Installment vs Cash Calculator
Work out whether paying monthly or paying upfront actually costs you less.
The plan's implied cost is 3.77% per month, about 45.23% a year. To come out ahead you need a gross annual rate above 53.22% after 15% stopaj. You entered 27.20% net.
| Cash price | ₺97,999.00 |
|---|---|
| Monthly payment | ₺18,554.48 × 6 |
| Installment total | ₺111,326.86 |
| Installment markup | ₺13,327.86 (13.60%) |
| Net monthly rate | 2.267% (after 15% stopaj) |
| Set aside today to cover plan | ₺103,002.73 |
| Interest that fund earns | ₺8,324.13 |
| Extra cost today | ₺5,003.73 |
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The question this answers
A shop offers a product for one price in cash and a higher total spread over monthly installments. Paying cash avoids the markup, but it also hands over money you could have kept earning interest. Which option leaves you richer depends on three things: how big the markup is, how long the plan runs, and what return you can get on the cash in the meantime.
How the calculation works
The calculator asks a single question: how much money would you need today to cover the whole installment plan? If you park money in an interest-bearing account and draw one installment from it each month, you need less than the plan's face value up front, because the balance keeps earning while it drains. That figure is the present value of the payments. Compare it against the cash price and the cheaper option is whichever needs less money today.
- Interest compounds monthly on the declining balance.
- A yearly rate is divided by twelve to get the monthly rate, matching how banks quote annual simple deposit rates.
- Withholding tax (stopaj in Turkey, 15% by default) is deducted from the interest you earn, not from the principal.
- Installments are assumed to be paid at the end of each month, with none due at the register.
- The month-by-month schedule starts from that set-aside amount and lands exactly on zero, so you can check the arithmetic yourself.
The break-even rate is the number to watch
Rather than trusting a single verdict, look at the implied rate the tool reports. That is the return the installment plan is effectively charging you — the internal rate of return of the payment stream against the cash price. If you can earn more than that after tax, installments win. If you can't, pay cash. It converts a fuzzy judgement call into one number you can compare against the deposit rate your bank is actually offering.
What it deliberately ignores
- Inflation — in a high-inflation economy, fixed future installments get cheaper in real terms, which favours installments beyond what this model shows.
- Credit card limits, annual fees, and the risk of missing a payment.
- Any cash discount you might negotiate by asking, which changes the cash price input.
- Whether buying at all is a good idea. That one is on you.
FAQ
- Is paying in installments always worse than paying cash?
- No. Installments cost more in nominal terms whenever there's a markup, but you keep your cash and can earn interest on it. When the after-tax return you can get is higher than the plan's implied rate, installments leave you better off. Interest-free plans almost always beat paying cash.
- What is stopaj and why does it reduce my interest?
- Stopaj is the withholding tax Turkish banks deduct from deposit interest before it reaches your account. At the default 15%, a 45% gross annual rate becomes 38.25% net. Since only the net return competes with the installment markup, the tax matters to the comparison.
- Should I enter a yearly or monthly interest rate?
- Enter whichever your bank quotes and switch the toggle to match. Banks usually advertise an annual rate, which the calculator divides by twelve. If you know the actual monthly rate, select Monthly and enter it directly for a more accurate result.
- Does this account for inflation?
- No, and that's a meaningful omission in a high-inflation currency. Fixed installments shrink in real terms over time, so the result you see is conservative — installments look better once inflation is included. A rough way to allow for it is to enter a rate closer to what you expect inflation to be rather than only your deposit rate.