Loan Comparison Calculator With Amortization

This loan comparison calculator estimates the monthly payment and total interest for one fixed-rate loan, then explains how to compare amortization schedules by changing the inputs. Enter the loan amount, APR, and term to see the payment and interest total; the schedule shows how each payment is split between interest and principal over time.

Formula

The calculator uses the standard fixed-payment amortization formula. Monthly payment is M = P × r / (1 − (1 + r)⁻ⁿ), where P is the amount borrowed in dollars, r is the monthly interest rate as a decimal (APR ÷ 1,200), and n is the number of monthly payments (term in years × 12). Total interest is I = M × n − P. The displayed payment is rounded to cents; total interest uses that rounded payment.

For an amortization schedule, the interest portion of a month’s payment is the starting balance multiplied by r. Principal paid is the payment minus that month’s interest, and the ending balance is the starting balance minus principal paid. The next month begins with that ending balance. This repeating calculation explains why early payments generally contain a larger interest share than later payments when the rate and payment stay level.

Worked Example

Using the calculator’s defaults: principal P = $20,000, APR = 8%, and term = 5 years.

1. Convert the APR to a monthly decimal rate: r = 8 ÷ 1,200 = 0.0066667.
2. Convert the term to payments: n = 5 × 12 = 60.
3. Substitute: M = 20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰].
4. The unrounded payment is about $405.53, so the displayed monthly payment is $405.53.
5. Total paid using the rounded payment is $405.53 × 60 = $24,331.80. Total interest is $24,331.80 − $20,000 = $4,331.80.

As a schedule illustration, the first month’s interest is $20,000 × 0.0066667, or about $133.33. The remaining $272.20 of the $405.53 payment reduces principal, leaving an estimated balance of $19,727.80. Schedule values can differ by a few cents depending on the lender’s rounding and posting practices.

Assumptions

• The APR and payment amount remain fixed throughout the loan.
• Payments are equal monthly payments made at the end of each monthly period.
• Interest is treated as compounding monthly at APR ÷ 12.
• The estimate excludes fees, taxes, insurance, PMI, escrow, and any charges not entered as an input.

How to Compare Amortization Schedules

Run the calculator separately for each offer using the quoted amount, APR, and repayment term. A comparison is meaningful only when the assumptions align. If one figure includes financed costs and another does not, or the loans have different repayment periods, the payment and total-interest figures do not describe identical borrowing.

• Monthly payment: the regular scheduled amount under the formula. It is not necessarily the complete monthly cost of borrowing if separate charges apply.
• Total interest: estimated interest over the full stated term, based on the rounded payment. It is not the same as the total amount repaid; add principal to interest to get that amount.
• Principal balance: the amount still outstanding at a point in the schedule. Compare balances at the same payment number when examining loans with different terms.
• Interest versus principal: the schedule shows allocation, not an extra charge on top of the payment. Each payment is divided between the two components in this model.

For example, shortening a term while holding principal and APR unchanged generally raises the required monthly payment and reduces the number of months over which interest accrues. The calculator makes that arithmetic visible, but it does not determine which cash-flow pattern suits a particular person.

When This Calculator Helps—and Its Limits

Use it for an initial comparison of level-payment, fixed-rate installment loans, such as a personal, auto, or mortgage loan when the quoted terms can be represented by one amount, one APR, and one term. It also helps explain the relationship among those inputs: a larger principal or APR generally increases the payment, while a longer term generally spreads repayment across more months.

This is a single-loan calculator, so compare offers by recording each result and reviewing the assumptions side by side. It does not generate a month-by-month table in the displayed outputs; the amortization steps above show how such a schedule is calculated. If an offer includes an introductory rate, variable rate, balloon payment, irregular payment dates, or changing payment amounts, one fixed-rate formula cannot represent the full schedule accurately.

APR alone may not describe every cost in the same way across offers. Ask the lender for the amount financed, the payment schedule, any fees, and the exact total repayment figures in its disclosure. Entering a fee as part of the principal changes the calculation, but does not model every way fees may be charged.

Common Comparison Mistakes

• Comparing payments without comparing terms: a smaller payment can result from spreading repayment over more months, so also examine total interest and the balance over time.
• Mixing APR and monthly rates: enter an annual percentage as a percent, such as 8, not 0.08 or a monthly rate. The formula divides APR by 1,200.
• Ignoring cent rounding: the payment is rounded to cents, and the stated interest total uses that rounded payment. A lender’s final payment may be adjusted for accumulated rounding.
• Assuming every charge is included: taxes, insurance, escrow, and fees are outside this calculation unless they are explicitly represented in the inputs.
• Treating an estimate as a quote: the lender may use different day-count conventions, payment timing, rounding, or loan terms.

Frequently Asked Questions

What does an amortization schedule show?
An amortization schedule lists each payment period’s starting balance, payment, interest portion, principal portion, and remaining balance. It shows how a level payment gradually reduces principal under the stated assumptions.

Does total interest include the amount borrowed?
No. Total interest is the estimated cost of interest only. Add the original principal to total interest to estimate total payments under this calculator’s assumptions.

Why does the interest portion change each month?
Interest is calculated on the outstanding balance. As principal falls, the interest amount generally falls too, leaving more of a fixed payment to reduce principal.

Can I compare loans with different terms?
Yes, but read both payment and total interest and note the different repayment periods. For a balance comparison, use the same elapsed month or year rather than comparing final balances at different dates.

Does this include fees or insurance?
No. The displayed formula includes principal and interest only. Check the lender’s disclosure for fees and any separate taxes, insurance, or escrow amounts.

This result is an estimate, and the lender’s disclosure gives the exact figures.

Related

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in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2