Which Loan Actually Costs Less — How to Compare Properly

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Overview

Banks advertise monthly payments, not total costs. The loan with lower monthly payments often costs far more overall.

Total Cost = Monthly EMI × Number of Months

Standard formula used by professionals worldwide

Loan A: 500k at 10% 60mo → total 637,448 | Loan B: 500k at 12% 48mo → total 591,200 → B is cheaper

Accuracy: Results are as accurate as the inputs you provide
Units: Always use consistent units throughout your calculation
Verification: Double-check important calculations before making decisions
Professional advice: For major financial, health, or structural decisions, consult a qualified professional

No — lower monthly usually means longer tenure and more total interest.

Annual Percentage Rate includes all fees and interest. Compare APR not just stated rate.

Processing fees, insurance requirements, prepayment penalties, monthly service charges.

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