| Loan A | Loan B | |
|---|---|---|
| Loan Amount | — | — |
| Interest Rate | — | — |
| Term | — | — |
| Monthly Payment | — | — |
| Total Amount Paid | — | — |
| Total Interest Paid | — | — |
| Interest Savings | — | — |
Enter the details for both loans — amount, interest rate (APR), and term in years — then click Compare Loans. The calculator instantly computes the monthly payment, total amount paid, and total interest for each loan. A winner banner highlights which loan costs less over its full term. You can also add an optional custom label (like "Bank Offer" or "Credit Union") to keep track of which loan is which.
Use this tool any time you receive multiple loan quotes — for a personal loan, auto loan, student loan refinance, or any installment loan with a fixed rate and term. Enter the exact figures from each lender's offer for the most accurate comparison.
Many borrowers focus only on the monthly payment, but this can be misleading. A longer loan term lowers your monthly payment — but because interest accrues over more months, you often pay significantly more in total. Example: a $20,000 loan at 5% APR paid over 48 months has a monthly payment of $460.59 and costs $1,108 in total interest. The same loan stretched to 60 months drops your monthly payment to $377.42 — but total interest rises to $2,645. The lower monthly payment costs you $1,537 more over time.
Always weigh both the monthly payment (its impact on your cash flow) and the total interest (the true cost of the loan). This calculator surfaces both so you can make an informed decision based on your budget and goals.
This calculator uses the standard amortization formula for fixed-rate installment loans:
M = P × [r × (1+r)^n] ÷ [(1+r)^n − 1]
Where: M = monthly payment, P = principal (loan amount), r = monthly interest rate (annual APR ÷ 12 ÷ 100), n = total number of monthly payments (years × 12).
Example: For a $15,000 loan at 7.5% APR over 4 years — r = 0.075 ÷ 12 = 0.00625, n = 48. M = 15,000 × (0.00625 × 1.00625^48) ÷ (1.00625^48 − 1) = $362.69/month. Total paid = $17,409. Total interest = $2,409. This formula governs virtually all fully amortizing installment loans.
The interest rate is simply the annual cost of borrowing the principal, expressed as a percentage. The APR (Annual Percentage Rate) includes the interest rate plus origination fees, closing costs, and other lender charges — rolled into a single annualized figure. APR represents the true cost of borrowing more accurately than the stated rate alone.
When comparing two loans, always compare their APRs rather than their nominal interest rates. A loan advertised at 5.9% with a 2% origination fee may carry an APR of 6.8% — more expensive than a 6.5% loan with no fees. This calculator accepts the APR for each loan, so you're comparing apples to apples when lenders disclose their APR upfront.
A shorter loan term means a higher monthly payment but far less total interest paid. If your budget can absorb the higher payment, a shorter term is almost always the better financial outcome. You become debt-free sooner, build equity faster (for secured loans like mortgages), and pay a fraction of the interest you'd pay on a longer-term loan.
A longer loan term reduces monthly cash outflow, which can be valuable if you need to preserve cash for other priorities (emergency fund, investing, other obligations). The trade-off is a higher total interest cost. Use this calculator to see exactly how much more a longer term will cost — then decide whether the monthly savings justify it for your situation.
A fixed-rate loan locks in your interest rate for the entire loan term. Your monthly payment never changes, making budgeting straightforward. Fixed rates tend to be slightly higher than introductory variable rates, but they protect you from rate increases — particularly valuable in rising rate environments.
A variable-rate loan (also called adjustable-rate) starts at a rate tied to a benchmark index (like SOFR or prime rate) and can rise or fall over time. Initial variable rates are often lower, but future payments are uncertain. This calculator assumes a fixed rate for both loans. If one of your offers is variable, use the current rate as a starting point but factor in the risk of future rate increases when making your decision.
Expert guides and educational resources to help you master the math.
Your monthly loan payment isn't arbitrary — it comes from a precise mathematical formula. Here's how it works, why early payments are mostly interest, and how to pay less overall.
APY and APR are both "interest rates" but they measure very different things — and confusing them can cost you real money. Here's exactly what each means and how to use them to compare accounts accurately.
