Personal Loan Fees Explained: Your Guide

When comparing personal loans, interest rates often receive the most attention, but fees can also affect the overall cost of borrowing. Some loan fees are commonly charged by lenders, while others depend on the lender, the loan structure, or how repayments are managed.

Understanding personal loan fees can help you compare loans more accurately, avoid unnecessary charges, and better estimate the total cost of borrowing. In this guide, you’ll learn about common personal loan fees in Australia, how they work, and what to review when comparing loan offers. We’ll also explain, in general terms, how Credit24 approaches fee transparency so borrowers can make more informed decisions.

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Why look at personal loan fees?

An interest rate alone does not always reflect the full cost of a loan. Two loans with the same rate can result in different total repayment amounts depending on the fees that apply.

Some fees may apply upfront, others may be ongoing, and some may only apply in specific situations, such as late or missed payments. Understanding these costs can help with:

• Making clearer loan comparisons
• Identifying potentially avoidable charges
• Budgeting for repayments more accurately
• Recognising higher-cost loan structures

In Australia, lenders must disclose a comparison rate that combines the interest rate with certain fees to help estimate the overall cost of credit. However, some conditional or optional fees may not be included, which is why reviewing the full list of charges remains important.

Common personal loan fees in Australia

Below is an overview of personal loan fees you may encounter and how they generally work.

Establishment fee (setup fee)

What it is

An establishment fee is a one-off fee that may be charged when a loan is approved and set up. It may also be referred to as an application, origination, or setup fee. The fee may cover administrative or assessment costs involved in creating the loan.

Key considerations

• May be deducted from the loan amount or added to the loan balance
• Interest may apply if the fee is added to the loan balance
• Often non-refundable once the loan is established
• Fee structures vary between lenders

When comparing loans, it can be helpful to review the overall cost of the loan rather than focusing on a single fee.

Loan service fee (account keeping fee)

What it is

Some lenders charge an ongoing fee to maintain the loan account. This may be charged monthly or annually.

Key considerations

• Can add up over longer loan terms
• Usually charged regardless of additional repayments
• Some ongoing account fees may be reflected in the comparison rate calculation, depending on how the loan is structured

Even small recurring fees can influence the total cost of borrowing over time.

Early repayment fee

What it is

An early repayment fee may apply if a borrower repays their loan before the end of the agreed loan term.

Key considerations

• More common with fixed-rate loans
• May reduce the financial benefit of repaying a loan early
• Some lenders allow extra repayments without penalty

If you expect to repay your loan ahead of schedule, it may be helpful to check whether early repayment fees apply.

Late payment fee

What it is

A late payment fee may be charged when a scheduled repayment is missed or made after the due date.

Key considerations

• Repeated or significant missed repayments may be reported to credit reporting bodies, depending on the lender’s reporting practices
• Additional charges may apply if repayments continue to be missed
• Automatic payments or reminders may help reduce the risk of missed repayments

Dishonour fee

What it is

A dishonour fee may be charged if a repayment attempt fails due to insufficient funds in the nominated account.

Key considerations

• May apply in addition to a late payment fee
• A financial institution may also charge its own fee
• Maintaining a buffer in the repayment account may help reduce the likelihood of failed payments

Payment processing fee

What it is

Some lenders may charge a fee depending on the repayment method used.

Key considerations

• Certain payment types, such as credit card repayments, may attract a processing fee
• Other methods such as direct debit or BPAY may be lower cost, depending on the lender
• Some lenders may accept OSKO-enabled transfers where supported by the lender’s payment systems and the borrower’s bank

Choosing an appropriate repayment method can help minimise payment-related fees.

Redraw fee

What it is

Some loans allow borrowers to access extra repayments they have previously made. A redraw fee may apply when accessing these funds.

Key considerations

• Only relevant if the loan includes a redraw facility
• Fees may reduce the flexibility benefit of making extra repayments
• Availability and conditions vary between lenders

Variation fee

What it is

A variation fee may be charged if changes are made to the loan agreement after it has been established. This could include adjustments to the repayment schedule or repayment frequency.

Key considerations

• Some lenders may charge a fee for each change requested
• Fees and policies vary between lenders
• In some cases, refinancing or restructuring the loan may be an alternative option

Settlement fee

What it is

A settlement fee may apply when the loan is fully repaid and the account is closed.

Key considerations

• May be separate from early repayment fees
• Not always included in comparison rate calculations
• Policies vary between lenders

Loan protection insurance

What it is

Loan protection insurance is a type of insurance designed to help cover repayments in certain situations, such as illness, injury, or job loss.

Key considerations

• Usually optional and offered alongside some credit products
• May include exclusions, limits, or waiting periods
• Alternative insurance policies may provide similar protection depending on individual circumstances

Borrowers may wish to review policy details carefully before deciding whether insurance is suitable for their situation.

Want to avoid most of these fees? Meet Credit24

Different lenders use different fee structures. Some borrowers prefer credit products that have fewer ongoing fees and clearly disclosed costs.

Credit24 personal loans generally offer:

• Fixed interest rates
• A clearly disclosed establishment fee
• Late payment fees only if repayments are missed

Credit24 generally does not charge:

• Monthly loan service fees
• Early repayment penalties
• Fees for additional repayments
• Redraw or settlement fees

Before applying, borrowers can review all applicable fees so they can better understand the potential cost of the loan.

Funds may be transferred to eligible bank accounts using OSKO where supported by the borrower’s bank and the lender’s payment systems.

This information is general only and does not consider your personal financial situation. Credit is subject to eligibility criteria, fees, and terms and conditions.

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Disclaimer

IPF Digital Australia Pty Ltd, trading as Credit24
ABN 59 130 894 405
Australian Credit Licence 422839

The information in this article is general in nature and does not consider your objectives, financial situation, or needs. Lending criteria, fees, and charges apply. For product details, eligibility requirements, and full terms and conditions, visit www.credit24.com.au.

Disclaimer

IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839.

The information in this article is general in nature and does not consider your objectives, financial situation, or needs. Lending criteria, fees, and charges apply. For product details, eligibility requirements, and full terms and conditions, visit www.credit24.com.au.