7 Personal Loan Myths That Can Cost You Thousands

Myth: the lowest advertised rate is automatically the cheapest loan. Reality: OurMoneyMarket lists a starting rate of 5.95% p.a., but an establishment fee of 0–6% may apply, and its representative rate is 9.99% p.a. That gap matters on a large loan. Use the comparison rate, request the personalised offer, and calculate the total repayment rather than comparing the headline rate alone. Best for borrowers with good credit who can handle a maximum five-year term and want no ongoing monthly fees.

Myth: a big bank always charges the highest rates. Reality: NAB's listed range runs from 7.50% to 12.99% p.a., a much tighter ceiling than lenders that can reach 20% or more. The advertised $250 application-fee waiver runs until 30 July 2026, but the $15 monthly loan account fee still affects the total cost. Best for borrowers with established income who value a rate cap and branch access more than the lowest possible starting rate.

Myth: a familiar bank name means the loan has no expensive extras. Reality: Westpac lists a $250 establishment fee and a $15 monthly account fee, while its unsecured rate can reach 21.99% p.a. The online response in 60 seconds is useful, but speed does not reduce the repayment total. Best for existing Westpac customers or electric-car buyers who can use the discounted 6.49% p.a. electric car loan rather than the broader unsecured product.

Myth: checking a rate always damages your credit score. Reality: Harmoney states that its rate check does not affect your credit score, but a full application can still involve formal assessment and approval is not guaranteed. Its unsecured rates start at 5.76% p.a. and can rise to 24.03% for higher-risk borrowers. Best for applicants with good to excellent credit who want a fully online quote before deciding whether to proceed.

Myth: non-bank lenders are automatically unsuitable if a bank says no. Reality: Liberty advertises secured loans from 5.67% p.a. and unsecured loans from 6.30% p.a., with lending criteria that may suit non-standard profiles. That flexibility can come with a higher personalised rate, and there is no branch network. Best for self-employed borrowers or applicants with unusual income patterns who can explain their finances and are open to securing the loan when appropriate.

Myth: a variable rate is always safer because it can fall. Reality: ANZ offers fixed and variable personal loans, but a variable rate can rise during the term, while fixed loans may include an early repayment adjustment. The listed range reaches 19.99% p.a., so flexibility does not erase pricing risk. Best for existing ANZ customers or borrowers who need up to A$75,000 and have a clear reason to choose rate flexibility over repayment certainty.

Myth: an online loan is automatically cheaper because it has no branches. Reality: ING lists fixed rates from 6.19% to 19.99% p.a. and no early repayment fees, but its comparison rate starts at 7.03% p.a. because fees affect the cost. The fully digital application and possible fast funding are helpful, yet the maximum is A$60,000 and there is no variable-rate option. Best for salaried or self-employed borrowers with a stable repayment plan who want fixed payments and online management.

Myth: paying a loan off early is always free. Reality: CommBank lists early repayment adjustments on fixed loans, plus a $250 establishment fee and $15 monthly service fee. The app may make repayments easy to manage, but convenience is not the same as low cost. Its listed personal-loan rates start at 7.25% p.a., while eligible electric-vehicle buyers may access a 5.79% p.a. programme. Best for existing CommBank customers who value in-app control or qualify for the electric-vehicle pricing.