Compare two loans side-by-side on total cost

Why Lifetime Cost Beats Monthly Comparison

Two loans with similar monthly payments can differ substantially in total cost when terms or rates vary. A longer term lowers the monthly figure but raises total interest. A slightly upper rate on a shorter term can cost less overall. Comparing total cost — monthly times total months — reveals the true winner.

Factors the Comparison Captures

This calculator compares both loans on the same metric: total units paid over the full term. It assumes fixed rates, no fees, and no prepayment penalties. For loans with different fee structures, origination points, or rate changes, add the fees to the principal input for the comparison. The total cost figure is what actually leaves the bank account across the loan life.

Quick example

With loan 1 amount of 20,000 and loan 1 rate of 7 (plus loan 1 term of 5 and loan 2 amount of 20,000), the result is 1,506.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Loan 1 Amount, Loan 1 Rate, Loan 1 Term, Loan 2 Amount, and Loan 2 Rate. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the winning option changes.

What's happening under the hood

Computes standard amortized monthly payment for each loan, multiplies by total months in term, and compares. Assumes fixed rates, no fees, no prepayment. Results are estimates for illustration purposes only. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Reading the output honestly

The payoff date assumes every payment lands on time and at the amount you entered. In reality, months with unexpected expenses happen. Treat the figure as the best-case timeline and add a buffer for life if you want a realistic target.

What this doesn't capture

Real payoff journeys include missed payments, fee changes, balance transfers, and promotional rates that reset. The calculation assumes a steady plan; reality is rarely that clean. Use the figure as the best-case plan against which actual progress gets measured.