Loan Comparison Calculator
Loan A
Loan B
The Lower Rate Doesn't Always Win
Comparing two loan offers side by side is trickier than it looks when the principal, rate, and term all differ between them. A loan with a higher rate but a shorter term can end up costing less in total interest than a lower-rate loan stretched over more years — this calculator runs both through the same amortization formula and declares a clear winner by total cost.
The Formula
Total Paid = M × n
Total Interest = Total Paid − P
Each loan is run through the standard amortized-payment formula independently, using its own principal, rate, and term, and the two totals are compared directly.
What to Watch For Beyond the Headline Rate
- Term length differences — a shorter term almost always raises the monthly payment even at a similar rate, but lowers total interest paid.
- The monthly payment vs. total cost trade-off — the loan with the smaller monthly payment isn't necessarily the cheaper one over its full life.
- Fees not captured here — origination fees or closing costs aren't part of this comparison; check the APR Calculator if a loan includes upfront fees.
Worked Example
Two $25,000 loan offers: Loan A at 6.5% over 5 years, Loan B at 5.9% over 6 years:
| Loan | Rate | Term | Monthly Payment | Total Paid |
|---|---|---|---|---|
| A | 6.5% | 5 years | $489.15 | $29,349.22 |
| B | 5.9% | 6 years | $413.14 | $29,746.30 |
Loan A costs about $397 less in total despite the higher rate, because its shorter term limits how long interest accrues.
How to Use This Calculator
- Enter Loan A Principal, Annual Interest Rate, and Term.
- Enter Loan B Principal, Annual Interest Rate, and Term.
- Select Calculate to see each loan's monthly payment, total paid, total interest, and which one costs less overall.
Related Calculations
For a single loan's full year-by-year breakdown, use the Amortization Schedule Calculator, or account for fees with the APR Calculator.