How the Loan Comparison Calculator works
This calculator runs the standard loan amortization formula once for each loan offer, using that loan's own interest rate and term against a shared loan amount, then lines up the results so you can see which offer costs less overall — not just which one has the lower advertised rate.
The amortization formula
Each loan's fixed monthly payment is calculated as M = P × i × (1+i)^n ÷ [(1+i)^n − 1], where P is the loan amount, i is the monthly interest rate (the annual APR divided by 12), and n is the total number of monthly payments (the term in years × 12). Multiplying the monthly payment by n gives total paid; subtracting the loan amount from that gives total interest.
What to look at beyond the monthly payment
- Total interest paid: a lower monthly payment on a longer term can still cost far more in total interest than a higher payment on a shorter term. Always compare the lifetime interest figure, not just the monthly number.
- APR vs. interest rate: APR includes fees rolled into the effective rate. It's the better number to enter here when comparing real offers from different lenders.
- Amortization curve: in the early years of any loan, most of each payment goes toward interest rather than principal. This matters if you're weighing an early payoff or a future refinance.
Rate versus term
A loan with a slightly higher rate but a shorter term frequently costs less in total interest than a loan with a lower rate stretched over a longer term, because total interest accrues on the outstanding balance for every month the loan is open. Run both offers through this calculator with their actual rate and term to see which effect dominates for your numbers, rather than assuming the lower rate always wins.