Loan Comparison Calculator
| Metric | Loan A | Loan B |
|---|---|---|
| Monthly EMI | ||
| Total Interest | ||
| Total Fees | ||
| Total Cost |
The Iceberg of Your Loan: What Lies Beneath the Surface?
When comparing loans, the interest rate is often the first—and sometimes only—number people look at. But the interest rate is just the tip of the iceberg. The true cost of a loan is often hidden below the surface, in a sea of fees and complex terms.
Meet the APR: Your True North
The most important tool for seeing the whole picture is the Annual Percentage Rate (APR). Unlike the simple interest rate, the APR includes both the interest and most of the upfront fees a lender charges, giving you a more accurate measure of a loan's real cost. A loan with a lower advertised interest rate but high fees could actually have a higher APR than a loan with a slightly higher rate but zero fees.
Frequently Asked Questions
What is the most important factor when comparing loans?
The total cost (principal + interest + fees) is the most important factor for determining which loan is cheaper overall. The APR (Annual Percentage Rate), which includes both interest and fees, is the best single percentage to use for an "apples-to-apples" comparison of this cost.
Should I always choose the loan with the lower EMI?
Not necessarily. A lower EMI (monthly payment) often comes with a longer loan tenure. This means that while your monthly outgo is less, you will likely pay significantly more in total interest over the life of the loan. This calculator helps you see both the monthly payment and the total cost to make a balanced decision.
How do fees impact the total cost of a loan?
Fees are a direct, out-of-pocket cost added to your loan. A $1,000 fee means you have to pay $1,000 more than the principal and interest. This is why a loan with a slightly lower interest rate isn't always the best deal if it comes with high upfront fees. Always factor them into your comparison.