Loan Comparison Calculator
Two loan offers are hard to compare when one has a lower payment and the other a lower rate. Enter up to three offers and this tool lines them up on the only number that settles it: total cost, including fees.
Which loan offer is actually the cheapest?
Loan comparison: Loan comparison means judging competing loan offers by total cost — every payment plus every fee — instead of by the monthly payment, which a longer term can make deceptively small. Of three offers to borrow $20,000, the cheapest is the 5% loan over 36 months: $599.42 a month and $21,579 in total. The 6.5% 60-month loan's lower $391.32 payment hides a $23,479 total — about $1,900 more — while the 4.5% 48-month loan with a $199 origination fee totals $22,090.
How to compare loan offers by total cost
- For each offer, calculate the monthly payment with the amortization formula.
- Multiply the payment by the number of months and add any upfront fees to get the total cost.
- Rank the offers by total cost, not by monthly payment.
- Finally, check that the winning offer's monthly payment still fits your budget.
Source: CFPB — Consumer Tools
Side-by-side comparison
Total cost = all payments over the full term plus upfront fees. The cheapest loan is the one with the lowest total cost — not the lowest monthly payment.
How to compare loans properly
Every loan offer is a bundle of four numbers — amount, APR, term and fees — and lenders know that shoppers fixate on the monthly payment, the one number that can be made to look good simply by stretching the term. This comparison cuts through that by computing, for each offer, the monthly payment (with the standard amortization formula), the total interest over the full term, and the total cost: every payment plus every upfront fee. The loan with the lowest total cost is the cheapest way to borrow that money, full stop. The table also keeps the monthly payments visible, because cash flow is real too: sometimes the right choice is the slightly costlier loan whose payment you can sustain without raiding savings.
Worked example
You need $20,000 and have three offers. Loan A: 5% APR over 36 months — $599.42 a month, $1,579 of interest, total cost $21,579. Loan B: 6.5% over 60 months — the payment drops to a tempting $391.32, but interest climbs to $3,479 and the total cost to $23,479. Loan C: 4.5% over 48 months with a $199 origination fee — $456 a month, $1,891 of interest, $22,090 all-in. Loan A wins by about $1,900 over Loan B, even though B's monthly payment is $208 lower. That is the trap this table exists to expose: the cheapest-looking payment is frequently the most expensive loan. Enter the defaults above and watch the ranking update as you tweak any offer.
The comparison mistakes to avoid
- Comparing payments instead of totals. A lower payment achieved by a longer term almost always costs more overall. Decide your budget ceiling first, then choose the lowest total cost that fits under it.
- Ignoring fees. Origination fees, application fees and prepayment penalties are part of the price. A low-rate loan with a 3% fee can lose to a slightly higher-rate loan with none — the table includes fees for exactly this reason.
- Comparing different amounts. Offers are only comparable when the amount borrowed is the same. If one lender approves you for less, normalize the amounts here before judging.
- Forgetting the APR already includes some costs. APR on consumer loans bakes in certain fees, which is why it is the best single comparison number after total cost — but it cannot capture term differences, which is why this tool shows both.
- Prepayment penalties. If you plan to pay extra or refinance early — and you should run those numbers too — a loan with a prepayment penalty can erase the savings. Check the fine print before signing.
Where to use this
Run competing auto loan offers here before the dealership visit, compare personal-loan quotes when consolidating credit card debt, or line up home equity offers against each other. Fifteen minutes with three real quotes in this table routinely saves more than hours of negotiating over monthly payments.
Frequently asked questions
Which loan is better: lower rate or shorter term?
Judge by total cost. In the worked example, the 36-month loan at 5% costs $21,579 all-in while the 60-month loan at 6.5% costs $23,479 — the shorter loan wins by ~$1,900 despite a $208 higher monthly payment. A lower rate with a much longer term can go either way, which is why this tool computes the totals instead of relying on rules of thumb.
Why is my monthly payment lower but the loan more expensive?
Because the payment is the total cost divided across more months. Stretching a loan spreads the same (or more) interest thinner, so each month feels cheaper while the sum grows. Lenders advertise payments precisely because this effect hides the real price — always compare the total cost line.
Should upfront fees change which loan I pick?
Yes, and the table includes them for that reason. A $199 fee on a loan that saves $1,900 of interest is a bargain; a 3% origination fee ($600 on $20,000) on a loan that saves only $400 of interest is not. Fees matter most on small, short loans, where they represent a bigger share of the total.
Can I compare loans of different amounts here?
You can enter different amounts, but the comparison stops being fair — of course the smaller loan costs less in total. For a true comparison, set all three amounts equal to what you actually need to borrow. If one lender only approves a smaller amount, that is a separate constraint, not a cheaper loan.
What if I plan to pay the loan off early?
Then total cost at full term overstates your real cost, and the ranking can flip toward longer, lower-payment loans — but only if there is no prepayment penalty. Check each offer for penalties, then model early payoff by shortening the effective term in this table and seeing how much interest disappears.
Sources
- CFPB — Consumer Tools — Compare offers by the total cost of credit, not by the monthly payment alone.