Loan Comparison Calculator
Enter two loan offers — each with its own amount, interest rate, and term — to see which one has the lower monthly payment and the lower total cost over its full life.
Compare two offers
Loan B costs $712.92 less overall.
- Monthly difference
- $92.41
- Total cost difference
- $712.92
| Measure | Loan A | Loan B |
|---|---|---|
| Monthly payment | $495.03 | $402.62 |
| Total interest | $4,701.80 | $3,988.88 |
| Total cost | $29,701.80 | $28,988.88 |
How the two loans are compared
Each loan is priced with the standard fixed-payment amortization formula. The monthly payment covers interest on the outstanding balance and reduces principal, so the balance reaches zero exactly at the end of the term. Total cost is the monthly payment times the number of months, and total interest is total cost minus the amount borrowed. The cheaper loan is the one with the lower total cost.
Payment = P × r × (1 + r)n / ((1 + r)n − 1)Total cost = Payment × nTotal interest = Total cost − P- P
- Loan amount (principal)
- r
- Monthly rate (annual rate ÷ 12)
- n
- Term in months
$25,000 at 7% for 60 months vs. 5% for 72 months
Loan A is $25,000 at 7% APR over 60 months: a $495.03 monthly payment, $4,701.80 in total interest, and $29,701.80 in total cost. Loan B is $25,000 at 5% APR over 72 months: a $402.62 monthly payment, $3,988.88 in total interest, and $28,988.88 in total cost.
Loan B has both the lower monthly payment — $92.41 less each month — and the lower total cost, coming out $712.92 cheaper overall despite the longer term. When a lower rate and a longer term both reduce total cost, the rate advantage is doing the heavy lifting.
What this calculator assumes
- Each loan carries a fixed interest rate for its full term with equal monthly payments.
- No origination fees, points, prepayment penalties, or insurance are included unless you fold them into the loan amount.
- Total cost counts only principal and interest, so loans with different terms are compared on that basis.
- No extra or missed payments are modeled.
- Money values are rounded to the nearest cent for display.
Loan comparison FAQ
Should I choose the lower payment or the lower total cost?
A lower monthly payment eases cash flow but often comes from a longer term, which can raise total interest. A lower total cost saves more over the life of the loan. This calculator shows both so you can weigh monthly affordability against lifetime cost.
Does a longer term always cost more?
Not always. A longer term raises total interest when the rate is the same, but a large enough rate reduction can more than offset it — as in the worked example, where the longer, lower-rate loan is cheaper overall.
Sources and review notes
- Consumer Financial Protection Bureau — comparing loan offers
- Financial Consumer Agency of Canada — loans
Methodology last checked Jul 14, 2026. Formula implementation is covered by deterministic unit tests. No financial professional review is claimed yet.