Loan APR Comparison Calculator
A loan APR comparison calculator helps you decide between two loans when one has a lower rate but charges upfront fees and the other has a higher rate with no fees. A headline rate alone can mislead, because fees raise the true cost of borrowing. This calculator computes the monthly payment for each loan using the amortization formula, then adds any upfront fees to the total paid so you can compare the full cost on equal footing. It reports each loan's monthly payment and total cost, including fees, over the same term, making the cheaper option clear. Enter Loan A at 20,000 dollars, 6 percent, 5 years, no fee, and Loan B at 20,000 dollars, 5.5 percent, 5 years, with a 600 dollar fee, and the tool returns a total cost of about 23,199.36 dollars for Loan A and about 23,521.39 dollars for Loan B. In this case the lower-rate loan is more expensive once its fee is counted, which is exactly the kind of result a rate-only comparison would miss. Because both loans use the same fixed amortization math, every figure is computed deterministically. The complete method and a worked example that reconciles exactly to the calculator above appear in full below for you to follow.
Comparing loans means counting fees, not just the rate. Loan A ($20,000, 6%, 5 yr, no fee) totals $23,199.36; Loan B (5.5% with a $600 fee) totals $23,521.39. Here the lower rate costs more once the fee is included.
Loan comparison method
payment = L x r / (1 - (1 + r)^-n), r = annual rate / 12, n = years x 12
total cost = (payment x n) + upfront fee
compare total cost of Loan A against Loan B
Each loan's level payment is found with the amortization formula, multiplied by the number of payments, then the upfront fee is added. The loan with the lower total cost is the cheaper choice over the term.
Worked example
Loan A: 20,000 dollars at 6 percent over 5 years, no fee. Loan B: 20,000 dollars at 5.5 percent over 5 years, with a 600 dollar fee.
- Loan A payment = 20,000 x 0.005 / (1 - 1.005^-60) = 386.66 dollars; total = 386.66 x 60 = 23,199.36 dollars
- Loan B payment = 20,000 x 0.0045833 / (1 - 1.0045833^-60) = 382.02 dollars; payments = 382.02 x 60 = 22,921.39 dollars
- Loan B total = 22,921.39 + 600 fee = 23,521.39 dollars
- Loan A (23,199.36) is cheaper than Loan B (23,521.39), so Loan A wins despite the higher rate
These are the calculator's default inputs, so the result above matches the widget exactly.
Loan APR Comparison Calculator: frequently asked questions
Why compare total cost instead of the interest rate?
Because upfront fees raise the true cost of a loan. A loan with a lower rate but a large fee can cost more overall than a higher-rate, no-fee loan. Comparing total cost, including fees, reveals the cheaper option.
How is total cost calculated?
Each loan's monthly payment is found with the amortization formula and multiplied by the number of payments, then any upfront fee is added. The loan with the lower resulting total is cheaper over the term entered.
Does this calculate APR exactly?
It compares total cost including fees, which is the practical question most borrowers face. A formal APR spreads fees into an equivalent rate; this tool instead shows the dollar totals directly so the comparison is transparent.
What if the loans have different terms?
You can enter different terms for each loan, and the calculator compares the total cost over each loan's own term. Be aware that comparing loans of very different lengths also changes how long you carry debt.
Where can I learn more about loan costs?
The US Securities and Exchange Commission's Investor.gov explains how interest and fees combine into the cost of borrowing. Use this calculator's total-cost outputs alongside that guidance when choosing between offers.
Official sources
- Loans, interest and borrowing basics: US Securities and Exchange Commission, Investor.gov. As at 25 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 25 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.