Guides

Which offer costs less

Read the note rate and the APR, then compare two home offers or two car offers.

9 lessons. Read them in order, or open the one that matches your question.

0% complete

1. 1What to type before you compare lendersPrice, down payment, and term first. Then each lender’s note rate and APR. Hold period last.1 min
2. 2APR versus the note rateThe note rate sets the payment and the balance. The APR is used only to estimate fees you pay up front.1 min
3. 3Lender fees are treated as paid up frontPoints and other prepaid finance charges are not added to the loan balance. They count on day one.1 min
4. 4How to compare two mortgage offersPut each lender’s note rate and APR on the same loan amount and term. The cheaper offer is fees plus interest over the years you plan to keep it.1 min
5. 5When a lower mortgage rate still costs moreA lower note rate can come with higher upfront fees. Over a short hold, the fees can outweigh the interest you save.1 min
6. 6Break-even on a higher mortgage feeBreak-even is the first month the lower rate’s fees plus interest are no longer higher than the other offer.1 min
7. 7Comparing two car loan offersBoth offers use the same amount financed and the same term. The cheaper one is fees plus interest over the hold.1 min
8. 8APR on a car loanThe note rate builds the car payment. The APR estimates lender fees paid up front and does not change the balance.1 min
9. 9Fees on a car loan from the APR gapThe dollar fee is the loan minus the amount the APR would support for the same payment. It is paid at the start.1 min