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How to use
- Enter Loan amount.
- Enter Points.
- Calculate, then verify which items are included in the definition before comparing.
How it is calculated
Points cost = loan amount × points ÷ 100
Example
A loan of 800,000 with 1.5 points means 12,000 points cost; arithmetic difference is 788,000.
Important notes
Paying points does not necessarily reduce principal by that amount. Payment method and rate impact depend on the loan offer.
Worked examples and interpreting results
| Case | Calculation | Result |
|---|---|---|
| Points cost | 800000 × 1.5 ÷ 100 | 12,000 |
| Arithmetic difference | 800000 − 12000 | 788,000 |
Frequently asked questions
Does one point always reduce the rate by a fixed amount?
No. One point here costs 1% of the loan, but the interest-rate reduction varies by offer.
Are these rates legally required?
No. This is a general math tool; actual fees, rates and rules vary by contract, provider and jurisdiction.
How should two scenarios be compared?
Use the same period and cost definitions, and change one variable at a time where possible.