About the Loan Comparison Calculator
This loan comparison calculator puts two loan offers side by side so you can see which one really costs less. Enter the amount you need, then each offer’s interest rate, term and upfront fees. You get the monthly payment, total interest, total cost including fees, and the true APR of each loan — the rate once fees are counted as a cost of borrowing.
Lenders often compete on whichever number looks best: a low rate with high origination fees, or a low monthly payment achieved by stretching the term. Comparing total cost and APR cuts through that. Use it for personal loans, auto loans, mortgages, student loan refinancing or business loans — any fixed-rate installment loan.
Both loans are assumed to be fixed-rate, fully amortizing and held to the end of the term, with fees paid upfront from the loan proceeds. If you plan to repay early, the offer with lower fees often wins even at a slightly higher rate.
With the default inputs, the total-cost savings choosing loan b is −$2,242.18. Change any value above to recalculate instantly.
How to use the loan comparison calculator
- 1Enter the amount you want to borrow.
- 2Enter Loan A’s interest rate, term in years and upfront fees.
- 3Enter the same details for Loan B.
- 4Compare the monthly payments, APRs and total cost.
- 5Choose the loan with the lowest total cost that has a payment you can afford.
Formula and method
Each loan’s monthly payment uses the standard amortization formula with the monthly rate r (rate ÷ 12) and n monthly payments. Total interest is M × n minus the loan amount, and total cost adds the upfront fees, so the savings figure is Loan A’s total cost minus Loan B’s.
The APR treats fees as a cost of borrowing: you effectively receive the loan amount minus fees but still repay the full payment schedule. The calculator solves for the monthly rate i that equates the two, then multiplies by 12. This mirrors how a US Truth in Lending disclosure folds prepaid finance charges into the APR. If fees equal or exceed the loan amount, the note rate is shown instead.
- M
- Monthly payment for an offer
- P
- Loan amount
- r
- Monthly note rate (rate ÷ 12 ÷ 100)
- n
- Number of monthly payments (years × 12)
- i
- Monthly rate including fees (APR ÷ 12)
Worked examples
$30,000: 7.5% for 5 years vs 6.9% for 7 years
Loan B has the lower rate and a payment $150 smaller, but stretching it to seven years adds interest. Including fees, Loan A costs $36,568 in total versus $38,810 for Loan B, so Loan A is about $2,242 cheaper despite its higher rate.
$200,000 mortgage: 30 years at 6.5% vs 15 years at 6%
The 15-year loan costs $423 more a month, but total interest drops from about $255,089 to $103,788. Even with $1,500 more in fees, Loan B saves roughly $149,801 over the life of the loan.
Same term, higher fee: 9% no fee vs 8% with $400 fee
On a small three-year loan, a $400 fee pushes Loan B’s true APR to about 10.8% even though its note rate is 8%. Loan A, with no fee, is about $233 cheaper overall.
Frequently asked questions
How do I compare two loan offers?+
Compare the APR and the total cost over the time you expect to keep the loan, not just the monthly payment. A lower payment often comes from a longer term, which usually means paying more interest overall.
Should I choose the lowest rate or the lowest payment?+
The lowest total cost (interest plus fees) is usually best long-term. Choose a lower payment only if you need the budget room, and consider paying extra when you can to reduce interest.
Why is the APR higher than the interest rate?+
APR spreads upfront fees such as origination charges over the life of the loan and expresses the total as a yearly rate. The bigger the fees relative to the loan, and the shorter the term, the larger the gap.
What if I plan to pay the loan off early?+
Fees are paid upfront regardless, so if you will repay early, a loan with low or no fees often costs less even at a slightly higher rate. Check that neither loan has a prepayment penalty.
Can I compare loans with different terms?+
Yes. The calculator shows the full-term cost of each. Remember that a shorter loan frees up your cash flow sooner, while a longer one keeps the payment lower each month.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.