How to read the comparison
The "cheaper" loan is the one with the lower total cost — that's your sum of all EMI payments plus the processing fee. A lower monthly EMI does NOT automatically mean a cheaper loan: a longer tenure reduces EMI but usually balloons total interest.
Total cost = (EMI × tenure months) + Processing fee
Things the calculator assumes
- Fixed rate for the entire tenure. Floating-rate loans will behave differently if rates change.
- No prepayment or foreclosure charges. Some loans have these; factor them in separately for high-prepayment plans.
- No GST on EMIs (most retail loan EMIs are GST-exempt). GST applies to the processing fee separately; add 18% to the fee if you want to be conservative.
- Processing fee paid upfront. Some lenders add it to the loan principal — that increases total interest. Keep this in mind when comparing.
What to look at besides total cost
- Prepayment flexibility: most Indian floating-rate home loans now have zero prepayment penalty for individuals, but fixed-rate and non-home loans may still charge.
- Disbursement speed: a bank that takes 45 days can cost a deal.
- Customer service and transparency: hidden charges (documentation fees, legal, stamp duty) can add 0.5-1% more.
- Interest reset frequency: quarterly or annual reset on floating rates affects your EMI timing when rates change.
FAQ
Is the lower rate always cheaper?
No. A lower rate with a longer tenure can actually cost more total than a slightly higher rate with a shorter tenure. This calculator removes the guesswork by comparing total cost.
Should I compare fixed and floating rates here?
This calculator treats both as fixed. If you're comparing a fixed rate vs floating, set floating to your best estimate of the average rate over the loan term — and remember that floating rates can change.
Can I compare three loans?
Two at a time. Compare A vs B, then the winner vs C. That way each comparison stays side-by-side and easy to read.