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No-Fee Equivalent Interest Rate

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It can be difficult to compare loans because of differences in the interest rates and fees. For example, which is the less expensive loan:

  • a loan with an 8% interest rate and 5% fees, or
  • a loan with a 9% interest rate and 4% fees
This calculator calculates the equivalent no-fee interest rate for the loan, allowing for easier comparison of loans with different terms. The calculator makes appropriate adjustments to ensure that the net disbursements are the same. (The calculator effectively increases the loan balance enough so that the net proceeds after deducting the fees is the same.)

Please note that this calculator does not involve net present value adjustments. A loan with up-front fees is somewhat more expensive than the equivalent loan with no fees, since the fees are paid earlier in the lifetime of the loan.


Interest Rate:
Loan Fees:
Loan Term:
 

 
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