How to Calculate Cents on the Dollar

Rebecca Graham

Last Updated: April 9th, 2021

The phrase “cents on the dollar” refers to a ratio or percentage of an asset’s original price or value. Cents on the dollar helps you calculate your profit or loss percentage in a transaction.

In the most simple terms: you are paying a price of X for every dollar the item or asset is worth. 

This metric can be helpful to identify when you’re weighing the price and overall value of a physical or financial asset, whether you’re getting it at a discount or paying a premium when you acquire it. Cents on the dollar can refer to bargain shopping, home shopping, or comparing loan options. 

Calculator and concept application

Are you considering a purchase and want to know the cents on the dollar ratio? Simply input the cost of the asset along with the value of the asset to get your cents on the dollar. 

The formula is simple: Cents on the dollar=(Value–Cost)/Value

If your result is 0.5, your ratio is “50 cents on the dollar” and you are paying 50 cents for every dollar — a 50% discount.

If your result is 1.5, your ratio is “150 cents on the dollar” and you are paying $1.50 for every dollar — a 150% premium. 

Cents on the dollar for a loan

A calculator and pad of paper with numbers written on it

In the context of a business loan, a mortgage, or a personal loan, calculating cents on the dollar means taking interest and other expenses into account to see what you are paying for the loan. 

When researching lending rates in the business loan industry, you’ll find that there is no standard way that lenders show borrowing fees. Interest rates are crucial to know but business loans generally involve additional fees that are not factored into the rate of interest. 

To compare loan rates as accurately as possible, one way is to compare the cents on the dollar business owners will ultimately pay — taking into account interest and other fees — for a standard loan type, amount, and term. 

For lenders that do not display rates

Banks generally do not disclose sample rates online. Big banks such as Wells Fargo and Bank of America may not display minimum requirements for borrowing, wait time to funding, and, most important to small business owners, interest rates. Even though some sources may cite banks as having lower interest rates than online lenders, banks won’t necessarily share this information online. 

However, banks aren’t the only ones that don’t disclose rates. You’ll find several online lenders who will not disclose even sample or case study-based rates until you fill out a contact form and speak to a loan officer or company representative. While not a hard and fast rule, this may indicate that these lenders have high interest rates.

*For these companies not displaying sample interest rates, we are unable to calculate cents on the dollar you would pay.

For lenders that provide sample scenarios and general rates

Other online lenders give you a scenario of what you could pay, which gives you important information to consider as you start shopping around. 

They do this by either giving you a possible interest rate when you borrow a set amount of money, or giving you a wide range that your interest rate could fall under, such as 5%–20%. 

Overall, you only get a general idea of what your interest rate will be with these companies because there are too many factors that will change the interest rate. Factors that will change your interest rate include the amount you borrow, term length, credit score, the business you are in, and more.

*When calculating cents on the dollar for these companies, we used the highest interest rates we could find to prepare users for the worst-case scenario. Interest rates in the examples following were also calculated based on a $100,000 loan over 12 months.

For lenders that provide custom calculators

In our opinion, the most transparent lenders are the ones who let you calculate your interest rate and other fees based on the amount you want to borrow and the term you borrow for. Companies with these types of calculators online include Lendio and Credibly.

Calculator and business lender examples

To view cents on the dollar for a loan, input the loan amount (what you’re borrowing) and the total cost of the loan, or what you’ll be paying back including interest and other fees.  

The formula is as follows: Cents on the dollar=(Repayment amount–Loan amount)/Loan amount

To compare the interest rates and ratios of some of the online lenders on Best Company, we calculated the cents on the dollar you would pay based on the information we could find on a particular day. You can follow this pattern with the lenders you're considering for your own business loan. 

For companies that provided interest rates, we used the highest interest rate we could find to calculate how much you would actually be spending for a $100,000 loan over 12 months. For companies that provided calculators, we used that to calculate the cost of the same loan ($100,000 over 12 months).  

  CAN Capital Lending Club Credibly OnDeck Funding Circle
Loan Amount $100,000 $100,000 $100,000 $100,000 $100,000
Repayment Amount $135,000 $132,000 $134,004 $136,000 $118,270
Cents on the dollar 0.35 0.32 0.34 0.36 0.18

Again, keep in mind that even interest rates given with online calculators are not necessarily indicative of the rates for which you will qualify. The following factors may also influence your interest rate and additional fees:

  • Industry type
  • Credit history
  • Credit score
  • Annual revenue
  • Cash flow

Regardless, cents on the dollar can be a useful preliminary calculation estimate as you comparison shop for the best loan for your situation. 

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