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The Loan Interest Rate Comparison Calculator helps borrowers determine potential savings when switching to a loan with a lower interest rate. It calculates the monthly savings by comparing the old EMI (Equated Monthly Installment) with the new EMI.
The calculator uses a simple formula:
Where:
Explanation: The calculator subtracts the new monthly payment from the old monthly payment to determine your monthly savings when switching to a loan with better terms.
Details: Comparing loan interest rates is crucial for making informed financial decisions. Even a small difference in interest rates can result in significant savings over the life of a loan, helping you reduce your monthly financial burden and pay off debt faster.
Tips: Enter your current monthly payment amount and the proposed new monthly payment amount. Both values must be positive numbers. The calculator will instantly show you your potential monthly savings.
Q1: What factors affect EMI calculations?
A: EMI is determined by loan amount, interest rate, and loan tenure. Lower interest rates or longer tenures typically result in lower EMIs.
Q2: Should I consider refinancing costs?
A: Yes, always factor in any refinancing fees, closing costs, or prepayment penalties when calculating overall savings from switching loans.
Q3: How often should I compare loan rates?
A: It's wise to compare rates annually or whenever there are significant changes in market interest rates or your credit score improves.
Q4: Are there other benefits to refinancing?
A: Besides lower payments, refinancing can provide better loan terms, fixed instead of variable rates, or cash-out options for home equity loans.
Q5: What's a good interest rate difference to justify refinancing?
A: Typically, a 0.5% to 1% reduction in interest rate can make refinancing worthwhile, but this depends on the loan amount and refinancing costs.