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Loan Comparison

Compare up to 3 different loans to find the best option

Loan 1

Loan 2

Loan 3

Comparison

Loan 1

Monthly

11,122.22

Total Interest

167,333.43

Loan 2

Monthly

8,300.59

Total Interest

197,249.73

Loan 3Best

Monthly

17,088.81

Total Interest

115,197.34

Loan Comparison: How to Choose the Right Loan

Before signing any loan agreement, it is essential to compare your options rigorously. Relying solely on the nominal interest rate can be misleading — the loan that appears cheapest may in fact cost more due to hidden fees and conditions.

Annual Percentage Rate (APR)

The Annual Percentage Rate (APR) is the most comprehensive and fair metric for comparing loans. It includes:

  • Nominal interest rate
  • File and processing fees
  • Mandatory insurance costs
  • Any other recurring charges

Always compare loans using APR, not just the nominal interest rate.

Total Cost of a Loan

Total cost = (Monthly payment × Number of months) − Principal

**Comparison example:**

| Bank | Principal | Annual Rate | Term | Monthly Payment | Total Paid | Total Interest | |------|-----------|-------------|------|-----------------|------------|----------------| | Bank A | 100,000 | 15% | 5 years | 2,379 | 142,740 | 42,740 | | Bank B | 100,000 | 13% | 7 years | 1,834 | 154,056 | 54,056 |

**Observation:** Bank B appears cheaper with a lower rate and lower monthly payment, but it costs you EGP 11,316 more in total due to the longer term!

Amortization Schedule

An amortization schedule shows how each payment is split between interest and principal repayment. Early in the loan, most of each payment covers interest. Later, most covers principal. This matters greatly if you are considering early repayment.

The Effect of Early Repayment

Paying off a loan early saves you the interest on the remaining balance. However, note that: - Some banks charge an early repayment penalty (typically 1–3% of the outstanding balance) - Early repayment is more valuable early in the loan when more interest remains outstanding

Practical Tips for Comparing Loans

  • Request a full amortization schedule from each bank before signing
  • Calculate the total amount you will pay, not just the monthly installment
  • Check early repayment terms and penalties
  • Read all contract clauses carefully, especially hidden fee provisions
  • Do not choose a loan solely because of a low monthly payment

FAQ

How do I correctly compare two loans?▼
Correct comparison relies on three criteria: the Annual Percentage Rate (APR) which includes all costs, the total amount you will pay over the loan's full term, and early repayment terms and flexibility. Never compare loans based solely on the monthly payment.
What is the difference between nominal and effective interest rate?▼
The nominal rate is the advertised rate in the ad or contract. The effective rate (APR) includes the nominal rate plus all fees and other costs. A loan with a 10% nominal rate but high fees may have an effective APR of 14%.
Is early repayment always a good decision?▼
Not always. Early repayment saves you the remaining interest, but if the early repayment penalty is large, or if the loan's interest rate is low, investing the same amount in a higher-yielding asset may be a better decision.
What is an amortization schedule and why does it matter?▼
An amortization schedule is a detailed table showing, for each payment, how much goes toward interest and how much toward principal repayment. It is important because it reveals exactly how much you would save by prepaying, and helps you fully understand the loan's structure.
Should monthly payments be below 40% of income?▼
This common rule of thumb advises that total monthly loan payments (all loans combined) should not exceed 40% of your net monthly income to maintain comfortable financial stability. Some banks allow up to 50%, but this increases financial risk.

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Results are approximate and for educational purposes only, not financial or legal advice. Consult a certified financial advisor before making financial decisions.