Loan Comparison Calculator
Compare Loan Options Side-by-Side with Our Loan Comparison Tool
The Loan Comparison calculator helps you evaluate two loan offers by calculating monthly payments, total payments, and total interest for each option. This is especially useful when deciding between different interest rates, loan amounts, or terms.
Enter the loan amounts, annual percentage rates (APR), and loan terms in years. The calculator updates automatically and displays both numerical results and a visual comparison chart to help you choose the best loan for your needs. This tool is particularly advantageous for first-time homebuyers and those looking to refinance.
How the Calculator Works
Monthly payments are computed using the standard amortization formula for fixed-rate loans. The monthly rate is derived from the annual percentage rate (APR) divided by 12. The formula used is:
M = P × (r × (1 + r)^n) / ((1 + r)^n − 1)Where:
- P = principal (loan amount)
- r = monthly interest rate (annual rate / 12 / 100)
- n = total number of payments (years × 12)
Understanding this formula can empower you to make better financing choices and provide clarity on how loans can impact your financial future.
Example Use Case
Suppose you have two offers for a $200,000 mortgage. Offer A: 4.5% APR for 30 years. Offer B: 3.8% APR for 30 years. Enter these values into the calculator. You will immediately see the monthly payments and total interest paid over the life of each loan, helping you decide which option saves more money.
Tip: Even a small difference in interest rate can lead to thousands of dollars in interest savings over long-term loans. Use the chart to visualize monthly payment and total interest differences—this can significantly affect your long-term finances.
Frequently Asked Questions about Loan Comparison
Does this calculator include fees or taxes?
No. This calculator performs pure amortization calculations based on principal, APR, and term. It does not include closing costs, origination fees, taxes, insurance, or other lender-specific charges.
What if the interest rate is 0%?
If the APR is 0%, the monthly payment is simply the principal divided by the number of payments (years × 12). The calculator handles that case and will show zero total interest, making it an essential tool in various scenarios.
Can I compare more than two loans?
This specific comparison tool supports two loans side-by-side for simplicity. For more complex comparisons, consider running multiple comparisons or using a spreadsheet to aggregate several offers.
Best Practices for Using the Loan Comparison Calculator
- Compare both monthly payments and total interest — a lower monthly payment won’t always mean less interest if the term is longer.
- Consider total costs, including fees, when choosing a lender.
- Use the PDF download feature to save or share comparisons with partners or advisors for easier decision-making.
- Take note of the loan-to-value ratio and other personal financial metrics that can influence your loan terms.
- Revisit the calculator regularly as market interest rates or your financial situations change to ensure you are making the best decisions.