Loan Comparison Calculator
Each loan is treated as a standard amortising loan with a fixed rate and equal monthly payments.
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Before you rely on this: First-pass guide only. Verify safety-critical or regulated work against the relevant standards, your project requirements and a qualified professional.
How to use this calculator
- Enter the amount, annual interest rate and term (in years) for Loan A.
- Enter the same three figures for Loan B — the amounts and terms do not have to match.
- Read the verdict: the cheaper loan overall, the total cost difference, and the monthly payment, total repaid and total interest for each loan side by side.
How it works
Each loan is treated as a standard amortising loan with a fixed rate and equal monthly payments. The monthly payment is found with the annuity formula: payment = P x r x (1 + r)^n / ((1 + r)^n − 1), where P is the loan amount, r is the annual rate divided by 100 and 12, and n is the term in months (years x 12). When the rate is 0%, the payment is simply P / n. Total repaid is the monthly payment multiplied by the number of payments, and total interest is total repaid minus the amount borrowed.
The two loans are then compared on total amount repaid — the true lifetime cost — rather than on the monthly payment alone, because a smaller monthly payment often just means a longer term and more interest. The tool reports which loan costs less overall and by how much. It assumes each loan runs its full term with no extra repayments, fees or rate changes; lender fees, offset or redraw features and variable rates can change the real cost, so always check the lender's comparison rate and your local rules or a licensed adviser before deciding.
Worked example
Same amount, lower rate wins. Compare Loan A of $25,000 at 8% over 5 years against Loan B of $25,000 at 6.5% over 5 years. Loan A: monthly payment $506.91, total repaid $30,414.59, total interest $5,414.59. Loan B: monthly payment $489.15, total repaid $29,349.22, total interest $4,349.22. Loan B costs $1,065.37 less overall, so it is the cheaper choice.
Common mistakes
- Choosing the loan with the lower monthly payment without checking the total repaid — a longer term lowers the monthly payment but usually raises total interest.
- Entering the term in months instead of years — this field expects years (e.g. 5, not 60), so a term entered in months makes the loan look far cheaper than it is.
- Comparing only the headline interest rate and ignoring fees — establishment, monthly and exit fees are not modelled here, so compare each lender's official comparison rate as well.
Frequently asked questions
Does 'cheaper' mean the lower monthly payment or the lower total cost?
It means the lower total amount repaid over the full term. A loan can have a smaller monthly payment yet cost more overall because it runs longer and charges more interest, so this tool judges the winner on lifetime cost, not the monthly figure.
Can I compare loans with different amounts and terms?
Yes. The two loans are independent — you can give each its own amount, rate and term. This is useful for weighing, say, a shorter, higher-rate loan against a longer, lower-rate one.
Are fees and variable rates included?
No. The calculation assumes a fixed rate and equal monthly payments with no fees, offset, redraw or rate changes. For a lender-to-lender comparison that includes fees, use the official comparison rate each lender must publish, and check your local rules or a licensed adviser.
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