Borrowing money
They gave you a payment. What's the actual rate?
The call, the mailer and the finance office all work the same way: lead with a comfortable monthly number, leave out the term, never say the APR. Type in what they told you and see what every plausible term would really mean.
What they told you
The two numbers they always lead with — and the one they never volunteer.
Compare against
Set this to what a credit union or your own bank would quote you. The difference is what one phone call is worth.
$25,000 at $520 a month means...
A payment alone doesn't describe a loan. Here is the rate each possible term would imply — pick the one they quoted, or ask.
| Term | Implied APR | Total paid | Interest | Verdict |
|---|---|---|---|---|
| 12 months1 yr | — | $6,240 | — | Can't be this term |
| 24 months2 yr | — | $12,480 | — | Can't be this term |
| 36 months3 yr | — | $18,720 | — | Can't be this term |
| 48 months4 yr | — | $24,960 | — | Can't be this term |
| 60 months5 yr | 9.09% | $31,200 | $6,200 | Competitive |
| 72 months6 yr | 14.36% | $37,440 | $12,440 | Middle of the road |
| 84 months7 yr | 17.63% | $43,680 | $18,680 | Middle of the road |
| 96 months8 yr | 19.75% | $49,920 | $24,920 | Middle of the road |
| 120 months10 yr | 22.19% | $62,400 | $37,400 | Expensive |
Tap any row to work through that term in detail below. Verdict bands: under 10% competitive · 10–20% middle of the road · 20–36% expensive · 36%+ predatory territory.
Interest saved
$1,143
Money that stays with you
Monthly difference
$19.05
$520 theirs vs $501 elsewhere
Total cost of this offer
$31,200
60 payments of $520
If this is a 60-month loan, they are charging you about 9.09%. Financing the same $25,000 at 7.50% over the same term would cost $500.95 a month and save you $1,143 overall.
Their offer
60 months at 9.09%
- Monthly payment
- $520.00
- Total interest
- $6,200
- Total paid
- $31,200
- Per dollar borrowed
- $1.25
Shopped elsewhere
60 months at 7.50%
- Monthly payment
- $500.95
- Total interest
- $5,057
- Total paid
- $30,057
- Per dollar borrowed
- $1.20
Interest as a share of the loan
25%
Of the amount you actually receive
Payments you'd make
60
5 yr
Cost of not shopping
$1,143
Versus 7.50% elsewhere
Their offer, payment by payment (60 months)
60 payments · $6,200 interest
Five questions to ask before you say yes
- 1What is the APR? Not the interest rate, not the payment — the APR, which includes fees. They are required to tell you in writing before you sign.
- 2What is the total of payments? This single number ends most bad deals on the spot.
- 3How many payments, and is the last one the same size? A balloon payment at the end is how a comfortable monthly number hides a wall.
- 4Is there a prepayment penalty, and is the interest precomputed? If interest is precomputed, paying early saves you little or nothing.
- 5What happens if I'm late? Ask about the fee, the penalty rate, and whether the loan is secured by anything you own.
If they won't answer in writing, that is the answer
Legitimate lenders disclose the APR and total of payments as a matter of routine. Pressure to decide immediately, a refusal to put terms in writing, or a request for an upfront “processing fee” before funding are all signs to hang up.
What this calculator assumes
- Why does the term matter so much?
- Because a payment is meaningless without one. $520 a month against $25,000 is roughly 9% over five years and roughly 18% over seven — the same two numbers, twice the cost. Anyone quoting a payment without a term is, at best, leaving out the part that decides whether it's a good deal.
- Is the implied APR the same as the legal APR?
- Close, but not identical. This solves for the interest rate that produces the quoted payment. The legally disclosed APR also folds in origination and finance charges — add those in the fees box and the two figures converge.
- Why do some rows say the numbers don't add up?
- Because the payments over that term total less than the amount borrowed, which would mean a negative interest rate. In the real world that usually signals a balloon payment at the end, a longer term than you were told, or a misquote.
- Where do the verdict bands come from?
- They are rules of thumb, not law. Well-qualified borrowers at banks and credit unions typically see single digits on secured loans and low teens on unsecured ones. Rate caps on consumer installment loans vary by state, and 36% is the ceiling Congress set for active-duty service members — a useful line for everyone else too.
- What isn't modeled?
- Precomputed interest, credit insurance bundled into the payment, variable rates, and prepayment penalties. Each makes a bad offer worse, never better.