How to compare loans

Enter up to three loan scenarios - each with its own principal, interest rate, and term - to see a side-by-side breakdown. The key factors to compare:

Monthly payment: what you pay each month - the cash-flow impact.
Total interest paid: the true cost of borrowing over the full term.
APR vs. stated rate: APR includes lender fees; the nominal rate does not.
Prepayment penalties: some loans charge a fee if you pay off early.

APR vs. interest rate

The annual percentage rate (APR) includes both the base interest rate and all mandatory lender fees (origination fees, points, mortgage insurance) amortized over the loan term. The nominal interest rate only reflects the base rate without fees. Always compare APRs when evaluating competing loan offers - a loan with a lower stated rate but higher fees can be more expensive than a loan with a higher stated rate and no fees.

Total cost of borrowing example

Loan option	Amount	Rate	Term	Monthly payment	Total interest
Option A	$30,000	5.0%	60 mo	$566.14	$3,968
Option B	$30,000	4.5%	72 mo	$479.92	$4,554

Option B has a lower monthly payment ($86 less) but costs $586 more in total interest over the life of the loan. This trade-off between payment and total cost is the central decision in loan comparison.

Refinancing break-even

When refinancing, you incur closing costs upfront in exchange for a lower monthly payment. The break-even point is:

Break-even months = Closing costs ÷ Monthly savings

Example: $3,000 in closing costs with $150/month savings = 20 months to break even. If you plan to stay in the home (or keep the loan) past 20 months, refinancing makes financial sense. If you might sell or pay off the loan sooner, the upfront cost is not recovered.