Comparison rates

Have you ever wondered what comparison rates are?

Comparison rates are provided so consumers can identify the true cost of a loan. The rate includes both the interest rate and fees and charges relating to a loan, reduced to a single percentage figure so you can compare the true cost of a loan between lenders.

How is a comparison rate calculated?

A Comparison Rate takes into account the:

• ◊ loan amount
• ◊ loan term
• ◊ repayment frequency
• ◊ interest rate and

fees and charges associated with the loan, except for:

• ◊ government charges, such as stamp duty or mortgage registration fees;
• ◊ fees and charges which may or may not be charged, because they depend on some event which may or may not occur (eg fees for early repayment or redraw fees)
• ◊ fees and charges which are not ascertainable at the time the comparison rate is provided.

Points to remember when using Comparison Rates:

These rates are a useful tool for comparing the cost of different loans, but it is important to consider all of a loans features and not just focus on the comparison rate. A comparison rate does not take into account things such as:

• ◊ fee free banking and flexible payment arrangements
• ◊ government fees and charges
• ◊ fees and charges that only occur in certain circumstances

What is a Comparison Rate Schedule:

A comparison rate schedule is a list of comparison rates for a range of standard loan amounts and terms for a particular credit product e.g. . The standard amounts and terms have been set in legislation and the credit provider must calculate a comparison rate for all of the listed amounts that are generally available for that credit product. As they use the same loan amounts and terms, comparison rate schedules can be used to compare the comparison rates of different credit products.

Where are your rates published?

Locumsgroup comparison rates are published each week in The Sydney Sun Herald.