The widely used number is becoming outdated and needs to be refined
There’s a home loan that’s advertised for 3.69% and another for 3.52%. Which do you choose? Savvy shoppers know that aside from looking at features you should never compare loans based on their advertised rates but rather their comparison rates. The problem with this, though, is that some experts are now suggesting that comparison rates may have passed their use-by date.
Vincent Turner, CEO of online mortgage broker Uno Home Loans, says comparison rates, while noble in their intention, don’t accurately demonstrate the true cost of a loan to the consumer. “The main reasons for this are that comparison rates are calculated using a loan value of $150,000 – significantly less than the value of the average Australian mortgage – and are always calculated across a 25-year term.”
By law lenders must show you the comparison rate. The figure typically includes the interest rate as well as most upfront and ongoing fees and charges.
Whatever its shortcomings, it does help customers identify the true cost of a loan. As an example, a loan with an advertised rate of just 3.74% and no establishment fee could have a comparison rate of 4.06% because of an ongoing annual fee and a discharge documentation fee.
هذه القصة مأخوذة من طبعة May 2018 من Money Magazine Australia.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة May 2018 من Money Magazine Australia.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
An outrageous, beautiful monopoly
Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.
Drop the anchor to judge value
Buying and selling decisions should be based on where a stock price is going, not where it has been.
Powering the AI boom
Beyond the software and chipmakers, where will the energy come from?
Get into life
Tucked inside super are products that can protect you from life's inevitable uncertainties.
Paths to home ownership
Taking the road less travelled can sometimes deliver unexpected benefits.
Sold! Quick ways to add value
Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.
Money lessons the kids need to know
Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.
Property-investing rules: are they likely to change?
The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.
What's love got to do with it?
A rollercoaster of emotions could be driving poor crypto behaviour.
Are we ready to be cash-free?
Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.
