The best way to compare personal loan rates is to look past the headline rate. Check the comparison rate, which includes the interest rate plus most fees and charges, and the total amount you’ll repay over the full term.
Lenders set your rate based on your credit history, income and existing debts, the loan amount and term, and whether the loan is secured against an asset. Many advertise a “from” rate, so the rate you’re actually offered may be higher.
This guide explains how those rates are set and what to compare, without quoting lender rates that can change at any time. For an overview of today’s rate landscape, see our page on personal loan rates in Australia.
How are personal loan rates set?
Every lender prices differently, but the main factors are:
- Your credit history: a clean credit report usually means a lower rate.
- Income and existing debts: stable income and lower debts reduce risk.
- Security: a loan secured against a car or other asset is often cheaper.
- Loan amount and term: these affect both risk and the lender’s costs.
- Funding costs: lenders’ own costs move with broader interest rates. The RBA lifted the cash rate target to 4.60% on 30 September 2026 (RBA), which can flow through to variable personal loans and new fixed rates.
Many lenders now use risk-based pricing, meaning they quote a personalised rate after assessing you. Moneysmart’s personal loans guide explains how to compare these offers (checked 3 October 2026).
What is a comparison rate, and why does it matter?
The comparison rate combines the interest rate with most upfront and ongoing fees into a single percentage. It’s designed to make it easier to compare loans whose fee structures differ.
Two points to keep in mind:
- The comparison rate is calculated on a standard example loan amount and term, so it may not reflect your exact loan.
- It doesn’t include every possible cost, such as early repayment fees or late payment fees.
Use it as a starting point, then check the total repayable for your actual amount and term.
Which fees change the true cost of a personal loan?
Two loans can look close on rate but differ once you include:
- Establishment or application fees.
- Monthly or annual account-keeping fees.
- Early repayment or break fees, often on fixed-rate loans.
- Late payment fees.
- Optional add-ons such as loan protection insurance.
Fixed fees hit smaller loans harder, because they make up a bigger share of what you borrow.
What is the difference between secured and unsecured personal loans?
| Feature | Secured personal loan | Unsecured personal loan |
|---|---|---|
| Security | Asset such as a car is pledged to the lender | No asset pledged |
| Typical pricing | Often lower, because the lender has security | Often higher, reflecting more risk |
| Risk to you | The lender can repossess the asset if you default | Default damages your credit and can lead to debt recovery |
| What lenders check | Asset value, age and condition plus your finances | Your credit history, income and debts |
| Usually suits | Buying a car or other eligible asset | Debt consolidation, travel, renovations or other uses |
If you’re buying a car, compare a secured car loan against an unsecured personal loan. Our car and personal loan calculator lets you model both.
Should you choose a fixed or variable personal loan rate?
A fixed rate gives you the same repayment for the whole term, which makes budgeting easier, but early repayment can attract fees. A variable rate can move up or down and often allows extra repayments without penalty. If you expect to pay the loan off early, check the early repayment terms carefully.
How does loan term change the total repayable?
A longer term lowers each repayment but usually increases total interest. A shorter term costs less overall, but only if the repayment still fits alongside rent or a mortgage and other bills.
Run the same amount over two or three terms using Moneysmart’s personal loan calculator or our loan comparison calculator before deciding what looks affordable (checked 3 October 2026).
Does your credit score affect the rate you’re offered?
Yes, for most lenders. Your credit report shows your repayment history and credit enquiries, and lenders use it to price risk. You can get a free copy of your credit report from the credit reporting agencies (Moneysmart, checked 3 October 2026). Fix any errors before you apply.
Each formal application can add an enquiry to your file, so it’s better to compare first and apply once.
How do you compare personal loans step by step?
- Decide exactly how much you need and for what.
- Check your credit report.
- Shortlist loans by comparison rate, not headline rate.
- List every fee, including early repayment fees.
- Calculate the total repayable for your amount and term.
- Test the repayment against your real monthly budget.
- Read the key facts sheet and loan terms before signing.
- Apply with one lender once you’ve chosen.
When is a personal loan the wrong tool?
If you’re juggling several debts, a new personal loan can add to the problem rather than solve it. Our debt consolidation guide explains when combining debts can help. If you need money quickly, read the quick personal loan guide so speed doesn’t hide the true cost.
Final word
The cheapest-looking personal loan isn’t always the cheapest. Compare comparison rates, fees and total repayable, and make sure the repayment fits your budget. Lending criteria, fees and charges apply, and all loans are subject to lender approval.