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01 Loan payments

Loan Comparison Search: Compare Payments and Interest

Calculator No. 01-11836 · Updated · Formula and assumptions shown below

Monthly payment $405.53
Total interest
$4,331.67
= Monthly payment × loan term × 12 − loan amount
Loan amount
$20,000
Input
Interest rate (APR)
8 %
Input
You enter
Loan amount ($), Interest rate (APR) (%), Loan term (years)
You get
Monthly payment ($), Total interest ($)
Rounding
2 dp

Estimate for education, not financial advice. The result follows from the numbers you enter and the formula shown. It is not a quote or an offer, and it does not include fees, taxes or insurance unless the calculator asks for them. Ask your lender for the exact figures.

A loan comparison search helps you examine the estimated payments and total interest for different loan amounts, APRs, or terms. This calculator works out the monthly payment and total interest for one fixed-rate loan at a time; enter the loan amount, annual percentage rate (APR), and term, then repeat with another offer’s figures to compare the results.

Formula

The calculator uses the standard fixed-payment loan formula. Monthly payment = P × r ÷ [1 − (1 + r)−n]. Total interest = monthly payment × n − P.

  • P is the amount borrowed, in dollars.
  • APR is the annual percentage rate entered as a percentage, such as 8 for 8% per year.
  • r is the monthly rate, calculated as APR ÷ 1,200.
  • n is the number of monthly payments, calculated as years × 12.

The payment is rounded to cents for display. Total interest uses that rounded monthly payment multiplied by the number of payments, then subtracts the original principal. The formula assumes equal monthly payments and a fixed rate; it does not model changing balances caused by fees or extra payments.

Worked Example

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

  1. Convert the APR to a monthly rate: r = 8 ÷ 1,200 = 0.0066667.
  2. Find the payment count: n = 5 × 12 = 60 months.
  3. Substitute into the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)−60] = $405.53 per month, rounded to cents.
  4. Calculate total interest using the displayed payment: $405.53 × 60 − $20,000 = $4,331.80.

The calculator therefore returns a monthly payment of $405.53 and total interest of $4,331.80 for these inputs.

Assumptions

  • The interest rate stays fixed for the full term.
  • Payments are made monthly at the end of each monthly period.
  • Interest is compounded monthly, using APR divided by 12.
  • Fees, taxes, insurance, PMI, escrow, and other charges are not included.

How to Compare Loan Offers

A useful loan comparison search starts with consistent figures. Enter each offer’s principal, APR, and term separately, and record the outputs. If the offers have different loan amounts, first consider whether the difference reflects the amount you need to borrow; payment figures alone do not make unlike loans directly comparable.

  • Compare the same term: A longer term often produces a lower scheduled monthly payment because repayment is spread over more months, but it can produce more total interest.
  • Compare the same amount: This helps isolate how rate and term affect payment and interest.
  • Check APR and rate definitions: APR is intended to reflect the annual borrowing cost under a lender’s disclosed calculation, but the precise included charges can vary. Use the figure and fee details in the actual disclosure.
  • Include charges separately: This calculator has no fee input, so its outputs cannot represent an offer’s full cost when fees or other required payments apply.

For example, comparing a $20,000 loan over three years with a $20,000 loan over five years changes both the payment schedule and the time interest accrues. A lower payment on the longer schedule does not, by itself, mean the total borrowing cost is lower. Run the calculator for each term, then review any fees and conditions separately.

What the Results Include—and Leave Out

The monthly payment is the scheduled principal-and-interest payment implied by the inputs. Total interest is an estimate over the full stated term if all scheduled payments are made as modelled. It is not the sum of every possible cost of borrowing, nor is it a payoff quote for a particular date.

Actual loan statements can differ because of payment timing, daily-interest methods, rounding, variable rates, fees added to the balance, or extra payments. A lender may also disclose a payment that includes items this calculator does not model. Use the lender’s written payment schedule and disclosures for the figures applicable to a particular offer.

Common Comparison Mistakes

  • Looking only at monthly payment: A smaller payment may result from a longer term, not a lower total cost.
  • Mixing APR and monthly rates: Enter an annual APR as a percentage, such as 8, not 0.08 or a monthly rate. The formula converts it to a monthly rate.
  • Ignoring fees: The calculator does not add origination charges or other costs. Check how these are paid and whether they are financed.
  • Assuming a quote is guaranteed: A search result or estimate is not necessarily a final offer. The lender’s disclosure specifies the applicable terms.
  • Overlooking rate changes: A variable-rate loan cannot be represented accurately by this fixed-rate calculation if its rate changes.

It is also a misconception that the lowest displayed payment is automatically the least expensive option. Payment size, total interest, fees, repayment flexibility, and the terms in the disclosure are distinct pieces of information; this calculator addresses only the stated fixed-rate payment and interest arithmetic.

Frequently Asked Questions

What does a loan comparison search show?
It helps compare estimated payments and interest using loan amount, APR, and term. This calculator models one fixed-rate loan per run, so enter each set of offer details separately.

Is APR the same as the interest rate?
Not necessarily. APR is an annualized cost figure defined by the lender’s disclosure, while the interest rate is used to calculate interest on the loan balance. Check the offer documents to understand the figures and included charges.

Why can a longer loan have a lower monthly payment?
The amount owed is divided across more scheduled payments. More months can also mean interest accrues for longer, so compare total interest and disclosed charges as well as the monthly payment.

Does this calculator include fees or insurance?
No. It calculates principal-and-interest payments from the amount, APR, and term. Fees, taxes, insurance, PMI, and escrow are not included.

Can I compare a variable-rate loan with this tool?
Only as a limited illustration using one assumed rate. The calculation holds the rate constant, so it cannot forecast payments or total interest if the rate changes.

Are these results a lender’s final quote?
No. They are estimates from the inputs and assumptions shown. The result is an estimate, and the lender’s disclosure gives the exact figures.

Related

Formula used
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

Each line is one input (in, sel, list) or one result (out: label, unit, formula, decimals). How the calculators work

Method: the standard loan formula for this calculation, fixed rate and monthly compounding unless stated, rounded as each result states. Not financial advice; no lender, rate or product is recommended. See formulas and assumptions, the disclaimer or report an error.

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