Before you sign up to a personal loan, it pays to study the detail. Many personal loans can come with fees, some common and some not-so-common, that could add hundreds, even thousands, to your annual costs.
The latest data, released by the Reserve Bank of Australia (RBA) in 2025, noted bank fees from personal loans grew strongly in the 2023-24 financial year - up 34% on the previous year - as personal credit grew for the first time since 2015. But the RBA data does not take into account lending data from non-bank lenders.
In recent years, many non-bank lenders have scaled back upfront personal loan fees, mainly due to healthy competition in the marketplace. However, at the same time, there has been a general rise in ongoing service fees among some lenders.
Let's take a look at some of the personal loan fees you may encounter and a rough idea of what you may be up for:
Application fees
Loan establishment fee
Average: ~$270
Minimum: $0
Maximum: $600 (standard personal loans)
This fee can come with many names: application fee, upfront fee, or establishment fee. It aims to cover the lender's costs when you submit your loan application, such as staff time in processing and assessing your documentation. These fees were far more common before loan applications moved online but still exist.
Upfront fees can range between $0 and $600, with some lenders charging a small percentage (around 1-5%) of the total loan amount. The big banks routinely levy between $150-$250 upfront although some lenders charge much more - up to $1,800 for one overdraft personal loan. We will concentrate on more standard personal loans in this article though. It's worth checking 'What are the different types of personal loans?' if you're after more details.
Documentation fees
Average: ~$5
Minimum: $0
Maximum: $125
When applying for a personal loan through a bank, you may be charged a separate documentation fee. These tend to be levied by smaller- to medium-sized banks and are designed to cover the cost of preparing loan documents to accompany your application.
They tend to be more commonly charged on secured loans or applications dealing with more complex financial circumstances. Many lenders will just lump a documentation fee in with a broader application fee. Retail bank Bendigo Bank charges a $100 document preparation fee for secured personal loans.
Encumbrance/REV check fees
Average: ~$5
Minimum: $0
Maximum: $100
These generally only apply when you're buying a used car via a personal loan when you need to check whether the vehicle has finance still owing on it - or is 'encumbered' as lending terminology goes. Encumbrance occurs when the previous owner of the car hasn't fully paid off their car loan before selling it to you. If it was a secured loan, the lender still has the right to repossess the car from you if the previous owner defaults on the loan - not a good situation to be in.
For as little as $2, you can find out if a car is encumbered or not through ppsr.gov.au. There are other REV (Register of Encumbered Vehicles) sites that will charge a bit more and some that are free through commercial websites, such as insurer Budget Direct's car history check. As such, there should be no reason to pay the average $4 - or the maximum of $100 - to have a lender check for you when it's cheap and easy to do yourself.
The bigger banks and major lenders rarely charge for encumbrance checks with some of the smaller credit unions occupying the most expensive spots here.
Ongoing fees
Typically, the two main types of ongoing fees are annual or monthly fees.
Annual fees
Average: ~$1
Minimum: $0
Maximum: ~$110
Annual fees have become increasingly rare on the personal lending market with many lenders opting to charge ongoing monthly fees instead.
Ongoing monthly fees
Average: ~$2
Minimum: $0
Maximum: ~$15
Around a quarter of lenders charge monthly fees and of those who do, the dollar amount is generally quite low. However, some of the big banks are charging up to $15 a month for the life of the loan.
It's not that difficult to avoid monthly fees and it's worth shopping around to find a personal loan that doesn't levy them.
Other ongoing fees
Average: ~$5
Minimum: $0
Maximum: $400
Other uncommon, but not extinct, ongoing fees include semi-annual or quarterly fees. These mainly exist on major bank overdraft personal loan products, although are not levied by all major banks.
That said, National Australia Bank charges a sliding scale of fees based on the overdraft amount linked to its Personal Overdraft Line product. It is debited to the account on the first business days of March and September each year.
Penalties
Early repayment fees
Average: ~$100
Minimum: $0
Maximum: $300
Making earlier or larger repayments or paying off your loan earlier can potentially save you hundreds, if not thousands, of dollars in interest charges. But some lenders will punish you for doing it.
This is generally because they have already factored a regular repayment schedule into their balance sheets and you paying off your loan early can eat into their planned profit margins. As such, some may charge early repayment fees to recoup some of their lost potential earnings.
Early repayment fees are associated with fixed-rate personal loans. But not all lenders will impose them, and many will determine their fee on a case-by-case basis according to the size of the loan and how early it is being paid off. Those that do charge early repayment fees can charge between about $20 and $300, with an average of about $100.
Fees at the higher end of the scale tend to be fairly evenly split between the big banks, customer-owned banks, personal lenders, and the retail banks. Some lenders may also charge small fees for making early repayments, while some may place caps on how many early repayments you can make on a fixed-rate loan.
Missed repayment fees
Average: ~$25
Minimum: $0
Maximum: $50
An easily avoidable, but often hefty, fee is the late payment fee, charged when you miss a repayment's due date. Of the lenders that charge the fee, it is generally a flat rate of around $20-$35, but some in the market can charge as much as $50.
Many personal lenders don't levy missed payment fees and others may choose to waive any fees if you make your repayment within a few days. But that doesn't mean you shouldn't do everything in your power to meet every repayment.
Repeatedly missing repayments on any loan can have a negative impact on your credit score. Setting up automatic repayments and making sure there's always a buffer in your bank account can avoid this issue.
Redraw fees
A redraw facility on a personal loan allows you to pay extra funds above your minimum repayments and lets you draw from these when necessary. Putting money in a redraw facility can effectively save on interest charges over the course of your loan.
See also: How redraw facilities work
Many banks and lenders now offer fee-free redraws as more customers seek flexibility in their loans, but those that charge fees may levy between $20-$30 to redraw extra funds. Sometimes borrowers may only be charged a fee if they withdraw an amount less than the lender's minimum requirement.
Redraw fees can vary greatly from lender to lender so if you can see yourself using this feature, make sure you read the product disclosure statements (PDS) of various loans to find out what the charges are.
Break/early exit fees
These fees were banned on variable-rate personal loans in 2011, but they can still be charged on fixed loans if you decide to break your contract early. This might happen if you sell a car you purchased through a personal loan, for example, or if you're choosing to pay out the loan in its entirety earlier than expected. These costs can differ on a case-by-case basis but are generally based on the lender's calculation of how much it has lost due to you breaking your loan contract.
Our story on break fees on fixed-rate home loans will give you some idea of what factors lenders take into account in their calculations.
Break costs largely reflect how much you've already paid off, how much of the loan term you still have to go, and what market interest rates have done during the fixed rate period. Sometimes these charges can be hundreds to thousands of dollars.
Be sure to speak to your lender if you are looking to break a fixed-term loan contract to determine how much you could be up for.
Don't forget the interest rate (and comparison rate) on your loan
As you can see, fees are important when choosing a personal loan. Certainly, not doing your homework can easily add hundreds to your overall repayments.
But, of course, the interest rate remains an all-important factor. Personal loan interest rates can vary according to many factors. The table below contains some of the lowest-free personal loans currently on the market:
Lender Car Loan Interest Rate Comparison Rate* Monthly Repayment Interest Type Secured Type Early Exit Fee Ongoing Fee Upfront Fee Total Repayment Early Repayment Instant Approval Online Application Tags Features Link Compare Promoted Product Disclosure
Disclosure
Depending on your circumstances, personal loan interest rates can more than double or triple according to a lender's assessment of your credentials and the risk it believes you pose as a borrower.
The table below will give you some idea of how much the interest rate can affect the cost of a personal loan over a five-year period.
Total loan repayments across various interest rates
$20,000 loan | $30,000 loan | $50,000 loan | |
|---|---|---|---|
6% p.a. interest rate | $23,199 | $34,799 | $57,998 |
10% p.a. interest rate | $25,496 | $38,245 | $63,741 |
15% p.a. interest rate | $28,548 | $42,822 | $71,370 |
The comparison rate, which lenders are legally required to display alongside the advertised rate, gives a better indication of the true cost of a loan because it factors in fees and charges as well. For example, a personal loan with a 7% p.a. interest rate might have a comparison rate of more than 9% p.a. due to higher application and ongoing fees associated with it.
But the comparison rate isn't perfect. It doesn't include 'non-standard' fees like redraw fees or early repayment fees, for example, and for personal loans, is uniformly based on a $30,000 loan with a five-year term. Still, it's a good first indicator of how costly a loan may be even if its advertised interest rate seems relatively low.
Other personal loan factors to consider
Now that we've considered fees and interest rates, there are a few other factors worth considering before settling on a loan product.
First, consider why you feel you need a personal loan and how long you are looking at taking it out for. There are different loans on the market that can be used for different purposes, including specialist car loans or low-rate green personal loans to eligible applicants.
Also consider whether a secured or unsecured loan is better for your circumstances and whether you'd prefer a fixed or variable repayment schedule. You may even decide a different type of credit product is better for you, such as a line of credit loan or a simple credit card, which might better suit your purposes.
See also: Personal loans vs credit cards
Secondly, consider how much you actually need to borrow. Different loans will have different limits which will also be determined by your credit score. Try to work out what your repayments will be ahead of time to see if you can comfortably afford potential loan repayments and assess how they will impact your budget.
Finally, consider whether you would like a loan that comes with extra features. Although personal loans tend to be quite simple, a good number of them will allow you to make additional repayments without penalty while also letting you withdraw from your account through a redraw facility - ideally free of charge - should you need access to the extra funds you've contributed.
Savings.com.au's two cents
Personal loans can be useful for borrowing money for life expenses that arise but you don't immediately have the money for. To save as much as possible on interest costs, it's important to seek out a loan with both a low interest rate and low fees.
While the majority of loans don't charge most of the fees we've mentioned in this article, there's no excuse for choosing one that does - unless your choices are very limited. Although the more common personal loan fees will often be displayed on a lender's website, make sure you do a deeper dive into a loan's PDS to have a more detailed look at what your lender may end up charging you, and why.