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Loans and EMI

How to compare loan offers: APR, fees and total cost

Updated 1 min readCelestial Infosoft

Compare loans by APR, fees, term and total repayable, spot hidden costs and avoid predatory lenders.

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This is general information, not financial advice.

Compare these five things

  1. APR (or the equivalent effective rate in your country).
  2. Fees: processing, late payment, early repayment, insurance.
  3. Term: the number of months.
  4. Monthly payment: must fit your budget.
  5. Total repayable: monthly payment multiplied by the number of months, plus fees.

A quick example

Two offers for the same amount:

  • Offer A: 12 months, lower total interest, higher monthly payment.
  • Offer B: 36 months, lower monthly payment, much higher total repaid.

Offer B feels easier but may cost significantly more. Use the formula in how EMI is calculated.

Red flags

  • Upfront fees before approval.
  • No clear lender name, address or licence.
  • Pressure to decide today.
  • Permission requests for contacts or photos from a loan app.
  • Rates or fees not shown before you accept.

Before you sign

Read the full written terms, check the lender with your financial regulator and borrow only what you can repay. See also checking information apps.

Frequently asked questions

What is APR?

Annual percentage rate. It expresses the yearly cost of borrowing, including interest and certain fees, so offers can be compared.

Is a lower monthly payment always better?

No. A longer term lowers the payment but often raises the total interest.

Should I pay a fee before the loan is approved?

No. A request for an upfront fee to approve a loan is a common scam sign.

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