## What is Real Time Ratings?

Real Time Ratings^{TM} is a world-first rating system that ranks car loans based on your individual lending requirements.

Unlike other car loan rating systems that grade their products once or twice a year, Real Time Ratings^{TM} results are calculated as you use the site, making them as up to date as possible.

Real Time Ratings^{TM} gives each car loan a score out of five stars, based on loan costs and flexibility. It also factors in your loan size, loan term, borrowing purpose and whether you’re providing loan security, so you don’t waste time looking at loans that aren’t applicable to you.

Getting a car should be an enjoyable experience, and that’s why Real Time Ratings^{TM} was created. It does the hard work for you, so you can make an easy decision on your next car loan.

## How we calculate Real Time Ratings

Each car loan displayed on RateCity’s car loan comparison table has been assessed using an algorithm that compares both the price and features of car loans using a methodology that assesses the value proposition of each product considered relative to its peers.

To arrive at a Total Score, RateCity applies a weight against a Cost Score and Flexibility Score. This method can be summarised as:

**Real Time RatingTM = Weighted Cost Score + Weighted Flexibility Score**

### How is the Cost Score calculated?

The Cost Score of each product is dynamically calculated using the Average Monthly Cost of the product and is based on the user inputs of the car loan comparison table. Scores are indexed based on the subset of products that meet the criteria of the inputs. E.g. a user that has filtered for car loans for $30k will be returned a list of products available for this criteria with the Cost Score of each product indexed against only the other products that meet this criteria.

Each time a user input filter impacting the assumptions of the Average Monthly Cost calculation or the available products is changed, the Cost Score calculations are retriggered. The following table outlines the values used in calculating the Average Monthly Cost for each product:

Product Details | General Assumptions |

Advertised interest rate | Loan term (based on user input) |

Introductory interest rate (if applicable) | Loan amount (based on user input) |

Duration of any applicable introductory period | Standard payment schedule based principal and interest repayments |

Upfront fees | Interest charged over the duration of the term |

Ongoing fees | Cost rounded to 1 decimal place |

#### Calculating Cost Score from Average Monthly Cost

When calculating the Cost Score from the market of Average Monthly Costs being displayed, outliers are handled such that really low or really high scores are adjusted to fit within the distribution of the rest of the market.

Once outliers have been adjusted, scores are normalised using a Box-Cox transformation. A Box-Cox transformation is a way to transform data so that it is more normally distributed and allows the Average Monthly Costs of car loans to be compared based on the other options in the market.

Following this, scores are scaled to a range between 0 to 5.

### How is the Flexibility Score calculated?

Real Time RatingsTM uses discrete scoring (i.e. having a specific feature is worth a specific number of points) and the overall Flexibility Score is based on the aggregated total of all points scored across all features assessed.

The percentage of available points listed below are based on the total number of points achievable for each category as a percentage of the maximum possible number of points achievable in the Flexibility Score. Percentages have been rounded to assist with interpretation of the methodology.

Category | Description | Percentage of Available Points |

Flexibility | 50% | |

Application Channels | Methods available for applying for the loan (branch, online, phone, mobile lender, broker) | Equally weighted for remaining 87% of the category |

Instant Approval | Is the loan able to be instantly approved upon application | |

Time to Funding | Following approval, how long until funds are received by the borrower | |

Maximum Loan Amount | How much can be borrowed, with larger loan amounts seen as favourable | |

Security Options | What security can be used for the loan (vehicle, property, deposit) | 13% |

Functionality | 50% | |

Repayment Frequency | What are the available repayment frequencies (daily, weekly, fortnightly, monthly, quarterly, semi-annually, annually) | 32% |

Extra Repayments | Are additional repayments allowed to be made against the loan | Equally weighted for remaining 68% of the category |

Redraw Facility | Are additional repayments allowed to be redrawn | |

No Early Exit Penalty | No penalty for paying off the loan early |

The flexibility points scored by a product is then converted into the Flexibility Score using the following steps:

- Adding up all the flexibility points for each savings account being evaluated.
- All car loans are ranked based on their total flexibility points. This ranking is then changed into a percentile score. For example, the top 1% of accounts (those with the most flexibility points) are given a 99th percentile ranking.
- Each product is then given a score that fits a normal distribution. This score is based on where it sits within the distribution of all the products, considering that the 'average' product scores a 3 and with variability around that average.
- Finally, scores that naturally fall above 5 based on the distribution are adjusted to be capped at a maximum of 5.

#### Applying Weights to Calculate Real Time RatingsTM

Following the calculation of the Interest Score and the Flexibility Score, a Real Time RatingTM is then calculated by weighting the Cost Score and the Flexibility Score and adding these scores together to come up with the Real Time RatingTM for the product.

This is done using the following weights with accompanying examples:

Cost Score | Flexibility Score | Total Score |

90% | 10% | Real Time RatingTM = 4.33 |

Interest Score of 4.5 x .90 = 4.05 | Flexibility Score of 2.8 x .10 = 0.28 |

As both the Cost Score and Flexibility Score are out of 5, once each is weighted and added together the maximum possible Real Time RatingTM score for a car loan is 5.

### How often are products reviewed for Real Time Ratings purposes?

Real Time RatingsTM are calculated on an hourly basis based on the information that is available in the RateCity database..

### Does RateCity rate all products available in the market?

We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our Real Time RatingsTM. However, this process is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you.

# How RateCity leaderboards work

We’ve built these leaderboards to help you quickly see what are the top banking products in each of the key categories.