Comparison Rate Schedules - what do they mean?

Effective from 1st July, 2003 the Uniform Consumer Credit Code (UCCC) was amended to ensure that all credit providers include a Comparison Rate in all credit advertising relating to consumer fixed term products where an interest rate is advertised.

WHAT IS A COMPARISON RATE?

A Comparison Rate is an annual percentage rate that also includes lender-retained foreseeable fees and charges. It is an interest rate that gives indication of how much a loan costs over the term of the loan.

The rate is calculated using a formula provided in the legislation. The Comparison Rate is designed to tell the consumer the 'true' cost of the loan because it includes the cost of any establishment and maintenance fees (such as annual or monthly fees) in the loan.

However, the Comparison Rate DOES NOT include any government fees, charges or duties, or any fee or charge that is not ascertainable at the time the rate is disclosed. For example, fees that are dependant on events that may or may not happen, such as early repayment fees, deferred establishment fees, top-up fees, re-draw fees and switching fees.

WHAT IS A COMPARISON RATE SCHEDULE?

The Comparison Rate Schedule provides a description of what the Comparison Rate is based upon for various loan amounts and terms as dictated by the legislation. The consumer's exact loan amount may not appear on the schedule, but the consumer should refer to the closest loan amount as an indication.

WHY THE CHANGE?

It is a requirement under the Uniform Consumer Credit Code (UCCC) that lenders fully disclose costs of the loan prior to borrowers entering into a loan contract. All finance providers are required to show the Comparison Rate for the same loan amounts.

The introduction of the Comparison Rate was to provide consumers with an added tool for comparing the cost of credit products offered by different credit providers, and give them a better indication of what their loan is costing them.

HOW DO I OBTAIN A COMPARISON RATE?

Comparison Rates will be advertised wherever the lenders advertise an annual percentage rate for Mortgage and Investment Property Loans that are subject to UCCC Regulation (e.g. posters, brochures and their websites). When you do lending with Hudson Finance we provide this to you.

PROBLEMS THAT WE HAVE ENCOUNTERED

THE SOLUTION:

By using Hudson's Finance team you will have the benefit of our experience in sorting through all those issues for you. You do not have to go to a large number of individual lenders...obtain all this information for yourself... then sit down and sift through it all...and try to decipher what lender you think is going to be best... and then see if you can get that amount of lending approved.

Here at Hudson Finance we will first look, in conjunction with your adviser, at what your goals are - where you want to be and what you are trying to obtain. We then look at where you are at now.

Once we have all that information we then do all the looking and sifting and the servicing calculations for you and come back to you with your best options given all the above information. This includes Standard Variable Rates, Fixed Rates, Discounted Rates long and short term, Packages, other benefits such as Lines of Credit versus 100% Offset Accounts, Basic Variable Rates, Interest Only, Principle & Interest and the list goes on.

So whenever you need lending be sure to speak to your Hudson Financial Adviser and to the Hudson Finance team and let us do the hard work for you! To book an appointment call us on freecall 1800 804 296 or book online.