1. What is the Loan Interest Comparison Calculator?

This calculator compares monthly payments between two different interest rates for the same loan amount and term. It helps borrowers understand potential savings when refinancing or comparing loan offers.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Loan principal amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months

Savings Calculation: The monthly savings is calculated as the difference between the old EMI and new EMI.

3. Importance of Comparing Interest Rates

Details: Even small differences in interest rates can result in significant savings over the life of a loan. This calculator helps visualize the immediate monthly impact of rate changes.

4. Using the Calculator

Tips: Enter the loan amount, loan term in months, and both interest rates (as percentages). The calculator will show your current payment, potential new payment, and monthly savings.

5. Frequently Asked Questions (FAQ)

Q1: What is EMI?
A: EMI stands for Equated Monthly Installment, which is the fixed payment amount made by a borrower to a lender at a specified date each calendar month.

Q2: Does this calculator account for loan fees?
A: No, this calculator only compares interest rates. Additional fees should be considered separately when evaluating loan options.

Q3: Can I use this for different loan types?
A: This calculator works best for fixed-rate installment loans. Adjustable-rate loans or interest-only loans may have different payment structures.

Q4: How accurate are the results?
A: The results are mathematically accurate for the inputs provided, assuming standard loan amortization and no additional fees.

Q5: What if one interest rate is zero?
A: The calculator handles zero interest rates by dividing the loan amount by the number of months, resulting in equal principal payments.