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Loans & mortgages

Loan Comparison Calculator

Compare two loan offers side by side, payment, total interest and total cost, to see which one actually costs less.

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Quick answer

A lower payment is not a cheaper loan: stretching the term cuts the payment but grows total interest. Compare offers on total cost over the life of the loan, then check the payment fits your budget, in that order.

Cheaper in total
Offer A
Saves $1,228.17 overall.
A: monthly
$489.15
B: monthly
$364.02
A: total interest
$4,349.22
B: total interest
$5,577.39

A lower monthly payment from a longer term usually costs more in total, this is the comparison lenders hope you skip.

Formulas last verified 2026-10-10. Results are estimates, not financial advice. How we calculate.

The comparison lenders hope you skip

Loan marketing leads with the monthly payment because it is the number that can always be made attractive: stretch the term and any payment target is reachable. The payment answers "can I carry this?", it says nothing about "what does this cost?". This page puts the two questions side by side, per offer, and names the cheaper one.

Worked example

$25,000 car loan. Offer A: 6.5% for 5 years → $489/month, $4,344 total interest. Offer B: 5.9% for 7 years → $364/month, $5,568 total interest. B's payment is $125 lighter; B's cost is $1,224 heavier, despite the lower rate. If A's payment fits, A wins. If it doesn't, B is a legitimate choice made with open eyes, which is the entire point.

Making offers comparable

  • Same amount financed. If one offer rolls fees into the loan, add those fees to the other side's cost, or compare APRs instead of nominal rates.
  • Same rate type. A fixed 8.7% and a floating 8.4% are different products; the floating one carries rate risk the number doesn't show. Compare fixed against fixed where possible, or at least note the asymmetry.
  • Check prepayment terms. Two otherwise-equal offers diverge sharply if one permits free prepayment and the other charges 4%. Flexibility has value the totals don't capture.

Beyond two offers

For a mortgage-sized decision, the structure questions run deeper than A-vs-B: whether to buy the rate down with points, what a term reset really costs (the refinance calculator handles that case), and what voluntary extra payments would do to either offer. For rupee loans with Indian conventions and a full schedule, use the EMI calculator.

Frequently asked questions

Which matters more: the monthly payment or the total cost?

Both, in the right order. Total cost tells you which loan is cheaper; the payment tells you whether you can afford it. Deciding on the payment alone is how a 7-year loan "beats" a 5-year one while quietly costing thousands more, the single most common loan-shopping mistake.

How can a lower rate still be the worse offer?

Through the term. Offer B at 5.9% over 7 years costs more total interest than offer A at 6.5% over 5 years, because B charges its lower rate for two extra years on a slowly-falling balance. Rate and term must be judged together, which is exactly what the total-cost line does.

What about processing fees and charges?

Add each loan's upfront fees to its total cost before comparing, a ₹10,000 processing fee on one offer can erase a 0.2% rate advantage on a small loan. For a fee-heavy comparison, the honest metric is APR (which folds fees into the rate); when quoted APRs are available, compare those at equal terms.

Should I take the longer term and prepay?

It is a legitimate strategy: take the longer term for the lower obligation, then voluntarily pay at the shorter-term level. You get the shorter loan's economics with a built-in safety valve. It requires discipline, and it only works when prepayment is penalty-free, confirm that first.

Can I compare a bank loan against dealer financing with this?

Yes, enter each as an offer. Watch for dealer quotes that bundle a price discount conditional on their financing: in that case, compare the total cost of (car price A + loan A) against (car price B + loan B), not the loans alone.

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