Question 1

What is the difference between the rate and the APR?

Accepted Answer

The rate sets the payment. The APR adds the fees and points spread over the term, so it is the better number for comparing two offers with different fees.

Question 2

When does a lower rate with higher fees win?

Accepted Answer

When you keep the loan past the break-even month: the extra fees divided by the monthly savings. Sell or refinance before it and the higher-rate, lower-fee offer was cheaper.

Question 3

Should I pay points?

Accepted Answer

One point costs 1% of the loan and usually cuts the rate by about 0.25%. The calculator shows the break-even; if you will keep the loan longer than that, points pay.

	Offer 1	Offer 2
Monthly payment	$0	$0
APR (with fees and points)	0%	0%
Upfront fees + points	$0	$0
Total interest over the term	$0	$0
Total cost over the months you keep it	$0	$0

Compare two loan offers

Offer 1

Offer 2

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