The decision you're actually making
When you compare personal loans, the advertised interest rate is the number that gets your attention. But two loans with similar rates can end up costing very different amounts once fees are added, and the fees are the part most applicants only discover after they've signed.
ASIC's MoneySmart consumer guidance puts it plainly: a lower rate or fewer fees can save you thousands over the life of the loan. That's the whole reason to read the fee section of a loan contract before you apply rather than after approval.
This guide is a checklist of the fee categories to look for, where to find them, and what to ask the lender. It's general information, not a recommendation of any product.
Start with the total cost, not the headline rate
The rate tells you the cost of the money. Fees tell you the cost of the loan's administration, and they're charged whether or not you use a feature.
MoneySmart's guidance is to use a personal loan calculator to estimate your repayments and compare how different loans affect the total cost. Do this with fees included, over the term you actually expect to hold the loan — not the shortest term available.
There's a second check worth running at the same time. MoneySmart advises checking whether you could still afford the loan if the rate rises by 2% or 3%. Run that scenario with the fees sitting on top. A loan that's comfortable today can be tight under either change.
Upfront fees to check
MoneySmart's guidance is to look for application, ongoing and missed payment fees. The upfront group typically sits under names like "application fee", "establishment fee" or "origination fee".
What you're checking:
| What to confirm | Where to find it |
|---|---|
| Is there a fee just to apply or to set the loan up? | Loan contract / fee schedule |
| Is it charged once, or per applicant on a joint application? | Terms and conditions |
| Is it paid upfront, or added to the loan balance? | Disclosure documents |
| Is it refundable if you withdraw or are declined? | Terms and conditions |
If the fee is added to the loan balance, you pay interest on it for the life of the loan. Ask explicitly which it is — that single detail changes what the fee really costs you.
Ongoing fees
Ongoing fees are charged for as long as the loan is open, so the term length multiplies them. A monthly fee on a five-year loan is charged sixty times.
Look for:
- Monthly or annual account-keeping / service fees — charged regardless of whether you use anything.
- Fees for specific payment methods — some repayment channels cost more than others, or than direct debit.
- Fees tied to features — redraw, statements, or account changes.
- Fees for a linked account or card attached to the loan.
MoneySmart's guidance is to check the terms and conditions for any extra costs, which is where these are usually buried. If a fee schedule isn't easy to find before you apply, treat that as information in itself.
Missed, late and default fees
This is the category most likely to cost you real money at the worst possible time, and it's the one people least often read.
- Missed or late payment fee — charged when a repayment isn't made on time or in full.
- Dishonour fee — charged when a direct debit fails.
- Default-related costs — including collection or enforcement costs if the loan falls into arrears.
MoneySmart specifically lists missed payment fees as something to look for. Two practical points:
- Check whether the fee applies per missed payment or per period. The difference compounds quickly if you miss several in a row.
- Check whether the fee is charged on top of continuing interest. A missed payment usually does not pause interest.
If your income is irregular, ask how the lender treats a payment made a day or two late, and whether changing your payment date is free.
Fees that apply when you pay early or pay extra
It's easy to assume that paying a loan out early is always cheaper. It can be — but not automatically. MoneySmart's guidance is that before you make extra repayments or pay the loan out early, you should check if there are any fees or limits.
Questions to put to the lender:
- Is there an early repayment or early payout fee?
- Is there a cap on extra repayments per year, or a limit before a fee applies?
- Is there a fee to close the loan or to get a payout figure?
- Does paying extra reduce the total interest, or does it just sit in an offset/redraw arrangement with its own conditions?
Fixed-rate and fixed-term loans are the ones most likely to carry conditions here. Get the answer in writing before you commit to a loan, because the exit cost is part of the cost of the loan even if you never leave early.
How to compare two loans properly
Put every loan on the same basis before you decide:
- Same amount borrowed. Include any upfront fee that gets added to the balance.
- Same term. A lower monthly repayment over a longer term is usually more total cost, not less.
- Fees included. Add application, ongoing and any likely late fees to the total, not just the rate.
- Stress-tested. Run the repayment again at a rate 2% to 3% higher, as MoneySmart suggests, and see whether it still fits.
- Exit cost noted. Write down what it would cost to pay the loan out early, so you know the cost of changing your mind.
MoneySmart also notes that shopping around can save thousands of dollars in fees and interest charges. Comparing on total cost — rather than on the advertised rate — is what makes that comparison meaningful.
Questions to ask before you apply
Use this list on a call or in writing. You're looking for specific answers, not general reassurance.
- What is the full fee list for this loan, and where is it published?
- Which of these fees are one-off and which repeat?
- Are any fees added to the loan balance and charged interest?
- What happens if I pay late, or if a direct debit fails?
- Can I make extra repayments, and are there limits or fees?
- What does it cost to pay the loan out early?
- Are any fees conditional — for example, waived for direct debit?
- What happens to fees if the rate changes during the term?
If a lender can't answer one of these clearly, that's a reasonable signal about how easy the loan will be to manage later.
If fees are the deciding factor
MoneySmart describes No Interest Loans (NILs) as a way to borrow money with no interest and no fees or charges. Eligibility and availability vary, and this is general information only — if you think a NIL might be relevant to you, check the current criteria directly with MoneySmart and with the organisations that offer them.
It's also worth asking whether the purchase needs to be financed at all at this moment, or whether waiting changes the size of the loan you need.
Your next step
Pick the two or three loans you're seriously considering and, for each one, write down four numbers: the application fee, the ongoing fee per month, the late payment fee, and the early payout cost. Add them to a repayment estimate over your actual term. That comparison is the decision.
If you want to see options side by side before you request a fee schedule, you can start with the matching tool at /match/. Compare on total cost, and verify every fee in the contract before you sign.
General information only
This article is general information about Australian personal loans. It isn't legal, tax, credit or financial advice, and it doesn't account for your circumstances, income or goals. Fees, terms and eligibility change between lenders and over time — confirm the current details in the lender's contract and fee schedule, and check the latest guidance at moneysmart.gov.au before you apply. Nothing here guarantees approval, a rate, or a saving.