Definitions for "Comparison rate"
A "Comparison Rate" is an attempt to express some of the costs of a loan into a single interest rate. These 'costs' include the nominal interest rate, some 'up-front' fees and on-going charges. It does not include fees and charges based on future events which may not occur eg redraw fees, progress payments etc which are not typical of all loans. The aim of the comparison rate is to help consumers make a more informed judgement of the costs of a loan, and in so doing, help them to compare various like loan products and services offered by the various lending institutions. The Uniform Consumer Credit Code (UCCC) has been amended to require a 'Comparison Rate' to be quoted on all advertising for home loans, personal loans and campus loans where an interest rate is stated.
a method of calculating the total cost of a loan, including interest and all fees and charges, to a single percentage rate
a tool designed to help you compare the true cost of loans offered by different lenders, taken out over the same time period for the same amount