Calculator
Comparison Rate Calculator
Comparison Rate Calculator
Comparison Rate
1200.00%
True Cost Analysis
Fees lift the true cost of this loan from the advertised 6.19% to a comparison rate of 1200.00% — a hidden load of 1193.81 percentage points that costs you $13,600 over the term. Under the NCCP rules, Australian lenders must advertise the comparison rate alongside the headline rate, so check that your lender's official comparison rate matches this figure; if yours is materially higher, the fees are doing more damage than the rate.
The comparison rate is calculated on standard NCCP assumptions (for a $150,000 loan over 25 years) but this tool models your actual inputs, so your figure may differ from a lender's official one. Educational only, not lending or financial advice.
The Comparison Rate: Australia's Truth-in-Lending Number
A comparison rate is a single percentage that bundles a loan's advertised interest rate together with its known fees and charges, so borrowers can see the true cost of a loan at a glance. Under Australia's National Consumer Credit Protection (NCCP) legislation, lenders must display the comparison rate next to the advertised rate whenever they market a home or personal loan to consumers. The idea is simple: two loans quoted at 6.19 per cent are not the same loan if one carries a $1,100 establishment fee, monthly service fees and an annual package fee — the comparison rate exposes that. The effect of fees on the true cost of borrowing is surprisingly large relative to the fee itself, because you pay interest on money you never actually received (when fees are deducted from loan proceeds) or service the fee cost across decades. On a typical Australian home loan, fees of a few thousand dollars can lift the effective rate by 0.05 to 0.15 percentage points over 30 years — worth tens of thousands of dollars. That is why financially sophisticated Australians compare comparison rates first and advertised rates second, and why this calculator, which models your own fees rather than the standard $150,000/25-year NCCP assumptions, matters for real-world loan shopping.
Behind the Formula: Solving the Rate That Fees Imply
The advertised-rate leg is a standard amortisation: Repayment = P × r / (1 − (1 + r)^−n), where P is the loan amount, r the monthly rate and n the total months. The comparison rate is then solved by iteration — we find the monthly interest rate at which the repayments (at the advertised rate) plus ongoing fees exactly amortise the net amount you actually receive after upfront fees are deducted. That recovered annual rate is the comparison rate, and the gap between it and the advertised rate is the fee load in percentage points. This is the same present-value logic regulators use: fees are converted into an equivalent interest rate so every charge speaks the same language. Monthly and annual fees are folded into the payment stream, establishment fees reduce the effective principal, and the iteration runs until the balance hits zero. Because the official NCCP comparison rate is mandatorily computed on a $150,000 loan over 25 years regardless of your real loan, your personalised number here will differ from a lender's marketing figure — on larger balances the fee load is diluted, on smaller balances it is amplified. Both numbers matter, but yours is the one that reflects what you will actually pay.
Expert Insights
The Smaller the Loan, the Harder Fees Bite
Because most loan fees are fixed dollars, they represent a higher effective rate on small loans. A $500 establishment fee plus $10 a month barely moves a $600,000 mortgage's comparison rate but adds well over half a percentage point to a $30,000 car or personal loan. When comparing small-balance loans, the comparison rate can differ from the advertised rate by a full point or more — always judge personal loans, car loans and small investment loans on the comparison rate, never the headline.
Watch What the Official Comparison Rate Excludes
The mandatory NCCP comparison rate omits government charges (stamp duty, LMI in most cases, title fees), optional extras like redraw or offset fees, and savings features. Two loans with identical comparison rates can still differ in exit fees, offset functionality, and break costs on fixed periods. Use this calculator to test your specific fee stack, but read the product disclosure statement for the fees the headline comparison rate legally ignores — especially valuation, settlement and annual package fees.
Break Costs and Cashback Distort the True Rate
A loan's advertised or comparison rate assumes you keep it for the full term at the same rate. In practice Australians refinance every 3 to 5 years, and lenders claw back discounts via cashback reclaims and break costs on fixed periods. A loan that loses by 0.03 points on the comparison rate but has no discharge fee, free redraw and a cheap break-cost formula can beat the 'cheapest' comparison rate in real life. Model the full-horizon cost here, then sanity-check the exit costs before you sign.
Actionable Tips
- 1
Request the Full Fee Schedule Before Comparing
Ask your broker or lender for the complete fee list — establishment or application fee, monthly service fee, annual package fee, valuation and settlement charges — and enter each one here. Advertised comparison rates assume the standard NCCP loan parameters, so your personalised figure from this calculator is the accurate yardstick for your actual loan size and term.
- 2
Convert Package Fees Into a Break-Even
If one lender charges an annual package fee (often $300 to $400) for a rate 0.05 to 0.10 points lower, calculate the dollars saved on interest versus the fee over your expected holding period. On a $500,000 loan, 0.05 points saves about $250 a year — less than many package fees. This tool's rate-load figure tells you exactly how many points the fee stack costs, making that arithmetic honest.
- 3
Compare Three Quotes on Equal Terms
Run this calculator for at least three lender quotes with the same loan amount, term and repayment type. Rank them by comparison rate, then use the breakdown panel to compare total fees versus total interest separately. The loan with the lowest comparison rate is your default choice unless another loan's features (offset, portability, unlimited redraw) are worth a measurable premium to you.
Real-World Examples
Grace Found the 'Cheap' Loan Was Not
Grace compared two $500,000 home loans quoted at the same 6.19 per cent. Lender A had no fees; lender B had a $1,100 establishment fee, $10 monthly service and a $398 annual package fee. This calculator showed lender B's comparison rate 0.08 points higher — roughly $26,000 of extra cost over 30 years for identical interest. She took lender A and put the saved fees into an offset account instead.
Tom Refused the Dealer's Headline Rate
Tom was offered a $35,000 car loan advertised at 9.95 per cent with a $250 establishment fee and $12 monthly fee over five years. The headline looked competitive until he ran the numbers: the true comparison rate came out near 10.6 per cent. Armed with that figure he negotiated with a credit union quoting a slightly higher headline but zero fees — and won by more than $1,000 over the term.
The Abbots Rebalanced Their Fix
The Abbots were fixing $600,000 and shortlisted two fixed offers: 5.79 per cent with a $995 establishment fee versus 5.89 per cent with nothing to pay. Because their fixed period was only three years, the fee barely had time to dilute into the rate, and the fee-free loan's comparison rate came out fractionally ahead. They fixed with the no-fee lender, keeping both cash and flexibility for the inevitable refinance discussion at term's end.
Glossary of Terms
- Comparison Rate
- The annual rate that a loan would cost if all its known fees and charges were converted into interest, shown alongside the advertised rate under Australian NCCP law.
- Rate Load
- The number of percentage points that fees add to a loan's true cost — the gap between the comparison rate and the advertised rate.
- NCCP
- Australia's National Consumer Credit Protection legislation, which mandates comparison-rate disclosure on loans marketed to consumers.
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Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.