71Comparison rate

71 Comparison rate

(1) This regulation applies if: (a) a credit provider, before entering into a credit contract, informs the debtor of the comparison rate in accordance with subsection 16(3) of the Code; or (b) a person publishes, or causes to be published, an advertisement that states or implies that credit is available and includes in the advertisement the comparison rate in accordance with Part 10 of the Code. (2) The comparison rate must be calculated as a nominal rate per annum, together with the compounding frequency, in accordance with this regulation. (3) The comparison rate is calculated using the formula: Start formula n times r times 100% end fraction where:

n is the number of repayments per annum to be made under the credit contract (annualised if the term of the contract is less than 12 months), except that:

(a) if repayments are to be made weekly, n is 52.18; and
(b) if repayments are to be made fortnightly, n is 26.09; and
(c) if the contract does not provide for a constant interval between repayments, n is to be derived from the interval selected for the purposes of the definition of j.

r is the solution of:

Start formula sigma-summation underscript j equals 0 overscript t endscripts start fraction A start subscript j end subscript over open bracket 1 plus r close bracket start superscript j end superscript end fraction equals sigma-summation underscript j equals 0 overscript t endscripts start fraction R start subscript j end subscript plus C start subscript j end subscript over open bracket 1 plus r close bracket start superscript j end superscript end fraction end formula where:

Aj is the amount of credit to be provided under the contract at time j (the value of j for the provision of the first amount of credit is taken to be zero).

Cj is the fee or charge (if any) payable by the debtor at time j in addition to the repayments Rj, being a credit fee or charge (other than a government fee, charge or duty) that is ascertainable when the comparison rate is disclosed (whether or not the credit fee or charge is payable if the credit is not provided).

j is the time, measured as a multiple (not necessarily integral) of the interval between contractual repayments that will have elapsed since the first amount of credit is provided under the credit contract, except that if the contract does not provide for a constant interval between repayments an interval of any kind is to be selected by the credit provider as the unit of time.

Rj is the repayment to be made at time j.