Check the terms and conditions of your loan for:
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Upfront fees, such as application or establishment fees, which can be charged when your loan is approved.
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Annual Percentage Rate (APR): The APR represents the annual cost of borrowing, including both the interest rate and any applicable fees or charges. It gives you a comprehensive understanding of the total cost of the loan over its term.
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Interest Charges. Interest is the cost of borrowing the loan amount and is typically calculated as a percentage of the outstanding balance. It's important to understand whether the interest rate is fixed (remains the same throughout the loan term) or variable (subject to change based on market conditions).
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Additional, late or early payment fees can be charged if extra repayments are made, miss one or pay less, or pay out a loan early.
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Ongoing administration charges, such as account keeping fees.
It's important to carefully review the terms and conditions provided by the lender, including any associated fees and charges, before accepting a personal loan. Different lenders may have different fee structures, so it's wise to compare offers and choose the loan that best fits your financial needs and circumstances.
Caps on fees & charges
By law, some lenders are restricted on the fees and charges that can be applied to specific loan amounts and terms.
For example, fees on medium amount loans (between $2,001 and $5,000, repaid between 16 days and 2 years) are limited to a one-off fee of $400 and a maximum interest rate of 48% per year, including all other fees and charges.