What This Calculator Does
You are buying a car. The dealer offers 0% financing for 5 years or a $3,000 rebate with your bank's 6.5% loan. Which is better? Or you are choosing between a 15-year and 30-year mortgage. Or comparing a personal loan from a credit union against an online lender. This calculator puts three loan offers side by side so you can see which one truly costs the least.
The Loan Comparison Calculator calculates the monthly payment, total interest, and total cost for up to three loan scenarios. You enter the same loan amount for each and vary the interest rate and term. The calculator shows you a clear comparison table and bar chart so you can identify the cheapest option at a glance.
According to the CFPB, nearly half of mortgage borrowers do not comparison shop and accept the first rate they are quoted. Even a 0.5% rate difference on a $300,000 mortgage adds up to over $30,000 in interest over 30 years. Shopping around is one of the highest-return activities in personal finance.
Inputs Required
- Loan Amount: The principal you need to borrow (same for all options)
- Option A, B, C Interest Rates: The annual percentage rate (APR) for each loan offer
- Option A, B, C Terms: The loan term in years for each offer
Outputs Provided
- Monthly Payment: For each loan option
- Total Interest: For each loan option
- Total Paid: Principal plus interest for each option
- Lowest Total Cost: Which option costs the least overall
- Lowest Monthly Payment: Which option has the smallest monthly burden
How the Calculation Works
Each loan option uses the standard amortization formula to calculate the monthly payment.
Monthly Payment = P x r(1+r)^n / ((1+r)^n - 1)
P = principal, r = monthly rate (APR/12), n = total months (term x 12)
Total paid equals monthly payment multiplied by the number of months. Total interest equals total paid minus the principal. The calculator then compares the three options to identify which has the lowest total cost and which has the lowest monthly payment. These may not be the same option: a longer term reduces the monthly payment but increases total interest.
How to Use the Calculator
- Enter the amount you need to borrow
- For each option (A, B, C), enter the interest rate quoted by the lender
- Select the loan term for each option
- Review the comparison table to see monthly payments, total interest, and total cost
- Check which option has the lowest total cost and which has the lowest monthly payment
Get actual rate quotes from at least three lenders before using this calculator. Rates vary by lender, credit score, loan type, and market conditions. For mortgage-specific comparisons including taxes and insurance, use our Mortgage Calculator. For a full payment schedule, try our Amortization Calculator.
Example Calculations
Example 1: The Auto Loan Decision
A buyer is financing a $35,000 car. The dealer offers three options:
- Option A: 0% APR for 5 years. Monthly payment: $583. Total interest: $0. Total paid: $35,000.
- Option B: 4.5% APR for 5 years with a $2,000 rebate (effective loan $33,000). Monthly payment: $615. Total interest: $3,884. Total paid: $36,884.
- Option C: 6.5% APR for 6 years. Monthly payment: $589. Total interest: $7,397. Total paid: $42,397.
Option A wins with zero interest, but only if the buyer qualifies for the promotional rate. If the 0% offer requires giving up the rebate, the comparison shifts. With the $2,000 rebate applied to the principal (Option B), the buyer finances $33,000 at 4.5%, paying $3,884 in interest but saving $2,000 upfront. Net cost: $35,884 vs. $35,000 for Option A. Option A is still cheaper, but by only $884, not the full $2,000 rebate.
Example 2: The Mortgage Term Decision
A homebuyer is choosing between 15-year and 30-year mortgages on a $350,000 loan. Rates in 2026 are 6.0% for 15 years and 6.5% for 30 years.
- Option A (30-year at 6.5%): Monthly payment $2,212. Total interest $446,300. Total paid $796,300.
- Option B (15-year at 6.0%): Monthly payment $2,954. Total interest $181,700. Total paid $531,700.
- Option C (30-year at 6.5% with $300 extra/month): Monthly payment $2,512. Total interest approximately $305,000. Total paid approximately $655,000. Pays off in about 21 years.
The 15-year mortgage saves $264,600 in interest but costs $742 more per month. Option C is a compromise: the 30-year payment gives flexibility, but the extra $300 per month saves $141,000 in interest and 9 years. The calculator lets the buyer see all three scenarios at once.
Real World Scenarios
The Refinance Decision
A homeowner has a $280,000 mortgage at 7.0% with 25 years remaining. Rates have dropped to 6.0% for a 25-year refinance, but closing costs are $4,500. Option A: keep the current loan (7.0%, 25 years, $1,971/month, total interest $311,300). Option B: refinance at 6.0% with closing costs rolled in ($284,500, 25 years, $1,830/month, total interest $264,900). Option C: refinance at 6.0% without rolling in costs ($280,000, 25 years, $1,802/month, total interest $260,500). The calculator shows Option C saves $50,800 in interest and $169 per month, paying for the closing costs in 27 months.
The Personal Loan Comparison
Someone needs $15,000 for home repairs. A credit union offers 8.5% for 5 years. An online lender offers 10.9% for 3 years. A credit card offers 0% for 18 months then 22%. Option A (credit union): $308/month, $3,495 interest. Option B (online): $491/month, $2,678 interest. Option C (credit card): $833/month for 18 months then minimums, potentially $5,000+ in interest if not paid off during the promo period. The calculator makes it clear that Option B costs the least total, but Option A has the most manageable payment.
The Student Loan Refinance
A graduate has $50,000 in federal student loans at 6.8% for 10 years. A private refinance lender offers 5.5% for 10 years. Option A (keep federal): $576/month, $19,140 interest. Option B (refinance): $543/month, $15,130 interest. Option C (refinance to 7 years at 5.25%): $706/month, $9,290 interest. The calculator shows Option C saves nearly $10,000 in interest but requires $130 more per month. The borrower must weigh the savings against the loss of federal protections (income-driven repayment, forgiveness programs).
Common Mistakes to Avoid
- Comparing APRs without looking at fees: Two loans at 6.0% can have very different costs if one charges $3,000 in origination fees and the other charges $500. Always compare the full cost, not just the rate.
- Choosing the lowest payment without considering total cost: A longer term means a lower monthly payment but thousands more in interest. The calculator shows both numbers so you can make an informed tradeoff.
- Forgetting about variable rates: This calculator assumes fixed rates. If a loan has a variable rate, the actual cost could be higher if rates rise. Variable-rate loans often start lower but can increase significantly over time.
- Ignoring prepayment penalties: A loan with a lower rate but a prepayment penalty may cost more if you plan to pay it off early or refinance. Check the loan terms for penalty clauses.
Limitations of This Calculator
This tool compares fixed-rate, fully amortizing loans. It does not handle variable-rate loans, interest-only loans, or loans with balloon payments. The calculator does not account for origination fees, closing costs, or prepayment penalties, which can significantly affect the true cost comparison. It does not model tax deductions for mortgage interest, which can reduce the effective cost of a mortgage. For precise comparisons, request Loan Estimates from each lender and compare the full cost disclosures.
Authoritative Research and Resources
- CFPB: Fixed vs. Adjustable Rate Mortgages - The Consumer Financial Protection Bureau explains rate types and why comparison shopping for loans is essential.
- Freddie Mac Primary Mortgage Market Survey - Weekly benchmark mortgage rates to use as realistic inputs for mortgage comparisons.
For related tools, try our Mortgage Calculator for full mortgage analysis, our Amortization Calculator for payment schedules, or our Refinance Calculator to evaluate refinancing decisions.