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MYLOANCALCS.COM

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Loan Comparison Calculator

Compare two loan options side by side to see which one is the better financial choice. Analyze monthly payments, total interest, and overall cost.

Loan Option A
Loan Option B

Quick Answers

Key metric to compare

APR not rate

Also compare

Total interest paid

Term affects

Payment and total cost

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Frequently asked questions

Common questions about comparing loan offers.

The most important single metric is APR (Annual Percentage Rate), which includes both the interest rate and lender fees and represents the true annualized cost of borrowing. Beyond APR, compare total interest paid over the full term, total cost (principal plus all interest), monthly payment, prepayment penalty terms, and whether the rate is fixed or variable. A loan with a slightly higher interest rate but no origination fee can cost less overall than one with a lower rate and a 5% origination fee, depending on the term. This calculator shows all of these figures simultaneously so you can make a complete, apples-to-apples comparison.
No -- and this is the most common mistake borrowers make. A longer loan term produces a lower monthly payment by spreading the same principal over more months, but each additional month accrues more interest. A $30,000 loan at 7% over 60 months has a payment of $594 and total interest of about $5,640. The same loan over 84 months has a payment of $451 -- $143 less per month -- but total interest of roughly $7,884. The monthly payment is a cash flow metric. Total interest paid is the financial metric that determines what the loan actually costs you. Use this calculator to see both before deciding.
The interest rate is the base annual cost of borrowing expressed as a percentage of the outstanding balance. APR includes the interest rate plus lender fees -- origination fees, points, and broker fees -- expressed as a single annualized figure, making it always equal to or higher than the stated rate. A lender quoting 6.5% with a 2% origination fee will have a higher APR than one quoting 7.0% with no fees, depending on loan term. The Truth in Lending Act requires lenders to disclose APR on all consumer loans. When comparing offers, always use APR -- not the nominal rate -- to determine which loan truly costs less.
The right term balances your monthly cash flow needs against your total cost goal. If your budget is tight and a lower monthly payment is essential to managing your other financial obligations, a longer term may be necessary even if it costs more in total interest. If you have budget flexibility, the shortest term you can comfortably afford will always save the most total interest. A practical approach: enter both a shorter and longer term in this calculator, note the monthly payment difference, and ask whether the extra interest paid on the longer term is worth the monthly cash flow relief. Often a modest $50 to $100 increase in payment on a shorter term saves thousands.
Yes, but with an important caveat: for an ARM you need to enter an assumed rate for comparison, since the rate changes after the initial fixed period. Enter the ARM's starting rate to compare initial payments, or enter the fully-indexed rate (index plus margin) to model a higher-rate scenario. Fixed-rate loans offer payment certainty for the full term. ARMs offer a lower initial rate but introduce payment risk if rates rise after the adjustment period. If the ARM's worst-case scenario is still preferable to the fixed loan's total cost and you plan to sell or refinance before the first rate adjustment, the ARM may pencil out -- but model the downside before committing.

Related Guides

What Is APR?

About this calculator

This loan comparison calculator applies the standard amortization formula to two loan scenarios simultaneously, showing monthly payment, total interest, and total cost side by side. It models fixed-rate loans only -- for adjustable-rate comparisons, enter an assumed rate for the ARM scenario and factor in rate-change risk separately.

APR comparison methodology referenced on this page follows the CFPB's loan estimate disclosure standards. Lenders are required by the Truth in Lending Act (TILA) to disclose APR on all consumer loan offers.

MyLoanCalcs.com provides free educational calculators and does not offer financial advice or lending services. Always obtain a formal Loan Estimate from each lender and compare APR -- not just interest rate -- before making a borrowing decision.

Before You Calculate

Understanding Your Loan Comparison Results

Most borrowers accept the first loan offer they receive or choose based on monthly payment alone. Both are costly mistakes. The difference between a good loan and a mediocre one on a $300,000 mortgage can exceed $20,000 in total interest -- and the winning loan is not always obvious from the advertised rate.

This guide explains how to set up a meaningful comparison, what numbers to focus on, and the factors that determine which loan actually costs less.

How to Read Your Comparison Results

Five steps for an accurate side-by-side evaluation.

01

Use APR, not interest rate, for each loan

The interest rate is the base cost of borrowing. The APR (Annual Percentage Rate) includes the interest rate plus origination fees, points, and other lender costs rolled into a single comparable number. When entering two loan offers, use each lender's APR -- not their advertised rate -- to get an accurate comparison.

Pro tip: By law, lenders must disclose APR on the Loan Estimate form within 3 business days of application. Always compare APR to APR.

02

Compare total interest paid, not just monthly payments

A lower monthly payment almost always means more total interest paid. Loan B may look attractive at $50/month less than Loan A, but if it runs 12 months longer, you may pay $4,000 more in total interest. The comparison that matters most for long-term financial health is total cost -- principal plus all interest paid over the full loan term.

Pro tip: The calculator shows total interest for both loans side by side. Focus on this number first, then evaluate whether the monthly payment difference fits your budget.

03

Model identical loan amounts for a clean comparison

To compare lender rates fairly, use the same loan amount for both scenarios. If you enter different amounts, you are comparing apples to oranges. The monthly payment difference will reflect the amount difference, not just the rate or term difference. Lock in the loan amount first, then vary the rate and term.

Pro tip: Compare the same amount and same term but different rates first. Then compare the same amount and rate but different terms. Separate the variables.

04

Factor in points and fees not captured in APR

Some loan costs are not included in the APR calculation -- notably third-party fees like title insurance, appraisal, and government recording fees. These costs are the same regardless of lender. Focus the APR comparison on lender-controlled costs. Use the total closing cost line on the Loan Estimate to compare lender fees directly.

Pro tip: Sort Loan Estimate fees into Section A (lender fees -- comparable) and Section C (third-party fees -- similar across lenders). Focus on Section A differences.

05

Check prepayment terms on both loans

If you plan to pay extra principal or pay off the loan early, prepayment terms matter. Some loans have prepayment penalties that offset the savings from a lower rate. A loan with no prepayment penalty and a slightly higher rate may be better for an aggressive payoff strategy than a low-rate loan with a 3-year penalty.

Pro tip: Ask each lender explicitly: "Does this loan have a prepayment penalty?" Get the answer in writing on the Loan Estimate.

3 Common Loan Comparison Mistakes

What to Do Next

These guides help you understand the key terms and make a confident final decision.

What Is APR?

The true cost of a loan, explained.

How to Compare Loan Offers

Full guide to evaluating lenders.

Mortgage Calculator

Model your home loan scenarios.

Refinance Calculator

Compare current loan vs. new terms.

Methodology

How It Works

Enter the details of two competing loan offers side by side. The calculator applies the standard amortization formula to each and highlights monthly payment, total interest, and total cost differences.

For each loan:

M = P x [r(1+r)^n] / [(1+r)^n - 1]

Total Interest = (Monthly Payment x n) - Principal

A loan with a longer term often has a more attractive monthly payment, but stretching the loan means more total interest. This tool shows you exactly which loan saves the most money in the long run.

About the Author: De Van Do

De Van Do is the author and site builder behind MyLoanCalcs.com. With a background in technology, De Van Do built this site out of an interest in making financial calculations clear and accessible. De Van Do is not a licensed loan officer, mortgage broker, or financial advisor -- content on this site is for informational purposes only.