In 2003 it became mandatory for financial institutions to display comparison rates when advertising loans. Why? - The government could see a trend developing. Lenders were advertising loans with low interest rates, yet on closer inspection, the extra bank fees and charges affected the loan’s overall cost. It was becoming too hard for borrowers to compare one loan against another. The government introduced mandatory comparison rates that made it easier for borrowers to compare the cost of loans before they commit. Basically, the loan’s costs are bundled up into one comparable rate, reflected as a percentage. For example, a bank’s ...
