Loan Comparison Calculator: Compare Monthly Payments

A loan comparison calculator estimates the monthly payment and total interest for a fixed-rate loan from its amount, annual percentage rate (APR), and term. Enter the figures from a lender’s disclosure to see the estimated payment and interest total; this calculator models one loan at a time, so compare two offers by running it twice.

Formula

The calculator uses the standard fixed-payment loan formula. It converts the annual APR to a monthly rate, calculates the payment needed to repay the principal over the selected number of months, rounds that payment to cents, and multiplies the rounded payment by the number of months to estimate total paid. Subtracting the original principal gives estimated interest.

• p = amount borrowed, in dollars.
• apr = annual percentage rate, entered as a percentage per year.
• r = monthly interest rate, calculated as apr ÷ 1,200.
• n = number of monthly payments, calculated as years × 12.
• pmt = monthly payment in dollars: round[p × r ÷ (1 − (1 + r)⁻ⁿ), 2].
• int = estimated total interest in dollars: pmt × n − p.

The APR input is expressed as a percentage, so enter 8 for 8%, not 0.08. The formula treats the monthly rate as APR divided by 12, then divides by 100 to convert the percentage to a decimal. The payment is rounded to the nearest cent before the total-interest calculation, matching the calculator’s displayed payment.

Worked Example

Using the calculator’s default values—$20,000 principal, 8% APR, and a five-year term—first find the number of monthly payments and monthly rate:

• n = 5 × 12 = 60 payments.
• r = 8 ÷ 1,200 = 0.0066667 per month.
• Monthly payment = round[$20,000 × 0.0066667 ÷ (1 − (1.0066667)⁻⁶⁰), 2] = $405.53.
• Total paid = $405.53 × 60 = $24,331.80.
• Total interest = $24,331.80 − $20,000 = $4,331.80.

The payment is rounded before multiplying by 60, so the displayed total follows the same convention as the calculator. A lender’s payment schedule may differ slightly because of its precise rounding, payment dates, or additional charges.

Assumptions

• The interest rate remains fixed for the entire term.
• Payments are equal, made monthly, and assumed to occur at the end of each monthly period.
• Interest compounds monthly using the APR divided by 12.
• The estimate excludes fees, taxes, insurance, private mortgage insurance, and escrow; none of these are inputs.
• The full principal is assumed to be borrowed at the start, with no extra payments, skipped payments, or changes to the schedule.

How to Compare Loan Offers

For a meaningful comparison, use the same amount borrowed and the same repayment period when comparing monthly payments. Then enter each offer’s disclosed APR separately. If the APRs are identical but the terms differ, the payment comparison reflects both the repayment length and the amount of time interest can accrue. A longer term often produces a lower scheduled monthly payment but more months of payments; the total-interest figure helps show that trade-off within this formula’s assumptions.

1. Find the amount you would actually borrow, not just an advertised maximum or a figure that includes charges you will not finance.
2. Use the APR and repayment term shown in the lender’s offer or disclosure. Do not substitute a promotional rate unless its conditions and duration match the loan being modelled.
3. Run each offer through the calculator, keeping the amount and term consistent where possible.
4. Compare payment and total interest, then separately review disclosed fees, payment timing, rate-change terms, and other conditions that this calculation omits.

For example, a $20,000 loan at one APR over five years can be compared with the same principal and term at a different quoted APR by changing only the APR input. To compare different terms, change the years input too, but note that the results then reflect more than a rate difference. The calculator does not decide which offer is appropriate for a person’s circumstances.

Reading Results and Common Limitations

Monthly payment is the estimated scheduled amount for principal and interest. Total interest is the modeled interest across all scheduled payments—not the total cost of borrowing if separate fees or other costs apply. The total paid can be reconstructed as principal plus interest, but it is not shown as a separate output here.

Common comparison mistakes include entering 0.08 instead of 8 for an 8% APR, mixing monthly and annual terms, and comparing loans with different principal amounts as though the APR alone explains the payment. Another source of confusion is APR versus an interest rate quoted without fees: this calculator accepts an APR but does not calculate one from a loan’s charges. Obtain the actual APR and costs from the lender rather than trying to infer them from this estimate.

This is a standard amortizing-loan calculation. It is not suitable for a variable-rate loan whose rate changes, an interest-only period, a balloon payment, irregular payment dates, or a loan with a different repayment structure unless those features happen to match the stated assumptions. It also cannot model extra payments or a payoff date. Use lender-provided schedules and disclosures for terms or charges not represented by the inputs.

When a Side-by-Side Comparison Needs More

Although the calculator runs one scenario at a time, recording the outputs in a simple table can make a comparison clearer. Include the lender’s quoted principal, APR, term, estimated payment, and estimated interest, plus separate columns for disclosed fees and any variable-rate or payment conditions. Those additional details should come from the relevant offer documents; the calculator does not supply or validate them.

A lower payment by itself does not establish that one loan costs less overall: it may be associated with a longer repayment period, a different amount borrowed, or costs excluded from this formula. Conversely, total interest alone does not describe payment flexibility or every contractual feature. Keep the calculation and the offer’s complete terms distinct when evaluating the figures.

Frequently Asked Questions

How do I compare two loans with this calculator?
Enter the first offer’s principal, APR, and term, note the payment and interest results, then repeat for the second offer. Keep inputs identical except for the feature you intend to compare.

Does the calculator include loan fees?
No. It uses the entered principal and APR and does not separately add origination charges or other fees. Use the lender’s disclosed figures to understand costs that are not represented.

Why can a longer loan have a smaller monthly payment?
The principal is spread across more scheduled payments. Under the fixed-rate assumptions here, a longer term can also mean interest accrues over more months, so compare the total-interest estimate as well as the payment.

Can I use this for a variable-rate loan?
Not accurately when the rate changes. This calculation assumes one fixed APR for the full term and cannot represent future rate adjustments or their effect on payments.

Is the result the exact payment my lender will charge?
No. Payment dates, lender rounding, fees, and loan terms can affect the actual figures. The result is an estimate and the lender’s disclosure gives the exact figures.

Related

• Loan Comparison Rate Calculator: Compare APRs
• Loan Comparison Rates: What They Mean and How to Compare
• Loan Comparison: Compare Monthly Payments and Interest

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