Australia
Comparison Rate Explained: What It Includes and How to Use It in Australia
A mandated number that makes fees visible. It has one known blind spot, and lenders price around it.
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- Legal basis
- NCCP, ASIC requires disclosure
- What it includes
- Interest plus most fees
- What it misses
- Small fees under $150, some charges
- How to use it
- As the primary comparison figure
It exists to expose fees
Before comparison rates, lenders advertised low rates with large establishment fees. The figure folds those in, which is why a 6.9% headline often shows a 7.8% comparison rate.
The blind spot is small fees
Fees below roughly $150 are excluded from the calculation. A lender can therefore stack several small charges that the comparison rate never reflects.
Read the fee schedule anyway
Comparison rate plus a fee schedule is a complete picture. The rate alone is not.
It is the only fair ranking
Across three or four offers, the comparison rate orders them by real cost. That is exactly what it was built for.
VerdictUse the comparison rate to rank, then read the fee schedule for what it misses.
FAQ
Is the comparison rate guaranteed?▾
No, it is illustrative for a standard loan amount.
Does it include early repayment fees?▾
No.
Should I compare headline rates instead?▾
Only alongside the comparison rate.
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