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