Loan Comparison Calculator

What this calculator does

A lower rate does not always produce the best loan if fees, term length, or payment strategy differ. This calculator compares two offers on both monthly affordability and lifetime cost.

Using one financed amount isolates the effect of each offer's rate and term. Optional fees and extra payments make the comparison closer to the cash flows a borrower will actually face.

The balance chart is especially useful when one option has a lower payment but remains outstanding much longer.

This page is built for users who need a defensible planning answer, not just quick arithmetic. It translates "Amount borrowed", "Loan A annual rate", and "Loan A term" into "Loan A scheduled payment", "Loan B scheduled payment", and "Loan A total cost" so the trade-off is visible in one place instead of being hidden behind a single number. It is also useful for comparing closely related searches such as "compare loans calculator" and "loan A vs loan B calculator", as long as the assumptions match the product or decision you are actually evaluating.

How to use the loan comparison calculator

1. Enter the amount both loans would finance, then add the annual rate and term for Loan A and Loan B.
2. Include only comparable upfront fees. If a fee is financed, add it to the borrowed amount instead of counting it separately.
3. Use extra-payment inputs only when you are likely to maintain them and the loan permits prepayment without a material penalty.
4. Start with "Amount borrowed", "Loan A annual rate", and "Loan A term", then check whether the first output cards already answer your question. After that, add advanced assumptions such as "Loan A upfront fees" and "Loan B upfront fees" only when they are real enough to change the decision.

Formula and methodology

Each scheduled payment uses the standard reducing-balance amortization formula with monthly interest.

The month-by-month schedules apply interest to the opening balance, then split each payment between interest and principal. Extra payments reduce principal.

Total cost equals all payments plus the upfront fee entered for that option. It excludes insurance, taxes, penalties, and charges not entered here.

The model maps "Amount borrowed", "Loan A annual rate", and "Loan A term" into "Loan A scheduled payment", "Loan B scheduled payment", and "Loan A total cost" using the formulas shown on the page. Keeping those relationships visible makes it easier to separate the core economics from the optional adjustments and to understand which assumption is actually moving the answer.

Worked example and practical context

A five-year loan may have a lower scheduled payment than a four-year loan even when its rate is higher. The lower payment can still create a larger total interest bill because the balance stays outstanding longer.

An upfront fee can also offset part of the benefit from a lower advertised rate, especially on a smaller or short-term loan.

How to interpret the results

The cheaper loan is the option with the lower total cost under assumptions you can sustain, not automatically the option with the lowest scheduled payment.

If the lower-cost option creates an unsafe monthly burden, compare a different term or principal amount rather than ignoring cash-flow risk.

Read "Loan A scheduled payment" first, then use the other summary cards, the chart, and the detailed table to judge short-term affordability and long-term borrowing cost. In most finance decisions, the best option is the one that stays strong across the full picture, not just the one with the most attractive first number.

Common mistakes to avoid

• Comparing loans with different financed balances.
• Ignoring origination or lender fees.
• Assuming an extra payment will be made every month when it is not affordable.
• Treating the advertised rate as equivalent to an all-in APR without checking disclosures.

Key terms

Scheduled payment

The regular principal-and-interest amount required by the original amortization schedule.

Total cost

The sum of payments and entered upfront fees over the modeled payoff period.

Amortization

The process of reducing a balance through payments split between interest and principal.