Comparison rate in personal loans

My husband and I are looking for a personal loan and assessing the different loan products that are available to us. What is meant by the lenders "comparison rate"?

Credit providers must advertise a comparison rate when they advertise fixed term credit which is for, or mainly for, personal domestic or household purposes. It is a tool to help you work out the true cost of the loan. The comparison rate includes the interest rate and fees and charges. For example if a lender advertises an interest rate of 5.49% its comparison rate might be 6.75%.

You'll find the comparison rate useful for comparing rates between different loans. However, as the comparison rate doesn't include government fees and charges or the fees payable if you pay off a loan early charges you need to consider all of a loan's features.

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