True Instalment Rate

📖 Overview

Instalment plans, consumer loans and credit card billing plans are usually quoted as a monthly rate. It sounds modest, but the real cost is far higher than it looks. The monthly rate is applied to the original principal, and although that principal shrinks every month, the fee keeps being charged on the full amount, so the true rate lands at roughly twice the quoted figure. This tool reconstructs the actual cash flows and solves for the internal rate of return, giving you the genuine annualised rate, then prints the quoted rate next to it with the gap between the two so you can see at a glance whether the deal is expensive. Two entry modes are supported: key in the per-period repayment if you have it, or just the monthly rate. You can also layer on an upfront fee or handling charge, and model an early settlement to see how much principal you would owe and how much interest you would save. The gap is not a rounding artefact. On a twelve-month plan quoted at 0.6 percent a month, the nominal annual figure reads 7.2 percent, while the internal rate of return comes out near 13, because you only hold the full money on day one and have repaid half of it by the midpoint. Understanding that difference is the whole point of the tool.

✨ Features

• Solves for the true annualised rate using internal rate of return on real cash flows, rather than passing off the quoted rate as the answer It reports the effective annual rate as well, which accounts for compounding within the year.
• Accepts either the per-period repayment amount or a monthly rate, so you can work with whatever figures you have Switching modes does not lose your other entries, so you can try both against the same loan.
• Shows the quoted monthly rate beside the true annualised rate and marks the gap in percentage points The gap is stated in percentage points and as a multiple of the quoted rate.
• Lets you add an upfront or handling fee and see how much the real cost rises once you receive less than you borrowed Fees can be entered either as a percentage or as a flat amount in currency.
• Models early settlement: enter the period number and it reports the principal due and the interest saved It also shows how much interest you would still pay if you let the loan run to term instead.
• Prints the full amortisation schedule, so principal, interest and remaining balance can be checked line by line Totals for interest and principal are summed at the bottom so the schedule can be checked against a statement.

🚀 How to use

1. Pick your entry mode: per-period repayment, or monthly rate
2. Enter the amount you actually receive, the number of periods and the repayment frequency
3. Add any upfront fee or handling charge while you are there
4. Press Calculate to see the true annualised rate and how far it sits above the quoted rate
5. To model settling early, enter the period number and read the principal due and interest saved

⚠️ Notes

• Annualised figure: the output is an annualised internal rate of return, which is not the same thing as the quoted rate a bank advertises, and lenders sometimes quote a flat rate for exactly this reason
• Fees matter a lot: an upfront charge reduces what you actually receive and pushes the real rate up sharply, so enter it honestly, so ask for the total cost figure in writing before signing
• Other costs excluded: late payment penalties, insurance, account keeping fees and early repayment penalties are not modelled, so true cost may be higher, so treat the result as a floor on your cost rather than the final number
• Assumes level payments: anything other than a standard amortising schedule, such as interest-only or balloon structures, needs manual adjustment, and the tool does not detect which structure you have
• Numbers only: a zero period count, empty amount or out-of-range value raises a message instead of a result, and no result is produced until every required field holds a number