$1,264.14
$1,660.82
$255,089
$98,948
$458,089
$303,948
-$396.68
$154,141
$156,141
$1,264.14
$1,660.82
$255,089
$98,948
$458,089
$303,948
-$396.68
$154,141
$156,141
The Loan Comparison Calculator helps you evaluate two loan options side-by-side to determine which one costs less over its full term. Whether you are comparing mortgage offers, auto loans, student loans, or personal loans, this calculator reveals the true cost of each option by factoring in monthly payments, total interest paid, and upfront fees — giving you a complete financial picture.
Comparing loans solely by interest rate is misleading. A loan with a lower rate but higher fees, or a shorter term with higher monthly payments, may not always be the best choice for your situation. This calculator computes the total cost of ownership for each loan — the sum of all monthly payments plus upfront fees — providing the definitive comparison metric. The loan with the lower total cost saves you real money.
The monthly payment is calculated using the standard amortization formula: PMT = P × r / (1 - (1+r)^(-n)), where P is the principal, r is the monthly interest rate, and n is the total number of payments. This formula calculates the level payment that fully amortizes the loan over its term. Each payment consists of interest on the remaining balance and principal reduction.
A common comparison scenario is the classic 30-year vs 15-year mortgage decision. A 15-year mortgage typically offers a lower interest rate and dramatically less total interest paid, but requires significantly higher monthly payments. For a $200,000 mortgage, a 30-year at 6.5% costs about $255,000 in total interest, while a 15-year at 5.75% costs about $95,000 — saving $160,000. However, the monthly payment jumps from about $1,264 to about $1,661, requiring $397 more per month.
The decision ultimately depends on your financial situation, goals, and risk tolerance. The lower-total-cost option is not always the right choice if it strains your monthly budget. Similarly, a loan with higher fees but a lower rate might be better if you plan to hold it long-term but worse if you plan to refinance or sell within a few years. This calculator gives you the data to make an informed decision based on your specific circumstances.
Monthly payment formula: PMT = P × r / (1 - (1+r)^(-n)), where P = loan amount, r = monthly rate (annual rate / 12 / 100), n = total months (years × 12). Total cost = (Monthly Payment × Number of Months) + Upfront Fees. Savings = Loan 1 Total - Loan 2 Total.
Compare total costs for the true savings. Note that lower total cost often means higher monthly payments. If Loan 2 saves money but requires $400+/month more, ensure your budget accommodates this. Consider your time horizon — if you plan to sell or refinance within 5-7 years, fees matter more than long-term interest savings.
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The 15-year loan saves approximately $154,000 in total cost despite higher monthly payments.
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The lower-rate loan saves $1,584 in total cost despite $500 higher fees.
Compare total cost (all payments + fees) over the full term. Also compare monthly payment affordability, APR (which includes fees), and consider your expected holding period.
Not necessarily. A loan with a lower rate but high fees may cost more over a short holding period. Compare the total cost including fees, and consider how long you will keep the loan.
APR (Annual Percentage Rate) includes the interest rate plus fees spread over the loan term. It provides a more complete cost comparison than the interest rate alone.
A 15-year mortgage saves enormous interest but requires higher monthly payments. Choose 15-year if you can comfortably afford the higher payment. Choose 30-year for lower payments and flexibility.
Upfront fees (origination, points, closing costs) increase total cost. A loan with no fees but a slightly higher rate may be better if you plan to refinance or move within 5-7 years.
Discount points are upfront fees paid to reduce the interest rate. Each point typically costs 1% of the loan amount and reduces the rate by 0.25%. Points make sense for long-term holders.
Shorter terms mean higher monthly payments but dramatically less total interest. A 15-year mortgage at any rate will always cost less in total interest than a 30-year mortgage at the same rate.
Divide the points cost by the monthly savings from the lower rate. Example: $4,000 in points saving $50/month breaks even in 80 months (6.7 years). Stay longer than that to benefit from points.
This calculator compares fixed-rate loans. Adjustable rates (ARMs) start lower but can increase. ARMs may be better for short-term holds (3-7 years); fixed rates provide certainty for long-term holds.
Mortgage interest is tax-deductible (up to $750K in loan value). The after-tax cost is lower than the nominal rate, but this applies to both loans equally so the relative comparison remains valid.
Roboculator Team
The Roboculator Team explains calculations, planning tools, and practical formulas in clear language for real-life situations.
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