Consumer Loan Comparator
Convert the nominal rate of a credit or consumer loan into the real annualized IRR, compare two plans side by side: monthly payment, total cost and true annual rate, so you can spot expensive installment traps.
Plan A vs Plan B
| Plan A | Plan B | |
|---|---|---|
| Monthly payment | 8,933.33 | 8,884.88 |
| Total to repay | 107,200.00 | 106,618.55 |
| Total cost | 7,200.00 | 6,618.55 |
| Nominal annual | 7.20% | 12.00% |
| Real annualized (IRR) | 13.84% | 12.68% |
Nominal vs real annual rate
What is it
A loan quoted at a monthly fee of 0.6 percent looks cheap — 0.6 × 12 = 7.2 percent a year. The catch: when the principal is repaid month by month but the fee is still charged on the full amount, the real cost is about double. This comparator rebuilds the cash flow of each plan and finds the true annualized IRR, then shows the nominal and real rates side by side.
Notes & fun facts
Lenders love quoting a monthly fee because 0.6 percent sounds friendlier than 13 percent. Financial regulators now force lenders to disclose the real annualized rate, but plenty of offers still hide it behind vague wording — checking the IRR yourself is the only reliable habit.
Origin & history
The idea of comparing loans by internal rate of return became standard in finance textbooks decades ago, and regulators worldwide started mandating an effective annual rate disclosure after the 2008 crisis. China introduced real annualized rate disclosure rules for consumer loans in 2021, making tools like this one essential reading.
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