Calculate whether a loan is worthwhile by comparing interest rates with inflation
This calculator estimates the "real" cost of a loan based on constant interest and inflation rates. Real-world economic conditions fluctuate. This tool is for educational purposes only and should not replace professional financial advice.
With a €30,000 loan at 3% interest and 3% inflation over 5 years, your real interest rate is approximately 0%. This means you're effectively borrowing for free in terms of purchasing power.
You're paying 0.0% interest in real terms after inflation.
Total interest paid: €2,340
The €2,340 you pay in interest is offset by inflation reducing the value of your repayments.
Future value of €30,000 after inflation: €25,000 (approx.)
With a 0.0% real interest rate, this loan is economically favorable as inflation cancels out the interest cost.
Calculated as: Loan Interest Rate - Inflation Rate. This shows the true cost of borrowing.
Inflation reduces the purchasing power of money over time, making future loan repayments "cheaper" in real terms.
Even with favorable rates, you must ensure the monthly payment fits your budget without financial strain.
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