Don’t Get Caught by Hidden Costs – Check the Real Interest Rate
That eye-catching low-interest rate might look tempting, but is it really the full picture? The comparison rate tells you the true cost of your loan, factoring in both the interest rate and any additional fees. That way, you can make smarter borrowing decisions and avoid unexpected costs down the track.
Use our Comparison Rate Calculator to instantly compare loans and find out which one actually offers the best deal.
But First, What Is a Comparison Rate?
A comparison rate is designed to give borrowers a clearer picture of what a loan will actually cost over time. Unlike the advertised interest rate, which only reflects the base rate, the comparison rate includes loan fees and charges, giving you a more accurate representation of your repayments.
For example, a loan may have an advertised interest rate of 4.99%, but once you factor in fees, the comparison rate might be 5.42%—meaning the real cost of borrowing is higher than it first appears.
Why Is the Comparison Rate Calculator Important?
The comparison rate is your best tool for cutting through lender marketing and seeing the actual cost of different loan options. Here’s why it matters:
Reveals the True Cost
Includes both the interest rate and mandatory loan fees so you get a complete picture.
Prevents Misleading Deals
Some loans advertise ultra-low interest rates but come loaded with hidden fees.
Helps Compare Apples to Apples
Two loans with the same advertised rate can have very different comparison rates, affecting your long-term costs.
Saves You Money in the Long Run
Choosing a loan based on the comparison rate, not just the advertised rate, helps you avoid expensive surprises.
What Affects the Comparison Rate?
The base rate offered by the lender.
Ongoing fees, annual fees, and upfront charges that impact the total cost.
Shorter loan terms often result in higher comparison rates due to upfront costs being spread over fewer years.
Weekly, fortnightly, or monthly repayments can slightly alter the comparison rate.
Common Mistakes to Avoid When Comparing Loans
Only Looking At the Advertised Rate
Many borrowers focus purely on the interest rate, ignoring the fees that can add up over time.
Not Factoring in Ongoing Costs
Application fees, annual fees, and early repayment penalties all impact the overall cost of the loan.
Ignoring Loan Features
A loan with a slightly higher comparison rate may still be better if it offers useful features like an offset account or extra repayment options.
Comparing Loans with Different Terms
A 30-year loan will have a different comparison rate than a 25-year loan, even with the same interest rate and fees.
What's Next?
Now that you know how to compare loans the right way, the next step is finding the best deal for your needs. Our team can help you navigate the fine print and secure a loan with the lowest true cost.
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