How to Compare Loan Offers: Rate, Fees, APR and Term
Compare loan offers on monthly payment, total interest, fees and APR, and see which is cheapest if you repay early, with a free loan comparison calculator.
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Free tool: Loan Comparison CalculatorWhen lenders offer you different rates, fees and terms, the cheapest-looking deal isn't always the cheapest loan. A lower rate can hide a big fee, and a longer term can turn a low payment into a high total cost. This guide shows how to compare offers properly with a worked example, using the free Loan Comparison Calculator.
The three numbers that matter
- Total cost: interest over the whole term plus fees. This is what the loan really costs.
- APR: the rate with fees included, for a quick like-for-like comparison.
- Monthly payment: what has to fit your budget.
Example: three offers for $30,000
| Offer | Rate | Term | Fees | Monthly payment | Interest + fees |
|---|---|---|---|---|---|
| A | 7.5% | 60 months | $0 | $601.14 | $6,068.31 |
| B | 6.9% | 60 months | $900 | $592.62 | $6,457.29 |
| C | 8.0% | 36 months | $0 | $940.09 | $3,843.27 |
- C is the cheapest overall, despite the highest rate, because it's repaid in 3 years.
- B has the lowest payment, but its $900 fee makes it more expensive than A over 60 months; its APR, including the fee, is 8.18%.
- A is in between: no fee, a moderate payment.
If you might repay early
Fees are paid in full no matter how soon you repay, while interest stops when the loan is cleared. That makes low-fee offers more attractive if you might pay early. The calculator's chart shows each offer's interest and fees paid by every month, which is also its total cost if you repay at that point.
How to choose
- Rule out payments you can't comfortably afford.
- Among the rest, pick the lowest total cost for the time you expect to keep the loan.
- Check the fine print: prepayment penalties, whether fees are paid upfront or added to the loan, and whether the rate is fixed.
How to use the Loan Comparison Calculator
- Open the Loan Comparison Calculator.
- Enter the loan amount.
- Enter each offer: a name, the rate (APR), the term in months and the fees. Add up to four offers, or remove one.
- Read the results: the cheapest offer overall, the offer with the lowest payment, the lowest APR and the savings between the cheapest and most expensive, with a chart of each offer's total cost, a chart of interest and fees paid over time, and a side-by-side table.
Frequently asked questions
How do I compare two loan offers?
Compare the total interest plus fees, the APR and the monthly payment. The offer with the lowest total cost over the time you'll keep the loan is usually the best, as long as its payment fits your budget.
Is a lower interest rate always cheaper?
No. A lower rate with a large fee, or a longer term, can cost more in total. In the example, a 6.9% loan with a $900 fee costs more than a 7.5% loan with no fee.
Should I choose the loan with the lowest monthly payment?
Only if you need it. The lowest payment usually comes from a longer term, which means more interest over the life of the loan.