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SAC or PRICE: how to compare loan amortization

SAC usually reduces installments over time; PRICE keeps installments more stable. The best choice depends on cash flow, term, rate and total cost.

Practical difference

In SAC, amortization is constant and interest falls with the outstanding balance. In PRICE, the installment is calculated to stay stable, so the mix of interest and amortization changes over time.

What to compare beyond the installment

Compare total cost, total interest, outstanding balance, down payment, term and effective cost. A lower initial installment may hide a higher total cost.

  • Effective cost is better than looking only at nominal rate.
  • A larger down payment reduces financed balance and interest.
  • A longer term usually lowers installments and raises total cost.

Compare month-by-month cash flow and total cost before deciding; the best schedule is not just the one with the most comfortable first installment.