Loan comparison calculator

• Both loans are fixed rate instalment loans repaid in equal monthly payments. The annual rate is divided by twelve to reach the monthly rate.
• Fees are charged once at the start and are counted in the cost of borrowing but not in the payment. A fee deducted from the advance instead would leave you with less than you asked for.
• The cost of borrowing is interest plus fees. It is not an annual percentage rate, which folds the same information into a single rate figure and is the number lenders are required to disclose.
• Comparing offers with different terms or different amounts compares different things. The calculator says so when the inputs do not line up.
• Insurance sold alongside a loan, penalties for paying early, and any charge for a missed payment are not included.
• Nothing here reflects whether you would be approved for either offer.

Two loans are easy to compare when only the rate differs. It gets harder as soon as a fee, a different term or a different amount enters, because the monthly payment stops being a fair signal. A longer term always produces a smaller payment, and a fee never shows up in the payment at all.

The number that settles it is what the loan costs on top of the money you receive: the interest over the whole term plus anything charged to arrange it. On a twenty five thousand dollar loan over five years, a one point lower rate saves roughly seven hundred dollars in interest, so a six hundred dollar arrangement fee eats most of the advantage. Reverse the fee and the ranking flips.

Lenders in both countries have to disclose an annual percentage rate that packages the fee back into the rate, which exists for exactly this comparison. It is a good check on what you see here, though it assumes you keep the loan to the end of its term. Repay early and a front loaded fee turns out to have been more expensive than the disclosed rate implied.

Term length deserves its own look. If one offer is cheaper only because it runs longer, you are comparing a smaller payment against a larger total, which is a decision about cash flow rather than price. Setting both terms to the same number of months isolates the rate and the fees, and then the comparison means what it appears to mean.