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True Cost of Buying on Installments
Before you sign an installment plan, know exactly how much more you're paying versus cash.
Is buying on installments always more expensive than cash?
Almost always — retailers and finance companies price in the cost of financing and default risk. Instead of a vague marketing percentage, this tool shows the one number that actually matters: how much more the total installment payments add up to compared with the cash price.
An approximate rate, not an exact one
The annualized rate shown here is a simple approximation (extra cost divided by the term in years) — not a precise time-value-of-money formula like APR or IRR. It's accurate enough for comparing a few installment offers side by side.
Frequently asked questions
Why might buying on installments still be worth it despite the extra cost?
If you don't have enough cash on hand, or you could invest that same money elsewhere at a return higher than the installment plan's extra cost, buying on installments can make sense — the right call depends on your personal finances.
Does this include late payment penalties?
No, this tool assumes every payment is made on time. Late fees and penalty interest can significantly increase the real cost.
How do I compare several different installment offers?
Run this tool separately for each offer with its own numbers, then compare the "approximate annualized rate" — the lower it is, the better the offer.
Does this work for 0% financing offers?
Yes — if the installment total equals the cash price, the extra cost comes out to zero, confirming the plan genuinely has no added cost.