What does a personal loan really cost you?

A secured loan is backed by an asset (like a car) as collateral, which usually earns a lower rate. An unsecured personal loan — used for debt consolidation, medical expenses, travel, or general purposes — has no collateral, so lenders charge a higher rate to offset their risk, typically 8–18% p.a. depending on your credit history.

Rates vary widely by credit score and lender. Borrowers with excellent credit can secure rates from around 6–9% p.a., while those with a average or below-average credit history may see 15–20%+ p.a. Always compare the comparison rate, not just the advertised rate, since it includes most fees.

It can be, if the new rate is meaningfully lower than your existing debts (e.g. credit cards at 19–22% p.a.). Consolidating multiple debts into one fixed-rate personal loan simplifies repayments and can cut total interest — but only if you don't run the paid-off credit cards back up.

Common fees include a one-off establishment fee ($0–$600), an ongoing monthly account-keeping fee ($0–$15), and sometimes an early exit or discharge fee. These fees are folded into the comparison rate, which is why two loans with the same advertised rate can have very different comparison rates.

Most Australian personal loans are fixed-rate, which locks in your repayment for the full term — useful for budgeting. Variable-rate personal loans are less common but can fall if the cash rate drops, at the cost of repayment certainty.