What is a comparison rate?

A comparison rate is a single annual percentage that combines a loan's advertised interest rate with most of its fees and charges. It's designed to give borrowers a truer picture of the total cost of a loan than the headline rate alone. In Australia, lenders are required by the Corporations Act 2001 and Corporations Regulations 2001 to display a comparison rate alongside any advertised personal loan rate. The comparison rate is always at least as high as the advertised rate — and typically higher when any fees are present.

Is the comparison rate the same as the interest rate?

No. The interest rate is the cost of borrowing the principal and doesn't include fees. The comparison rate folds fees into the rate, so it's almost always higher than the advertised interest rate. The only time they're equal is when the loan has genuinely no application fee and no ongoing fees — which does happen, particularly with some online lenders operating in Australia as of May 2026.

What fees are included in the comparison rate?

The comparison rate includes: the advertised interest rate, application and establishment fees, and ongoing monthly or annual account-keeping fees. These are the fees charged regardless of borrower behaviour — they're built into every repayment schedule for that loan product.

What fees are excluded from the comparison rate?

Per ASIC's framework, excluded fees include: late payment fees, default fees, redraw fees, fees for loan variations or early repayment, and fees contingent on a future event (such as an early payout fee). These are real costs — this calculator shows them in the total cost figure when entered — but they're excluded from the comparison rate to maintain consistency with the ASIC-mandated methodology.

Why do comparison rates differ from advertised rates?

The gap exists because fees are real costs that don't appear in the headline rate. A lender advertising 7.99% p.a. but charging $395 upfront and $10/month recovers those costs in addition to interest. The comparison rate translates all those costs into a single annualised percentage — making the true cost visible and the comparison fair. The bigger the fee load relative to loan size, the larger the gap between advertised rate and comparison rate.

Is a lower comparison rate always better?

Almost always — for loans of similar size and term. The comparison rate is the best single benchmark for ranking personal loans. The exception: if you plan to pay off the loan early, a loan with no early payout fee may be more cost-effective than one with a lower comparison rate but a significant exit penalty. Fixed vs variable is also a separate consideration — a fixed-rate loan eliminates rate risk even if its comparison rate is marginally higher than a variable alternative.

How is the comparison rate calculated?

The comparison rate is calculated using the Internal Rate of Return (IRR) method. The calculator constructs a cash-flow schedule: the net advance at month 0 (loan amount minus any application fee), then monthly outflows combining the standard amortising repayment and any ongoing fees, until the loan is fully repaid. The IRR algorithm — using Newton-Raphson iteration — finds the single monthly rate that makes the net present value of that entire cash-flow schedule equal to zero. That monthly rate is then compounded: comparison rate = ((1 + monthly IRR)^12 − 1) × 100.

What's a good comparison rate for a personal loan in Australia?

As of May 2026, a competitive comparison rate for an unsecured personal loan in Australia typically sits between 7% and 12% p.a. for borrowers with good credit. Rates below 7% are available from select lenders, particularly for green loans or secured personal loans. Rates above 15% generally indicate a high-fee structure, a subprime or bad-credit product, or a very small loan amount where fixed fees dominate.

Are comparison rates regulated in Australia?

Yes. The requirement to disclose comparison rates is mandated under the Corporations Act 2001 and Corporations Regulations 2001 (Schedule 4). The standard reference loan for personal loans is $30,000 over 5 years. Lenders who advertise a rate must display the comparison rate in equal or greater prominence. The Australian Securities and Investments Commission (ASIC) oversees compliance, and failure to disclose can attract regulatory action.

Why do small loans have higher comparison rates?

Because fixed fees (like a $400 application fee) represent a larger proportion of the loan amount on smaller loans. On a $5,000 loan, a $400 fee is 8% of the principal and adds substantially to the comparison rate. On a $50,000 loan, the same fee is 0.8% and has a much smaller impact. This is why the ASIC standard reference loan of $30,000 / 5 years exists — to ensure published comparison rates are like-for-like — and why this calculator lets you input your actual loan amount for a more accurate result.

The Rate They Advertise vs The Rate You Pay

A loan advertised at 7.99% p.a. is not a 7.99% loan if it comes with a $400 application fee and $12 a month in account-keeping fees. This calculator reveals the comparison rate — the single regulated figure that folds every standard fee into the annual cost, so you can see what you'll actually pay on any personal loan. Run the numbers before you sign anything.

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Who this calculator is for

Borrowers who have received a personal loan quote and want to verify the true cost, not just the headline rate.
Anyone comparing two or more loan offers and unsure whether lower rates or lower fees win on total cost.
First-time borrowers who want to understand what the comparison rate number on a lender's website actually means.

What it calculates

The comparison rate (% p.a.) using the ASIC-standard Internal Rate of Return method.
The gap between the advertised rate and the comparison rate.
Total cost of the loan: principal, interest, and fees itemised separately.
Monthly repayment including ongoing account-keeping charges.

Why it matters

The advertised interest rate on a personal loan is a starting point, not the full price. Lenders set headline rates knowing application, monthly, and annual fees make up a substantial portion of the real cost. The comparison rate is the number Australian law requires lenders to disclose precisely because the headline rate misleads.

Loan Amount$20,000

Advertised Rate (p.a.)11.00%

Loan Term5 years

Establishment Fee$395

Monthly Fee$10

True Cost

Comparison Rate

12.88% p.a.

Advertised: 11.00% p.a.

Monthly Pmt

$445

Total Repaid

$27,086

Total Interest + Fees

$7,086

Comparison rate based on a $20,000 loan over 5 years. Excludes some fees.

Your true cost is waiting — now compare real lenders

You've seen what this loan costs. Now find out if a better deal exists. LoanGorilla compares personal loans from 30+ lenders — including their real comparison rates, not just the headlines.

Compare real personal loan rates Or model two offers side by side →

How this Comparison Rate Calculator works

The comparison rate is a regulated concept, not a marketing construct. Under the Corporations Regulations 2001 (Schedule 4), Australian lenders are required to disclose a comparison rate alongside any advertised interest rate. For personal loans, ASIC specifies a standard reference loan of $30,000 over five years. This calculator applies the same methodology to your specific loan details — so you get a comparison rate tuned to your actual amount and term, not a generic reference figure.

The Internal Rate of Return (IRR) method. When you take out a personal loan with an application fee, the lender gives you slightly less money upfront than the face value — the fee is deducted immediately — and then collects a stream of repayments that includes monthly service fees on top of the amortising principal-and-interest payment. The IRR finds the single annual interest rate that would produce exactly that stream of payments from exactly that net advance. That rate is the comparison rate.

Under the hood. The calculator builds a cash-flow timeline starting at month 0 (the net advance, which is the loan amount minus the application fee) and running through to the final month. Each monthly outflow is the standard amortising repayment plus the monthly fee. Annual fees are added in months 12, 24, 36, and so on. The Newton-Raphson iterative method solves for the monthly IRR — the rate at which the net present value of all cash flows equals zero — which is then compounded to produce an annual percentage:

comparison rate = ((1 + monthly IRR)¹² − 1) × 100

Excluded fees. Default and late payment fees, redraw fees, fees for loan variations, and contingent fees such as early payout fees are excluded by regulation. They're real costs and appear in the total cost figure when entered, but the comparison rate itself follows the ASIC-defined methodology so the number remains directly comparable to what lenders publish.

How to interpret your results

The comparison rate is your primary ranking number. If two loans have the same advertised rate but different comparison rates, the one with the lower comparison rate is the cheaper loan — full stop. If two loans have different advertised rates but similar comparison rates, their real costs are close to identical.
The rate gap shows the fee burden at a glance. A 0% gap means the lender charges no fees. A 0.01–2.99% gap is typical for most mainstream personal loans. A 3%+ gap signals a high fee load relative to the loan size — often seen with smaller loan amounts where a fixed application fee is a large proportion of the principal.
Total fees paid is the number most borrowers underestimate. A $12/month account-keeping fee looks trivial — but over 60 months on a 5-year loan, it's $720. Add a $400 application fee and you're paying $1,120 in fees on a loan you thought had a 7.99% rate.
Worked example — when the lower headline rate loses. Loan A: 7.99% advertised + $400 app fee + $12/month on $20,000 over 5 years → comparison rate ≈ 9.2%. Loan B: 8.49% advertised + $0 fees → comparison rate 8.49%. Loan B is cheaper despite the higher headline rate.
Comparison rates are sensitive to loan size and term. A $400 application fee on a $5,000 loan over 2 years produces a far higher comparison rate than the same fee on a $30,000 loan over 5 years. If your scenario differs from the lender's published reference, your personalised comparison rate may differ — that's by design.

How to find the best comparison rate on a personal loan

Always ask for the comparison rate, not just the interest rate. Every Australian lender is legally required to disclose one. If a quote only shows the headline, ask explicitly.
Run every loan through this calculator before proceeding. A 6.99% advertised rate paired with a $595 application fee and $15/month service fee on a $15,000 loan can push the comparison rate over 10%.
On smaller loans, prioritise lenders with low or no application fees. A $400 fee on a $50,000 loan is 0.8% of principal — barely visible. On a $5,000 loan, the same fee is 8% of principal and can add several percentage points to the comparison rate.
Digital-first lenders often publish the best comparison rates. As of May 2026, several fintech and green loan lenders are offering comparison rates in the 6–8% range with no ongoing fees. See low-interest personal loans.
Consider comparison rate and flexibility together. A loan at 8.9% comparison rate with no early payout fee may be cheaper over 3 years than a loan at 8.5% comparison rate with a $1,500 early exit penalty — if you plan to pay it off ahead of schedule. Use the loan comparison calculator to model this.
If you're financing an EV, solar panels, or an energy-efficient renovation, check green loan rates first. Several lenders are offering green personal loan comparison rates among the lowest in the market. See green personal loans.

The win is not chasing the lowest advertised rate in isolation; it's finding the lowest comparison rate for your specific loan amount and term — then confirming it comes with the flexibility your situation actually requires.

Example Comparison Rate Calculations in Australia

All examples use a $20,000 loan over 5 years (60 months), calculated May 2026.

Scenario	Advertised Rate	App Fee	Monthly Fee	Comparison Rate	Rate Gap	Total Fees Paid
Online lender, no fees	8.49% p.a.	$0	$0	8.49% p.a.	+0.00%	$0
Major bank, low rate + fees	7.99% p.a.	$400	$12/mo	~9.21% p.a.	+1.22%	$1,120
Non-bank lender, mid-tier	10.50% p.a.	$250	$8/mo	~11.22% p.a.	+0.72%	$730
High-fee lender	9.99% p.a.	$595	$15/mo	~12.08% p.a.	+2.09%	$1,495

Assumptions

Loan amount: $20,000 | Term: 5 years (60 monthly payments).
Monthly repayment calculated using standard amortising (P&I) formula on advertised rate.
Comparison rate calculated using IRR method per Corporations Regulations 2001 Schedule 4.
Annual fee: $0 for all scenarios; early payout fee excluded from IRR.
All figures in Australian dollars as of May 2026. Rates are illustrative — not quotes from specific lenders.

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Calculator assumptions

This calculator produces estimates based on the inputs you provide. It applies the Internal Rate of Return method consistent with ASIC's comparison rate framework under the Corporations Regulations 2001 (Schedule 4) — the same regulated methodology Australian lenders use. Results are calculated for your specific loan amount and term, which means your personalised comparison rate may differ from the comparison rate a lender publishes (lenders use a standard $30,000 / 5-year reference loan; this calculator uses your actual figures). The monthly repayment assumes a standard P&I amortising loan with fixed regular payments. Early payout fees and extra repayment fees are shown in the total cost breakdown when entered but are excluded from the comparison rate calculation, as required by regulation. Variable rate loans are calculated on the current advertised rate only — future rate movements are not modelled. All figures in AUD; rates indicative as of May 2026 and subject to change. This calculator does not constitute financial advice. Always read a lender's Key Facts Sheet and credit contract before signing. Reviewed by the LoanGorilla editorial team — last updated May 2026.