Personal loans with no application fees

• Compare personal loans with no application fees
• What is a personal loan application fee?
• How many personal loans have no application fees?
• Are $0 application fee loans cheaper?
• Fixed vs variable personal loan fees
• Secured vs unsecured personal loan fees
• What other personal loan fees are there?

Given there are loans on the market that don’t charge you for this, at first glance it seems silly to choose one that does. There are legitimate reasons for doing so, but being lazy and not comparing different personal loans shouldn’t be one of them.

Here you’ll find some personal loans with no application fees, as well as information on what they usually cost, as well as how much of a difference a no-fee loan can make.

What is a personal loan application fee?

The personal loan application fee, also referred to as an establishment fee or just an upfront fee, is charged by lenders for the cost of arranging a personal loan for you. These costs might be to pay staff members, file and submit paperwork, assess your application digitally and more. This is a common fee in all types of loans and is often charged on both home loans and car loans.

See also: The different personal loan fees explained

What do personal loan application fees cost?

Personal loan application fees tend to cost between $0 and $600, although a select few charge much more than this. Other lenders will charge a percentage of your borrowed amount as a fee instead, around 1-5% of the loan value.

The big four banks (Commonwealth Bank, ANZ, NAB and Westpac) typically charge between $150 and $250. However, the Commonwealth Bank is offering unsecured personal loans with $0 establishment fees until February 2023.

It’s always a good idea to compare these application fees when considering a personal loan as the difference can be hundreds of dollars.

How many personal loans have no application fees?

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

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

Are $0 application fee loans cheaper?

Loans with $0 application fees aren’t always cheaper as some may charge a higher interest rate than those that do charge application fees. Borrowers are generally encouraged to factor in both the interest rate and fees when choosing a personal loan. That’s where comparison rates can be handy, as they’re designed to reflect the loan’s overall cost i.e. fees and interest.

Related: Compare the lowest-rate personal loans

Fixed vs variable personal loans

Personal loans can have fixed and variable interest rates just as home loans and car loans can.

There isn’t much difference between the two types of loans in terms of fees. There are $0 application fee loans on the market in both fixed and variable rates.

Secured vs unsecured personal loans

In almost all circumstances, you will end up paying more for an unsecured loan. Secured loans are much less risky from your lender's point of view, so they will not be as expensive. This may be reflected in reduced application fees, although reduced interest rates are more common.

What other personal loan fees are there?

Aside from upfront fees, personal loans can charge any of the following:

1. Ongoing annual fees
2. Monthly fees
3. Other ongoing fees
4. Documentation fees
5. Encumbrance check fees
6. Early repayment fees
7. Missed repayment fees
8. Redraw fees
9. Break/early exit fees

Before taking out a personal loan, make sure you understand what 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 break fees, which can be much larger on the off chance you have to pay them.

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

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

• The Citi Personal loan plus
• The Liberty Personal loan
• The Police Credit Union Solar Eco Loan
• MoneyPlace Unsecured Personal Loan

But at the time of writing, some of these loans also charge late payment fees for missing a repayment. Across all the fees listed above, there’s bound to be at least one hidden in the terms and conditions.

Savings.com.au’s two cents

While upfront fees can be expensive (often costing a couple of hundred dollars), they aren’t the most important thing to consider. That would be the interest rate in the vast majority of cases. On a five-year loan with $0 fees for everything, this is the difference a good rate can make:

Big differences in interest rates can be worth thousands of dollars, so there would certainly be situations where you would happily take a loan with a high application fee for lower interest rates.

Look for a personal loan with a combination of a low interest rate and a low application fee, but prioritise low interest rates.

A good way to accurately get a sense of how much a loan will cost you is to look at the comparison rate. Comparison rates take into account some charges and fees associated with a loan, giving you a more accurate sense of how much extra money you will need to pay the lender. If you notice a provider with a comparison rate substantially larger than its interest rate, this would suggest the loan has high fees. Using comparison rates, you can put a dollar value on how much money you will be paying your lender on top of your loan repayments, and ideally, pick the provider that minimises this.