Loan Comparison Tool

When you're shopping for a loan—whether it's a mortgage, car loan, personal loan, or student loan—you'll likely receive multiple offers with different rates, terms, and fees. Choosing the right one can save you thousands of dollars, but comparing loans isn't as simple as picking the lowest interest rate. This loan comparison calculator helps you see the complete picture for up to four loan options side by side.

A loan with a lower interest rate might actually cost more if it has higher fees or a longer term. A loan with a higher monthly payment might save you significantly in total interest. Without running the numbers, it's nearly impossible to know which option truly costs less. This tool calculates monthly payments, total interest, total cost, and payoff timelines so you can make an informed decision.

Beyond the math, the "best" loan depends on your priorities. Need the lowest monthly payment for cash flow? Want to minimize total interest paid? Planning to pay extra and need to see how that affects each option? This calculator handles all these scenarios, giving you the data to match your financial goals with the right loan.

Whether you're a first-time homebuyer comparing mortgage offers, a car shopper evaluating dealer financing vs. bank loans, or anyone weighing multiple loan quotes, this tool transforms complex loan math into clear, actionable comparisons.

The Four Key Comparison Metrics

When comparing loans, focus on these four numbers:

• Monthly Payment: What you'll pay each month (affects your budget)
• Total Interest: The cost of borrowing over the loan's life
• Total Cost: Principal + interest + fees (the true price you pay)
• Payoff Date: When you'll be debt-free

Interest Rate vs. APR

The interest rate is the base cost of borrowing. The APR (Annual Percentage Rate) includes the interest rate plus fees, expressed as a yearly percentage. APR gives you a more accurate picture of total cost. A loan at 5.5% interest with $3,000 in fees might have a 5.8% APR, making it more expensive than a 5.7% loan with no fees. Always compare APRs, not just interest rates.

How Loan Term Affects Everything

Loan term (the repayment period) dramatically impacts both monthly payment and total cost. A 30-year mortgage has lower monthly payments than a 15-year mortgage, but you pay interest for twice as long. Example: $250,000 at 6% costs $289,595 in interest over 30 years, but only $129,882 over 15 years—a $160,000 difference!

Origination Fees and Points

Origination fees are upfront costs (often 0.5-1% of the loan). Points are optional prepaid interest—one point equals 1% of the loan amount and typically reduces your rate by 0.25%. Points make sense if you'll keep the loan long enough to recover the upfront cost through lower payments.

Step 1: Enter Your Loan Details

Start with at least two loans to compare (you can add up to four). For each loan, enter the principal amount (how much you're borrowing), the APR (annual percentage rate), and the loan term in months. You can also add a custom label like "Bank A Offer" or "Credit Union 15-Year" to keep track of each option.

Step 2: Add Fees and Extra Payments (Optional)

If a loan has origination fees or points, enter them in the fee field. This ensures the total cost comparison is accurate. If you plan to make extra monthly payments on any loan, enter that amount—it'll show how extra payments affect payoff time and total interest for each option.

Step 3: Review the Comparison Results

Click "Calculate" to see all loans compared side by side. The results show monthly payment, total interest, total cost, and payoff date for each. Visual charts highlight differences in cost and how balances decrease over time.

Step 4: Identify the Winner Based on Your Goals

The tool highlights which loan has the lowest monthly payment, lowest total interest, and lowest total cost. These might be different loans! Choose based on what matters most to you—cash flow (monthly payment) or total savings (interest/cost).

Step 5: Ask the AI for Guidance

Use the AI assistant to get personalized insights. Ask questions like "Which loan should I choose if I plan to pay it off in 5 years?" or "How much would I save paying $200 extra monthly on Loan B?"

Monthly Payment Formula

Loan payments are calculated using the standard amortization formula:

Where P = principal, r = monthly interest rate (APR ÷ 12), and n = number of payments. This formula ensures each payment covers interest and reduces principal.

Total Interest Calculation

Total interest = (Monthly Payment × Number of Payments) - Principal. For a $200,000 loan at 6% for 30 years: Payment = $1,199, Total Payments = $431,640, Total Interest = $231,640. That's more than the original loan amount in interest!

Why Shorter Terms Save So Much

Consider two loans for $200,000 at 6%:

• 30-year: $1,199/month, $231,640 total interest
• 15-year: $1,688/month, $103,788 total interest

The 15-year loan costs $489 more monthly but saves $127,852 in interest. You're paying for half as many years, so interest has less time to accumulate.

How Extra Payments Accelerate Payoff

Extra payments go directly to principal. On a $200,000/6%/30-year loan, paying just $100 extra monthly saves $51,000 in interest and pays off the loan 6 years early. The earlier in the loan you make extra payments, the more you save because interest compounds on a smaller balance.

Scenario 1: Mortgage Shopping

Situation: Sarah has three mortgage offers for $350,000: Bank A at 6.5% for 30 years with $4,000 fees, Credit Union at 6.25% for 30 years with $8,000 fees, and Bank B at 5.75% for 15 years with $3,000 fees.

Comparison: Bank A: $2,212/month, $400,320 interest. Credit Union: $2,156/month, $374,160 interest (but $4,000 more in fees). Bank B: $2,915/month, $178,700 interest.

Winner: If Sarah can afford $2,915/month, Bank B saves $217,000+ over the loan. If she needs lower payments, Credit Union wins despite higher fees.

Scenario 2: Car Loan Options

Situation: Mike is buying a $35,000 car. Dealer offers 4.9% for 72 months; his bank offers 5.5% for 48 months.

Comparison: Dealer: $563/month, $5,536 interest, 6-year commitment. Bank: $814/month, $4,072 interest, 4-year commitment.

Winner: Bank loan saves $1,464 in interest and Mike owns the car outright 2 years sooner. But if $814/month strains his budget, the dealer loan provides flexibility.

Scenario 3: Student Loan Refinancing

Situation: Lisa has $60,000 in student loans. Current rate: 7.5%. Lender A offers 5.5% for 10 years; Lender B offers 4.9% for 15 years.

Comparison: Lender A: $651/month, $18,120 interest. Lender B: $470/month, $24,600 interest.

Winner: Lender A saves $6,480 in interest. But if Lisa's income is tight, Lender B's lower payment gives breathing room—she can always pay extra.

Scenario 4: Personal Loan for Debt Consolidation

Situation: James has $15,000 in credit card debt at 22% APR. Bank offers 11% for 5 years; Credit union offers 9% for 3 years.

Comparison: Bank: $326/month, $4,560 interest. Credit Union: $477/month, $2,172 interest.

Winner: Both beat the 22% credit card! Credit union saves $2,388 more but requires higher payments. James should choose based on affordability.

Scenario 5: Same Rate, Different Terms

Situation: Same $300,000 mortgage at 6%, but should Alex choose 15, 20, or 30 years?

Comparison: 15-year: $2,531/month, $155,683 interest. 20-year: $2,149/month, $215,838 interest. 30-year: $1,799/month, $347,515 interest.

Winner: Depends on goals. 15-year saves nearly $200K vs. 30-year but costs $732/month more. The 20-year is a middle ground—lower payment than 15-year while still saving $131K over 30-year.

• ❌ Comparing only interest rates, ignoring APR: A loan at 5.5% with $5,000 in fees costs more than a loan at 5.75% with no fees. Always compare APR, which includes fees, for an apples-to-apples comparison.
• ❌ Choosing the lowest monthly payment without considering total cost:Lower payments usually mean longer terms and much more interest. A $200 lower payment could cost you $50,000+ extra over the loan's life.
• ❌ Ignoring the impact of loan term: A 30-year loan at 5.5% costs more total interest than a 15-year loan at 6%. Term length often matters more than a small rate difference.
• ❌ Not factoring in how long you'll keep the loan: If you plan to sell a house in 5 years or refinance, a loan with higher fees and lower rate might not save you anything—you won't keep it long enough to benefit.
• ❌ Forgetting about prepayment penalties: Some loans charge fees for paying off early. If you plan to make extra payments or pay off early, verify there's no penalty—it could eat into your savings.
• ❌ Comparing different loan amounts: Ensure you're comparing the same principal. A $300,000 loan will always cost more than $250,000 regardless of rate—compare equivalent scenarios.
• ❌ Not considering your actual financial situation: The "cheapest" loan isn't best if you can't comfortably afford the payment. Choose a loan that fits your budget while still being cost-effective.

1. Calculate Your "True" Rate

If you plan to pay extra or pay off early, the "true" cost differs from the stated rate. Use this calculator to model extra payments on each loan—the loan with the lowest total cost assuming your actual payment behavior wins.

2. Consider the Breakeven on Points

If a lender offers to "buy down" your rate with points, calculate breakeven. If paying $4,000 in points saves $80/month, breakeven is 50 months. Only pay points if you'll keep the loan longer than breakeven.

3. Negotiate Using Competing Offers

Get quotes from multiple lenders and use this calculator to show each lender how their offer compares. Many will match or beat competitors to win your business—especially banks and credit unions.

4. Model "What If" Scenarios

What if you got a 0.25% lower rate? What if you chose 20 years instead of 30? What if you paid $300 extra monthly? Run multiple scenarios to understand the sensitivity of each variable.

5. Don't Forget Opportunity Cost

A shorter-term loan saves interest but ties up more cash monthly. If you could invest that extra $500/month and earn 7%, the "cheaper" loan might not be the wealth-maximizing choice. Consider your overall financial picture.

6. Check for Rate Lock Options

If rates are volatile, ask about rate locks. A lock guarantees your rate for 30-60 days while your loan processes. Compare locked rates, not just quotes that might change.

7. Factor in Flexibility Features

Some loans offer features like payment holidays, recast options, or easy prepayment. If two loans are close in cost, the more flexible loan might be worth a slight premium—life circumstances change.