Loan Fees and Comparison Rates Explained

The interest rate on a loan tells you only part of the story. To know what you'll really pay, you need three things: the fees, the comparison rate and the total amount repaid. In Australia, the law caps what lenders can charge, and the rules change depending on how much you borrow.

Here's how it all works, in plain English.

The short answer

• Loans of $2,000 or less (small loans): no interest. Lenders can charge an establishment fee of up to 20% and a monthly fee of up to 4% of the amount borrowed.
• Loans of $2,001 to $5,000 (medium loans): a one-off establishment fee of up to $400, plus interest and fees capped at 48% a year.
• Larger loans from non-bank lenders: total interest and fees are capped at 48% a year.
• Always check the total repayable. It's the most honest number in any loan contract.

How fees work by loan size

Small loans: $2,000 or less

• Legal type: small amount credit contract (SACC)
• Term: 16 days to 1 year
• Interest: not allowed
• Fee cap: 20% establishment fee + 4% per month
• Jingle's pricing: 20% + 4% per month

Medium loans: $2,001 to $5,000

• Legal type: medium amount credit contract (MACC)
• Term: 16 days to 2 years
• Interest: allowed
• Fee cap: $400 establishment fee + 48% annual cost cap
• Jingle's pricing: $400 + 47.6% p.a. (comparison rate 69.04% p.a.)

Larger loans: above $5,000

• Legal type: standard credit contract
• Interest: allowed
• Fee cap: 48% annual cost cap
• Jingle's pricing: no establishment fee, 45% p.a. (comparison rate 45% p.a.)

Comparison rates are true only for the examples given and may not include all fees and charges.

Small loan fees, step by step

Small loans, legally called small amount credit contracts (SACCs) and often searched for online as “payday loans”, have two fees, both capped by law:

1. An establishment fee of up to 20% of the amount borrowed, charged once.
2. A monthly fee of up to 4% of the amount borrowed, charged for each month of the loan.

Because the monthly fee is based on the original amount, not the remaining balance, a longer term costs more in total.

Example: Borrow $1,000 over 6 months. The establishment fee is $200 and the monthly fees total $240 (4% x 6). You'd repay $1,440 in total, which at Jingle is 25 weekly repayments of $57.60.

There's also a cap on what you can be charged if you fall behind, which protects borrowers from runaway default costs.

What is a comparison rate?

A comparison rate combines a loan's interest rate with most of its fees and charges into a single yearly percentage. It's designed to help you compare loans like-for-like, because a low interest rate with high fees can cost more than a slightly higher rate with no fees.

That's why a Jingle medium loan has an interest rate of 47.6% p.a. but a comparison rate of 69.04% p.a. The $400 establishment fee is built into the comparison rate. On a large loan with no establishment fee, the interest rate and comparison rate are the same: 45% p.a.

A few things to know:

• Comparison rates are calculated for a specific example loan amount and term, so your actual cost may differ.
• They don't include every possible fee, such as dishonour fees or late fees.
• Small loans don't have a comparison rate, because they don't charge interest. Compare them using the total repayable instead.

What is the 48% cap?

Australian credit law caps the total cost of most consumer loans, including interest and most fees, at 48% a year. Medium loans of $2,001 to $5,000 can also charge a one-off establishment fee of up to $400 on top. Small loans have their own separate caps.

Other costs to look out for

Before you sign any loan, check the contract for:

• Dishonour fees if a direct debit fails
• Late payment or default fees if you fall behind
• Early repayment fees if you pay the loan off early (Jingle doesn't charge these)
• Monthly or account-keeping fees that keep running for the life of the loan

Your credit contract's Financial Table lists every fee and your total repayments, so read it carefully before you accept.

How to keep loan costs down

1. Borrow only what you need. Even a few hundred dollars more can move you into a different loan type with different costs.
2. Choose the shortest affordable term. This matters most for small loans, where every month adds 4%.
3. Compare the total repayable, not just the rate or the repayment amount.
4. Set up repayments on payday to avoid dishonour and late fees.
5. Check free options first, like the No Interest Loan Scheme (13 64 57) or a payment plan with your provider.

Frequently asked questions

How much are payday loan fees in Australia?

“Payday loan” is an informal term for small loans of $2,000 or less. For these loans, lenders can charge an establishment fee of up to 20% and a monthly fee of up to 4% of the amount borrowed, and they can't charge interest. Jingle's small loans are instalment loans repaid over 3 to 12 months, not lump-sum payday loans.

What does comparison rate mean?

It's a single yearly percentage that combines the interest rate with most fees and charges, so you can compare loans more fairly. It's based on a specific example and may not include all fees.

Why is the comparison rate higher than the interest rate?

Because it includes fees, such as an establishment fee. The bigger the fees relative to the loan, the bigger the gap.

What is the maximum interest rate on a personal loan in Australia?

For most consumer loans, total interest and fees are capped at 48% a year. Small loans of $2,000 or less have separate fee caps instead of interest.

Does Jingle charge early repayment fees?

No. You can repay your loan early with no early repayment fee.

See exactly what a Jingle loan costs

We show every fee and your total repayment before you sign. No surprises, just the numbers. Approval is not guaranteed. See our borrowing and loan costs page, or explore short-term loans.