Informal Loan vs Bank Cost Calculator

Compare one monthly flat-rate offer with one nominal annual reducing-balance loan. See repayment, finance cost and effective annual rate using the terms you enter.

User-entered offersCash-flow APRLocal & free

Compare Loan Costs

Assumes interest is charged on the original principal each month and principal is repaid evenly.
Assumes equal monthly payments on a reducing balance with monthly rate = annual rate ÷ 12.
Difference in Total Repayment
Monthly Flat-Rate Offer
Monthly repayment
Total interest
Effective annual rate
Reducing-Balance Offer
Monthly repayment
Total interest
Effective annual rate
Flat Offer Effective Annual Rate
Reducing Offer Effective Annual Rate
Finance-Cost Ratio
This comparison excludes upfront fees, insurance, penalties, collateral loss, rollover charges and irregular repayment dates. Confirm the lender's licence where required and obtain the full repayment schedule before borrowing. Never rely on a verbal percentage alone.

Frequently Asked Questions

Payment comparison workflow

Loan Shark vs Bank Rate: quick guide

Make sure the first rate is truly charged monthly on the original principal and the second is a nominal annual reducing-balance rate.

  • Flat offer: equal principal plus the same monthly interest charge.
  • Reducing offer: equal amortising payments calculated from annual rate ÷ 12.
  • Effective annual rate: derived from the monthly cash flow, not monthly rate × 12.

Before deciding: add fees and insurance from the disclosure to total repayment; this calculator does not yet model them.

Loan Shark vs Bank Rate FAQ

Is a monthly flat rate the same as APR?

No. APR or effective annual rate must reflect timing and declining outstanding principal. This calculator derives a monthly cash-flow rate and compounds it for 12 months.

What if the offer uses one lump-sum repayment?

Do not use the flat-offer result; its cash-flow timing assumes monthly payments. Ask for a repayment schedule and compare matching cash flows.

Does the calculator check lender licensing?

No. Check the current official lender register for your jurisdiction before sharing documents, collateral or money.

How does this model interpret the monthly flat rate?
It applies the entered percentage to the original principal every month, while principal is repaid in equal portions. If the offer works differently, the result is not comparable.
Why can a flat rate look smaller than its effective annual rate?
The borrower keeps repaying principal while the flat interest charge stays based on the original amount. Cash-flow yield therefore rises relative to the declining balance.
What should I compare beyond repayment?
Check fees, insurance, collateral, penalties, rollover terms, collection practices, data privacy, complaint channels and whether the lender is authorised where required.