Formula
Interest is every payment minus the amount borrowed. The same term is priced at both rates:
Total interest = all payments − principal
The difference is the entered rate's interest minus the comparison rate's interest. A positive difference means the entered rate costs more. The monthly payment itself is on the loan payment page.
Assumptions
- Both rates stay fixed for the same amount and term.
- Payments are monthly and rounded to the nearest cent.
- No fees or extra principal payments are included.
Worked example
A $20,000 loan at 8.5% for 4 years costs $3,662.32 in interest. At 6% the interest is $2,545.66.
Input definitions
- Annual interest rate
- The rate whose total interest is the main result.
- Comparison rate
- A second fixed rate used only to show the change in total interest.
Limitations
This is an estimate, not a loan offer or a quote of the rate you will be approved for. The currency control changes the symbol only.
Questions
What does the difference mean?
It is the entered rate's total interest minus the comparison rate's total interest over the same term. A negative difference means the comparison rate costs more.
Does this include the principal?
No. The main result is interest only. The monthly payment row includes both principal and interest.