Toyota Comparison Rate vs Interest Rate, do you know the difference?

What is Toyota Comparison Rate?

Comparison rates vs interest rates. Do you know the difference?

It’s always good to compare lenders when you’re considering car finance. But do you know the true cost of different loans? People usually focus on the rates they see on advertisements without knowing what the comparison rate actually means. So here’s the rundown.

A comparison rate gives you a better picture of the real cost of a car loan. It includes both the interest rate and fees relating to the loan (excluding government fees and charges), reduced to a single percentage. Comparison rates are required to be used when advertising car finance rates and were introduced as a way to ensure lenders were being transparent about the actual costs of their car loans. Lenders also must say whether the comparison rate is for a secured or unsecured loan.

Comparison rates are based on a legislated standard list of amounts and terms typical of the type of loan being advertised. For car loans, comparison rates are always calculated using $30,000 and a term of five years.

What makes up a comparison rate?

A comparison rate is calculated by taking into account:

• The term of the loan
• The frequency of repayments
• The annual percentage rate
• Credit fees and charges connected with the loan.

These fees and charges can include application fees, monthly or annual charges, cost of valuation and legal fees. However, they don’t include government charges, such as stamp duty, or anything that may be charged if a certain event happens in the future, such as a redraw or early termination fees.

The next time you’re comparing car loans, be sure to keep a lookout for the comparison rate. It’s your best tool when it comes to comparing and understanding the true cost of all the loans on offer.

Toyota Comparison Rate at Sunshine Toyota

Our team here at Sunshine Toyota can help you every step of the way when purchasing the Toyota of your dreams. For more information about the Toyota Comparison rate, contact us at Sunshine Toyota, your local Toyota dealership.