Loan Comparison Calculator
Using the information provided by each lender, you can compare the cost of two loans. This can provide more insight into what monthly payments will look like and how they will affect the long-term viability and health of your finances.
This Refinance Calculator provides you with monthly, total, and interest payments for both loans. Using this information can help you pick the loan that works best for you and your financial health.
Loan Comparison Calculator Instructions
Follow these steps to compare two loans to determine which one is the best for you.
Step 1: Input the Loan Amount for the First Loan
Adjust the sliding number line to the amount that the first loan is for.
Step 2: Input the Interest Rate for the First Loan
In the box, type in the numerical interest rate value of the first loan.
Step 3: Input the Duration of the First Loan
Click on the drop-down menu in the “repayment period” section. Select from the “15-year fixed,” “20-year fixed,” or “30-year fixed” based on the duration of the first loan.
Step 4: Input Second Loan Amount
After inputting the values for the first loan, move to the second loan section. Adjust the sliding number line to the amount that the second loan is for.
Step 5: Input the Interest Rate for the Second Loan
In the box, type in the numerical interest rate value of the second loan.
Step 6: Input the Duration of the Second Loan
Click on the drop-down menu in the “repayment period” section. Select from the “15-year fixed,” “20-year fixed,” or “30-year fixed,” based on the duration of the second loan.
Step 7: Calculate
Press the recalculate button to reveal each loan’s numbers and compare them side-by-side. The results will provide you with values for monthly payments, total payments, and total interest payments for both loans.
Find the Best Personal Loan Rates
Finding the lender with the best personal loan rates is quick and easy using our search tool. Compare personal loan rates now.
Comparing the Results
Knowing how to interpret the data the calculator provides will contribute to your financial literacy and is essential to deciding which loan will best serve your needs.
Monthly Payments
The first value that the calculator will calculate is the monthly payment of the loans. The monthly payment is the amount of money you will be expected to repay towards your loan amount to your lender.
This depends upon the loan amount, the loan, the loan duration, and the loan’s interest rate. This is an essential factor to consider when deciding which loan, as this will be the factor that affects you most in your day-to-day life.
Total Payments
This value represents the sum that your entire loan will end up costing you after the loan is repaid, including the cost of the loan and the amount of interest added to the cost of the loan. This number will represent what you will end up paying for the loan once the loan has been completely repaid.
Total Interest Payments
This value represents how much of the total loan cost will be the cost accrued by the loan’s interest rate. The total interest rate payments tell you how much extra money, after the cost of the loan amount itself, you are required to pay back to your lender.
What Should You Look at When Comparing Loans?
There are several different factors when comparing loans against each other.
To understand which loan will work best for its intended purpose, your finances, and your future, there are factors to weigh when deciding. Let’s take a look at some essential factors to consider.
Interest Rate
Interest rates are a feature of almost every auto, home, or personal loan. The interest rate on a loan is the price a borrower pays to borrow money from the lender.
Borrowers are obligated to repay the total cost of the loan plus the amount of money accrued based on the interest rate, which is represented in a percentage.
Your interest rate is calculated based on the amount of money you borrow, the loan’s length, and often outside factors. These outside factors can include the borrower’s credit score, their credit and financial history, and other monthly costs and bills.
Loan Term
The loan term, or the loan’s lifetime or duration, is how long the loan will take to repay. Through monthly payments, you will repay your loan over a predetermined amount of time, typically a few years. Your loan term is a factor in deciding how much your monthly payments will be.
Monthly Payment Amount
Your monthly payment amount is the amount your lender requires you to pay towards the total loan cost. This number is predetermined and is the sum of part of the loan amount and part of the interest the loan accrues.
This amount can be fixed because your interest rate is set, or it can fluctuate as your interest rate fluctuates.
Total Loan Amount
The total loan amount is what the cost of a loan will be. This number is the sum of the total amount of money that was borrowed plus the amount of money that was accrued via interest. This figure illustrates precisely how much money you will be required to repay.
Principal Cost
The principal cost of a loan is the amount of money a lender lends to a borrower. This is the amount that the loan is worth. The entire principal cost of a loan is required to be paid back by a borrower.
Annual Percentage Rate (APR)
The annual percentage rate of a loan is the yearly interest accrued on the loan.
This number represents the annual cost of how much it is to borrow money from a lender.
The amount of money borrowed is broken down into equal parts based on how many years your loan will take to repay, the fixed amount of time predetermined by the loan terms. This value is expressed as an interest rate.
Loan Origination Fees
The origination fee of a loan is a one-time fee that is charged to the borrower at the beginning of the loan’s lifetime.
This fee covers loan application fees and processing of the loan application. A loan origination fee is often expressed as a percentage of the amount that the loan is for.
Prepayment Penalties
Lenders depend on interest payments to make a profit from lending money to borrowers. The interest on a loan is calculated based on the amount the loan is worth and the duration of the loan. Lenders expect to make a certain amount of money from your loan payments. Lenders sometimes charge prepayment penalties to borrowers who repay their loans before the agreed date of the loans ending.
Fixed Interest Rate
A fixed interest rate is an interest rate that stays the same throughout the loan. This means that a borrower will always pay the same amount of interest every time they make a loan payment. This also means your monthly payments will be consistently the same.
Variable Interest Rate
Sometimes also called a floating interest rate, a variable interest rate is an interest rate that is subject to change throughout the lifetime of a loan.
Your monthly payment is likely to fluctuate and can be different every month throughout the loan. This can make financial planning more difficult for borrowers as you can never count on your monthly payment remaining the same.
Credit Score Requirements
Your credit score is a grade determined by weighing your financial and credit history. Financial institutions use this number to assess the risk of lending money to you, granting a line of credit to you, or for landlords to determine if they want to take you on as a tenant.
This number ranges between 300 and 850 (300 being a poor credit score and 850 being a perfect credit score) and is designed to assess the likelihood that you will make payments on time and to the total payment amount.
Every lender will have different credit score requirements. Knowing the credit score requirements of a potential lender can save you time and effort if you know that you do not meet their requirements.
The higher your credit score, the more extensive the selection of lenders willing to lend to you.
Repayment Schedule
When considering your loan options, it is essential to consider the loan repayment schedule. Your loan repayment schedule includes the duration or lifetime of the loan, which can be anywhere from one year to 30 years or more, depending on the type of loan. The duration of personal loans is typically two to seven years.
Why You Should Compare Loan Offers
Collecting necessary information from various lenders when searching for a loan is crucial. Comparing your loan options against each other will grant you the knowledge and freedom to make the most informed, rational, and sensible choice for you, your finances, and your future.
Cost Savings
The total cost of your loan might be the most crucial factor to consider. Comparing the costs will help you know where you can save the most money, how much a loan will impact your finances, and how the cost will affect your day-to-day life.
Finding the Best Terms
Comparing each loan’s terms will allow you to choose an option that will work with your finances years into the future.
Avoiding Predatory Loans
Predatory loan practices, or generally things considered unethical in the lending industry, can include using outright fraudulent and illegal techniques, not being forthcoming with information, or being deceptive.
One of the easiest ways to avoid predatory loan practices is by borrowing only from respected, trustworthy lenders and financial institutions.
To avoid exorbitant, hidden fees and other deceptive tactics, such as being targeted for having a lower credit score or a not-so-great financial history, you must vet the financial institution or lender you are considering borrowing from.
Meeting Financial Goals
A loan can be a powerful financial tool.
If you are diligent about making your loan payment on time and to the total amount due, this can help you build your credit score and a positive financial history.
Comparing your loan options with the previously mentioned factors can allow you to get a loan that will work best for you, your needs, and your finances.
Ensuring Financial Flexibility
When comparing your loan options, choosing the loan that will allow you financial flexibility is essential.
Looking at what loan timeline works best with your financial and personal future and what monthly payment will be the most doable for you are all things to consider.
This does not mean you will want to choose a loan with the cheapest monthly payment, as this can prolong the time you make payments on your loan.
You may not want to choose the loan option with the shortest duration, as this can give you payments that are too high for your monthly income and other costs and bills you must pay.
Consider the loan option that is a happy medium between these two factors and will grant you the most freedom.
