What is a comparison rate?
The National Consumer Credit Protection Act 2009 (Cth) stipulates that any advertised interest rate must also include a comparison rate. A comparison rate is calculated in accordance with a standard formula which incorporates known establishment, ongoing and discharge fees into the interest rate.
It is designed to provide you with the ability to compare the ‘true cost’ of different loans.
However, the comparison rate does not include any ‘event-based costs’ such as redraw fees or fees that are not known at the time the comparison rate is provided.
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