What is a car loan comparison rate?

A car loan comparison rate is the interest rate of a car loan plus most fees and charges such as account keeping or administration fees, rolled up into one figure and expressed as a percentage per annum (per year). The comparison rate gives a would-be borrower a clearer understanding of how much their loan will cost instead of the base interest rate. The bare interest rate is often used in marketing as it’s usually far lower than the comparison rate on offer. Some lenders and banks advertise interest rates this way to attract customers. Since the comparison rate also includes most fees and charges, this allows you to calculate your budget and get a better estimate of how much you can expect to pay each month in repayments.

How to best use a comparison rate to calculate your repayments

A comparison rate gives you a standard formula so you can compare two (or more) loans side by side and get a complete picture of the cost of a loan. When you have a comparison rate, loan term, and amount you want to borrow, you can calculate your repayments using a car loan calculator. This will give you approximate repayment figures, so you know whether your loan is within your budget.

Let’s look at a $20,000 car loan with a five-year term. Here are two examples with differing rates.

Car Loan Interest Rate Fees Comparison Rate Monthly Repayment
Package A 7.45% p.a. 0.5% p.a. 7.95% p.a. $405.05
Package B 6.95% p.a. 1.75% p.a. 8.7% p.a. $412.26

Though Package A has a higher base interest rate, it is more competitive when fees are added in as a comparison rate. All rates and figures here are estimates.

Remember, some car loan comparison rates may be for different loan terms, amounts, and include facilities such as balloon payments. Make sure you are comparing loans that have the same terms and amounts to get a clearer picture of how much you’ll be spending.

Compare car loan rates with Savvy

LenderProduct NameAdvertised RateComparison RateMonthly Repayment
SavvyNew Car Loan2.85%
fixed
3.93%$537.06
Bank of AustraliaUsed Car Loan6.45%
variable
6.66%$586.28
ANZOnline Secured Car Loan7.85%
fixed
8.70%$606.14
CUAFixed Rate Car Loan7.99%
fixed
8.29%$608.15
BankSASecured Fixed Personal Loan8.49%
fixed
9.39%$615.35
St GeorgeSecured Fixed Personal Loan8.49%
fixed
9.39%$615.35
CBASecured Car Loan8.49%
fixed
9.54%$615.35
NABVariable Rate Personal Loan14.19%
variable
15.06%$701.01

* Commercial loan with the loan amount of $40,000 is looking at a 5 year secured fixed rate of 2.85% p.a. and comparison rate of 3.93% p.a.. WARNING: all fees and charges may not be included on the example above, only the comparison rates, monthly repayment and total cost applies. Therefore, the total cost of the loan might be different. Comparison rate do not include broker fees, redraw fees, early termination fees and fee waivers. Comparison rate may change as a result of the different loan terms, fees and the loan amounts. Establishment fees and monthly fees do not apply to commercial loans, only consumer loans. However, there might be different fees apply.

Why choose Savvy?

We give you the choice of car loans with comparison rates so you know how much your loan will cost up front.

Upfront comparison rates
Find out how much you can spend on your next car with car loan comparison rates up front.
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Loans done your way. Loan consultants that tailor a competitive loan to your needs and expectations.
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