Loans: read the monthly payment and total cost
A small monthly payment tells only part of the story. Duration, interest and fees complete the comparison.
A small monthly payment tells only part of the story. Duration, interest and fees complete the comparison.
Define the simulation inputs
Our tool uses three inputs: borrowed principal, nominal annual rate and duration in years. It models a fixed-rate amortising loan with twelve identical payments per year. The entered rate is an assumption, not a bank offer. A calculated monthly payment is therefore an arithmetic guide, not a financing commitment or creditworthiness check.
What a monthly payment contains
Each payment in the model repays part of the principal and pays interest for the period. Interest is calculated on the outstanding principal: its share is higher at the start of the loan, while the principal repaid gradually increases. At a zero rate, the calculation simplifies: principal is divided equally across the number of monthly payments. Borrowing €12,000 over 24 months at a zero rate gives €500 per month, excluding fees.
Compare durations with the same principal and rate
Extending the duration spreads repayment over more instalments and generally reduces the monthly payment. In return, the principal remains borrowed longer, increasing total interest in this model at a positive rate. Look at the monthly payment, total repaid and displayed interest together. To compare two scenarios consistently, change one variable at a time and keep a record of your assumptions.
Distinguish the nominal rate from the French APR (TAEG)
The nominal rate is used here to calculate interest. In France, TAEG expresses the cost of credit more broadly by including associated fees under the applicable rules. This simulation does not calculate TAEG. Consult the official Service Public information sheet and documents supplied by the lender to understand the exact scope of fees. A real comparison must also examine insurance, guarantees, fees and contract terms.
References
Service Public — Understanding TAEG
Put it into practice
Educational text prepared with AI assistance. The examples use adjustable assumptions and are not personal advice.
Cite this resource on your website
Vous utilisez cet outil ou cet article dans une publication ? Vous pouvez ajouter une référence descriptive vers cette page.
Texte : Loans: read the monthly payment and total cost · https://eseogen.com/mensualite-et-cout-credit/?mp_lang=en