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“Interest isn’t everything”: What else matters in a personal loan?

It's important to examine other personal loan features that could either help or hinder you.

Personal loans aren't entirely complicated financial products, but they do come with a range of features that can make them difficult to compare. For that reason, many people focus on the one feature that affects how much they will pay over their loan term: the interest rate.

And while the interest rate is an important detail, it should by no means be your sole point of comparison. Other differentiating features such as the loan term, upfront and ongoing fees, the type of interest rate that applies to your loan and the flexibility you have with your repayments can also affect your repayments and how much you pay for your loan overall.

This guide will take you through what you need to know to sort through these features and choose the right loan for you.

Loan term

Generally, personal loans come with terms of between one and seven years. The loan term you select will have a huge bearing on how high your repayments are, and may even affect your interest rate with some lenders.

If you choose shorter repayment terms your ongoing repayments will be higher but you will repay your loan more quickly and therefore repay less interest. A good rule of thumb is to choose the shortest repayment terms while still leaving your repayments affordable. Use a personal loan calculator to determine this.

Some lenders like peer-to-peer lenders such as SocietyOne use tailored interest rates. Choosing shorter repayment terms mark you as a low-risk borrower and can earn you a lower interest rate.

Establishment or application fees

These fees are essentially the same: a fee charged at the beginning of your loan term and usually added onto your principal loan amount. The purpose for these fees is to cover the cost of processing your loan.

Make sure to look at whether you will be charged an establishment or application fee when comparing your options. Checking the comparison rate as well as the interest rate shows total interest and fees to give you a clearer idea of the loan's true cost.

Monthly or annual fees

Ongoing fees are another important feature to check. Usually charged monthly or annually, these fees can really add to the overall loan cost. This is especially true if you have a longer loan term.

Determine what ongoing fees are charged, and check the comparison rate for its competitiveness to similar loan offerings.

Quick personal loan comparison tips

  • Compare loans by the comparison rate, which includes both fees and interest so you can better determine the true loan cost.
  • Choose the shortest loan term that still has repayments you can afford.
  • Make sure the loan offers flexible repayments – you don't know what can happen in the future, so you want a loan that will be able to adjust to unexpected life circumstances.

Loan flexibility

Personal loans can come with generous loan terms – up to seven years in most cases – and while this is usually a positive, you also need to consider how much your life may change in this time. Because of this, you want a loan that isn't going to hinder you as your circumstances change.

Some features to watch out for are repayment flexibility, such as being able to make additional repayments without penalty or excessive restrictions, being able to choose your own repayment frequency, being able to make lump sum payments and also being able to redraw additional repayments as necessary.

Exit fees or early repayment fees

These are more common with fixed rate personal loans but may also apply to some variable rate personal loans. While these fees may not seem like an immediate drawback if you have no plans to make additional repayments or repay your loan early, you don't know what your financial position will be in a year or two. You may get a larger than expected tax return that you decide to put towards your loan, you may decide to sell your vehicle and repay the loan to take out another one or you may get a pay rise and be able to contribute more to the loan.

The fees to be wary of are exit fees that are charged for repaying your loan before the scheduled end date, and early or additional repayment fees that are charged for making additional repayments on top of your regular repayments.

Fixed vs variable interest rate

The type of rate you want may also affect the cost of your loan. Variable rates are called so because they can vary during the loan term – although finder has found that this does not happen often at all. With variable rate loans you also tend to get more flexibility with your loan, including the ability to make additional repayments and redraw these repayments.

Fixed rate personal loans give you the guarantee that the interest rate will not change throughout the loan term. However, the loan may come with restrictions on additional repayments and penalties for repaying the loan early.

Compare a range of personal loans

Citi Personal Loan Plus

Citi Personal Loan Plus

From

8.99 % p.a.

variable rate

From

9.96 % p.a.

comparison rate

  • Loan amounts from $5,000
  • Offers a reusable credit facility
  • Repay over 5 years
Security Logo

100% confidential application

Citi Personal Loan Plus

A reusable credit facility of up to $75,000. Receive a tailored interest rate between 8.99% p.a. and 17.99% p.a. based on your risk profile.

  • Interest rate from: 8.99% p.a.
  • Comparison rate: 9.96% p.a.
  • Interest rate type: Variable
  • Application fee: $199
  • Minimum loan amount: $5,000
  • Maximum loan amount: $75,000
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Rates last updated August 16th, 2018
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Monthly Service Fee Application Fee Product Description Monthly Repayment
Citi Personal Loan Plus
From 8.99% (variable)
9.96%
$5,000
3 to 5 years
$10
$199
Borrow up to $75,000 to use for a range of purposes. You’ll receive a rate of between 8.99% p.a. and 17.99% p.a. depending on your risk profile. (Comparison Rate of 9.96% p.a. to 18.91% p.a.)
ING Personal Loan
8.99% (fixed)
9.13%
$5,000
2 to 5 years
$0
$100
Benefit from no ongoing fees, no early repayment fees and flexible loan terms on amounts up to $30,000.
SocietyOne Unsecured Personal Loan
From 7.5% (fixed)
9.51%
$5,000
2 to 5 years
$0
3% (of loan amount)
Based on your risk profile, you will receive a tailored rate between 7.5% and 20.49% with a SocietyOne personal loan.
Harmoney Unsecured Personal Loan
From 6.99% (fixed)
7.69%
$5,000
3 to 5 years
$0
$500 (Upfront fee)
Interest rates are tailored to each applicant individually, and start from as low as 6.99% p.a. to 26.95% p.a.. based on your credit history.
Latitude Low Rate Personal Loan (Unsecured)
10.99% (fixed)
12.21%
$20,000
2 to 7 years
$13
$250
A low rate unsecured personal loan you can repay over terms of 2- to 7 years. Only available to homeowners.
NAB Personal Loan Unsecured Variable Rate
Headline rate 12.69% (variable)
13.56%
$5,000
1 to 7 years
$10
$150
Based on your risk profile you will receive a tailored rate between 10.69% p.a. and 18.69% p.a. (comparison rates between 11.58% p.a. and 19.53% p.a.)
HSBC Personal Loan
From 9.5% (fixed)
10.06%
$5,000
1 to 5 years
$5
$150
A competitive fixed interest rate loan with the option to make extra repayments. Rates range from 9.5% p.a. to 15.99% p.a. based on your credit history.
RateSetter 3-Years Personal Loan
From 7.17% (fixed)
9.72%
$2,001
0.5 to 5 years
$0
$220
RateSetter offers loans with terms ranging from 6 months to 5 years and comparison rates from 6.39% p.a. - 11.08% p.a. based on your risk profile.

Interest and comparison rates calculated for a 3-year loan term.
NOW FINANCE Personal Loans
From 7.95% (fixed)
9.56%
$5,000
1.5 to 7 years
$13
$395 (Based on $10,000)
Get rewarded with a low interest rate for your good credit history. Rates from 7.95% p.a. to 16.95% p.a. depending on your credit score.
Latitude Personal Loan (Unsecured)
From 13.99% (fixed)
15.19%
$3,000
2 to 7 years
$13
$250 (Loans under $4000 - $140)
An unsecured loan with a tailored rate from 13.99% p.a. to 29.99% p.a. designed for multiple purposes including renovating, buying a car or travelling.
Pepper Money Unsecured Fixed Rate Personal Loan
From 9.99% (fixed)
9.99%
$5,000
1 to 7 years
$0
$0
Apply for up to $50,000 and receive conditional approval within minutes. Interest rates range from 9.99% p.a. to 21.74% p.a. The rate you are approved for depends on individual circumstances.
CUA Unsecured Fixed Rate Personal Loan
11.99% (fixed)
11.99%
$5,000
1 to 7 years
$0
$0
Apply for a loan up to $60,000 and keep repayments manageable with a competitive fixed rate.
MyState Unsecured Personal Loan
12.99% (variable)
16.42%
$3,000
1 to 7 years
$10
$200
Apply for up to $50,000 and make additional repayments at any time without penalty.
Westpac Unsecured Personal Loan
12.99% (fixed)
14.14%
$4,000
1 to 7 years
$12
$250
A competitive, fixed rate personal loan that allows you to make extra repayments.

Compare up to 4 providers

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Personal Loan Offers

Important Information*
HSBC Personal Loan

A competitive fixed interest rate loan with the option to make extra repayments. Rates range from 9.5% p.a. to 15.99% p.a. based on your credit history.

SocietyOne Unsecured Personal Loan

Based on your risk profile, you will receive a tailored rate between 7.5% and 20.49% with a SocietyOne personal loan.

Harmoney Unsecured Personal Loan

Interest rates are tailored to each applicant individually, and start from as low as 6.99% p.a. to 26.95% p.a.. based on your credit history.

Latitude Personal Loan (Unsecured)

An unsecured loan with a tailored rate from 13.99% p.a. to 29.99% p.a. designed for multiple purposes including renovating, buying a car or travelling.

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