Loan Comparison Calculator: Compare Two Loans
Enter the amount and the rate and term of each offer to see how the payments and total interest differ.
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Formula
Each loan uses the standard fixed-rate payment:
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
where r is the yearly rate ÷ 12 ÷ 100 and n is the term in months. Total interest is M × n − P (payment rounded to cents). The difference rows are loan B minus loan A.
Worked example
20,000 borrowed:
- Loan A, 6% over 36 months:
M = 608.44, interest 608.44 × 36 − 20,000 = 1,903.84 - Loan B, 5% over 60 months:
M = 377.42, interest 377.42 × 60 − 20,000 = 2,645.20 - Interest B − A = 741.36; monthly payment B − A = −231.02
Frequently asked questions
How do I compare two loans?
Compare the monthly payment, which affects your budget, and the total interest, which is what the loan really costs. For 20,000, loan A at 6% over 36 months pays 608.44 and 1,903.84 in interest; loan B at 5% over 60 months pays 377.42 and 2,645.20.
Why can a lower rate cost more?
A longer term means more months of interest. In the example, loan B has the lower rate but costs 741.36 more in interest because it runs 24 months longer.
How do I read the difference rows?
They are loan B minus loan A. A positive interest difference means loan A is cheaper overall. A negative monthly difference means loan B has the lower payment.
Do fees change the comparison?
Yes, and they are not included here. If the offers have different fees, check each one with the APR calculator as well.