Loan Comparison Calculator

Use this calculator to figure out exactly how much a loan will cost you. You can plug in different values for the loan amount, interest rate, term, and closing costs to see how much each one will affect what you have to pay. You can also figure out the effective APR of a loan, which makes it easier to compare a loan with forms of credit calculated in terms of APR, such as credit cards. Costs are broken down into the total cost of the loan, the total interest, and the amount of monthly payments. So, if you want to cut down on the amount of interest you'll have to pay, you can find out exactly how much money a shorter term or lower interest rate will save you. If you are more concerned about a low monthly payment, you can see how a long a term you need to lower your monthly payment--and how much more you'll pay in interest during that longer term. Simply plug in different values for the factor you want to test-- interest, loan amount, term, or closing costs--in Loan 1, Loan 2, and Loan 3. Values for all the other factors will be filled in automatically.

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Calculator Legend

Loan amount: the actual amount you are borrowing, not counting closing costs or interest.
Interest rate: the interest rate quoted on the loan. The calculator lets you specify between 1% and 18% (though you will almost certainly not get either such a low or such a high interest rate). The calculator assumes you are applying for a loan with a fixed interest rate, as almost all loans in the US have.
Term: the amount of time you will be making payments, assuming you don't make additional payments to pay down the loan earlier. The term is determined at the time you take out the loan; generally, the longer the term of the loan, the lower the monthly payments. The calculator lets you select from 1 to 30 years. (Longer than 10 years is a very long term for any loan but a mortgage.)
Down payment: amounts you will pay against the principal at closing. Mortgage lenders have traditionally required a down payment as a sign of creditworthiness, and also to provide them with a safety cushion in the event the borrower defaults.
Monthly debt payments: amount you are paying on average each month toward car loans, education loans, credit card debt, and other debt. The calculator only allows you to select a single amount for the sake of simplicity. In reality, of course, your debt may increase or decrease over time, but the lender will likely want the average amount you are paying toward debt now.
Closing costs: any costs that must either be paid before the loan is signed or that will be factored into the loan. Closing costs usually cover the costs of transacting the loan, such as costs charged by a broker. Closing costs are most commonly associated with mortgages, and often include not only broker's fees but also a down payment toward the mortgage. Note that apart from mortgages, a loan will usually not have closing costs.

Types of Loans

There are various types of loans available, but the three most common for individuals are auto loans, personal loans, and mortgages.
  • An auto loan is a loan to buy an automobile, in which the automobile itself is used as collateral to secure the loan. If you miss loan payments, the lender may seize your automobile. For this reason, an auto loan has a lower interest rate than most other loans.
  • A personal loan is a loan that is usually unsecured, meaning that you do not put up any collateral for the lender to seize automatically if the loan is not paid. For this reason, a personal loan usually has a higher interest rate than secured debt.
  • A mortgage is a loan to buy property, in which the property itself is used as collateral to secure the loan. Typically, the lender may foreclose on a mortgage for nonpayment, seizing the property and selling it at auction.

Loans and Interest

Interest is the biggest cost of any loan. On a loan that stretches out as long as thirty years, the interest will easily amount to more than the original loaned amount (or principal). It's important to keep this in mind when choosing a loan. Generally, you want to pay as much up front and borrow as little as possible to avoid having to pay interest on a larger principal.

Loans vs. Lines of Credit: Differences

Loans and lines of credit (such as credit cards) are both debt. Yet despite this fundamental similarity, people often face a choice between taking out a loan and using a line of credit. It's important to remember the essential differences of a loan vs. a line of credit.
  • Repayment term: a loan usually must be repaid within a fixed period, also called a term. For many people, the repayment term makes it easier to manage debt in the form of a loan than in the form of a line of credit.
  • Availability: the issuer of a line of credit often reserves the right to close it at any time. With a loan, the lender generally may not withdraw the loan once it has been granted, unless the borrower has violated the terms of the loan. That is why for some things, such as the cost of a large project, it is essentially safer to borrow the money up front rather than to rely on a line of credit that may not be available later. On the other hand, once you make a payment toward a revolving line of credit, an amount of credit equal to your payment is usually freed up. However, with a loan, you will not receive back the money you have paid.
  • Interest: the interest rate on a loan is usually lower than the interest rate on a line of credit.