The comparison rate is a tool that may help you compare the true cost of a loan.
While the interest rate is a major component, it’s not the only cost. There are other fees and charges that affect the true cost of the loan. The comparison rate includes in its calculation the interest rate and some of the fees and charges that may be payable with a loan reduced to a single rate.
You should be aware that different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.
Fees and charges are not the only factors to consider when deciding on the best loan for you. The features that each loan offers may also be important when making your decision.