Build a comparison table
For each offer, record the amount, rate, rate type, term, monthly payment, all fees, any required insurance, the total repayable and the early settlement terms. Differences that were invisible in a sales conversation become obvious in a table.
Normalise the term first
A 48-month loan and a 72-month loan cannot be compared by payment. Recalculate both over the same term, or compare total cost only.
Fees to look for
- Initiation or origination fees, often added to the balance so you pay interest on them.
- Monthly service or admin fees.
- Credit life insurance premiums.
- Early settlement penalties.
Worked comparison
Offer A: 100,000 at 14 percent over 36 months, no fees — around 3,420 a month and roughly 123,000 total. Offer B: 100,000 at 12.5 percent over 48 months with a 1,200 initiation fee and 69 monthly admin — a lower monthly payment but around 132,000 total. The cheaper-looking offer costs more.
Check affordability against your real budget
Use your own expense figures rather than the lender's affordability estimate, and confirm the payment still works in your leanest month.
Before signing
- Confirm the total repayable in writing.
- Check whether the rate is fixed or variable.
- Confirm whether extra payments reduce the principal.
- Ask what happens if a payment is missed.