Loans
Loan Comparison Calculator
Compare two fixed-rate loan options by payment and total interest.
What this calculator does
Compare monthly payment and total interest for two regular fixed-rate loans; the highlighted option is the lower-interest option, not automatically the better contract.
Scope, period, and currency
This page runs a local formula from user-entered values. The country/currency selector changes money symbols and formatting only: it does not perform live or historical FX conversion or automatically change contract, tax, accounting, or regulatory rules. Convert all amounts into one currency first and keep periods and metric definitions consistent.
Formula variables
- P₁/P₂
- Principal for each loan.
- r₁/r₂
- Each monthly rate from its nominal annual rate.
- n₁/n₂
- Whole monthly payments for each term.
Formula and worked example
Formula: For each loan: payment = P × r ÷ [1 − (1 + r)^−n]; total interest = payment × n − P.
Recalculation: A: $25,000, 8.5%, 5 years → $512.91/month and $5,774.80 interest. B: $25,000, 6.9%, 4 years → $597.50/month and $3,679.85 interest. B saves $2,094.94 interest but costs $84.58 more per month.
Model assumptions
- Both loans are fixed-rate, fully amortizing, and fee-free.
- Payments are monthly and entered years are rounded to whole months.
- APR, origination fees, insurance, and prepayment terms are excluded.
Reading the result and model boundary
- Lower total interest does not mean lower monthly payment.
- The highlighted result does not judge affordability, APR, or contract risk.
This is a principal-and-interest comparison, not a complete APR or suitability analysis.
How to use it
- Enter each offer exactly as quoted.
- Compare monthly payment and total interest separately.
- Add disclosed fees and APR before choosing a contract.
Common incorrect uses
- Calling the lower-interest option the cheapest contract when fees differ.
- Ignoring the higher monthly payment of a shorter term.
- Comparing rates from different principal amounts without context.
Suggested verification workflow
- Compare formula outputs.
- Add contract fees and insurance.
- Review affordability and formal disclosures.
FAQ
Does the winner include fees?
No. It is selected from calculated total interest only.
Why can the lower-interest loan have a higher payment?
A shorter term can reduce total interest while concentrating repayment into fewer months.
Does currency selection convert either offer?
No. It changes formatting only; both offers must use the same currency.
Method and review boundary
Results are calculated locally in the browser from the formula shown on this page. The tool does not retrieve live rates, quotes, approvals, or billing data. Last reviewed: July 24, 2026.
Use the result for first-pass estimates, scenario comparison, and question preparation; it is not financial, investment, tax, accounting, or legal advice.
Authoritative sources and notes
- How to compare loan offers - Consumer Financial Protection Bureau
- Interest rate and APR - Consumer Financial Protection Bureau
- Regulation Z Appendix J - Consumer Financial Protection Bureau
Sources checked July 24, 2026. Rates, product rules, and official guidance can change; verify them again before a formal decision.