Compare the true cost of borrowing from a bank against a formal family loan: interest, fees, and how much money stays in the family. Free, and your numbers stay in your browser.
Enter the loan amount, the term, the bank's APR and up-front fees, and the rate a family lender would charge. The calculator amortizes both loans the same way, with equal monthly payments where each one covers that month's interest first, then compares what each costs beyond the principal you repay either way. For the full schedule of a single loan, use the Family Loan Calculator.
The principal is left out of the comparison because you repay it under either option. A bank loan's cost is its total interest plus up-front fees (origination and processing, entered as a percentage of the loan). A family loan's cost is just its interest, with no fees. "Kept in the family" is the interest and fees a bank would collect: with a family loan none of it leaves the family. The lender earns the interest, and the borrower keeps the rest as savings.
Borrow $25,000 over 5 years. A bank at 12% APR with a 5% origination fee costs $556.12 a month, $8,366.48 in interest and $1,250 in fees, for $9,616.48 in total. The same loan within the family at 4.35% (a recent IRS mid-term minimum) costs $464.38 a month and $2,862.29 in interest, with no fees. The borrower pays $6,754.19 less, and the full $9,616.48 that would have gone to the bank stays inside the family.
A family loan is not automatically cheaper or simpler. If the family rate is below the IRS Applicable Federal Rate, the shortfall can be treated as imputed interest and a gift, so check the IRS Minimum Interest Rate Calculator (AFR). The lender also gives up what that money could have earned elsewhere, and a loan between relatives carries a risk no bank loan does: a strained relationship if repayments stall. Put the terms in writing and weigh both sides; for the full picture see our bank loan vs. family loan guide.
Usually, but not always. Family loans skip origination and processing fees and typically charge a much lower rate, so the total cost is lower. But if the family rate is set higher than the bank's, or the bank offers a promotional 0% deal, the bank loan can win. This calculator shows the actual numbers for the rates you enter, in both directions.
A common choice is the IRS Applicable Federal Rate (AFR) for the month and term of the loan, the minimum the IRS expects on a private loan. It is far below typical bank rates, so the borrower still saves while the lender avoids imputed-interest issues. The default here, 4.35%, is a recent mid-term AFR; check the current rate with our AFR calculator before you lend.
Use the actual quote from your bank if you have one. If you are estimating, the tool starts from a 12% APR and a 5% up-front fee, which sit in the typical range for unsecured personal loans. Bank rates and fees vary widely by lender and credit profile, so adjust them to your situation for an accurate comparison.
No. "Kept in the family" is the interest and fees that would have gone to the bank and now stay inside the family circle. Part of it, the family interest, moves from the borrower to the family lender, so it stays in the family but is not a saving. The rest is the borrower's actual saving, shown separately as "Borrower saves."
There are no origination or processing fees, which is a real advantage. But a family loan still deserves a written agreement, and if it is secured against property you may have recording or legal costs. The bigger "cost" is non-financial: keeping the loan on good terms. A clear agreement and a shared payment record, which Family Loan Tracker provides, protect both the money and the relationship.
Family Loan Tracker turns these numbers into a loan you can follow: a payment schedule, a running balance, reminders before each due date, and a history both sides can see.
Kept in the family
$9,616
Interest and fees a bank would keep, none of it leaving your family
Borrower saves
$6,754
Lower total cost than the bank loan
| Bank loan | Family loan | |
|---|---|---|
| Monthly payment | $556.12 | $464.38 |
| Total interest | $8,366 | $2,862 |
| Up-front fees | $1,250 | $0 |
| Total cost (interest + fees) | $9,616 | $2,862 |
Lending this money for real?
Bank APR and fees are starting assumptions. Enter your bank's actual quote for a precise comparison. Estimates for information only, not financial advice. Calculations run entirely in your browser; nothing you enter is stored or sent to us.