The all important comparison rate.
Often people are confused by this term and only concentrate on the interest rate of the loan.
However this can give a less than accurate picture of how much your loan is really costing you, and of how much the loan will be, when comparing to other products with the same or different lenders.
The best analogy I find is – when you buy a discount airline ticket and think wow that’s great $39.00 for a flight to Melbourne – that’s the analogy for the interest rate. But then you have to add taxes and g.s.t, luggage charges, booking fees and so on – that is the analogy for the comparison rate.
So always remember to check the comparison rate – as this is how much the loan will cost you overall (just ensure you are comparing Melbourne flights with Melbourne flights and not with Queensland flights eg. Fixed loans, vs Variable or Lines of Credit, as these are different products with different features).
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