Updated · Built and checked by the PlinzoTools team, formulas tested against published sources
Compare two loan offers side by side on monthly payment and total interest cost.
Loan A
Loan B
Loan A costs less overall (total interest: A $3199 vs. B $4898).
A lower monthly payment doesn't always mean a cheaper loan overall -- a longer term can lower the payment while increasing total interest paid. This calculator runs two loan offers through the same amortization math side by side, showing both the monthly payment and the total interest cost so the real cheaper option is clear.
Enter the amount, rate, and term for both Loan A and Loan B.
Each loan is run through the standard amortization formula independently, then compared on both monthly payment and total interest paid.
Use this whenever comparing two real loan offers -- from different lenders, or the same lender's different term options -- to see past the monthly payment number to the real total cost.
In the example above, Loan A is $20,000 at 4% for 5 years, giving a payment of about $368 and total interest of about $2,100. Loan B is $20,000 at 7.5% for 6 years, giving a payment of about $346 and total interest of about $4,900. Loan B has the lower monthly payment, roughly $22 less, but costs about $2,800 more in interest. That is the kind of gap that a payment-only comparison would hide. The example above summarizes this in words, and these figures show the size of the difference.
The tool is not limited to two lenders. You can compare the same lender's 3-year and 5-year options, or see how a rate cut would offset a longer term. Sometimes a longer loan at a lower rate ends up cheaper than a short loan at a higher rate, and sometimes not. Only running the numbers reveals which.
If your budget can handle either payment, the lower total interest is generally the better financial choice. If one payment would leave you short each month, the cheaper monthly option may be wiser even at higher total cost, particularly if you plan to make extra payments later. In that case, look at whether the loan has prepayment penalties, because paying it off early lets you keep the lower required payment while still cutting interest. Use the Loan Payoff Calculator to see how much extra payments could help.
Before signing, compare the written loan disclosures from each lender to confirm the numbers you entered.
Sometimes cash flow matters more than total cost -- a lower monthly payment (even with higher total interest) can be the right choice if it better fits your monthly budget, especially during a tighter financial period.
If monthly affordability isn't a concern, yes -- lower total interest means paying less overall for the same amount borrowed, all else being equal.
You can add financed fees to the loan amount for a fairer result, or use the APR Calculator to compare effective rates directly.
Both affect total interest. A lower rate reduces cost per dollar borrowed, while a longer term adds months of interest. Compare the totals shown.
Yes, but interpret totals carefully, since the borrowed amounts differ. Comparing what you receive for each is often clearer.
Reference: Consumer Financial Protection Bureau