Loan Comparison Calculator

The amortization formula behind every result

Most consumer loans — car loans, personal loans, fixed-rate mortgages — are amortizing: you pay the same fixed amount every month, and that payment is split between interest on the outstanding balance and a chunk of principal. Early on, most of the payment is interest; near the end, most is principal. This tool computes the fixed monthly payment with the standard amortization formula:

M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ]

Here P is the principal, n is the number of monthly payments, and r is the monthly interest rate — the annual rate divided by 12 and by 100. That last conversion matters: a 6% annual rate becomes 0.06 ÷ 12 = 0.005 per month, not 6. Once it has M, the tool multiplies by n to get the total paid, and subtracts the principal to get total interest. If you enter a 0% rate, it skips the formula entirely and divides the principal evenly across the months, with zero interest.

A worked example

Take a $10,000 loan at 6% annual over 60 months. The monthly rate is 0.005, and (1.005)⁶⁰ ≈ 1.3489. Plugging in:

M = 10000 × (0.005 × 1.3489) / (1.3489 − 1) = 10000 × 0.0067445 / 0.3489 ≈ $193.33

Over 60 months that is about $11,599.80 paid, of which roughly $1,599.80 is interest. The tool runs this for each of your three loans, then highlights the one with the lowest total interest in green and draws a bar chart scaled so the most expensive loan fills the bar — making the cost gap obvious at a glance.

Why the cheapest monthly payment is often the most expensive loan

This is the single most valuable lesson the comparison teaches. A lower monthly payment usually comes from a longer term, and a longer term means more months of interest. Compare two $10,000 loans: one at 5% over 60 months pays about $1,323 in interest; one at 7.5% over 48 months pays about $1,587. But stretch that same 5% loan to 84 months and the monthly drops further while total interest climbs past $1,800. The headline "low monthly payment" can quietly cost you the most. That is exactly why this tool surfaces total interest as the green-highlighted, decisive number rather than the monthly figure.

Genuine use cases

• Choosing between lender offers. Drop in three quotes with their real rates and terms to see which one actually costs least over its life.
• Term length trade-offs. Hold the amount and rate constant, vary only the term, and watch how the monthly payment and total interest pull in opposite directions.
• Rate-shopping leverage. Quantify how much a half-point lower rate saves you, so you know whether it's worth negotiating or paying points.
• Refinance sanity check. Compare your current loan's remaining figures against a refinance offer to confirm the switch truly helps.

Tips and common mistakes

• Enter the term in months, not years. A 5-year loan is 60, a 30-year mortgage is 360. Mixing units is the most common input error and silently produces wrong numbers.
• Keep the unit consistent. The tool is currency-agnostic; just use the same currency for all three loans so the comparison is apples to apples.
• This models a plain amortizing loan only. It does not include fees, insurance, taxes, points, or variable-rate adjustments. Real APR can be higher than the quoted interest rate once fees are folded in.
• Use the quoted nominal annual rate. The tool converts it to a monthly rate for you; don't pre-divide it yourself or you'll understate the cost.
• Nothing is saved. All math runs locally in your browser and refreshing clears every field — no data is transmitted anywhere.