General
Loan vs Buy Calculator
Compare buying with cash vs taking a loan. Side-by-side analysis with true cost including opportunity cost, total interest paid, and a clear recommendation.
Enter values and click Calculate to see comparison
How is this calculated?
Loan:
EMI = P × r × (1+r)^n / ((1+r)^n − 1)
Total cost = EMI × months + down payment
Interest paid = total payments − loan amount
Cash:
True cost = price + opportunity cost
Opportunity cost = price × ((1+rate)^years − 1)
Recommendation: compare true costs of each optionFAQ
Frequently asked questions
When is it better to buy cash vs take a loan?
It depends on the opportunity cost of your money. If your savings earn more than the loan interest rate, taking a loan may be smarter. If loan interest exceeds your savings rate, paying cash saves money.
What is opportunity cost in this context?
Opportunity cost is the return you could earn by investing the purchase price instead of paying cash. If you pay $50,000 cash and miss 7% annual returns, your opportunity cost over 5 years is significant.
How do I calculate the true cost of a loan?
True cost = total payments (monthly payment × number of months) + down payment. This includes all principal and interest. The difference from the purchase price is the interest cost.
What is the true cost of buying cash?
True cost of cash = purchase price + opportunity cost (what that money could have earned invested). Even though you avoid interest, you lose potential investment returns.
Does this calculator account for down payment?
Yes! Enter your down payment percentage. The loan amount is calculated as purchase price minus down payment. Opportunity cost is computed on the down payment plus monthly payments.
Is this loan vs buy calculator free?
Yes, completely free with no sign-up required. All calculations run in your browser — your data stays on your device and is never sent to any server.