Loan Comparison Calculator
Compare up to three loan offers side by side -- monthly payment, total interest, and total cost -- to identify the best deal.
What Is a Loan Comparison Calculator?
A loan comparison calculator evaluates multiple loan offers simultaneously, computing monthly payment, total interest, and total cost for each so you can identify the best deal at a glance. When lenders present offers with different combinations of rates, terms, and fees, the lowest rate does not always mean the lowest total cost -- a shorter term with a slightly higher rate often costs less overall. The monthly payment is calculated using standard amortization: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the number of payments. Total interest is (monthly payment x term) minus principal. This formula assumes fixed-rate, fully amortizing loans. For variable-rate or interest-only loans, the actual cost will differ. Comparing loans on monthly payment alone is the most common and most expensive mistake borrowers make. A 72-month auto loan has a lower monthly payment than a 48-month loan for the same amount, but the total interest paid is dramatically higher. This calculator forces you to look at total cost -- the number that actually matters to your long-term financial health.
How to Use This Calculator
Enter Each Loan Offer
Input the amount, interest rate (APR), and term for each loan. Use the exact figures from your pre-qualification or rate quotes. If loan amounts differ (e.g., one lender requires a larger down payment), enter the net amount financed.
Include Origination Fees
If a loan charges an origination fee (typically 1-6% of the loan amount), add it to the loan amount or subtract it from the net proceeds. A $50,000 loan with a 3% origination fee means you receive $48,500 but repay $50,000.
Compare Total Cost, Not Just Monthly Payment
The calculator highlights the loan with the lowest total cost. A lower monthly payment with a longer term almost always means more total interest. Use this to make a deliberate choice between cash flow comfort and total cost minimization.
Key Concepts
APR vs. Interest Rate
The interest rate is the cost of borrowing the principal. The APR (Annual Percentage Rate) includes the interest rate plus origination fees, points, and other lender charges, expressed as an annualized rate. Always compare APRs, not just interest rates, for an apples-to-apples comparison.
Amortization
The process by which each monthly payment is split between interest and principal. Early payments are mostly interest; later payments mostly reduce the balance. Understanding this explains why extra payments early in the loan term save the most interest.
Total Cost of Borrowing
The sum of all payments over the life of the loan, including principal, interest, and fees. This is the true price of the loan and the only metric that captures the full financial impact of your borrowing decision.
Origination Fee
A one-time charge by the lender to process and fund the loan, typically 1-6% of the loan amount. Some lenders fold this into the interest rate (no-fee loans at higher rates). Others charge it upfront. The APR accounts for origination fees.
Expert Insights
Shorter Terms Almost Always Win on Total Cost: A $50,000 loan at 7% for 48 months costs $57,437 total ($7,437 interest). The same loan at 7% for 72 months costs $60,810 total ($10,810 interest). The monthly payment is $329 lower with the longer term, but you pay $3,373 more in interest. Unless cash flow is critically tight, choose the shortest term you can afford.
Watch for Prepayment Penalties: Some loans (especially MCA, certain SBA loans, and subprime auto loans) charge penalties for early payoff. If you plan to refinance or pay ahead of schedule, confirm there is no prepayment penalty before signing. A 2-3% prepayment penalty on a $100,000 loan is $2,000-$3,000 in exit costs.
Rate Shop Within a 14-Day Window: Multiple credit inquiries for the same loan type within a 14-day window count as a single inquiry for FICO scoring purposes. Get all your quotes within two weeks to minimize credit score impact while maximizing your options.
Frequently Asked Questions
Results are estimates for educational purposes only. Actual amounts may vary based on your specific financial situation, market conditions, and other factors. This calculator does not constitute financial advice.
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