It is easy to take a private loan, but it must be repaid as well. Find out what the loan actually costs so you know if you can afford it!

To determine if you can afford a loan, you need to figure out two different things:

- monthly Payment
- The total cost

### Monthly Payment

The monthly payment is the amount that you are going to spend each month. The amount is part of your budget, so you can find out if the money is enough each month.

Three types of expenses are included in the monthly payment. We will go through all three further down.

- Interest
- fees
- installments

### Total cost

How much does the loan cost you in real money The total cost consists of all fees and interest that you pay during the entire term of the loan:

Total cost = Fees + Interest

We’ll take a closer look at the cost down, but first we’ll talk about the installments. They are included in the monthly payment but not in the total cost.

### Installments – expense but no charge

How is this related? Well, when you pay off a loan, you reduce a debt. As a result, your total capital increases, and the installment is thus a saving, and no expense. But the amount must be paid monthly, and is therefore an expense in the budget in the same way as the rent or gym card.

### Summary

The longer loan has a lower monthly payment but a higher total cost. The short loan has a higher interest rate but still costs less, overall.

Which arrangement you prefer depends on your budget. How much can you afford to pay each month without getting into financial need? How much does the loan cost, in total?

We have used this calculator for the calculations.