Comparison Rates

A comparison rate helps consumers identify the true cost of a loan. It includes both the interest rate and fees and charges relating to a loan, further reduced to a single percentage figure. A comparison rate can be a useful tool for comparing the cost of different loans, but it’s important to consider all of a loan’s features and not just focus on the comparison rate.

Comparison rates are calculated with a standard formula, taking into account:
  • The amount of the loan
  • The term of the loan
  • The repayment frequency
  • The interest rate and
  • The fees and charges connected with the loan

The comparison rate does not take into account:
  • Government charges, such as stamp duty or mortgage registration fees
  • Fees and charges which may or may not be charged, depending on the event in which they occur
  • Fees and charges which are not ascertainable at the time the comparison rate is provided

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