List every cash flow
Record the amount received, each required payment, origination or account fees, optional products, late or default charges, and the final payoff amount. Note whether fees are financed or paid separately.
Annual percentage rate can aid comparison, but the exact treatment and disclosure depend on product and jurisdiction. Keep the contract cash flows visible beside any summary rate.
- Net amount received
- Payment dates and amounts
- Upfront and recurring fees
- Payoff or balloon amount
Test the actual holding period
A borrower who repays early may experience a different effective cost than one who follows the full schedule. Check prepayment terms and do not assume future refinancing will be available.
Compare total cost and payment stress under at least two plausible timelines.
Create a dated cash-flow row for every amount paid or received and independently recompute the total under two payoff dates.