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How do you work out the cost of a loan in order to compare it with others? Most people simply look at the interest rate. That’s a start, but it’s not the whole picture.
While the interest rate is a major component, you also need to take into account other costs that will have an impact on a loan over the course of the loan term. Costs such as up-front charges and ongoing fees can obscure the cost of a loan because they can vary between loans and lenders. |
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A Comparison Rate reveals the cost of a loan, allowing you to compare ‘apples with apples’ when choosing a loan. The Comparison Rate takes into consideration the costs associated with setting up a loan including the interest rate, the loan approval fee and any other up-front or ongoing fees. It excludes government fees and charges, because they are standard across all loans.
Here are two examples:
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Loan Amount
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$150,000
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$150,000
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Interest Rate
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7.74 % p.a.
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7.04 % p.a.
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Loan Term
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25 years
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25 years
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Loan Approval Fee
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$600
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$600
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Monthly Fee
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$5
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Nil
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 Comparison Rate™ (based on monthly repayments)
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7.84 % p.a.
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7.09 % p.a.
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The resulting Comparison Rate can be compared against the Comparison Rate for other ANZ Loans and loans with other lenders.
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Simply look for this symbol which represents the Comparison Rate.
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It’s also important to consider the features of a loan rather than just the interest rate when comparing loans. No monthly fee, repayment flexibility and money-saving features such as 100% mortgage offset can make a huge difference to the final cost of a loan.
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