Loans and debt guide
How to Compare Two Loan Offers
A lower monthly payment does not always mean a lower borrowing cost. Compare the amount borrowed, rate, term, fees, and total scheduled interest.
Compare the same scenario
Use the same principal and compare written offers with matching loan purposes and repayment assumptions. Record each quoted interest rate, term, and upfront fees.
Look beyond the payment
A longer term can reduce each payment while extending the time interest accrues. Review total interest and fees alongside the monthly amount.
Read the disclosures
APR can include certain fees and is defined by applicable lending rules. This calculator estimates interest plus fees you enter; it does not calculate a lender’s disclosed APR. Check official loan documents and ask about costs the calculator omits.
Worked example
For $25,000 over 60 monthly payments, a 7% fixed annual rate gives an estimated $495.03 payment and about $4,701.82 in interest when payments and monthly interest are rounded to cents. Add $500 in upfront fees separately to get a modeled borrowing cost of about $5,201.82.
Frequently asked questions
Is the lower monthly payment always cheaper?
No. A longer term or higher upfront charges can raise total borrowing cost.
Does this calculator compute the official APR?
No. It models the entered rate, term, and fees; use the lender’s disclosures for APR.
Sources and further reading
Try the calculator
Use the Loan Comparison Calculator to explore your own numbers with the assumptions shown in the tool.
Related guides
Educational content only; not individualized financial, tax, or legal advice.