Payment Calculator Side by Side: Compare Loan Costs

A side-by-side payment calculator compares the estimated monthly payments and total interest for two loans using each loan’s amount, APR, and term. Enter one loan at a time in the calculator below; its result is a standard fixed-rate estimate, so compare the outputs using the same assumptions and then repeat with the second loan’s figures.

Formula

This calculator uses the fixed-payment loan formula. It calculates a monthly payment from the amount borrowed, the monthly interest rate, and the number of monthly payments.

Monthly payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

• P is the loan principal, in dollars.
• r is the monthly interest rate as a decimal: annual APR ÷ 12 ÷ 100.
• n is the term in months: years × 12.

Total interest = monthly payment × number of payments − principal. The calculator reports cents for both results. Its total-interest calculation uses the displayed, cent-rounded monthly payment multiplied by the full number of payments. Actual lender schedules can differ because of payment dates, rounding, fees, or other contract terms.

Worked Example

Using the calculator’s defaults: a $20,000 loan, 8% APR, and a five-year term.

1. Convert APR to a monthly decimal rate: 8 ÷ 100 ÷ 12 = 0.0066667.
2. Convert the term to payments: 5 × 12 = 60 monthly payments.
3. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = approximately $405.53 per month.
4. Calculate interest using the displayed payment: $405.53 × 60 − $20,000 = $4,331.80.

The calculator therefore shows a monthly payment of $405.53 and total interest of $4,331.80. The payment is rounded to cents; using an unrounded payment for the final multiplication would produce a slightly different total.

Assumptions

• The interest rate stays fixed throughout the term.
• Payments are made monthly, with the first payment one month after the loan begins.
• Interest accrues monthly at APR divided by 12.
• The calculation excludes fees, taxes, insurance, PMI, and escrow because they are not inputs.

How to Compare Two Payments

Run the calculation with the first loan’s amount, APR, and term, and record both outputs. Then enter the second offer’s figures and compare monthly payments and total interest. For a clean comparison, confirm that both figures describe the same borrowing amount and that APR and term are entered in the correct units. If the offers have different principal amounts, the outputs describe different amounts borrowed, not just different pricing.

A side-by-side view should distinguish monthly cash flow from borrowing cost. A longer term often reduces the scheduled payment by spreading repayment over more months, but it can increase total interest because interest accrues for longer. A shorter term can mean higher monthly payments and less time for interest to accumulate. The calculator shows the arithmetic consequences of the inputs; it does not determine which payment fits a household budget.

For example, if two offers finance the same principal but have different terms, do not judge them only by the monthly payment. Compare the total number of payments and the displayed interest as well. For a fuller comparison, include any lender-provided costs that are not represented by APR or the loan amount; this calculator cannot add them unless you account for them separately.

When to Use It and How to Read the Result

Use the calculator to estimate the scheduled payment on a conventional fixed-rate installment loan or to understand how changing one input affects the estimate. It can help answer “what if” questions—for instance, how a different term changes a payment—provided you enter a realistic rate and principal. Get the actual APR, fees, and repayment terms from the lender’s written disclosure rather than treating the default example as a current market figure.

The monthly payment is the formula’s level principal-and-interest payment, not necessarily the entire amount due each month. A mortgage bill, for example, may include escrowed taxes or insurance, while other loans may have separate fees or optional products. The total-interest output is an estimate over the stated term, assuming every scheduled payment is made as modeled. It is not the same as the total amount paid, which includes returning the principal as well as interest.

Common Comparison Mistakes and Limits

• Entering APR as a decimal: Enter 8 for 8%, not 0.08. The formula converts the percentage to a monthly rate.
• Mixing up years and months: This calculator takes a term in years. A five-year term becomes 60 payments internally.
• Comparing different loan amounts: A lower payment may simply reflect borrowing less. Compare equal principal amounts when isolating rate or term effects.
• Ignoring costs outside the formula: Fees, insurance, taxes, and other charges can change the actual payment or total cost. Use the lender’s documents to identify them.
• Assuming every loan has fixed payments: Variable rates, interest-only periods, balloon payments, skipped-payment arrangements, and irregular schedules are not represented by this formula.

Rounding also matters. A lender may calculate interest daily, use a different payment date convention, or adjust the final payment to clear a small remaining balance. That can make its schedule differ by a few cents or more from a simple monthly estimate. Extra payments are not included, and the calculator does not model early payoff or refinancing.

Frequently Asked Questions

How do I compare two loan payments side by side?
Calculate each loan separately using its principal, APR, and term. Record the monthly payment and total interest for both, then check that the inputs and any excluded fees are comparable.

Does a lower monthly payment mean a loan costs less?
Not necessarily. A longer repayment term can lower the monthly payment while increasing total interest. Compare the full term and total costs, not only the monthly amount.

Is APR the same as the monthly interest rate?
No. APR is entered as an annual percentage. In this formula, the monthly decimal rate is APR divided by 1,200. The calculator does not separately model fees that may affect an APR disclosure.

Does the payment include taxes and insurance?
No. The result covers the modeled fixed loan payment only. Taxes, insurance, PMI, escrow, and fees are excluded unless separately included in the amount you are comparing.

Why might a lender’s payment differ from this estimate?
Differences can arise from fees, daily rather than monthly interest calculations, payment dates, rate changes, rounding, or loan features not included in the formula. Check the lender’s payment schedule and disclosure for the exact terms.

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

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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