A comparison rate combines the interest rate with most fees and charges into one percentage, to help you compare the cost of similar loans, it does not include every possible cost, and it is not a personalised figure for your actual loan.
What it does and doesn’t include
- It’s calculated on a standard, prescribed loan amount and term set by regulation, not your own numbers
- It includes the interest rate and most fees and charges
- It does not include government fees and charges
- It does not include charges that only arise in particular circumstances, such as some early-repayment costs
- It compares cost only, it does not capture feature value such as offset or redraw flexibility
Why two loans with the same comparison rate can still differ
Because the comparison rate uses a standard scenario, it’s most useful for comparing similar products against each other, it’s less useful as a prediction of exactly what your own loan will cost. Two loans can share an identical comparison rate while differing meaningfully in the features, flexibility or fees that actually matter to your situation, so it’s a starting filter, not the final word.
Where PolicyMatch draws the line
Where this site displays a lender’s advertised comparison rate, it uses the lender’s current compliant published figure and required warning, PolicyMatch does not calculate an unofficial marketing comparison rate of its own.
What to prepare
- Use the comparison rate as one filter among several, not the sole decision factor
- Check which fees are and aren’t included in a given comparison rate
- Model your actual loan amount and term separately using the Calculator Lab, since the comparison rate won’t reflect them
Next step: see Comparison rate in the Loan Feature Explorer, and read the current official explanation on ASIC’s National Credit Code page.