What a different rate costs.
Keep the loan amount and term the same, then compare two interest rates. See the difference in monthly payments and total interest.
What does a different rate cost?
Compare two rates on the same loan, with equal monthly payments.
At 9%, the monthly payment is higher by $28.51 than at 6%.
| Scenario | A: 6% | B: 9% |
|---|---|---|
| Monthly | $386.66 | $415.17 |
| Total interest | $3,199.36 | $4,910.03 |
| Total paid | $23,199.36 | $24,910.03 |
The Fed's rate is not your loan rate.
Central-bank decisions can influence borrowing costs, but lenders also consider credit risk, competition, and longer-term market rates. A Fed change does not translate directly or immediately into an equal change in a mortgage, card, or savings rate.
Assumptions, exclusions, and formula
Payment = P × r ÷ [1 − (1 + r)−n], where P is principal, r is the annual nominal interest rate divided by 12, and n is the number of monthly payments. At zero interest, payment = P ÷ n.
Assumes a fully amortizing fixed-rate loan with end-of-month payments. Excludes origination fees, taxes, insurance, late charges, variable rates, extra payments, and lender rounding. The input is the contractual interest rate, not an APR including fees. Results are educational, not an offer or recommendation.