1. What is Cost Per Thousand?

The Cost Per Thousand calculation determines how much interest you'll pay per $1,000 borrowed on a monthly basis. This helps standardize comparison between different loan options.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Interest Rate — Annual interest rate in decimal form (e.g., 0.05 for 5%)
• 1000 — Standardized loan amount
• 12 — Number of months in a year

Explanation: The equation converts the annual interest rate to a monthly cost per $1,000 borrowed.

3. Importance of Cost Per Thousand Calculation

Details: This calculation helps borrowers compare loan costs directly, regardless of total loan amount, making it easier to evaluate different loan offers.

4. Using the Calculator

Tips: Enter the annual interest rate in decimal form (e.g., 0.075 for 7.5%). The rate must be greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate cost per thousand instead of total cost?
A: It provides a standardized way to compare loans of different amounts and terms.

Q2: Does this include principal payments?
A: No, this calculation only shows the interest portion per $1,000 borrowed.

Q3: How does loan term affect this calculation?
A: The term doesn't affect the monthly interest cost per $1,000, though total interest paid over time would be higher for longer terms.

Q4: Can I use this for credit card debt?
A: Yes, if you know the annual interest rate, this can help estimate monthly interest costs per $1,000 balance.

Q5: Is this calculation used by lenders?
A: Many lenders use similar calculations to determine payment amounts and compare loan products.