Comparison Rates

In order to help you compare the true cost of borrowing, all lenders are required by law to use the Comparison Rate when advertising interest rates for consumer credit loans, such as home loans, personal loans and car loans.

Most people just use the loan interest rate to compare different loans. Although this is a good start, it does not take into account other costs such as establishment fees, approval fees, any upfront or ongoing fees.

How are comparison rates calculated?

Comparison rates are calculated in accordance with a standard formula, which takes into account:

  • the amount of the loan;
  • the term of the loan;
  • the repayment frequency;
  • the interest rate; and
  • the fees and charges connected with the loan.

Comparison rates do NOT include:

  • government charges (eg stamp duty or mortgage registration fees) as these charges will be the same regardless of which financier or loan product the customer chooses;
  • fees and charges which cannot be ascertained at the time that the comparison rate is calculated; and
  • fees and charges which may or may not be charged, because they depend on some event which may or may not occur (for example, fees for early termination).

Comparison rates in advertisements

As different loan amounts and terms produce different comparison rates, comparison rates in advertisements must be based on the amount and term in a legislated standard list that is most typical of the loan being advertised.

For example, the standard list includes a loan of $30,000 for 5 years, which is similar to a typical car or personal loan, and $150,000 for 25 years, which is similar to a typical home loan.

A credit advertisement must clearly state the amount and term on which a comparison rate is based.

What is a Comparison Rate Schedule?

A comparison rate schedule is a list of comparison rates for a range of standard loan amounts and terms. The standard amounts and terms have been set in legislation and a comparison rate must be provided for all of the listed amounts that are generally available.

Comparison rate schedules must be made available at any premises of a credit provider, finance broker or linked supplier at which home and personal loans are advertised or where applications can be received. As the schedules use the same loan amounts and terms they can be used to compare the comparison rates of different credit products. So if you want to compare loans just ask the lender for their comparison rate schedule.

ME Bank has comparison rate schedules for the following products:

Super Members Home Loans (PDF) 20KB

Members Equity Home Loans (PDF) 19KB

Personal Loans (PDF) 32KB

Business Banking Home Loans (PDF) 38KB

What interest rate am I actually charged?

You are charged interest at the nominal rate. The Comparison Rate is included for comparison purposes only - to enable you to compare one loan against another.

What should you consider when choosing a loan product?

When choosing a loan product there are numerous things to consider, such as:

  • How much will the loan cost (use comparison rates to compare across different lenders)?
  • What features do I get for the cost and how many features are fee free?
  • Is the home loan flexible, does it allow me to make extra repayments?
  • Is the home loan accessible and allow redraws of extra repayments?
  • Are there fees for fixing my loan, topping up my loan or splitting my loan?
  • How much will different lenders lend me- this can vary between lenders?
  • How much can I afford and what amount do I want to borrow (this may be less than what the lender is willing to offer you)?


For further information about comparison rates please call us on 13 15 63

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