers with excellent credit, a quick 1 minute rate estimate and simple online application, there’s a lot to love about this loan! You’ll not only benefit from no exit fees, there are also no early repayment fees. To qualify, simply earn above $25,000 and you’ll be on the way to start spending.

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    Details
  • placeholder
    Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.35% p.a.to 19.09% p.a.
    6.14% p.a.to 19.99% p.a.based on $30,000
    over 5 years

    Fast, easy and 100% online, this is a low cost loan with no ongoing fees or extra repayment penalties. It's perfect for savvy borrowers with great credit. If you’re over 18 and earn above $30,000, you'll likely qualify.

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    Details

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

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