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What is a comparison rate?

If you’ve been researching personal loans or home loans you may have noticed something called a ‘comparison rate’. Australian lenders are legally required to show customers a comparison rate to help them compare loans that last for a set period. Knowing exactly what the comparison rate is and how it works will help you make the decision that’s right for you.

A comparison rate indicates the true cost of a loan

A comparison rate is designed to help you understand the overall cost of a loan based on several relevant factors, rather than just the interest rate. That’s why this rate is useful when you're comparing loans from different lenders. 

It’s calculated using the interest rate and some additional fees and charges that may apply to the loan. It considers some of the following:

  • amount of the loan
  • loan term
  • repayment frequency
  • interest rate
  • fees and charges

Why pay attention to comparison rates?

The loan with the lowest interest rate isn’t always the cheapest option. Based on interest rates alone, you may think two loans cost the same – but the comparison rate could help reveal whether one loan costs more than the other. It could also help you decide the loan most suited to your budget and long-term financial goals. 

For instance, a loan with a low interest rate but high fees and charges may have a higher comparison rate than a loan with a higher interest rate but low fees and charges. That’s why, when shopping around for a loan, the comparison rate gives Australian borrowers a more accurate way to understand the true loan cost.

It’s important to remember that comparison rates only apply to loans with a fixed repayment term, not lines of credit such as Flexi loans, as there are too many variables.

Things to keep in mind

Remember that when you look at comparison rates, the loan amounts and terms don’t cover all possible situations – so they may not be an accurate reflection of your particular loan. The amounts that a comparison rate is based on will be in the fine print. While comparison rates can be a good starting point, they’re not the only thing to consider when shopping around for a personal loan. It’s also important to compare the other features of the loan to see if it works for you.

If you’d like to review the comparison rates on Westpac Personal Loans, take a look at our Unsecured Personal Loan  and Car Loan.

For more information about Westpac Home Loan comparison rates, see our full list of fixed and variable rates.

Want to learn more? Learn how to get a personal loan with Westpac.


Things you should know

Online Banking Terms and Conditions (PDF 236KB)

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice. Please consider your individual circumstances before applying for a Westpac Personal Loan. Credit criteria, fees, charges, terms and conditions apply. Information correct as of 19 May 2022. 

^Comparison rates: Comparison rates help you understand the true cost of a loan. All comparison rate examples shown are for a personal loan amount of $30,000 and a term of 5 years. WARNING: Comparison rates apply only to the example or examples given and may not include all fees and charges. Different loan 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.

  • Unsecured Personal Loan repayment terms range from 1 to 7 years. Interest rate ranges and representative examples are based on an unsecured loan of $30,000 borrowed for 5 years with the interest rate of 7.99% p.a. (comparison rate 9.18% p.a.), the estimated total amount payable including fees is $37,513. The actual rate offered may be higher or lower than the comparison example above. Rates currently range from 7.99% p.a. to 17.49% p.a. (comparison rate from 9.18% p.a. to 18.62% p.a.)
  • Car Loan repayment terms range from 1 to 7 years. Interest rate ranges and representative examples are based on a personal loan of $30,000 borrowed for 5 years with the interest rate of 6.49% p.a. (comparison rate 7.69% p.a.), the estimated total amount payable including fees is $36,224.