Loan comparison calculator

How this calculator works

This calculator compares two fixed-rate loan offers side by side using the same loan amount, APR, term, and fees for each option. For each offer, it estimates the monthly payment, total interest paid over the life of the loan, and total dollars repaid including upfront fees.

The monthly payment uses standard amortization: each payment covers interest on the remaining balance plus a portion of principal. Total interest is the sum of all interest charges across every payment period. Total cost adds any entered origination or documentation fees to total interest and principal repaid.

The lower-cost result is identified based on the assumptions you enter. This is a simplified comparison—it assumes the rate stays fixed for the full term, payments are made on schedule, and fees are treated as entered. Actual lender disclosures may allocate fees differently or include costs this model does not capture.

What affects the result

Several inputs can change which offer wins, even when headline rates look similar.

• APR vs. nominal rate — APR is designed to reflect borrowing cost including certain fees spread over the loan term. Comparing nominal interest rates alone can miss the effect of upfront charges.
• Term length — A longer term typically lowers the monthly payment but increases total interest because the balance accrues interest for more months. A lower-rate loan with a longer term is not always cheaper overall.
• Upfront fees — Origination, documentation, or processing fees added to total cost can make a lower-rate offer more expensive than a no-fee loan at a slightly higher APR.
• Loan amount consistency — Both offers must reflect the same amount borrowed. If one lender deducts fees from proceeds, the effective amount you receive may differ even when the principal on paper is the same.
• Prepayment behavior — This calculator assumes scheduled payments only. Paying extra toward principal shortens the loan and reduces total interest, which can change the relative winner between two offers.

When reviewing official disclosures, check whether fees are financed into the loan, deducted from proceeds, or paid separately at closing. Those details affect both cash flow and total cost.

Real-world examples

1. Shorter term wins on total cost. You borrow $15,000. Offer A is 8.0% APR for 48 months with no fee. Offer B is 7.5% APR for 60 months with no fee. Offer B may show a lower monthly payment, but Offer A often repays less in total interest because the balance is retired faster.

2. Fees flip the winner. Offer A quotes 9.0% APR with a $500 origination fee. Offer B quotes 9.5% APR with no fee on the same $20,000 loan over 36 months. The slightly higher rate without a fee may cost less in total dollars repaid once the upfront charge is included.

3. Auto loan dealer vs. credit union. A dealer offer at 6.9% for 72 months may advertise a manageable payment on a $28,000 vehicle loan. A credit union offer at 7.2% for 60 months with lower fees may save thousands in total interest despite the higher nominal rate and higher payment.

4. Consolidation quote comparison. Two personal loan offers for $12,000 at 11% and 10.25% look close until you account for a 4% origination fee on one side only. Standardizing total cost reveals whether the lower headline rate actually saves money.

Common mistakes

• Choosing the lowest payment without checking total cost. A longer term almost always reduces the monthly number while raising lifetime interest.
• Comparing nominal rate rather than APR. APR is the better starting point for cost comparison, though you still need to verify how each lender treats fees.
• Ignoring fees deducted from proceeds. If you need $10,000 in hand but a 5% fee is deducted upfront, you may need to borrow more than $10,000 to receive the full amount.
• Comparing different borrowed amounts. A larger loan naturally produces a higher payment and more total interest. Align principal before comparing offers.
• Forgetting prepayment penalties or variable-rate terms. This tool is for fixed-rate comparisons. Variable rates, balloon payments, and penalty clauses require different analysis.
• Trusting advertising over disclosures. Promotional rates may assume autopay discounts, excellent credit, or short promotional periods not reflected in your actual quote.

When to use this calculator

Use this calculator when you have two fixed-rate loan quotes for the same purpose and amount—personal loans, auto loans, or other installment borrowing—and want to see whether a lower payment or lower rate actually costs less over time.

Run it before signing to sanity-check lender math, especially when one offer has a longer term or upfront fees. Pair the result with the personal loan calculator or auto loan calculator to model a single offer in more detail, or the debt consolidation calculator when comparing a consolidation loan against current balances.

Replace estimates with figures from each lender's official disclosure once you receive it.

Related calculators

Model a single personal loan with fees and extra payments using the personal loan calculator. Estimate vehicle financing with down payment and trade-in using the auto loan calculator. Compare consolidation against current debt using the debt consolidation calculator.