Loan Comparison Calculator
Compare two competing loan offers side by side to see which costs less in total. Enter the loan amount, interest rate, term, and any origination fees for each loan, and the calculator displays monthly payments, total interest, origination fees, total cost, and effective APR. When comparing loans, total cost matters more than monthly payment alone. A loan with a lower monthly payment may cost significantly more in total interest if the term is longer. The effective APR accounts for origination fees, giving you a true cost comparison that reflects how fees increase the overall cost of borrowing. This calculator helps you evaluate trade-offs between affordability now (lower monthly payment) and affordability over time (lower total interest). Interest rate differences of even one percent can result in thousands of dollars of difference over a loan's life. Always compare offers from multiple lenders using either the monthly payment or total interest as your primary decision point, depending on your budget priorities.
Loan A: --/month, total cost --. Loan B: --/month, total cost --.
Loan A
Loan B
| Metric | Loan A | Loan B |
|---|---|---|
| Monthly payment | -- | -- |
| Total repaid | -- | -- |
| Total interest | -- | -- |
| Origination fee | -- | -- |
| Total cost (interest + fee) | -- | -- |
| Effective APR | -- | -- |
How the loan comparison is calculated
Monthly payment uses the standard PMT (payment) amortisation formula. Total interest is (monthly payment x term) minus principal. Total cost adds the origination fee to total interest. Effective APR is calculated by finding the monthly rate that, applied to the loan amount net of fee (the amount actually received), produces the same monthly payment over the same term.
r = stated_APR / 100 / 12
n = term_months
monthly_pmt = amount x r x (1 + r)^n / ((1 + r)^n - 1)
total_interest = monthly_pmt x n - amount
total_cost = total_interest + origination_fee
effective APR: solve for r* such that amount_net = monthly_pmt x (1 - (1+r*)^-n) / r*; effective_APR = r* x 12 x 100
Worked example
Loan A: $25,000, 7.5%, 60 months, $500 fee:
- r = 7.5 / 100 / 12 = 0.00625
- Monthly payment = 25,000 x 0.00625 x (1.00625)^60 / ((1.00625)^60 - 1) = $500.91/month
- Total repaid = $500.91 x 60 = $30,054.41
- Total interest = $30,054.41 - $25,000 = $5,054.41
- Total cost = $5,054.41 + $500 = $5,554.41
Lower monthly payment vs lower total cost
A longer loan term reduces your monthly payment but usually increases total interest paid. This is because interest accrues for more months. The origination fee also matters: a loan with a lower stated rate but a high origination fee can cost more overall than a loan with a higher rate and no fee. The effective APR accounts for fees and gives the most accurate apples-to-apples comparison.
The CFPB's guidance on personal loans at consumerfinance.gov/consumer-tools/personal-loans recommends shopping at least three lenders and comparing APRs, not just interest rates, before committing to a loan.
Loan comparison: frequently asked questions
What is the difference between interest rate and APR?
The interest rate is the cost of borrowing the principal, expressed as an annual percentage. APR (Annual Percentage Rate) includes the interest rate plus other loan costs such as origination fees, expressed as an annualised rate. APR gives a more complete picture of the true cost of a loan and is required to be disclosed by lenders under the Truth in Lending Act (Regulation Z). When comparing loans, the APR is the most meaningful single number for cost comparison. Source: CFPB, consumerfinance.gov.
How do I compare loans with different terms?
A loan with a shorter term will have higher monthly payments but lower total interest. A longer-term loan has lower monthly payments but costs more in total because interest accrues for longer. This calculator shows both metrics so you can weigh the monthly cash-flow impact against the total cost difference. The better choice depends on your budget: if the higher payment is affordable, the shorter term usually saves money.
What is an origination fee?
An origination fee is a one-time charge by the lender for processing the loan, typically expressed as a percentage of the loan amount (e.g., 1% to 8% for personal loans) or as a flat dollar amount. Some lenders deduct the fee from the disbursed amount (you receive less than the face value), while others add it to the loan balance. This calculator adds origination fees to the total cost for comparison purposes. The CFPB defines origination fees in detail at consumerfinance.gov.
Should I choose a shorter or longer loan term?
If you can comfortably afford the higher monthly payment, a shorter term reduces total interest paid significantly. For example, a $25,000 loan at 7.5% APR costs around $4,900 in interest over 60 months versus around $3,800 over 48 months. However, if the higher monthly payment would strain your budget and increase the risk of missed payments, the longer term provides a buffer. Missed payments have credit and fee consequences that can outweigh the interest savings from a shorter term.
What is the difference between simple interest and precomputed interest?
Most personal loans use simple interest, where interest is calculated on the current outstanding principal each period. Precomputed (or add-on) interest calculates total interest up front and adds it to the loan, then divides the total into equal payments. With precomputed interest, paying off early does not save proportional interest (some states require a rebate). This calculator uses the standard PMT formula, which assumes simple interest. Check with your lender about the interest calculation method before signing.
Official sources
- Personal loan comparison: CFPB, Personal Loans.
- APR vs interest rate: CFPB, What is the difference between a loan's interest rate and its APR?
Reviewed by the CalculatorHub team, edited by James Graham, 13 June 2026. See our methodology. General information only, not financial advice.