Loan Comparison Calculator: Compare Payments and Interest

A loan comparison calculator estimates the monthly payment and total interest for one fixed-rate loan, using its amount, annual percentage rate (APR), and term. Enter the figures from a lender’s offer to see the calculated costs; this page models one loan at a time, so compare offers by running it separately for each set of terms.

Formula

The calculator uses the standard fixed-payment amortization formula. It first calculates the monthly payment, rounds that payment to cents, then multiplies the rounded payment by the number of monthly payments and subtracts the original principal to estimate total interest.

• 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 as a decimal: apr ÷ 1,200.
• n is the number of monthly payments: years × 12.
• pmt is the monthly payment in dollars: round[p × r ÷ (1 − (1 + r)⁻ⁿ), 2].
• int is estimated total interest in dollars: pmt × n − p.

The payment calculation assumes equal payments made monthly and a constant rate. The output is an estimate based on the entered APR and term, not a lender quote. Because the payment is rounded to the nearest cent before total interest is calculated, the displayed total follows the calculator’s stated rounding method.

Worked Example

Using the calculator’s default inputs—$20,000 principal, 8% APR, and a five-year term:

1. Convert the APR to a monthly decimal rate: 8 ÷ 1,200 = 0.0066667.
2. Find the number of payments: 5 × 12 = 60.
3. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = $405.53, rounded to cents.
4. Calculate total interest using the rounded payment: $405.53 × 60 − $20,000 = $4,331.80.

For these inputs, the estimated monthly payment is $405.53 and estimated total interest is $4,331.80. Actual final payments or totals can differ if a lender’s payment schedule, rounding, fees, or other contract terms differ.

Assumptions

• The interest rate remains fixed for the full loan term.
• Payments are equal, made monthly, and begin on the schedule assumed by a standard amortization calculation.
• Interest is modelled monthly at APR ÷ 12; this is a calculator convention and may not match every lender’s exact calculation method.
• Fees, taxes, insurance, mortgage insurance, escrow, late charges, and other costs are not included.
• No extra payments, missed payments, rate changes, or balance changes are modelled.

How to Compare Loan Offers

For a useful comparison, enter each offer’s principal, APR, and repayment term in separate runs. Use the figures that actually apply to the offer rather than relying on a headline rate or an illustrative example. The APR may reflect some borrowing costs, but this calculator does not separately itemize fees or determine how an APR was calculated. Check each lender’s disclosure for the precise terms and included charges.

Compare the outputs alongside the term and amount borrowed. A longer term can reduce the scheduled monthly payment while increasing the number of payments, which can raise total interest. A shorter term can have the opposite effect. These are mathematical consequences of the inputs, not a judgment about which loan fits a person’s circumstances.

• Keep the amount borrowed consistent if the goal is to compare pricing for the same principal.
• Use the same term when isolating how different APR inputs change the payment and interest estimate.
• If offers have different terms, note both monthly payment and total interest; one figure alone does not describe the full payment schedule.
• Check whether the quoted APR is fixed or variable. This calculator assumes a fixed rate.

Limits and Common Mistakes

A frequent mistake is entering 0.08 for an APR of 8%. The input expects a percentage, so enter 8. Another is confusing the amount financed with the purchase price: if the loan includes an added amount, use the actual principal shown in the offer. The term is entered in years, not months; for example, enter 5 for five years.

This is a simplified amortization estimate, not a complete comparison of loan contracts. It does not account for fees paid upfront, origination charges, balloon payments, variable-rate changes, payment-date conventions, or a final payment adjusted for rounding. It also does not evaluate eligibility, approval, taxes, or a borrower’s budget. For an exact schedule, use the lender’s written payment disclosure and verify which costs are included.

Do not interpret a lower displayed payment as proof that an offer has lower overall cost: the term, principal, and omitted charges matter. Conversely, the total-interest output is not the total amount paid, since it excludes the principal and costs outside the model. The estimated total scheduled payments, before excluded charges, are the rounded monthly payment multiplied by the number of months.

Frequently Asked Questions

How do I compare two loans with this calculator?
Run the calculator once for each offer, entering its principal, APR, and term. Compare the payment and interest estimates while checking the written disclosures for fees and other terms the calculator omits.

Does APR mean the monthly interest rate?
No. APR is entered as an annual percentage. For this estimate, the monthly rate is APR divided by 12 and then converted from a percentage to a decimal by dividing by 100.

Why can a longer loan have more total interest?
A longer term generally means more scheduled payment periods. With a fixed rate and equal payments, spreading repayment over more periods can increase the sum of interest, even when the monthly payment is lower.

Does the result include fees or insurance?
No. The outputs model principal and interest only. Fees, taxes, insurance, escrow, and other charges are excluded unless they are already reflected in the principal or APR you enter; check the lender’s disclosure for details.

Can I use it for a variable-rate loan?
Only as a simplified illustration of one assumed fixed APR. A variable rate may change over time, so this calculation cannot predict later payments or total interest.

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

Related

• Home Loan Comparison Calculator: Compare Payments
• Home Loan Comparison Rate Calculator: What It Shows
• Home Loan Comparison Calculator: Compare Payments and Cost

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 | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2