How to compare personal loans in Australia

Finding the right personal loan can save you thousands of dollars — but only if you know what to compare.

In Australia, lenders offer hundreds of options, all with different rates, fees, and repayment rules.

The trick isn’t just spotting the lowest number — it’s understanding what that number really means.

This guide shows you how to compare personal loans like a professional — so you can find the one that truly costs less, fits your lifestyle, and supports your goals.

Why You Must Compare (Hidden Costs Add Up Fast)

Two loans with the same advertised rate can have completely different costs. That’s because one might charge setup fees, account-keeping fees, or redraw penalties that the other doesn’t.

Comparing loans helps you:

• Avoid hidden fees that quietly raise your repayments.
• Choose flexible terms that match your budget.
• Understand how much you’ll really pay over time.

Without proper comparison, what looks like a cheap loan can quickly become an expensive mistake.

Interest Rate vs Comparison Rate — Know the Difference

Every lender advertises two key numbers:

• Interest Rate: The percentage charged on the amount you borrow — it looks attractive but doesn’t show the full cost.
• Comparison Rate: Includes the interest rate plus mandatory fees and charges — this is the real cost of borrowing.

💡 Example: A loan might advertise 6.99% p.a., but once you include setup and monthly fees, the comparison rate could be 7.45% p.a.

When comparing, always line up comparison rates, not just interest rates. That’s how you spot the true winner.

Fixed vs Variable: Which Type Suits You Better?

Australian lenders usually offer two types of personal loans:

• Fixed Rate Loans:
  Your interest stays the same for the entire term. You know exactly what you’ll pay — great for budgeting.
• Variable Rate Loans:
  The rate can move up or down with market conditions. They often include features like extra repayments or redraws, which offer flexibility.

If stability matters more to you, go fixed.
If flexibility and potential savings are your priority, variable may work better.

Secured vs Unsecured Personal Loans

Secured loans use an asset (like a car or savings account) as security. Because the bank’s risk is lower, they often offer better rates — sometimes 2–3% cheaper than unsecured loans.

Unsecured loans don’t need collateral, but rates are higher since the lender takes on more risk.

💡 Tip: If you can offer something as security, you’ll likely qualify for a lower rate and faster approval.

Fees & Charges to Watch Out For

Even small fees can add up. Always review:

• Establishment fees (AUD 150–250)
• Monthly or annual fees (AUD 10–15)
• Early repayment fees (if you pay off early)
• Redraw or transaction fees (for variable loans)
• Late payment fees (AUD 20–30 per instance)

Sometimes, a slightly higher comparison rate with fewer fees ends up cheaper over time — check the full cost before signing.

Tools & Platforms to Compare Loans

Australia offers excellent comparison tools to make research easy. Trusted platforms include:

• Canstar — detailed side-by-side comparisons and ratings.
• Finder — filters for rate type, purpose, and credit score.
• RateCity — displays real-time rates and approval speed.
• InfoChoice — lists fixed and variable loans with comparison rates.
• MoneySmart (ASIC) — the official government guide with calculators and consumer protections.

Use at least two different sites — and cross-check results directly on each lender’s website before applying.

Tips to Make Your Comparison Smarter

✅ Use the same loan amount and term when comparing — e.g. AUD 10,000 over 3 years — for an accurate cost match.
✅ Look at the total repayment amount, not just the monthly figure.
✅ Check repayment flexibility — can you pay extra or finish early without penalty?
✅ See if the lender offers digital management tools (apps, redraws, online calculators).
✅ Read real customer reviews to gauge service and transparency.

These fine details are where you’ll find real value — not just numbers on paper.

Common Mistakes When Comparing Personal Loans

• ❌ Focusing only on the interest rate.
• ❌ Ignoring hidden or ongoing fees.
• ❌ Not checking credit-score impact when pre-qualifying.
• ❌ Comparing loans with different terms or amounts.
• ❌ Applying for too many loans at once — this can lower your score.

A well-prepared borrower compares calmly, applies strategically, and never rushes a decision.

FAQ — Comparing Personal Loans in Australia

💰 What’s a good personal-loan rate right now?
Anything under 9% p.a. for unsecured or 6% p.a. for secured loans is competitive.

📉 Does checking my rate hurt my credit score?
No — using pre-qualification tools gives a soft inquiry, not a hard credit check.

📊 What is the “comparison rate” exactly?
It’s the total cost of the loan, including fees and interest, expressed annually.

⚡ Can I switch loans later if I find a better deal?
Yes — through refinancing, but check for early-exit fees first.

📅 How often should I review my loan?
At least once a year, or any time rates drop significantly in the market.