HesapHanem

Loan Comparison Calculator

Enter the amount, APR, and term for two loans to see which one costs less overall.

How it is calculated

For each loan the tool converts the annual rate to a monthly rate, r = APR / 1200, rounds the term to a whole number of months n, and computes the level payment M = P × r / (1 − (1 + r)−n), where P is the amount borrowed. With a 0% rate the payment is just P / n. The figure shown for each loan is the total repaid, M × n, so it includes the principal as well as interest. The better loan is the one with the lower total repaid per unit borrowed (total ÷ amount), so loans of different sizes compare fairly; with equal amounts this is simply the cheaper total. An exact tie goes to Loan A. Amounts and terms must be above zero and the APR cannot be negative. Fees, insurance, early-repayment charges and any change of rate are not part of the calculation.

Worked example

Loan A is $20,000 at 7.5% APR for 60 months. The monthly rate is 7.5 / 1200 = 0.00625, which gives a payment of about $400.76 and a total of 60 × 400.76 = $24,045.54. Loan B is also $20,000, at 6.5% for 72 months. Its payment is about $336.20, so the total is 72 × 336.20 = $24,206.30. Loan A is cheaper by roughly $161 despite the higher rate, because Loan B is paid back over a year longer. The tool shows Loan A as the better one.

Try this example →

Common mistakes

  • Choosing the loan with the lower rate. As in the example, a lower APR spread over a longer term can still cost more in total, which is why the tool compares full repayment.
  • Entering the term in years. The fields expect months, so 5 years is 60, not 5; a 5-month term would give a very different and misleading answer.
  • Reading the total as interest only. The figure includes the principal, so subtract the amount borrowed to see the interest cost.
  • Comparing a quoted flat or nominal rate against an APR. The formula treats the number as an annual rate compounded monthly, so enter rates on the same basis for both loans.
  • Ignoring arrangement fees or insurance. They are not included, so a loan with a slightly higher total here can still win once its lower fees are counted.

Sources

About this calculator

Two loans with the same headline amount can end up costing very different totals once APR (annual percentage rate) and term length are factored in — a lower rate over a longer term can cost more in total interest than a higher rate over a shorter one. Comparing them fairly means calculating the full monthly payment and total repayment for each, not just eyeballing the interest rate.

This calculator takes the amount, APR, and number of months for two loan offers, computes the amortized monthly payment for each using the standard loan payment formula, and multiplies it by the number of months to show the total repayment (principal plus interest) for each loan, along with which one costs less per unit borrowed, so offers of different sizes compare fairly. To see the interest alone, subtract the loan amount from the total. It's built for borrowers comparing offers from different banks or lenders — for a car, mortgage refinance, or personal loan — who want to know which one is actually cheaper over its lifetime, not just which has the lower rate.

Was this helpful?

You can pick up to 3 reactions.

Comments (1)

  • Editorial team

    The verdict compares the total repaid per unit borrowed, so two offers of different sizes can still be ranked fairly. Take 10,000 at 20% against 20,000 at 3% over 60 months: the totals are 15,896 and 21,562, yet Loan B is named better because it costs about 1.08 per unit borrowed against 1.59. The totals shown are absolute, so a bigger loan tends to look dearer there. What are the two offers you are weighing?

Popular calculators

Loan Calculator

Monthly payment, total interest and full amortization schedule.

Percentage Calculator

Percent change, percent of, and ratio calculations.

Discount Calculator

Calculate final price, savings, and discount amount.

BMI Calculator

Body mass index from height and weight (metric or imperial).

Age Calculator

Compute your exact age in years, months and days from a birth date.

Compound Interest Calculator

Calculate the final amount and interest earned with compounding.

All Calculators