Are You Paying Too Much Interest? Real Dollar Examples

Lenders reserve their sharpest rates for new customers and hope existing ones never check. The RBA and the ACCC have both documented this pattern: borrowers who stay put for years typically pay more than new borrowers on equivalent loans. If you accepted the first rate you were offered — or have not reviewed your loan in a few years — there is a fair chance you are paying more than you need to.

The percentages sound small. The dollars are not. All figures below are estimates for illustration only, based on standard repayment maths — your own numbers will differ.

At 6.5% p.a. over 30 years, repayments on a $600,000 loan are roughly $3,792 a month. At 6.0% — just half a percent less — they are about $3,597 a month.

That half a percent is around $195 a month, which adds up to roughly $70,000 over the life of the loan. Half a percent is not an exotic discount; it is the kind of gap that routinely exists between a lender's back-book rate and what a comparable lender offers new borrowers.

Dealer-arranged finance can be convenient, but convenience has a price. At 10.5% p.a. over 5 years, a $40,000 car loan costs about $860 a month. At 7.5%, it is about $802 a month.

That is close to $58 a month, or roughly $3,500 over the term — on a single car. For a business running several vehicles, the same gap multiplies across the fleet.

Business lending has the widest spread of all, because pricing depends heavily on how the application is presented and which lender sees it. At 12% p.a. over 5 years, a $150,000 loan costs about $3,337 a month; at 9.5%, about $3,150.

The difference is around $187 a month — roughly $11,000 over the term — money that could be working in the business instead.

Almost nobody chooses to overpay. It happens because comparing lenders properly is tedious: every lender quotes differently, advertised rates carry conditions, and comparison rates only tell part of the story once fees and loan structure are included. So people take the path of least resistance — their existing bank, or the finance desk at the dealership — and the gap compounds quietly for years.

A licensed broker does this comparison for a living, across a panel of lenders, and for most home and car loans is paid by the lender rather than by you. They cannot guarantee a lower rate — anyone who guarantees outcomes should be treated with caution — but they can put your actual numbers in front of the lenders most likely to price them sharply.

Start with two numbers: the rate you are paying now, and what comparable loans are being written at today. Our free calculators can show you what a rate difference means in dollars for your own loan size.

Asset Connect Australia does not lend, arrange, or approve finance — we are a referral platform. If you want the comparison done properly, one enquiry connects you with a licensed broker from our network who can review what you are paying and tell you whether a better structure is realistically available. If you are already on a sharp rate, you will know that too — and that certainty costs nothing.