What is a comparison rate and why is it important?

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What information do you look for when searching for a personal loan?

If you look at and put prominence on the interest rate, you’re not alone! Many consumers and brokers who help consumers find personal loans automatically choose to apply for or recommend the loan with the lowest interest rate.

However, this doesn’t always guarantee you’re getting the cheapest or best deal for your circumstances.

Instead of focusing exclusively on the interest rate, you should look at the comparison rate instead.


What is the comparison rate?

The comparison rate helps you to understand the real cost of a personal loan, whereas the interest rate is literally just the finance charged.

The comparison rate includes other fees attached to your loan. These include the establishment fee and any ongoing administration and management fees.


Pay more attention to the comparison rate

The interest rate doesn’t account for those fees. As such, loans with lower interest rates can have high fees. As a result, the comparison rate for these loans can be higher. You subsequently end up making higher repayments and paying back a larger amount overall than if you’d opted for the loan with the lowest comparison rate!

In contrast, a loan with a higher initial interest rate may have lower fees and a lower comparison rate.

It’s easy to see why automatically opting for a lower interest rate can be a bad idea!


How do I find out the comparison rate?

It is a regulatory requirement for all lenders to display the comparison rate for their loans alongside their interest rate in all advertising and communications. Both must be as prominent as each other.

Therefore, it’s easy to find out the comparison rate for a personal loan; you just need to understand what it is telling you!


With NOW Finance, the interest rate and comparison rate are always the same!

Because all our loans are fee-free!

With a NOW Finance personal loan, you’ll pay no application, no monthly, and no early termination fees.

Even if you find a personal loan offering a lower interest rate than NOW Finance, discover what the comparison rate is once all fees are considered. With no fees on your NOW Finance personal loan, our comparison rate may still be lower, and your loan cheaper as a result.


Focus on the comparison rate to get the cheapest personal loan solution for you

By focusing on the comparison rate when shopping around for a personal loan, you give yourself the best chance to find the best value loan for your needs.

What’s more, with NOW Finance, you can get your comparison rate before you apply without affecting your credit score. Get started by getting your rate to check whether you’re eligible for a NOW Finance personal loan, and discover the potential savings you can make with a no fee loan!

Disclaimer:  This article contains general comments and recommendations only.  This article has been prepared without taking account of your objectives, financial situation or needs.  Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.


New loans only. Applications for finance are subject to NOW Finance’s lending and approval criteria. Terms and conditions may apply. No fees apply however if you do not comply with the terms of your loan, we may pass on to you any third party enforcement or recovery costs incurred by us. Settlement times may vary depending on individual circumstances. Loan repayment terms range between 18 months to 7 years. For unsecured loans you can borrow between $5,000 to $50,000 with interest rates ranging from 5.95% p.a. (5.95% p.a. comparison rate*) to 17.95% p.a. (17.95% p.a. comparison rate*). For secured loans you can borrow between $15,000 to $100,000 with interest rates ranging from 4.45%p.a. (4.45% comparison rate*) to 15.45% p.a. (15.45% p.a. comparison rate*).  


The Comparison Rate is designed to help you understand the overall cost of the personal loan. It combines the amount of the loan, loan term, repayment frequency, interest rate, fees and charges into a single rate to show the total true cost of the loan. The comparison rates for the NOW Finance loans are based on a loan of $30,000 over 5 years. WARNING: The comparison rates given are true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. NOW Finance does not charge any fees therefore the true cost of the loan or Comparison Rate will always equal the interest rate quoted.


An unsecured personal loan of $30,000 borrowed for 5 years with the interest rate of 5.95% p.a. (5.95% p.a. comparison rate), would estimate to a minimum total amount payable of $34,686.60 via the weekly payment option. Rates are subject to change.


Our confirmed guaranteed personalised rate may change if you provide NOW Finance with incorrect personal information or security details. In some circumstances, NOW Finance may require further information from you in order to provide you with your guaranteed personalised rate.

NOW Finance is a trademark of Now Finance Group Pty Ltd ACN 158 703 612 Australian Credit Licence number 425142, as agent for NF Finco 2 Pty Ltd ACN 164 213 030