"Hi I work for a Debt Agreement administrator. There are 3 ways to end a debt agreement, you pay it out in full, you can apply to have the agreement terminated (however interest backdates from the start of your agreement), or you can offer to make a…"
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Interest rates - real versus comparison rates
Hi all, just wondering if anyone can shed some light on what the comparison rate means? The reason I ask is that I saw the HSBC ad here, and they have an interest rate and also a comparison rate...
Not sure what this is all about...
Can anyone help?
Not sure what this is all about...
Can anyone help?
Views: 5
Replies to This Discussion
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Permalink Reply by Vonny on -
Not sure about the textbook definition but the comparison rate is the advertised rate plus all the fees and charges u need to pay in order to get the loan or maintain it. It doesn't include exiting fees however. All mortgage products need to have a comparison rate stated somewhere.
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Permalink Reply by Tina on -
OK, that makes sense. But how is it determined? Do the banks determine it themselves, randomly choosing a "comparison rate"? Or is there a formula that is followed (much more likely)?
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Permalink Reply by Matthew Reader on -
There's a formula that is used that was devised by CANNEX.
You can use this calculator on St George's site. Most of the banks have it on their website somewhere:
Comparison rate calculator
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