NATIONAL CONSUMER CREDIT PROTECTION REGULATIONS 2010 - REG 100 Calculation of comparison rates

NATIONAL CONSUMER CREDIT PROTECTION REGULATIONS 2010 - REG 100

  (1)   For section   166 of the Code, comparison rates are to be calculated in accordance with this regulation.

  (2)   The comparison rate must be calculated as a nominal rate per annum, together with the compounding frequency.

  (3)   The comparison rate is calculated using the formula:

    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 the following:

    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 .

"t" is the time, measured as a multiple of the interval between contractual repayments (or other interval so selected) that will elapse between the time when the first amount of credit is provided and the time when the last repayment is to be made under the contract.

  (4)   The comparison rate must be correct to at least the nearest one hundredth of 1% per annum.

  (5)   In the application of the formulae, reasonable approximations may be made if it would be impractical or unreasonably onerous to make a precise calculation.

Example:   If repayments are to be made on a fixed day each month, it may be assumed that repayments will be made on that day each month even though the credit contract provides for payment on the preceding or succeeding business day when the due date is not a business day.

  (6)   The tolerances and assumptions under sections   180 to 182 of the Code apply to the calculation of the comparison rate.

  (7)   The comparison rate must be accompanied by a statement of the amount of credit on which it is based and the term for which credit is provided.