Continue your simulation with the CommBank personal loan comparison rate and see how fees push the true cost above the interest rate.
Australian personal loan adverts show two percentages: the interest rate and the comparison rate. The second figure is often higher because it combines interest with most fees. CommBank charges an establishment fee and a monthly service fee on its unsecured loans, so understanding the comparison rate is essential to know what you will actually pay.
Short answer: the comparison rate expresses interest plus most fees as one annual percentage, calculated on a standard loan amount and term. At the time of writing, CommBank advertised a fixed rate from 7.25% a year with a comparison rate of 8.65%. That gap comes from the $250 establishment fee and the monthly service fee spread across the loan.
The comparison rate is based on a typical example rather than your own loan. For unsecured personal loans in Australia, the standard example is $30,000 over five years. If you borrow less or for a shorter period, fixed fees weigh more heavily and your real cost will be higher than the published comparison rate suggests.
That does not make the comparison rate useless. It remains a fair way to compare lenders on the same basis, and it quickly reveals products combining low headline rates with high fees. What it cannot do is replace a calculation using your own amount and term. Used together, both steps give you the clearest possible picture.
In this guide you will learn how the comparison rate is calculated, why it changes with loan size, which costs it leaves out, how to calculate the effective cost for your own loan, how to compare CommBank with fee-free lenders and how promotions affect the numbers. A worked example, frequent questions and a short checklist complete the guide.
How the comparison rate is calculated
The comparison rate treats upfront fees as reducing the money you receive and adds ongoing fees to each repayment. It then finds the annual rate that makes the payments equal to the net amount received. Because it is a standard calculation required by law, it allows like-for-like comparisons between different lenders and products.
- Included: interest, establishment fees and regular service fees.
- Usually excluded: late payment fees, dishonour fees and optional insurance.
- Excluded: government charges and fees that depend on events you control.
- Based on: a standard amount and term set by regulation.
Why loan size matters
The table uses CommBank fees of $250 upfront and $15 a month with three illustrative interest rates. It shows the comparison rate for the standard $30,000 over five years and the effective cost for smaller loans. The smaller the loan, the wider the gap between the interest rate and the true cost.
| Interest rate | $30,000 over 5 years | $10,000 over 5 years | $5,000 over 3 years |
|---|---|---|---|
| 7.25% | About 8.65% | About 11.45% | About 17.26% |
| 10% | About 11.37% | About 14.12% | About 19.92% |
| 15% | About 16.33% | About 19.00% | About 24.79% |
For a $5,000 loan over three years at 7.25%, the effective cost is more than double the interest rate. A lender with no fees and a 12% rate would be cheaper. For a $30,000 loan, the fees matter much less, and CommBank becomes more competitive. This is why your own amount and term should drive the comparison.
Calculating your own effective cost
- Find the monthly repayment for your amount, rate and term.
- Add the monthly service fee to each payment.
- Subtract the establishment fee from the amount you receive if paid upfront.
- Use a spreadsheet RATE function with the term, payment and net amount.
- Multiply the monthly result by twelve for an annual figure.
If you prefer not to use a spreadsheet, simply compare totals. Multiply the monthly outgoing by the number of months, add the establishment fee and subtract the amount borrowed. The lender with the lowest total cost for your exact loan is the cheapest, whatever the advertised percentages say.
Promotions and fee waivers
CommBank sometimes waives the establishment fee for loans funded within a promotional window. Removing $250 reduces the effective cost, especially on smaller loans. Check the dates carefully, because the loan usually needs to be funded, not only approved, inside the offer period. The monthly service fee normally continues to apply.
Comparing with fee-free lenders
Some Australian lenders, including many online platforms, charge no monthly fee but may set a higher interest rate or a variable establishment fee. Compare the total cost for your amount and term. For large loans held for several years, a low rate with fees may still win; for small, short loans, a fee-free product often costs less overall.
Worked example
Ella wants $8,000 over three years. CommBank offers her 9% with the standard fees, giving a monthly outgoing of about $269 and a total cost near $1,950. A fee-free online lender offers 11.5%, with payments of about $264 and total interest close to $1,500, with no fees. Despite the higher rate, the second loan is cheaper.
Checklist before you choose
- Compare comparison rates first to filter options.
- Then calculate total cost using your own amount and term.
- Check whether any fee waiver applies to your funding date.
- Look at flexibility, such as extra repayments and redraw.
- Read the warning that comparison rates apply only to the example given.
Variable loans and the comparison rate
For variable rate loans, the comparison rate is calculated using the rate at the time of the advert. If rates change, the real cost of your loan will change too. When you compare a variable CommBank loan with fixed products, test what would happen if the rate rose by one or two points during the term.
Variable loans often allow extra repayments without penalty, which can reduce the effect of fees by shortening the loan. Paying off a $10,000 loan in three years instead of five, for example, saves two years of monthly service fees as well as interest. Factor this flexibility into your comparison if you expect to repay early.
Questions to ask CommBank
- What is my personal interest rate and comparison rate?
- Is the establishment fee waived for my funding date?
- What is the monthly service fee and does it apply for the whole term?
- Are there early repayment or break costs on this product?
- Can I make extra repayments and redraw them later?
Recording the answers in one place makes comparisons faster and helps you notice when a lender changes its terms between your first enquiry and the final offer. If the terms worsen, ask why before accepting.
Why is my personal rate higher than advertised?
Advertised rates are starting points for the strongest profiles. Credit history, income and debts decide your personal rate.
Can I avoid the monthly fee?
The fee is part of the product terms. Repaying early reduces the number of months you pay it.
A short list like this also gives you a record if a dispute ever arises about what you were told before you signed the loan contract.
Frequently asked questions
Why is the comparison rate required?
Australian consumer credit law requires it so borrowers can see the combined effect of interest and fees.
Does a lower comparison rate always mean a cheaper loan?
Not always. It depends on how close your loan is to the standard example amount and term.
Conclusion
The CommBank personal loan comparison rate is a helpful filter, but your own amount and term decide the real cost. Calculate the total for your loan, check for fee waivers and compare with fee-free lenders before applying.