Why Comparing Personal Loans Matters
With 18 personal loan products from 9 lenders currently on the market, finding the right loan can feel overwhelming. Rates, fees, loan terms, and borrowing limits vary widely - and the cheapest-looking deal isn't always the best value.
This step-by-step guide gives you a structured checklist to cut through the noise and compare personal loans with confidence. Whether you're consolidating debt, buying a car, or covering an unexpected expense, following these steps will help you find a loan that genuinely suits your situation.
Step 1: Start with the Comparison Rate
The advertised interest rate is only part of the picture. Lenders can set a low headline rate but load the loan with fees - making it more expensive than it first appears.
That's where the comparison rate comes in. It folds the interest rate and most standard fees into a single percentage, giving you a truer cost of borrowing. The best comparison rate currently available is 7.03% - 20.78% p.a..
Key points:
- The comparison rate is calculated on a benchmark loan of $30,000 over 5 years - your actual costs may differ.
- It includes most (but not all) fees. Government charges and some conditional fees may be excluded.
- Always compare like-for-like: secured loan comparison rates should be compared with other secured loans, and unsecured with unsecured.
For a deeper explanation, see our guide on how to read a comparison rate.
Step 2: Understand Rate Ranges
Personal loan rates are almost never one fixed number. The rate you see advertised - such as 6.19% - 19.99% p.a. - is typically the lowest rate available, offered only to borrowers with the strongest applications.
Your actual rate depends on several factors:
- Credit score - a higher score generally means a lower rate. Learn more in our credit score guide.
- Income and employment - stable, higher income can work in your favour.
- Loan amount and term - some lenders offer better rates for larger or shorter loans.
- Security - offering an asset as security often unlocks a lower rate.
Tip: Don't be discouraged if you don't qualify for the lowest advertised rate. Focus on the rate you're actually offered and compare that across lenders.
Step 3: Check All the Fees
Even with a low interest rate, fees can significantly increase your total loan cost. Before signing anything, check for these common charges:
| Fee Type | What It Covers | What to Look For |
|---|---|---|
| Establishment fee | One-off cost to set up the loan | Some lenders waive this entirely |
| Monthly or annual fee | Ongoing account-keeping charge | Can add hundreds over the loan term |
| Early repayment fee | Penalty for paying off the loan ahead of schedule | Critical if you plan to make extra repayments |
| Late payment fee | Charged when you miss a due date | Check the amount and any grace period |
| Redraw fee | Cost to withdraw extra repayments you've made | Not all loans offer redraw facilities |
| Discharge fee | Fee when the loan is fully paid out | Usually a small flat fee |
Some lenders advertise "no fee" loans but compensate with a slightly higher interest rate. Always compare the total cost over the life of the loan, not just the fees or rate in isolation.
For a full breakdown, read our guide on personal loan fees explained.
Step 4: Secured vs Unsecured
Personal loans come in two main types, and the choice between them can significantly affect your rate and your risk.
- Secured loans require you to pledge an asset (typically a car or term deposit) as collateral. Because the lender has lower risk, secured loans generally offer lower rates. The best secured rate currently available is 6.49% - 12.99% p.a..
- Unsecured loans don't require collateral, which means less risk for you but higher rates for the lender to compensate. The best unsecured rate is 6.19% - 19.99% p.a..
When to choose secured: You have an eligible asset, you want the lowest possible rate, and you're confident you can make all repayments on time.
When to choose unsecured: You don't have an asset to offer, you want a simpler application, or you're uncomfortable with the risk of losing an asset.
For a detailed comparison, see our guide on secured vs unsecured personal loans.
Step 5: Loan Term and Flexibility
The length of your loan term has a direct impact on your repayments and total interest cost.
- Shorter terms (e.g. 1–3 years) mean higher monthly repayments but significantly less interest paid over the life of the loan.
- Longer terms (e.g. 5–7 years) reduce your monthly repayments but increase the total interest you'll pay.
Flexibility features to check
Beyond the term itself, look for these features that give you more control:
- Extra repayments - Can you make additional payments without penalty? This can save you thousands in interest.
- Flexible repayment frequency - Weekly, fortnightly, or monthly options let you align repayments with your pay cycle.
- Repayment holiday - Some lenders allow you to pause repayments temporarily in cases of financial hardship.
- Redraw facility - If you've made extra repayments, can you access that money again if needed?
Tip: If you're likely to pay off the loan early, prioritise lenders with no early repayment fees and the option for extra repayments.
Step 6: Check Borrowing Limits
Personal loan amounts vary widely across lenders. Currently, borrowing limits range from $2,000 to $130,000.
Before you apply, confirm that the lender can accommodate the amount you need:
- Borrowing too little? Some lenders have minimum loan amounts of $5,000 or more. If you need less, a credit card or building an emergency fund may be more appropriate.
- Borrowing too much? Only borrow what you actually need. A larger loan means more interest paid, even at the same rate.
- Loan purpose restrictions - some lenders restrict what you can use the funds for. Check that your intended purpose is covered.
Personal Loan Comparison Checklist
Use this checklist when evaluating any personal loan offer. Tick off each item to make sure you've covered all the essentials.
| Criteria | What to Check | ✓ |
|---|---|---|
| Comparison rate | Is it competitive? Compare with similar loan types. | ☐ |
| Fees | Establishment, ongoing, early repayment, late payment, discharge. | ☐ |
| Secured or unsecured | Which type suits your situation and risk tolerance? | ☐ |
| Loan term | Does the term match your repayment capacity? | ☐ |
| Flexibility | Extra repayments, redraw, repayment frequency options. | ☐ |
| Borrowing range | Does the lender cover the amount you need? | ☐ |
| Lender reputation | Check reviews, AFCA complaints, and ASIC licensing. | ☐ |
| Application process | How long does approval take? Is it fully online? | ☐ |
Top Personal Loans Right Now
| Lender | Product | Rate | Comparison | Borrow | Type |
|---|---|---|---|---|---|
| Ing Personal Loan | 6.19% - 19.99% | 7.03% - 20.78% | $5k - $60k | UnsecuredFixed | |
| Secured Fixed Personal Loan | 6.49% - 12.99% | 7.90% - 14.34% | $10k - $130k | SecuredFixed | |
| Secured Fixed Personal Loan | 6.49% - 12.99% | 7.90% - 14.34% | $10k - $130k | SecuredFixed | |
| Secured Fixed Personal Loan | 6.49% - 12.99% | 7.90% - 14.34% | $10k - $130k | SecuredFixed | |
| Unsecured Variable Personal Loan | 7.00% - 21.99% | 8.41% - 23.28% | $2k - $50k | UnsecuredVariable | |
| Unsecured Fixed Personal Loan | 7.00% - 21.99% | 8.41% - 23.28% | $2k - $50k | UnsecuredFixed |
For the full list of competitive offers, see our best personal loan rates in Australia.
Common Mistakes When Comparing Personal Loans
Avoid these pitfalls to make sure you're getting a genuinely good deal:
1. Only looking at the advertised rate
The advertised rate is a starting point, not the full story. Always use the comparison rate to get a truer picture of the loan's cost.
2. Ignoring fees
A "low rate" loan with a $400 establishment fee and $10 monthly fee can end up costing more than a slightly higher rate loan with no fees. Calculate the total cost over the full loan term.
3. Applying to multiple lenders at once
Each loan application triggers a hard credit inquiry, which temporarily lowers your credit score. Too many inquiries in a short period can signal financial stress to lenders. Instead, research thoroughly first, then apply to one or two lenders you're most confident about.
4. Borrowing more than you need
It's tempting to round up or take a larger amount "just in case," but every extra dollar accrues interest. Borrow only what you need and create a clear repayment plan.
5. Ignoring early repayment terms
If there's any chance you'll pay the loan off ahead of schedule, check for early repayment fees. These can negate the savings you'd make by paying down the loan faster.
How to Apply for a Personal Loan
Once you've compared your options and narrowed down your shortlist, the application process is straightforward. For a step-by-step walkthrough, see our guide on how to get a personal loan.
You can also browse and filter personal loan products directly on RatePilot to find offers that match your borrowing needs.
Frequently Asked Questions
Ready to take the next step?
Put this guide into action - compare your options now.