Loan Comparison Calculator (Offer A vs Offer B)
Two offers, different rates, terms, and fees? Enter both. The calculator computes the true total cost of each and names the winner in dollars.
| Offer A | Offer B | |
|---|---|---|
| Monthly payment | — | — |
| Total cost (interest + fees) | — | — |
Why the lower rate is not always the cheaper loan
The default example proves it: Offer B has the lower rate (7.9% vs 8.5%) yet costs more overall, because its longer term (72 vs 60 months) accrues interest for an extra year and its fees are higher. Rate is one ingredient; total cost = all payments + all fees − principal is the answer.
The three levers to compare correctly
- Rate: only comparable at the same term. A lower rate over more months often loses.
- Term: longer = smaller payment, bigger total cost. Salespeople quote payments precisely to hide this.
- Fees: origination, application, and prepayment fees belong in the math — the APR figure lenders must disclose bundles most of them, which makes disclosed APR (not the interest rate) the best single comparison number.
Same-payment trick
To truly compare a 60- and 72-month offer: take the cheaper monthly offer and imagine paying the higher offer's payment on it anyway — it ends early and saves more. If you can afford Offer A's payment, applying it to Offer B beats both as quoted.
Frequently asked questions
How do I compare two loans with different terms?
Compare total cost: monthly payment × number of payments + fees − loan amount. A lower rate stretched over a longer term frequently costs more in total, as the default example here shows.
Is APR the same as interest rate?
No. APR includes the interest rate plus most mandatory fees, spread over the term — which is why it is the legally required comparison figure in the US. Between two same-term loans, lower APR wins.
Should I pick the lower monthly payment?
Only if cash flow forces it. The lower payment usually means a longer term and more total interest. Pick the highest payment you can safely afford instead.
Do prepayment penalties matter?
Yes — a loan you plan to pay off early with a prepayment penalty can lose to a slightly pricier loan without one. US personal loans rarely have them; always check the agreement.
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Last updated: 2026-07-08