Loan Comparison Calculator
Two loan offers side by side: which payment is lower, and which costs less in the end.
Good to know. The loan with the lower payment is often the one that costs more. A longer term hides the interest.
Not financial advice. Uses only the numbers and rates you enter — no live data.
How it works
In plain words
Work out each loan’s monthly payment from its rate and term, multiply by the number of payments and add the fees. The loan with the lower total costs less, whatever its monthly payment.
The formula
payment = amount × i ÷ (1 − (1 + i)⁻ⁿ), where i = rate ÷ 12 total cost = payment × n + fees
Worked example
Borrowing 20,000: loan A at 7% over 60 months costs 396.02 a month, 23,761.44 in all. Loan B at 6% over 72 months costs only 331.46 a month, but 24,364.96 with its 500 fee. Loan A costs less overall by 603.52.
Sources
- Brealey, Myers and Allen, Principles of Corporate Finance, chapter 2 The standard formulas for loan payments, compounding and present value, the same as a spreadsheet’s PMT and FV.
Sources checked October 3, 2026. 3 automated tests check its answers on every change.
About the loan comparison calculator
Loan offers are hard to compare by eye, because they differ in three ways at once: the rate, the term and the fees. This calculator puts two of them on the same footing, the total you will pay to borrow the same amount.
The monthly payment is what most people compare, and it can mislead. A longer term lowers the payment by spreading the loan over more months, but you pay interest for longer. In the example, loan B has the lower rate and the lower payment, yet costs about 600 more over its life because of the extra year and its fee.
Upfront fees, such as an origination fee, count as part of the cost even when they are taken out of the loan rather than paid separately. The APR a lender quotes includes many of these fees, which is why comparing APRs is better than comparing rates.
The cheapest loan overall isn’t always the right one: a lower payment can matter more if your budget is tight. Just make the choice knowing what it costs. Check, too, whether either loan charges for paying it off early.
Questions people ask
How do I compare two loan offers?
Compare the total cost: monthly payment times the number of payments, plus fees. The lower total is the cheaper loan.
Is a lower monthly payment always better?
No. A longer term lowers the payment but usually raises the total interest. It is easier on your budget, not on your wallet.
Should I compare the rate or the APR?
The APR, where both offers give one: it includes most fees and so reflects the real cost better than the rate alone.