Installment Sale Interest & Effective Rate Calculator
Calculates interest difference and effective rate for installment sales.
Info
When making installment sales, use this tool to answer "How much interest is added? What is my effective rate?" With this tool you can: - Find the **total interest difference** based on the cash price and installment plan. - Calculate the **effective interest rate (per period and annual)** relative to the cash price. - See the total amount payable by the customer and the average maturity period. Core logic: - Cash price = the cash/single-payment value of the good or service. - Installment plan: equal installments paid each month/year. - Interest difference = (Total installment amount − cash price). - Effective interest rate is the rate at which the present value of installments equals the cash price (internal rate of return logic). Note: Results are calculated approximately assuming equal installments and regular payment periods. Actual contract terms and tax effects may vary.
- The cash price is the amount for the same item in a single-payment cash sale.
- In installment sales, the customer pays more in total; the difference is the interest (vade farkı).
- The interest difference is treated as financing income in accounting; tax and VAT implications may vary by regulation.
- This tool approximately calculates the effective interest rate for equal installments (similar to an internal rate of return approach).
- It also calculates the annualized effective interest rate based on the number of months, helping you compare different offers.
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