How do I compare loans fairly?

Compare total lifetime cost (monthly payment × number of payments) — not just the monthly payment. A lower monthly payment with a longer term often costs substantially more overall. Also consider APR (which includes fees) rather than just the headline interest rate, since two loans at the same rate can have very different fee structures.

Is a shorter term always better?

Mathematically, shorter terms have higher monthly payments but much lower total interest. They're better if you can comfortably afford the higher payments. Longer terms offer lower monthly payments but cost significantly more in lifetime interest. The "right" choice depends on your cash flow constraints, alternative uses for the difference (investing vs. faster payoff), and risk tolerance.

Should I compare by rate or APR?

APR is the better comparison when loans have different fee structures because it includes origination fees, points, and other lender costs. Two loans with the same nominal interest rate can have very different APRs. For loans where you know you'll hold to maturity, APR is the best single comparison metric.

When does refinancing actually save money?

Refinancing saves money when: (1) the new rate is meaningfully lower than the existing rate (typically 0.75% or more), (2) you plan to stay in the home long enough to recoup the closing costs (the "break-even period"), and (3) you don't extend the term so far that the lower rate is offset by additional years of payments. Always check lifetime cost comparison, not just monthly payment, when evaluating refinances.

How does this account for prepayment?

The calculator assumes both loans are paid as scheduled to maturity. If you might pay off early (refinance, sell, or make voluntary extra payments), the actual lifetime cost will be lower than calculated for both options. The relative ranking between the two loans usually holds, but the absolute dollar savings may differ. For loans you intend to pay off early, also calculate "cost per year of holding" by dividing the planned-period cost by years held.

Loan Comparison Calculator

Compare two loan offers head-to-head. Enter the amount, rate, and term for each option to see which one costs less in monthly payments, total interest, and overall cost. Perfect for comparing mortgage offers, auto loans, or refinancing options.

Comparing loan offers is one of the most common — and most consequential — personal finance exercises. Two loans for the same amount can produce dramatically different lifetime costs depending on their rate and term combinations. A $250,000 mortgage at 6.5% over 30 years costs nearly twice as much in total interest as the same loan at 6.5% over 15 years. A 0.5% lower rate over 30 years saves tens of thousands of dollars. Knowing how to compare loans precisely makes the difference between an informed choice and an expensive default.

The relevant comparison isn't just monthly payment. A shorter-term loan has higher monthly payments but dramatically lower total cost. A lower-rate loan with higher fees may end up more expensive than a slightly higher-rate loan with no fees. The "best" loan depends on your specific situation: cash flow constraints, time horizon (will you pay off early?), tax situation, and risk tolerance.

This calculator compares two loan options on the metrics that actually matter: monthly payment, total interest paid, and lifetime cost. Use it for: comparing mortgage offers from different lenders, evaluating 15-year vs. 30-year mortgage options, choosing between auto loan terms, comparing personal loan structures, deciding whether refinancing makes sense. For the most complete comparison, also factor in APR (which includes fees) and your expected holding period (if you might pay off early, the longer-term loan's higher lifetime cost may not actually accrue).

Inputs

Loan A: Amount

Loan A: Interest Rate

Loan A: Term (Years)

Loan B: Amount

Loan B: Interest Rate

Loan B: Term (Years)

Results

Loan A Payment

$1,580

Loan B Payment

$2,076

Winner

Loan B

Total Savings

$195,177

Total Cost Comparison

Balance Over Time

Year-by-Year Comparison

Year	Loan A Balance	Loan A Interest	Loan B Balance	Loan B Interest
1	$247,205.69	$16,167.73	$239,180.51	$14,092.81
2	$244,224.23	$15,980.59	$227,722.24	$13,454.03
3	$241,043.10	$15,780.91	$215,587.48	$12,777.54
4	$237,648.93	$15,567.87	$202,736.28	$12,061.11
5	$234,027.44	$15,340.55	$189,126.35	$11,302.37
6	$230,163.42	$15,098.02	$174,712.89	$10,498.84
7	$226,040.61	$14,839.23	$159,448.47	$9,647.88
8	$221,641.69	$14,563.12	$143,282.83	$8,746.67
9	$216,948.17	$14,268.52	$126,162.78	$7,792.25
10	$211,940.32	$13,954.18	$108,031.96	$6,781.49
11	$206,597.07	$13,618.80	$88,830.71	$5,711.05
12	$200,895.99	$13,260.95	$68,495.81	$4,577.41

Last updated: May 26, 2026Reviewed by the CalcMountain editorial team

Formula

Monthly payment for each loan: M = L × [ r × (1 + r)^n ] / [ (1 + r)^n − 1 ] Where: L = Loan amount r = Monthly interest rate (annual rate ÷ 12) n = Term in months (years × 12) Total interest: Total Interest = (M × n) − L Lifetime cost: Lifetime = M × n = L + Total Interest Comparison metrics: Monthly difference: M(A) − M(B) Total interest difference: Total Interest(A) − Total Interest(B) Lifetime cost difference: Lifetime(A) − Lifetime(B) Example: $250K loan at 6.5% over 30 years vs. $250K loan at 5.75% over 15 years. Loan A (30 year at 6.5%): Monthly: $1,580 Total interest over 30 years: $318,800 Lifetime cost: $568,800 Loan B (15 year at 5.75%): Monthly: $2,075 Total interest over 15 years: $123,500 Lifetime cost: $373,500 Comparison: Monthly difference: Loan B is $495 more Total interest difference: Loan B saves $195,300 Lifetime cost difference: Loan B saves $195,300 For someone who can afford the extra $495/month, Loan B (15-year) saves nearly $200K. For someone who can't afford the higher payment, Loan A is the only viable choice — but the lifetime cost is much higher. Same calculation with refinance comparison: keep current loan A vs. refinance to loan B. Current Loan A: $250K at 7%, 30 years, 5 years in (~25 years remaining, ~$235K balance). Refinance Loan B: $235K at 6.0%, 30 years (resetting clock). Loan A path (keep current): Monthly: $1,663 Remaining payments × months remaining: $1,663 × 300 = $498,900 Loan B path (refinance): Monthly: $1,409 Lifetime (30 years from now): $1,409 × 360 = $507,240 Refinance LOSES $8,340 in lifetime cost despite the rate drop, because the term resets to 30 years. Refinancing to a 25-year loan instead would preserve the savings.

How to use this calculator

Enter Loan A: amount, interest rate, and term in years. This is your first option.
Enter Loan B: amount, interest rate, and term in years. This is your alternative.
Review three comparison metrics: monthly payment, total interest paid over the life of the loan, and overall lifetime cost.
For mortgage offers from competing lenders: enter the same amount and term, vary the rate. Lower rate wins.
For 15-year vs. 30-year mortgage comparison: same amount, different terms. The shorter term typically saves substantial interest at the cost of higher monthly payment.
For refinance evaluation: Loan A = current loan with remaining balance and remaining term; Loan B = new loan with refinance rate and new term. If you refinance, the clock resets — be sure to compare equivalent remaining periods or factor in the term extension.
For auto loan comparisons: vary term (36 vs. 60 vs. 72 months) to see how the term extension trades off against lower monthly payment.
Compare APR rather than just interest rate when fees differ between loans. APR includes fees and provides a more apples-to-apples comparison.

Worked examples

Rate-based mortgage comparison

Two mortgage offers, both $400K over 30 years. Offer A: 6.5%. Offer B: 6.125%. Loan A monthly: $2,528 Loan B monthly: $2,431 Monthly savings with B: $97 Lifetime interest savings: $35,100 The 0.375% rate difference saves over $35,000 in lifetime interest. Always shop multiple lenders for any large loan — even small rate differences compound substantially.

15-year vs 30-year mortgage

$350K mortgage. 30-year at 6.5% vs. 15-year at 5.75% (15-year rates typically lower). 30-year: Monthly: $2,213 Total interest: $446,500 15-year: Monthly: $2,905 Total interest: $172,900 Monthly cost of choosing 15-year: $692 more per month Lifetime interest savings: $273,600 For households that can afford the extra $692/month, 15-year produces enormous lifetime savings. For households that can't, the 30-year is the only viable choice. Many planners suggest: take the 30-year for flexibility, but make voluntary extra principal payments to mimic 15-year payoff.

Auto loan term comparison

$25,000 auto loan at 7%. 36 months vs. 60 months vs. 72 months. 36 months: $772/mo, total interest $2,800 60 months: $495/mo, total interest $4,700 72 months: $426/mo, total interest $5,700 Longer terms reduce monthly payment substantially but add 70% more interest. For most buyers, 48-60 months is a reasonable trade-off — short enough to limit interest, long enough to keep payments manageable. 72+ month auto loans typically mean buying more car than you can afford.

When to use this calculator

Use this calculator whenever you're evaluating multiple loan offers or considering whether to refinance. It's the fastest way to see which option costs less in total dollars across its life.

For mortgage shopping, this calculator complements the mortgage-payment, mortgage-refinance, APR, and mortgage-points calculators. Use it as the head-to-head comparison tool; use the others for specific aspects (refinance break-even, APR calculation, points evaluation).

For auto loan decisions, the calculator helps avoid the common trap of stretching to a longer term just to lower the monthly payment. Sometimes a longer term is necessary; sometimes it's the difference between affording the car and not. But always know the lifetime cost difference before defaulting to "as long as possible."

For personal loan comparisons across providers, both rate and term matter. Lower-rate longer-term loans can cost more than higher-rate shorter-term loans. Always compare lifetime cost, not just monthly.

Pair this with the mortgage-payment calculator (the underlying amortization math), the APR calculator (for fee-aware rate comparison), the mortgage-refinance calculator (for the refinance-specific analysis), the auto-loan calculator (auto-specific scenarios), and the personal-loan calculator (personal loan specifics).

Important comparison framework:

1. **Monthly payment** matters for affordability. Can you make the payment without strain? If not, the lifetime cost analysis is moot — you can't afford the lower-monthly option.

2. **Total interest** matters for lifetime cost. After affording the payment, the loan with less total interest is the better financial deal.

3. **Total of payments** = loan amount + total interest. This is the absolute lifetime dollar cost.

4. **APR** matters when comparing loans with different fees. Two loans at the same rate but different origination fees have different APRs. Use APR for fairest comparison.

5. **Expected holding period** matters when fees are high. If you might refinance or sell within a few years, the high-fee/low-rate loan may not pay off vs. the low-fee/higher-rate alternative.

For refinance decisions specifically: NEVER look only at monthly payment. Always check the lifetime cost including the term reset. Refinancing a 25-year-remaining loan into a new 30-year loan often produces lower monthly payment but higher lifetime cost. To preserve interest savings, refinance into a shorter term (or make voluntary extra payments on the longer-term loan to match a shorter payoff timeline).

Common mistakes to avoid

Comparing only by monthly payment. Lower monthly payment often means longer term and higher lifetime cost. Always compare both.
Forgetting the term reset on refinances. Refinancing a 25-year-remaining loan into a 30-year new loan extends the term by 5 years. The lifetime cost can be higher despite the lower rate.
Ignoring fees. Two loans at the same interest rate can have very different APRs based on fee structures. Use APR for the apples-to-apples comparison when fees differ.
Comparing different loan types as if equivalent. A fixed-rate loan and an ARM at the "same rate" have very different risk profiles. Compare similar types or explicitly weigh the differences.
Not factoring in tax treatment. Mortgage interest may be deductible (for itemizers); auto loan interest is not. After-tax cost is sometimes meaningfully different than gross cost.
Failing to consider prepayment ability. A 30-year mortgage with voluntary extra payments can effectively become a 15-year mortgage with the flexibility to stop the extra payments during lean months. Sometimes "30-year with extras" is better than locked-in 15-year.

Frequently Asked Questions

Sources & further reading

Loan Estimate explainer — comparing mortgage offers — U.S. Consumer Financial Protection Bureau
Annual Percentage Rate (APR) — explainer — U.S. Consumer Financial Protection Bureau
Auto Loans — comparison guidance — U.S. Consumer Financial Protection Bureau

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