APR, TIP and Cost-Over-Time Comparisons In Loan Estimates

The Loan Estimate form helps you compare different loans; Page 3 of the form summarizes the key figures.

  • Cost-over-time figures (“In ___ Years”) chart out the total amount paid, and the amount applied against loan principal.  This ratio usually changes over time.
  • Annual Percentage Rate – APR – gives you the ratio of interest PLUS any applicable fees for a complete percentage cost, per year.
  • Total Interest Percentage – TIP – shows interest over the life of the loan, in relation to the loan amount.  For example, a $500K loan with a TIP of 20% indicates that you would pay $600K (20% of $500K = $100K) in total.

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