How to use scenarios to compare offers
Key takeaways
04 · ideas- Rates mode — Compare lenders: 6.5% vs 7.0% vs 7.5%
- Terms mode — Compare durations: 15yr vs 20yr vs 30yr
- Extra payments mode — Compare strategies: no extra vs $200 vs $500/mo
- Combined mode — Each scenario gets its own rate, term, and extra payment
Basic level
The essentials · 1 min
The Scenarios tab lets you compare up to 4 different loan configurations side by side.
- Rates mode — Compare lenders: 6.5% vs 7.0% vs 7.5%
- Terms mode — Compare durations: 15yr vs 20yr vs 30yr
- Extra payments mode — Compare strategies: no extra vs $200 vs $500/mo
- Combined mode — Mix any combination: each scenario gets its own rate, term, and extra payment
The table shows the final difference in total interest paid and total cost.
Intermediate level
How it applies · 1 min
Scenario comparison — $200,000 loan, 4 options
| Scenario 1 | Scenario 2 | Scenario 3 | Scenario 4 | |
|---|---|---|---|---|
| Rate | 7.5% | 7.0% | 7.5% | 7.0% |
| Term | 30yr | 30yr | 15yr | 20yr |
| Extra/mo | $0 | $0 | $0 | $0 |
| Monthly P&I | $1,398 | $1,331 | $1,854 | $1,551 |
| Total interest | $303,434 | $279,018 | $133,681 | $172,292 |
| Total cost | $503,434 | $479,018 | $333,681 | $372,292 |
| **Savings vs S1** | — | **$24,416** | **$169,753** | **$131,142** |
Key insight: Going from 30yr to 15yr at the same 7.5% rate costs $456 more per month but saves $170,000 in interest — that's a 31-year annuity worth of "savings" compared to the higher payment.
How to set up combined scenarios:- Click "Scenarios" tab
- Select "Combined" mode
- Enter rate, term, and extra payment for each of the 4 columns
- Read off the total interest and total cost comparison table
Advanced level
The math, step by step · 1 min
Quantifying the rate-term tradeoff
For a fixed loan amount P, the optimal term minimizes total cost subject to a payment budget B:
The partial derivative — sensitivity of total cost to rate:
For our loan (P=\200k, n=360): each +0.5% rate adds approximately 22,000 in total interest.
Rate vs. term iso-cost curves (same \approx \1{,}400$/mo payment):
| Rate | Equivalent term | Total interest |
|---|---|---|
| 6.0% | 36 yr | $307,000 |
| 7.0% | 28 yr | $270,000 |
| 7.5% | 26 yr | $261,000 |
| 8.0% | 24 yr | $252,000 |
Counterintuitively, at higher rates a shorter term becomes more attractive on a cost basis.