Loan Comparison Calculator
See which loan saves you more money
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How to Compare Loans
Comparing loans isn't just about the interest rate. Two loans with different rates, terms, and amounts can result in very different total costs — even if one has a lower monthly payment. This calculator shows you the full picture: monthly payments, total interest paid, and total cost over the life of each loan.
When a Lower Rate Wins
A lower interest rate almost always means less total interest paid, assuming the same loan amount and term. For example, on a $200,000 30-year loan, the difference between 6.5% and 7.0% is over $27,000 in total interest. However, a lower rate doesn't automatically mean a better deal if the loan has fees, points, or a shorter term that increases the monthly payment beyond your budget.
When a Shorter Term Wins
A 15-year loan typically has a lower rate than a 30-year, and you pay far less interest overall — but the monthly payment is significantly higher. If you can afford the higher payment, a shorter term builds equity faster and saves tens of thousands. The trade-off is cash flow: a shorter term leaves less room for emergencies or other investments.
Amortization Schedule
Most mortgages and auto loans use amortization, where early payments are mostly interest and later payments are mostly principal. In year 1 of a 30-year mortgage, roughly 75-80% of your payment goes to interest. By year 25, that flips. Understanding this helps you see why refinancing early in a loan term has more impact than refinancing later.
Loan Comparison Example
Loan B has a higher rate but a lower total cost because the principal is $20,000 less. This is why comparing total cost — not just rate — matters.
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Written by Finance Experts · Last updated September 2026
Frequently Asked Questions
How do I compare two loans with different interest rates?
Use this calculator to enter the same loan amount with different rates. The lower rate will always result in less total interest paid, assuming the same term. However, if one loan has a shorter term, the monthly payment may be higher even with a lower rate — so compare both monthly payment and total cost.
Should I choose the loan with the lower monthly payment?
Not necessarily. A lower monthly payment usually means a longer term, which means more total interest. If you can afford higher payments, a shorter term saves significantly. For example, a $200,000 loan at 6.5% costs $255K in interest over 30 years but only $113K over 15 years.
What matters more — interest rate or loan term?
Both matter, but in different ways. A lower rate reduces the cost of borrowing per dollar. A shorter term reduces the number of payments and the time interest accrues. On a $200K loan, cutting the term from 30 to 15 years saves more in total interest than dropping the rate by 0.5%.
How does refinancing affect loan comparison?
Refinancing replaces your current loan with a new one, usually at a lower rate or different term. Use this calculator to compare your current loan against a refinanced option. Factor in closing costs (typically 2-5% of the loan) — the monthly savings must justify the upfront cost.
What is the difference between fixed and variable rate loans?
A fixed rate stays the same for the entire term. A variable (adjustable) rate starts lower but can increase over time. For comparison purposes, this calculator uses fixed rates. If comparing a fixed vs. variable loan, run the calculator at the variable rate's worst-case scenario to see the maximum possible cost.
How do points affect loan comparison?
Points (also called discount points) are upfront fees paid to lower your interest rate. One point costs 1% of the loan amount and typically reduces the rate by 0.25%. If you plan to keep the loan long enough for the monthly savings to exceed the point cost, buying points can save money. Use this calculator to compare with and without points.
Can I compare a mortgage against a home equity loan?
Yes. Enter the mortgage details as Loan A and the HELOC or home equity loan as Loan B. Keep in mind that HELOCs often have variable rates, so you may want to use the maximum possible rate for Loan B to see worst-case total cost.
Does this calculator account for closing costs and fees?
No, this calculator shows principal and interest only. Closing costs, insurance, taxes, and PMI are separate. To compare true total cost, add estimated closing costs to each loan's total. For a $200K mortgage, closing costs typically run $4,000-$10,000 (2-5%).
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Current Mortgage Rates
Rates updated daily via Bankrate.com
How This Calculator Works
Real-World Example: Buying a $400,000 Home
- Loan amount: $360,000
- Monthly P&I: $2,275
- PMI (0.7%): $210/month
- Property tax (1.1%): $367/month
- Insurance: $150/month
- Total monthly: $3,002
- Total interest over 30 years: $419,131
- Total cost (including down payment): $459,131
Historical Mortgage Rates (1971-2026)
Source: Freddie Mac Primary Mortgage Market Survey
When to Use This Calculator
- Refinancing decisions: Calculate your break-even point
How Mortgage Payments Are Calculated
- Insurance: Homeowners insurance, also escrowed monthly
Fixed-Rate vs Adjustable-Rate Mortgage (ARM)
Closing Costs: What to Expect
Private Mortgage Insurance (PMI) Explained
Real-World Example: $400,000 Home Purchase
- Loan amount: $360,000
- Principal & Interest: $2,275/mo
- Property tax (1.8%): $600/mo
- Homeowners insurance: $175/mo
- PMI (0.6%): $180/mo
- Total monthly payment: $3,230
- Down payment: $40,000
- Closing costs (3%): $12,000
- Total cash needed at closing: $52,000
When Refinancing Makes Sense
- The payment saving clears the closing costs. Worked example: a $250,000 balance at 7% on a 30-year term refinanced to 6.25% drops the payment from about $1,663 to $1,539 — $124 a month. $4,000 in closing costs breaks even in about 32 months.
- You expect to keep the loan past break-even. Sell or refinance again within three years on a 32-month break-even and there is nothing left to gain — skip it.
- The new note does not reset your payoff date. Refinancing a 22-year remaining balance back to a full 30-year schedule lowers the payment by stretching principal, not by beating the rate; compare total interest, not just the monthly figure.
- Fee structures are compared correctly. A quote with origination fees and a no-cost quote with a higher rate are not directly comparable — run both through the calculator and compare total paid over the horizon you actually expect.
Data Sources & Citations
- OfficialInternal Revenue Service (IRS)
Disclaimer: Calculators and tools on this site are for informational purposes only and do not constitute financial, tax, legal, medical, or investment advice. Results are estimates and may not reflect actual rates or terms. Consult a qualified professional before making decisions. Privacy Policy
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