Contents
- ๐ What is this?
- ๐จ๐ปโ๐ป How to use it?
- ๐ฐ Examples
- ๐ Nuances
- ๐ค Frequently asked questions
- ๐ Related materials
Compare the whole loan, not just the rate
The calculator gives both offers the same loan amount, builds a monthly repayment schedule for each, adds the entered upfront fee, and identifies the lower total cost. It keeps the first monthly outlay and actual payoff time beside that answer.
Put both offers on the same basis
Start with the amount you actually need to borrow. Enter each annual interest rate and term in months. Add a required one-time fee only when it is paid separately; if the lender finances the fee and charges interest on it, include it in the shared loan amount instead.
A fixed monthly payment is calculated as follows:
Here is principal, is the annual rate divided by 12 and 100, and is the contractual number of months. At 0%, the principal is divided evenly. An extra monthly payment goes to principal from month one, so it shortens the schedule.
The result follows the useful comparison order described by the Consumer Financial Protection Bureau: compare the amount, rate, term, monthly payment, and cost over the full term rather than focusing on one number.
Four offers that reverse the obvious answer
Lower rate, longer term. On 500,000, offer A at 20% for 36 months costs 668,944.50. Offer B at 18% for 48 months costs 704,999.98 before fees. The higher-rate loan is cheaper by 36,055.48 because it ends a year earlier.
Zero interest with a fee. A 300,000 loan at 0% for 24 months plus a 40,000 fee costs 340,000. A 10% offer for the same term with no fee costs 332,243.45, so the interest-bearing offer wins by 7,756.55.
Regular overpayment. Paying 5,000 extra each month on 500,000 at 20% cuts a 36-month schedule to 27 months. The first outlay is 23,581.79 and total payments are 622,067.12.
Identical offers. Two loans of 120,000 at 0% for 12 months both produce twelve payments of 10,000. When totals match within one minor currency unit, the calculator reports a tie.
What the comparison includes and misses
Total cost here means calculated principal and interest payments plus the one-time fee you entered. Use one currency throughout. A fee entered separately does not itself earn interest.
The schedule assumes a fixed rate, equal monthly periods, and payment at the end of each month. It rounds monthly interest to two decimal places and adjusts the final payment to clear the balance. A lender may use calendar days, different rounding, recurring fees, insurance, changing rates, or early-payment rules.
This is not an official APR or annual percentage rate calculation. APR disclosures can include fees under rules that depend on the product and jurisdiction. Compare the calculator with the lender's written disclosure, and reject an apparently cheap option if its monthly outlay leaves no room in your budget.
Questions about comparing loans
These answers separate the mathematical schedule from fees, official disclosures, and affordability.
Why must both offers use the same loan amount?
Different principals mix the price of financing with a different amount of money received. Put both offers on the amount you actually need before comparing them.
Is the loan with the lower interest rate always cheaper?
No. A longer term or a required fee can outweigh the lower rate. Check total cost, first payment, and payoff time together.
Where should I enter insurance or an origination fee?
Add a required one-time cost to the upfront fee if it is paid separately. If it is financed and earns interest, add it to the common loan amount instead.
What does the extra monthly payment do?
It is added to principal repayment from the first month. The scheduled payment stays the same, but the balance and term fall faster.
Does this calculate APR?
No. It compares cash payments under a simplified monthly model. Use the lender's official APR or equivalent disclosure for the regulated percentage measure.
Why can the lender's schedule differ?
The lender may accrue interest by exact day, round differently, move payment dates, or include charges and rate changes that are absent here.
Similar calculators
You may find the following calculators on the same topic useful:
- Credit card payoff calculator. Enter the current balance, annual rate, fixed payment, and optional extra amount to estimate the payoff plan.
- Margin and markup calculator. Choose the two values you know to calculate profit, price, cost, margin and markup.
- Salary to hourly calculator. Enter your pay and work schedule to compare hourly, weekly, monthly, and annual amounts.
- Savings goal calculator. Enter your target and current savings to find the time needed or the monthly contribution for a fixed deadline.
- Simple interest calculator. Enter a principal, annual rate, and term to find the interest earned without compounding.
- Printer cost per page calculator. Enter cartridge price and yield, paper price, and page count to see the unit cost and total.
- Churn rate calculator. Choose customers or recurring revenue and enter three values for the same period.
- VAT Calculator. Determine the VAT amount from the price or calculate the VAT to be added.
- Online Income Tax Calculator. Calculate income tax online, based on the amount received 'in hand' or the total salary using different rates.
- Compound Interest Calculator. Discover how compound interest can boost your investments through reinvestment, scheduled contributions, and capitalization.
Share on social media
If you liked it, please share the calculator on your social media platforms. It`s easy for you and beneficial for the project`s promotion. Thank you!