Loan Comparison Calculator: Compare Offers Side by Side
Same EMI, Different Cost: Why Tenure Matters More Than Rate
A common mistake when comparing loan offers is focusing only on the interest rate. Two loans with different rates can have similar EMIs if the tenures differ — but wildly different total costs. A ₹40L home loan at 8.5% for 20 years costs ₹54.14L in interest. The same loan at 9% for 25 years costs ₹75.56L — ₹21.4 lakh more in interest despite just a 0.5% rate difference, because of the extended tenure.
What to Compare Beyond Interest Rate
| Factor | Why It Matters | Where to Check |
|---|---|---|
| Processing fee | 0.25–1% of loan amount, adds to upfront cost | Loan agreement / sanction letter |
| Prepayment charges | Can kill your savings from early repayment | Loan terms (floating rate home loans: nil by RBI rule) |
| Rate type (fixed vs floating) | Fixed protects against rate hikes; floating benefits from cuts | Sanction letter |
| Insurance bundling | Some banks mandate expensive life/property insurance | Ask explicitly; bundled insurance can be refused |
| Foreclosure charges | Penalty for closing loan early | Most terms — nil for floating home loans |
How to Compare: Total Cost Method
The true comparison metric is Total Cost of Loan = Processing fee + Total interest paid + Insurance premium + Prepayment penalties. Calculate this for each offer, not just EMI.
Example: Two Home Loan Offers
| Bank A | Bank B | |
|---|---|---|
| Loan Amount | ₹40,00,000 | ₹40,00,000 |
| Rate | 8.5% | 8.75% |
| Tenure | 20 years | 20 years |
| Processing fee | ₹20,000 (0.5%) | ₹10,000 (0.25%) |
| Monthly EMI | ₹34,713 | ₹35,282 |
| Total interest | ₹43,31,000 | ₹44,68,000 |
| Total cost | ₹43,51,000 | ₹44,78,000 |
Bank A costs ₹1.27 lakh less despite the higher processing fee, because the 0.25% rate difference compounds over 20 years. Use the loan comparison calculator to run your own side-by-side comparison.
Fixed vs Floating Rate: Which to Choose?
- Floating rate: Moves with RBI repo rate. Better when rates are expected to fall or remain stable. Most home loans in India are floating.
- Fixed rate: Locked for the tenure. Better when rates are historically low and expected to rise. Often 0.5–1% higher than floating at sanction.
- Semi-fixed: Fixed for 2–3 years, then converts to floating. A middle-ground option some banks offer.