Understanding your result
Borrowing cost is interest plus the entered upfront fee, excluding the principal you receive and repay. A negative A-minus-B difference means offer A costs less over its full term. Monthly payment and total cost answer different questions.
If your starting point is a monthly payment budget rather than a principal amount, use the Loan Affordability Calculator to solve for the loan size that matches that budget.
The formula
P is the common amount borrowed, r is each nominal annual interest rate divided by 1,200, and n is that offer’s monthly payment count. Zero-rate payments are P ÷ n. Fees are paid separately at the start and are not financed into the balance.
A smaller payment can still cost more
Borrow 12,000 with zero interest. A twelve-month term requires 1,000 monthly; a twenty-four-month term requires 500. If upfront fees are 100 and 200 respectively, the longer offer has the smaller payment but costs 100 more overall.
How to use this calculator
- Enter the same borrowing amount for both offers.
- Copy each fixed interest rate, term in months, and separately paid upfront fee.
- Compare both the payment commitment and full-term cost before choosing which terms to investigate.
Make the comparison consistent
Use the contractual interest rate rather than an APR that already includes fees. Entering an APR and then adding those fees again can double-count costs. If fees are financed, the amount borrowed and payment calculation change; this model assumes a separate upfront payment.
The lower full-term total may not be cheaper if you refinance or repay early. Different terms also mean cash is paid at different dates. This simple comparison does not discount payments to present value or estimate early-exit costs.
Assumptions & limitations
What this calculation assumes
- Both loans are fixed-rate, fully amortizing monthly loans.
- Payments occur at each month-end with no missed installments.
- The loan is held for its entire contractual term.
What to keep in mind
- No variable rates, balloon payments, insurance, taxes, or early-repayment penalties are included.
- Results are estimates and do not replace lender disclosures.
Common questions
Does a lower rate always win?
No. A longer term or larger fee can outweigh a rate reduction. Inspect the total interest and fees as well as the quoted rate.
Why are the two principal amounts identical?
The tool compares offers funding the same need. Comparing unequal amounts would mix borrowing cost with the size of the loan.