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Personal loan advertised rates vs actual rates

Are the advertised rates on personal loans accurate?

You want to apply for a personal loan, so you look online and find a range of very enticing offers; interest rates so low that you apply immediately, not wanting to miss out on the opportunity.

You know you can comfortably meet your repayments, you have a stable income and you aren’t borrowing more than you need for a specific purpose.

After hours, days, or even weeks of waiting to hear from the lender to discuss approval, you finally receive your loan documents to review and sign … and notice the interest rate is much higher than the advertised rate you first saw and applied to receive.

So what gives, and why aren’t advertised personal loan rates the same as the actual rates?

Let’s take a closer look at how lenders assess applicants on risk and their credit score, and why (until now) it’s been hard for consumers to find clarity on what their actual rate will be.

If you want to see the actual rate you can get on a personal loan today, simply use the Smart Form to compare real, personalised loan offers from Australian lenders.

How to get the advertised rate on a personal loan

Unfortunately, there’s very little way to tell if you’ll be offered the same rate as you see advertised online.

Each lender will have its own criteria for risk assessments, but it’s unlikely you will ever get the rate you see advertised as ‘From X%’ simply because it would require anyone to be absolutely perfect and for there to be zero risks in lending the money.

On paper, this makes sense, but the reality is that we are all different, and your credit profile and history would need to be flawless. In general, people with flawless credit profiles who can comfortably wait around to save money don’t take out personal loans.

Can I borrow $10,000 no-questions-asked?

Imagine you are living with one of your friends, and they ask if they can borrow $100 to pay their portion of the rent. Previously, you thought this friend was quite financially stable, had a good job, always paid their bills on time, and has never had any difficulties with money.

Now imagine they ask to borrow $10,000. You have the money, you’ve saved it up for quite a while. What thoughts go through your head?

  • Do you feel comfortable handing over the money after being asked that question?
  • Are you suddenly questioning the integrity of their financial capabilities?
  • Why do they need the money so urgently?
  • Will they ask again in the future?
  • How will they pay you back?
  • Can you trust them to pay you back?
  • Is this a one-time situation or will it happen again?
  • Will you ever see the money again?

These aren’t unreasonable questions to ask of someone if they’re borrowing money as a friend, so imagine if your business was reliant on that money as well. In the world of personal lending, lenders are first and foremost a business.

They need to take care of their rent, but also their staff, their profits, their shareholders, and numerous other dependents that make risk assessment a serious and strict process.

This is why our credit score is so important, and also why bank statements can be a simple, but crucial aspect of determining someone’s reliability in borrowing and repaying the money; it affects the actual loan rate you can qualify for.

Risk vs Credit Score

Your credit report is a history of borrowing and other personal and financial information kept by credit reporting agencies. Your credit score boils all this information down into a single number that represents your reputation or quality as a borrower - the higher the score the better.

Lenders use your credit score to profile the level of risk you present as a borrower and help decide whether to lend you money and what to charge if they do. Credit scores range from 0 to 1,000 or 1,200, with 1,000 and 1,200 being excellent scores.

How can I check my credit score?

You can check your credit score for free by with an online credit agency such as:

To get your score you may have to sign up and provide an email address and a password. Once you’ve got an account you will need to provide further details like your:

  • Full name
  • Driver licence number
  • Residential address
  • Date of birth

There’s no need to pay to access your credit score so avoid providers who ask for credit card details.

About want to make managing money easy and fun! By giving Australians simple tools so they can make the best decisions they can about their money.

We understand that the world of finance is complex, and offer free, extensive guides on Personal Loans, Car Loans and Business Loans, along with tools like our Budget Planning Spreadsheet to help you better manage and understand personal finance.

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Money Pty Ltd,
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Money Pty Ltd trading as Money
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© Copyright 2021 Money Ltd.


Money Pty Ltd (trading as provides information about credit products and is authorised to do so as the holder of Australian Credit Licence 528698. does not compare every Lender in Australia. We are not a broker or credit provider and when we provide information via this website, we are not providing you with a recommendation or suggestion about a particular credit product. When you apply for a credit product via the website, you are not applying with us, you are applying directly with a Lender Partner. Before entering into any credit product from one of our Lender Partners, you should confirm the rates and product information with the Lender. All information on this website is general advice only and does not take into account your objectives, financial situation or needs. You should consider whether this advice is right for you and we encourage you to seek independent financial advice.