Personal loans: how to compare rates, fees and terms
A personal loan lets you borrow a lump sum, from a few thousand dollars to tens of thousands, and repay it with interest over one to seven years. The right one is the loan with the lowest total cost for your amount and term that still lets you repay early if you want to. For reference, new personal fixed-term loans averaged 9.40% in July 2026 (RBA), and a $20,000 loan over 5 years at that rate costs about $419 a month.
This guide explains how lenders set your rate, fixed versus variable and secured versus unsecured loans, the fees to look for, how applying affects your credit report, and when a personal loan is the wrong tool. Our personal loan calculator, linked at the end of this page, compares two offers side by side.
By Better Rate Mate Editorial Team · Last reviewed
What people pay on personal loans
Advertised rates are a starting point: most lenders use risk-based pricing, so the rate you're offered depends on your credit score, income, expenses and savings, and can be well above the headline figure. The RBA's monthly averages show what borrowers actually paid on new loans.
| Type of personal credit | Average rate |
|---|---|
| New fixed-term loans, all | 9.40% |
| New fixed-term loans, fixed rate | 10.48% |
| New fixed-term loans, variable rate | 8.22% |
| New fixed-term loans secured by residential property | 6.26% |
| Credit card balances accruing interest (outstanding) | 18.67% |
| Standard credit card rate (August 2026) | 20.99% |
Fixed or variable rate
A fixed rate keeps your repayments the same for the whole loan, which makes budgeting simple. Moneysmart notes fixed loans may charge a fee if you repay early. A variable rate moves with the lender's rate, so repayments can rise; check you could still afford them if the rate went up by 2 or 3 percentage points. Variable loans often let you make extra repayments or pay the loan out early without a fee.
Secured or unsecured
A secured personal loan uses an asset, most often a car, as security, so the lender can take and sell it if you don't repay. That lowers the rate. An unsecured loan has no asset behind it and usually costs more; if you don't repay, the lender can take legal action to recover the debt. Some lenders offer a lower rate, or will only lend, with a guarantor. Our guide to secured vs unsecured loans sets out the trade-offs.
Fees to look for
The interest rate is only part of the price. Moneysmart's list of fees to check:
- Application or establishment fees, usually added to the loan so you pay interest on them
- Ongoing administration or monthly fees
- Missed payment or default fees, and default interest
- Early repayment fees, mainly on fixed-rate loans
- Balloon payments, where a lump sum is due at the end
How much and for how long
A longer term lowers each repayment but increases the total interest. On $20,000 at 9.40%, stretching the loan from 3 to 7 years cuts the monthly repayment from $640 to $326 but adds $4,342 in interest. Borrow what you need, over the shortest term you can comfortably afford.
| Term | Monthly repayment | Total interest |
|---|---|---|
| 1 year | $1,753 | $1,033 |
| 2 years | $917 | $2,017 |
| 3 years | $640 | $3,030 |
| 5 years | $419 | $5,144 |
| 7 years | $326 | $7,372 |
Applying: your credit report and what lenders check
Under responsible lending law, a lender has to make reasonable inquiries about your finances and what you need the loan for, verify them, and not offer a loan that's unsuitable for you. Expect to provide identification, recent payslips or tax returns if you're self-employed, bank statements and details of your debts and regular expenses.
Each formal application is recorded on your credit report as an enquiry and stays there for five years. Moneysmart warns that applying for lots of loans can hurt your credit score. Some lenders give a personalised quote before a full application; ask whether a quote will be recorded on your file before you proceed.
Personal loan, credit card or buy now pay later?
Each suits a different job. For a one-off cost you'll repay over a few years, a personal loan is usually cheaper than a credit card; for small purchases you can clear within weeks, card interest-free days or buy now pay later can cost nothing if you pay on time.
| Personal loan | Credit card | Buy now pay later | |
|---|---|---|---|
| Best for | A set amount repaid over 1–7 years | Ongoing spending cleared each month | Small purchases repaid over weeks |
| Cost | Interest (new loans averaged 9.40% in July 2026) plus fees | Interest on unpaid balances (standard cards averaged 20.99% in August 2026) | Usually no interest; late and account fees apply |
| Repayments | Fixed schedule; the debt ends | Minimum repayment only; can revolve for years | Fixed instalments |
| Regulated as credit | Yes | Yes | Yes, since 10 June 2025 |
When a personal loan is the wrong answer
If you need up to $2,000 for essentials such as a fridge, car repairs or medical costs and you're on a lower income, a No Interest Loan has no interest and no fees; see our guide to loans with bad credit for how the scheme works. If you're borrowing to pay other debts, read debt consolidation first. And if you're struggling with repayments you already have, call the National Debt Helpline on 1800 007 007 before taking on more credit.
What to watch for
- The rate you're offered can be higher than the advertised rate. Compare written quotes, not ads.
- Fixed-rate loans may charge an early repayment fee. Check before you plan to pay the loan off early.
- A comparison rate is exact only for the lender's example amount and term; on a small loan, flat fees add a lot.
- Every formal application stays on your credit report for five years.
- Loan protection insurance offered with the loan is optional. Check what cover you already have.
Common questions
How much would a $20,000 loan cost per month?
About $419 a month over 5 years at 9.40%, the RBA's average rate on new personal fixed-term loans in July 2026. Over 3 years it's about $640 a month. Fees add to this.
How much would a $30,000 personal loan cost a month?
About $629 a month over 5 years at 9.40%, with total interest of about $7,715. At 10.48% (the average fixed rate) it's about $645.
Which bank gives a personal loan easily?
No lender can approve a loan without checking you can afford it: responsible lending rules require every licensed lender to verify your finances and not offer an unsuitable loan. Your chances depend on your income, expenses, existing debts and credit history more than on the lender. Be wary of anyone promising guaranteed approval.
What is a good rate on a personal loan right now?
The RBA's figures give a benchmark: new personal fixed-term loans averaged 9.40% in July 2026, with fixed rates averaging 10.48% and variable 8.22%. A rate below the average for your loan type, with low fees, is competitive.
Can I get a 0% interest personal loan?
Not from a mainstream lender, but No Interest Loans of up to $2,000 for essentials (up to $3,000 for a rental bond or disaster recovery) have no interest or fees, if you meet the income or concession card criteria.
Does applying for a personal loan affect my credit score?
A formal application is recorded as a credit enquiry and stays on your report for five years. Several applications in a short time can lower your score, so compare quotes first and apply once.
About rates on this page
We don't quote lenders' rates: they change often, depend on your credit history and we don't have a live feed. The averages here are the RBA's published figures for the month shown. Ask any lender for its interest rate, comparison rate and every fee in writing before you apply. This is general information, not financial advice.
