Compare Personal Loans with $0 Application Fee

When applying for a personal loan, you can be charged hundreds of dollars just for the privilege of being approved.

Given that there are loans on the market that don’t charge you for this, why would you choose one that does? There are reasons to, but being lazy and not comparing different personal loans shouldn’t be one of them.

Here you will find personal loans with no application fees, as well as information on their average cost and the difference a loan with no fees can make.

Compare personal loans with no application fees

The table below presents a selection of personal loans on the market with no set-up fees, sorted by interest rate (ascending order).

*Comparative rates based on a loan of $30,000 for a term of five years. Please note: this comparison rate is only true for this example and may not include all fees and charges. Different terms, fees or other loan amounts may result in different comparison rate, rates correct as of February 15, 2022. See disclaimer.

What is a personal loan application fee?

Personal loan application fees, also known as set-up fees or simply initial fees, are charged by lenders for the cost of securing a personal loan for you. These costs can be paying staff members, filing and submitting documents, evaluating your application digitally and more. These are fees common to all types of loans and are often charged for both home loans and auto loans.

See also: The different personal loan fees explained.

How much are the personal loan application fees?

Personal loan application fees tend to cost between $0 and $600, although a select few charge significantly more than that. But on average, personal loans charge around $165 on average for upfront fees, which can be around $270 if other “upfront” fees like documentation or appraisal fees are included. Other lenders will instead charge a percentage of the amount borrowed as a fee, around 1-5% of the loan value.

The big four banks (Commonwealth Bank, ANZ, NAB and Westpac) charge an average of $388 to apply for a personal loan at the time of writing. This should give you an idea of ​​how much extra you can pay if you don’t compare the different options.

How many personal loans without application fees?

Application fees are very common on personal loans. In a sample of over 200 products, research from Savings.com.au found that there are only 21 personal loans that charge a 0 or 0% flat rate to apply. It’s less than 10%.

Other personal loan fees are less common, but chances are a loan you’re comparing will charge an upfront fee for an application.

Are $0 Loans with Application Fees Cheaper?

“Cheaper” can be determined by many factors, including how quickly someone pays off their loan. But in terms of interest rates and pure fees, personal loans with no application fee seem cheaper overall.

According to research from Epargne, this selection of no application fee loans has lower interest rates on average than those who charge one. The average interest rate is 7.87% per annum (per annum) for no upfront loans, compared to around 10.30% per annum otherwise. The maximum interest rate on these loans is also 15% pa and 20.25% pa respectively.

Comparing two average loans in terms of fees and interest rates leads to two very different total repayments for a $30,000 loan with a five-year term (fixed repayments):

Loan 1

Loan 2

Interest rate

7.87% per year

10.30% per year

Upfront costs

$0

$270

Monthly repayments

$606

$642

Total cost

$6,386

$8,781

Based on this scenario (no ongoing repayments or additional repayments made), Loan 1 would be cheaper by nearly $2,400 over five years, or nearly $40 per month. On average, no application fee loans are cheaper, but this is not a guarantee.

Related: Compare personal loans at the lowest rates

Fixed vs Variable Personal Loans

Personal loans can have fixed and variable repayments, just like home loans and car loans. Like auto loans, fixed rate personal loans are more common, but only just. Based on this sample of some 200 past loans (213 to be exact), just over half (112) have fixed repayments and 101 are variable.

There is not much difference between the two in terms of fees. Both have loans with no set-up fees, while the average upfront fee is around $167 for fixed loans and $163.5 for variable loans. The maximum fee ($600) is charged on a fixed rate loan, but on average these loans are very similar in terms of application fees.

Secured vs Unsecured Personal Loans

Fees for secured personal loans are often lower than for unsecured loans due to reduced risk to the lender.

What are the other personal loan fees?

In addition to the upfront fee, personal loans may charge for any of the following:

  1. Current annual fees
  2. Monthly fee
  3. Other ongoing charges
  4. Documentation fees
  5. Charge Verification Fee
  6. Prepayment charges
  7. Missed refund fees
  8. Withdrawal fees
  9. Cancellation/early exit fees

Before taking out a personal loan, make sure you understand the fees the lender will charge by reading the Product Disclosure Statement (PDS). Some of these fees are more common, like ongoing annual or monthly fees, while others are avoidable, like breakage fees, which can be much higher if you have to pay them.

The table below presents a selection of personal loans on the market with no ongoing fees, sorted by interest rate (ascending order).

*Comparative rates based on a loan of $30,000 for a term of five years. Please note: this comparison rate is only true for this example and may not include all fees and charges. Different terms, fees or other loan amounts may result in different comparison rate, rates correct as of February 15, 2022. See disclaimer.

There are very few personal loans that have absolutely zero fees. Lender NOW FINANCE last year introduced a personal loan with no set-up, ongoing or prepayment fees – one of the few on the market – but only for loans under $15,000. There are only a handful of others, like:

  • The Citi plus personal loan
  • Liberty personal loan
  • The Police Credit Union Solar Eco Loan
  • MoneyPlace unsecured personal loan

But as of this writing, some of these loans also charge late payment fees for missed repayments. On the other side all fees listed above, there is bound to be at least one hidden in the terms and conditions.

The two cents from Savings.com.au

Although the initial fees can be high (often costing a few hundred dollars), they are not the most important thing to consider. This would be the interest rate in the vast majority of cases. In the comparison of the two loans above, most of this cost difference of over $2,000 is due to the different interest rates. On a five-year loan with $0 fees for everything, here’s the difference a good rate can make:

$30,000 loan

$50,000 loan

Interest rate of 6% per annum

$34,799

$57,998

10% interest rate per year

$38,245

$63,741

15% interest rate per year

$42,822

$71,370

Look for a personal loan with a combination of a low interest rate and low application fees, but prioritize the low interest rate first. The comparison rate on the personal loan can be a good indicator of its cheapness, as it usually takes into account these upfront and ongoing fees.


Photo by DocuSign on Unsplash

The whole market has not been taken into account in the selection of the above products. Instead, a reduced portion of the market was considered. Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au and Performance Drive are part of the Savings Media group. In the interest of full disclosure, Savings Media Group is associated with Firstmac Group. To learn how Savings Media Group handles potential conflicts of interest, as well as how we are paid, please visit the website links at the bottom of this page.


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