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How is a comparison rate calculated?

Comparison rates are calculated using a standard formula that is set out in the National Credit Code.

Also known as the the ‘true’ or ‘real’ rate, the comparison rate calculates the average interest rate with the addition of any other upfront or ongoing fees during the loan term. Comparison rates operate under fixed conditions, which considers a loan of $150,000 on a 25 year loan period with a principal and interest repayment method.

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