Cash vs Financing Calculator

About this calculator

Paying cash for a big purchase avoids interest charges entirely, but it isn't automatically the cheaper option once you account for opportunity cost — the return that cash could have earned if it had been invested instead of spent. Financing, meanwhile, lets you keep your cash invested while paying interest on the loan, which can come out ahead if your expected investment return exceeds the loan's APR.

This calculator compares the total interest cost of financing a purchase against the growth the same cash could generate if invested at your expected return over the loan term, so you can see numerically which option leaves you better off. It's a decision framework used in personal finance for weighing major purchases — cars, appliances, home improvements — against tying up savings, and it mirrors the reasoning financial advisors apply when a client asks whether to pay cash or take on low-interest debt.