When choosing Commercial Hire Purchase finance, there is a wide variety of different factors that should be considered to ensure you choose the right loan for you. You need to consider other costs such as ongoing fees, and up-front charges which add to the cost of your loan over the loan term at the same time as comparing interest rates. These costs can vary between finance lenders and banks, so how do you make sure you are comparing apples with apples. By using the comparison rate.

What is the comparison rate?

The comparison rate is an indicative interest rate that combines the nominal interest rate with any foreseeable fees and charges associated with the loan, to help you obtain a more comprehensive picture of what your loan is going to cost you over the life of the loan. While the comparison rate helps you to compare one loan against another on a cost basis, it's also important to consider the features of a loan such as redraw and direct debit facilities, loan portability and repayment options that increase the flexibility of your loan and can make a huge difference to the overall cost of the Commercial Hire Purchase finance.

What costs does the comparison rate include?

• Nominal interest rate
• Loan approval and any other up-front fees
• Known ongoing fees

What does the comparison rate exclude?

• Government and statutory fees - as these are standard regardless of lender or loan type
• Insurance products like comprehensive car insurance premiums
• Fees and charges that are event based and may or may not apply throughout the life of your loan. Eg. Statement fees or early repayment fees

How do you calculate the comparison rate?

The comparison rate is calculated in accordance with a standard formula, specified by the regulations, which takes into account:

• The amount borrowed
• The term of the loan
• The frequency of repayments
• The interest rate
• Ascertainable fees and charges connected with the loan except for government charges

What is a comparison rate schedule?

The Comparison Rate Schedule is a table that displays Comparison Rates for varying loan amounts and terms. At Advance Car Loans Pty Ltd the Comparison Rate Schedules of our major panel lenders will be on display and available for collection. The Schedules will also be provided to customers with each application. The loan amounts and terms displayed in the various lenders. Schedules are examples that are determined by law and will be consistent for all lenders providing similar products. The schedules are not, in themselves offers of finance at the rates or terms shown and each application is judged on the credit and security criteria standards of the Lenders approached.