Loan Comparison Calculator
Lenders compete on the rate and differentiate on the fees, which is why the loan with the best rate is often not the cheapest. Enter every quote as given and this ranks them on total cost of credit with the fees folded back in.
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EstimateThis calculator provides estimates for educational and informational purposes only. It does not constitute financial, investment, legal, accounting, or tax advice. Results are based on the assumptions and information entered and may differ materially from actual outcomes.
The APR here is solved from the cash flows you enter. Lenders' printed APRs follow a defined regulatory list of includable fees, so small differences reflect definitions rather than errors.
- Compares up to eight quotes at once on payment, rate, solved APR, fees and total cost.
- Solves the APR numerically from the actual cash flows rather than repeating the quoted rate.
- Warns when the lowest monthly payment is not the cheapest loan, which is the usual trap.
- Handles fees either financed into the balance or deducted from what you receive.
How to use this calculator
Add a row for each quote, entering the amount, rate, term and every fee exactly as the lender stated them. Name the rows so the comparison table is readable.
Set the fee checkbox to match the product. Mortgages usually roll fees into the balance; personal loans usually deduct an origination fee from the money you receive. The difference changes both the payment and the APR.
Read the total cost column when the amounts and terms match — it settles the question outright. When they do not match, read the APR column instead, because a longer loan costs more simply by lasting longer.
How the comparison works
Payment = amortising payment on the amount borrowed Total cost of credit = total interest + fees Net proceeds = amount − fees (or amount, if fees are financed) APR solves: net proceeds = Σ payment ÷ (1 + r)ⁿ for r
The APR is found by bisection on the monthly rate that makes the present value of the payment stream equal the money you actually receive. With no fees it lands exactly on the nominal rate, which is a useful check that the method is sound. Add fees and it rises above the rate — by how much depends on the fee size relative to the term, which is precisely the information a rate alone conceals.
A worked example
Three quotes for $25,000: a bank at 9.99% over five years with no fees; a credit union at 8.49% over five years with $750 of fees; an online lender at 7.99% over seven years with $1,250 of fees.
The online lender has the lowest rate and by far the lowest payment — about $390 a month against $531 and $513. It is also the most expensive of the three, because seven years of interest plus $1,250 of fees exceeds the alternatives. The credit union wins on total cost at roughly $6,518 of interest and fees.
This is the ordinary shape of the trap. A longer term makes any loan look affordable without making it cheap, and it is the comparison lenders are most comfortable having you make.
Where the differences actually hide
Rates are advertised and therefore competitive. Fees are quoted late, in documents, under a variety of names — origination, application, processing, administration, underwriting — and are where the real variation sits.
The APR exists to solve this, and it does, with one caveat: which fees a lender must include is defined by regulation and does not always match the everyday meaning of "cost". Two lenders can print different APRs on economically identical loans because they classify a fee differently. Solving the APR from the numbers you were actually given avoids that problem, at the cost of not matching either printed figure exactly.
One thing worth checking separately: prepayment terms. A loan you intend to repay early behaves quite differently from the amortising schedule modelled here, and a prepayment penalty can undo an apparent saving.
Assumptions and limitations
- Fixed rates only. Every offer is treated as fixed and fully amortising.
- No prepayment. Early payoff, prepayment penalties and biweekly schedules are not modelled.
- No insurance or add-ons. Payment protection and similar products bought alongside a loan are not included unless you enter them as fees.
- No credit-cost differences. Two offers may carry different consequences for your credit profile; that is not a dollar figure and is not modelled.
- Solved APR, not quoted APR. Useful for comparing offers consistently; not a substitute for the disclosure the lender must give you.
Common mistakes
Comparing monthly payments. The payment is a function of the term as much as of the cost. Comparing payments across different terms tells you almost nothing.
Ignoring fees deducted from proceeds. A $25,000 loan with a $1,250 fee deducted is a $23,750 loan you repay as if it were $25,000.
Assuming the printed APR settles it. It is much better than the rate, and it is still a defined construct with edges.
Comparing a secured offer with an unsecured one on cost alone. A lower rate secured against your house is not simply a cheaper version of the same product.
Frequently asked questions
The rate determines the payment. The APR folds the fees back in and expresses the whole cost of borrowing as an annual percentage, which makes it the better single number for comparing offers. A low rate bought with high fees can carry a higher APR than a higher-rate loan with none.
Total cost of credit, when the amounts and terms match — it is the complete answer. When terms or amounts differ, use APR, because a longer or larger loan costs more for reasons that have nothing to do with whether it is a good offer.
Because it is solved from the figures you entered, whereas a lender's printed APR includes a specific regulatory list of fees. If you entered a fee the regulation excludes, or omitted one it includes, the two will differ a little. Treat that as a difference in definition rather than an error.
Financing them spreads the cost and means you pay interest on it. Paying up front costs cash now and less overall. The checkbox lets you model both; the difference is usually smaller than people expect on a short loan and larger on a long one.
Only when the term and amount are the same. Across different terms, a lower payment usually means a longer and therefore more expensive loan. The calculator warns explicitly when the lowest payment is not the cheapest offer, because it is the single most common mistake in this comparison.
Enough that the spread becomes visible. Two quotes tell you which is better; three or four tell you what the market actually is. The calculator takes up to eight for that reason.