7 Personal Loan Myths That Can Inflate Your Cost

Myth 1: Harmoney's 5.76% p.a. starting rate is what most applicants pay. The supplied data places higher-risk rates as high as 24.03%, and an establishment fee applies. Its rate check does not affect your credit score, so it makes sense for a good-to-excellent-credit borrower to test eligibility before accepting the headline figure. Compared with CommBank's 7.25% starting rate, Harmoney has more rate upside but also a much wider risk spread. Best for a borrower with strong credit who wants an online quote without an initial score impact.

Myth 2: a 5.95% rate means there are no meaningful fees. OurMoneyMarket has no ongoing monthly fee and no early-exit fee, but its establishment fee can range from 0% to 6%. On a A$30,000 loan, a 6% fee would be A$1,800 before interest, so the comparison rate matters more than the first number in the advert. The five-year maximum term is shorter than the seven years available from several banks, which can lift monthly repayments. Best for a strong-credit borrower who can handle a medium-term repayment schedule and confirms the actual establishment fee first.

ING illustrates why the comparison rate deserves equal billing: its advertised rate starts at 6.19% p.a., while the comparison rate starts at 7.03% p.a. because fees are included. The fixed-rate structure gives repayment certainty, and there are no early repayment fees, but there is no variable option and no branch network. Compared with OurMoneyMarket, ING gives you a larger seven-year term range but a higher starting rate. Best for a borrower who wants a fully online bank application, fixed repayments and the option to repay early without an exit fee.

Myth 3: fast funding means sacrificing cost control. Plenti advertises funding within 24 hours of approval, no monthly fees and no early repayment fees, with rates from 6.17% p.a. The less visible cost is an establishment fee of 0% to 6%, and personalised pricing can rise for higher-risk applicants. Its A$75,000 maximum and one-to-seven-year terms give more room than OurMoneyMarket's five-year cap, but the fee range means you need a written quote before comparing repayments. Best for a good-credit borrower who needs approved funds quickly and values fee-free early repayment.

Myth 4: a major bank's starting rate tells you the whole story. CommBank lists unsecured loans from 7.25% p.a., but the representative rate supplied is 16.25%, alongside a A$250 establishment fee and A$15 monthly service fee. Over a five-year term, the monthly charge alone totals A$900, before interest. The bank does offer fixed and variable options, app-based management and secured car rates from 6.79%, so the product becomes more credible for an existing customer who values branch-scale support or a secured purpose. Best for an existing CommBank customer who needs in-app management and can qualify well above the representative pricing.

ANZ shows the gap between an advertised floor and a realistic comparison range: rates run from 7.49% to 19.99% p.a., with comparison rates from 8.18% to 20.58%. It supports A$5,000 to A$75,000 over one to seven years and offers both fixed and variable structures, but fees may apply and fixed loans can carry an early repayment adjustment. Against CommBank, ANZ allows the same top loan size but starts 0.24 percentage points higher. Best for an existing ANZ customer who wants branch access, a choice of rate type and a loan term up to seven years.

Myth 5: every big-bank personal loan has a 20% or higher upper rate. NAB's supplied range tops out at 12.99% p.a., materially below ANZ's 19.99% ceiling and CommBank's 16.25% representative rate. The current A$250 application-fee waiver runs until 30 July 2026, but the A$15 monthly account fee remains, and the maximum loan is A$55,000. That makes NAB less useful for a large renovation than ANZ, yet potentially more predictable for a borrower worried about a high personalised rate. Best for a borrower who wants a major-bank loan with a published rate ceiling and does not need more than A$55,000.

Myth 6: a loan with no early-exit fee has no important fees. Westpac removes early exit fees on unsecured variable loans, but the supplied product data lists a A$250 establishment fee and A$15 monthly account fee. Its unsecured range reaches 21.99% p.a., while secured car loans start at 6.99% and electric-car lending at 6.49%. The product makes more sense for a borrower who needs variable-rate flexibility or a vehicle-specific loan than for someone chasing the cheapest unsecured borrowing. Best for an existing Westpac customer buying a qualifying vehicle or needing variable repayments with branch support.

Myth 7: a non-bank lender is automatically unsuitable if a bank says no. Liberty lists secured rates from 5.67% p.a. and unsecured rates from 6.30% p.a., lends up to A$80,000, and uses flexible criteria for borrowers outside traditional bank profiles. The rate is personalised, there is no branch network, and terms are limited to three, five or seven years. Compared with NAB's A$55,000 maximum, Liberty gives more borrowing headroom, but the wider eligibility does not mean guaranteed approval or a low final rate. Best for a borrower with non-standard income or a recent credit issue who can offer security or accept personalised pricing.