What Loan Fees Should You Check Before Applying?

When you compare personal loans, it is easy to focus on the advertised interest rate. However, interest may be only one part of the amount you pay.

Personal loan fees can affect how much money you receive, the size of your repayments and the total cost of borrowing. Some fees apply when the loan begins, while others may be charged only if you use a particular feature, change your agreement or miss a repayment.

At Sunshine Loans, we believe you should understand these costs before you make a decision. Check the lender’s fee schedule, credit contract, repayment schedule and total repayment information before applying.

Understanding the costs can help you compare your options and decide whether the repayments will fit comfortably within your budget.

Which Personal Loan Fees Should You Check?

The main personal loan fees to look for include:

• Application fees.
• Establishment or upfront fees.
• Account-keeping or service fees.
• Payment-processing fees.
• Late-payment and default fees.
• Early repayment or exit fees.
• Loan variation or repayment-rescheduling fees.
• Brokerage or third-party fees.
• Government charges, when applicable.

Not every lender charges every fee. Lenders may also use different names for similar costs, so check what triggers each charge rather than relying only on its label.

You should also review the interest rate, comparison rate, repayment schedule and total amount repayable. These are not all fees, but they help you understand the broader cost of the loan.

1. Application Fees

An application fee may be charged for processing a loan application.

Depending on the lender and product, it may also be described as a:

• Processing fee.
• Assessment fee.
• Administration fee.

Before submitting an application, check:

• Whether the fee is payable upfront.
• Whether it is charged only if the loan is approved.
• Whether it is refundable if you decide not to proceed.
• Whether it is deducted from the loan amount.
• Whether it is added to the balance and subject to interest.

This matters because a fee deducted from the loan proceeds reduces the amount that reaches your bank account. A fee added to the balance may increase the amount you need to repay.

Try to compare the available costs and conditions before submitting applications.

Moneysmart advises being careful about applying for several loans because multiple credit applications may affect your credit score.

2. Establishment Fees

An establishment fee is an upfront charge for setting up an approved loan.

It may relate to activities such as:

• Preparing the credit agreement.
• Verifying information.
• Establishing the loan account.
• Arranging the approved funds.

Check the dollar amount rather than looking only at how the fee is described. A fixed establishment fee represents a larger proportion of a smaller loan than it does of a larger loan.

You should also confirm:

• When the establishment fee becomes payable.
• Whether it is deducted from the funds or added to the loan balance.
• Whether it is included in your repayment schedule.
• What happens to the fee if you repay the loan early.
• Whether it is included in the advertised comparison rate.

An establishment fee can make a meaningful difference to the total cost, even when the advertised interest rate initially appears competitive.

3. Account-Keeping and Regular Service Fees

Some lenders charge ongoing fees for maintaining a loan account.

These may be charged weekly, monthly or annually and could be described as:

• Account-keeping fees.
• Service fees.
• Administration fees.
• Loan management fees.

A small recurring charge can add up when it applies throughout a longer loan term.

Multiply the fee by the expected number of billing periods and include that amount when comparing your likely total cost.

You should also check whether the fee continues to apply when your loan balance is low or when you are ahead on repayments.

4. Payment-Processing Fees

A lender may charge a fee for processing certain repayment methods, including:

• Direct debit.
• Card payments.
• BPAY.
• Manual transfers.

Check whether the standard repayment method is free and whether you could be charged for:

• Each scheduled repayment.
• Changing your payment method.
• Making a payment over the phone.
• Using a debit or credit card.
• Requesting a replacement payment arrangement.

You should also check your bank’s conditions.

For example, a failed direct debit could potentially result in a charge from the lender as well as a separate charge from your financial institution.

5. Late-Payment and Default Fees

Late-payment or default fees may apply when you miss a scheduled repayment or fail to meet another obligation under the credit contract.

These costs may be described as:

• Missed-payment fees.
• Failed-payment fees.
• Arrears fees.
• Default fees.
• Direct-debit dishonour fees.
• Collection or enforcement costs.

Read the credit contract carefully to understand when each fee is triggered.

Check whether more than one charge could apply to the same missed repayment and whether further costs may arise while the account remains overdue.

A missed repayment may have consequences beyond the immediate fee.

Contact your lender as early as possible if you believe you may have difficulty making a payment. Depending on your circumstances, the lender may be able to discuss support or a hardship arrangement.

If you have a loan with us and are experiencing financial difficulty, you can contact our hardship support team to discuss your circumstances.

6. Early Repayment and Exit Fees

Paying a loan off early may reduce the amount of interest that would otherwise accrue. However, some loan products charge an early repayment, break or exit fee.

Before entering into a loan, check whether you can:

• Make additional repayments without a charge.
• Increase your scheduled repayments.
• Pay the entire balance early.
• Receive a reduction in future interest.
• Close the account without an administration fee.

Moneysmart recommends checking the early repayment conditions, particularly when you expect to pay the loan off ahead of schedule.

You should also ask the lender to explain how an early payout figure would be calculated.

This can help you determine whether repaying the loan early would produce a genuine saving.

7. Loan Variation and Repayment-Rescheduling Fees

Your circumstances may change during the loan term.

Some lenders charge a fee when you ask to modify your agreement, change your repayment date or temporarily reschedule a repayment.

Check the possible cost of:

• Changing the repayment frequency.
• Moving a repayment date.
• Extending the loan term.
• Requesting a payment deferral.
• Replacing a failed direct debit.
• Varying another part of the credit contract.

Extending the loan term may reduce the size of individual repayments, but it can increase the amount of interest you pay overall.

Consider both the immediate variation fee and the longer-term effect on your total repayments.

A hardship request should be assessed under the applicable hardship rules. The exact arrangement requested is not guaranteed, and the way fees or other costs are treated will depend on the contract, applicable law and the arrangement agreed with the lender.

8. Brokerage and Third-Party Fees

You may apply directly to a lender or use a broker or comparison service.

A third party could:

• Receive a commission from the lender.
• Charge you a separate fee.
• Do both.

Before proceeding, check:

• Whether the broker charges you directly.
• Whether the lender pays the broker a commission.
• Whether a fee is added to the loan.
• Whether the broker compares a broad range of lenders or a limited panel.
• Whether paid or promoted results are clearly identified.

A broker or comparison service may be useful, but its fees, lender relationships and commercial arrangements should be transparent.

9. Government Charges

Government duties or statutory charges may apply to some financial products or transactions.

Whether a charge applies will depend on:

• The type of loan.
• Any security involved.
• The relevant state, territory or federal requirements.

Ask the lender whether any government charges apply to your proposed loan and whether they are included in the quoted total repayment amount.

Interest Rate vs Comparison Rate

The interest rate shows the percentage of interest charged on the amount you borrow. It does not necessarily include every separate fee associated with the loan.

A comparison rate combines the interest rate with most standard fees and charges into a single percentage figure. It can be a useful starting point when comparing similar products.

However, a comparison rate is calculated using a prescribed or stated loan amount and term.

It may not:

• Reflect your exact borrowing arrangement.
• Include conditional costs such as late-payment fees.
• Include enforcement or debt-recovery costs.
• Reflect every feature of the loan.

When reviewing a comparison rate, check:

• The loan amount and term used in the calculation.
• Which standard fees are included.
• Which conditional fees are excluded.
• Whether your proposed amount and term are similar to the example.
• The total repayments shown in your individual loan offer.

Moneysmart recommends comparing the interest rate, fees, comparison rate, loan term and repayment flexibility rather than choosing a product based on one advertised figure.

How to Compare the Total Cost of Two Loans

When comparing two loan options, use the same loan amount and approximately the same term wherever possible.

For each option, write down:

• The amount you will actually receive.
• The interest rate.
• All upfront fees.
• All recurring fees.
• The scheduled repayment amount.
• The number of repayments.
• The total amount repayable.
• Fees that could apply if you miss or change a payment.
• The cost of paying the loan out early.

A lower regular repayment does not automatically mean a less expensive loan.

It may result from a longer loan term, which could increase the total interest and fees you pay.

You can also use Moneysmart’s personal loan calculator to estimate how different rates, terms and repayment amounts may affect a loan’s cost.

Remember that a calculator provides an estimate and may not include every fee or consider whether the repayments are affordable for you.

Personal Loan Fee Checklist

Before applying, make sure you can answer the following questions:

• How much money will I actually receive?
• What is the total amount I am expected to repay?
• Is there an application or establishment fee?
• Are there weekly, monthly or annual account fees?
• Does my repayment method attract a charge?
• What happens if a direct debit fails?
• What fees apply if a repayment is late?
• Can I make extra repayments without paying a fee?
• Is there a fee for paying the loan off early?
• Could changing my repayment date or schedule cost extra?
• Is the interest rate fixed or variable?
• What assumptions are used for the comparison rate?
• Can I afford the repayments alongside rent, food, utilities and other essential costs?

You should receive the relevant credit information and agreement before entering into the loan.

Take the time to read these documents and ask the lender to explain anything that is unclear.

What Fees Apply to One of Our Loans?

We currently offer unsecured Medium Amount Credit Contracts rather than Small Amount Credit Contracts, wage advances, lines of credit or traditional payday loans.

Our current product features are:

In certain circumstances, other costs may apply.

You should review our current loan cost information and your individual credit contract before proceeding.

Our advertised comparison rate is 66.2% per annum, calculated on a $2,500 loan over two years.

The $2,500 amount and two-year term are prescribed for the comparison-rate example, but we do not offer our Medium Amount Credit Contracts over two years.

WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Applications are subject to our eligibility requirements, individual assessment, responsible lending obligations and approval.

Our general minimum eligibility requirements include:

• Being at least 18 years old.
• Receiving take-home income of at least $750 per week or $1,500 per fortnight.
• Receiving income from legal and verifiable sources.
• Receiving income from a source other than government benefits alone.
• Having income that is visible and verifiable through your bank statements.
• Being able to afford the repayments without experiencing financial hardship.
• Using the loan for a personal rather than business purpose.

Government benefits may form part of your income, but they cannot be your only source of income.

Meeting these minimum requirements does not guarantee approval.

We assess every application individually and consider whether the proposed credit contract would be unsuitable based on the information available to us.

You can review our complete loan eligibility requirements before applying.

Our loans are intended for eligible people considering finance for an infrequent, one-off or unexpected personal expense.

They should not be used to fund regular, ongoing ordinary household expenses or business costs, subject to the circumstances described in our Target Market Determination.

You can also review our frequently asked questions or read more about how applying for credit may affect your credit score.

Sunshine Loans Pty Ltd holds Australian Credit Licence number 390556 and operates under ACN 092 821 960.

Consider the Alternatives Before Borrowing

A loan may be one option for an eligible person dealing with a specific expense, but it is not the only option.

Before borrowing, consider whether you could:

• Use available savings while keeping enough money for essential costs.
• Delay or reduce the expense.
• Request a payment plan from the service provider.
• Ask whether a discount is available for paying another way.
• Review your household budget.
• Seek hardship assistance from an existing lender or utility provider.
• Compare other suitable forms of credit.
• Check whether you may qualify for a No Interest Loan.
• Speak with a free financial counsellor.

Borrow only what you need and make sure the repayments leave enough room for essential living costs and existing commitments.

If you are already experiencing repayment difficulties, contact your existing lender promptly rather than taking out another loan simply to cover the debt.

Moneysmart also recommends exploring support services and lower-cost alternatives when you are struggling with essential costs.

If you already have a loan with us, you can use our contact and hardship support options to discuss your circumstances.

Frequently Asked Questions About Personal Loan Fees

Are Loan Fees Included in the Interest Rate?

No.

The interest rate generally shows the cost of interest and does not necessarily include separate fees.

Review the comparison rate, fee schedule, repayment information and total amount repayable to get a broader picture of the loan’s cost.

What Is the Difference Between an Application Fee and an Establishment Fee?

An application fee generally relates to processing or assessing an application.

An establishment fee is generally charged for setting up an approved loan.

A lender may charge one, both or neither, so check the terms of the individual product.

Can a Lender Deduct Fees From the Loan Amount?

Depending on the credit contract, an upfront fee may be:

• Deducted from the funds you receive.
• Added to the amount you owe.
• Paid separately.
• Included in your scheduled repayments.

Check how much money will reach your bank account and the total amount you will need to repay.

Does a Comparison Rate Include Late Fees?

A comparison rate generally includes the interest rate and most standard fees.

It may not include conditional charges such as:

• Late-payment fees.
• Default fees.
• Dishonour fees.
• Enforcement or debt-recovery costs.

Review the lender’s fee schedule and credit contract separately.

Is a Loan With No Ongoing Fees Always Cheaper?

Not necessarily.

A product with no regular account fees could still have:

• A higher interest rate.
• A substantial upfront fee.
• A longer loan term.
• Other conditional charges.

Compare the total repayment amount using the same loan amount and a similar term.

Can I Avoid a Late-Payment Fee?

The most reliable approach is to make sure enough money is available before each scheduled repayment.

Contact the lender early if you expect a problem.

Asking about available support before several repayments have been missed may provide more options, although the exact arrangement requested is not guaranteed.

Do We Charge an Early Repayment Fee?

No.

We currently do not charge an early repayment penalty.

You can ask us for an up-to-date payout figure if you are considering repaying your loan before the end of the agreed term.

Review the Complete Cost Before Making a Decision

Before applying for a personal loan, look beyond the advertised interest rate.

Review:

• Every upfront charge.
• Recurring fees.
• Conditional fees.
• The repayment schedule.
• The comparison rate.
• The total amount repayable.
• Early repayment conditions.
• The effect of the repayments on your budget.

Check how each cost affects the amount you receive and the total amount you will repay.

We provide information about our fees, terms and eligibility requirements online. Review our current loan costs and repayment terms before deciding whether borrowing may be appropriate for your circumstances.

Applications are individually assessed, and approval is not guaranteed.

The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. It is not tailored to the specific circumstances of any individual. Before acting on the information, you should consider whether it is appropriate for you, having regard to your objectives, financial situation and needs.