💳 Loan Comparison Calculator

Compare Loans to Make the Best Financial Decision

When you need to borrow money, whether for a car, home improvement, or personal expenses, you'll likely receive multiple loan offers. Comparing loans can be confusing - a lower interest rate doesn't always mean a better deal. This calculator helps you compare multiple loan options side-by-side, showing the true cost of each loan including total interest paid, monthly payments, and overall affordability.

What This Calculator Shows You

• Monthly Payment: Your fixed monthly payment amount for each loan option
• Total Interest Paid: The total amount of interest you'll pay over the life of each loan
• Total Amount Paid: Principal plus interest - the true cost of each loan
• Interest Type Comparison: See the difference between simple and compound interest loans
• Best Option Highlight: Automatically identifies which loan saves you the most money

Key Loan Factors to Compare

• Interest Rate: The annual percentage rate (APR) - lower is generally better, but consider the full picture
• Loan Term: How long you have to repay - shorter terms mean higher monthly payments but less total interest
• Loan Amount: The principal amount you're borrowing
• Interest Type: Simple interest (interest only on principal) vs. compound interest (interest on interest)

Simple vs. Compound Interest

Simple Interest: Interest is calculated only on the original loan amount (principal). Your monthly payment goes toward interest first, then principal. Simple interest loans are typically more straightforward and predictable.

Compound Interest: Interest is calculated on both the principal and previously accrued interest. This can result in higher total interest payments over time, especially for longer-term loans. Most mortgages and many personal loans use compound interest.

This calculator lets you compare both types to see which structure works better for your situation.

What Makes a Loan "Better"?

The "best" loan depends on your priorities:

• Lowest Total Cost: Choose the loan with the lowest total interest paid over its lifetime
• Lowest Monthly Payment: Choose the loan with the most affordable monthly payment (often longer terms)
• Fastest Payoff: Choose the loan with the shortest term (often higher monthly payments but less total interest)
• Best Balance: Find a loan that balances affordable monthly payments with reasonable total cost

Loan Comparison Strategies

Compare Apples to Apples: Make sure you're comparing loans for the same amount and similar terms. Adjust one variable at a time to see its impact.

Consider Your Budget: A loan with lower total interest might have higher monthly payments that don't fit your budget. Always ensure you can comfortably afford the monthly payment.

Factor in Fees: Some loans have origination fees, prepayment penalties, or other costs not reflected in the interest rate. Ask about all fees before making a decision.

Check Prepayment Options: If you plan to pay off the loan early, check if there are prepayment penalties. Some loans allow extra payments without penalty, which can save significant interest.

Common Loan Types

• Personal Loans: Unsecured loans for various purposes, typically 3-7 year terms
• Auto Loans: Secured by the vehicle, typically 3-7 year terms
• Home Equity Loans: Secured by your home, typically 5-30 year terms
• Student Loans: For education expenses, typically 10-25 year terms
• Payday Loans: Short-term, high-interest loans (generally not recommended)

Important Notes

This calculator provides estimates based on standard loan formulas. Actual loan terms may vary based on your credit score, income, lender policies, and other factors. Always read the full loan agreement before signing. Consider consulting with a financial advisor for large loans or complex situations. Remember that taking on debt should be done carefully and only when necessary.