Loan guides and explainers

How to compare any loan without getting dazzled

Every loan, whatever the asset, comes down to the same handful of levers. Master these and you can size up an offer for a jet ski, a ute or a home extension with the same clear eyes.

1. Read the comparison rate, not the headline rate

In Australia, an advertisement that quotes an interest rate for a consumer loan must also show a comparison rate, which rolls most fees into a single figure. It exists so you can compare the true cost of two loans on a like-for-like basis rather than being swayed by an eye-catching headline number.

2. Add up every fee across the whole term

Establishment fees, monthly account fees and early-exit or break costs all change what a loan really costs. A slightly higher rate with no fees can beat a lower rate loaded with charges. Do the sum over the full term, not the first month.

3. Decide what secured versus unsecured means for you

A secured loan pledges an asset the lender can repossess, which usually lowers the rate but raises the stakes. An unsecured loan risks no asset but tends to cost more. Choose deliberately rather than by default.

4. Match the features to how you repay

Redraw, extra repayments, offset, fixed versus variable and the loan term shape both flexibility and total interest. The best loan is the one whose features fit how you actually manage money, not the one with the flashiest brochure.