Loan Comparison Calculator
Compare two personal loan offers side by side to find the cheaper option, including hidden fee costs
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Loan Comparison Calculator
Which Loan Offer Is Actually Cheaper?
| Metric | Offer A | Offer B |
|---|
Effective APR accounts for origination fees by calculating the true annualized cost on the amount you actually receive. Two loans with the same quoted APR can have very different effective APRs if one charges a higher fee.
Key Takeaways
- A lower quoted APR does not always mean a cheaper loan. Offer B at 8.99% with a 5% origination fee can cost more than Offer A at 10.99% with no fee — the comparison table reveals the true winner.
- The “Effective APR” metric is the single most important number when comparing offers with different fee structures. It accounts for the origination fee by calculating the true annualized cost on the money you actually receive.
- On a $10,000 loan, a 5% origination fee means you receive $9,500 but pay interest on the full $10,000. That hidden cost can add 1–3 percentage points to the effective APR.
- The calculator highlights the winning metric in green and the losing metric in gray on each row, making it easy to see where each offer has an advantage.
- The total cost bars at the bottom provide an at-a-glance visual: the shorter bar is the cheaper loan.
How to Use This Calculator
This calculator is designed for the moment when you have two pre-qualification letters or loan offers in hand and need to determine which one actually costs less. It goes beyond simple APR comparison by factoring in origination fees and calculating effective APR.
Step 1 — Enter Offer A. Fill in the loan amount, quoted APR, term, and origination fee percentage. If the lender charges no fee, leave it at 0%. The default Offer A represents a no-fee lender at 10.99% APR — a profile similar to SoFi or LightStream.
Step 2 — Enter Offer B. Fill in the second offer’s details. The default Offer B represents a lender with a lower quoted rate (8.99%) but a 5% origination fee — a profile similar to some marketplace lenders. This is the scenario where the comparison is most revealing.
Step 3 — Read the verdict. The calculator instantly shows which offer has a lower total cost (interest plus fee), the dollar difference, and an explanation of why the winner wins. The side-by-side table breaks down every metric with the winner highlighted in green.
Step 4 — Adjust and explore. Change amounts, rates, terms, and fees on either side to model different scenarios. Try matching the terms to see a pure rate-vs-fee comparison, or use different terms to see whether a shorter-term higher-payment loan beats a longer-term lower-payment one.
Understanding the Results
The comparison table shows eight metrics for each offer. The most important are effective APR and total cost. The effective APR is calculated using Newton’s method to find the annualized rate that equates the payment stream to the actual disbursed amount (not the loan face value). When both offers have no fee, the effective APR equals the quoted APR. When one has a fee, the effective APR is higher than quoted — revealing the true cost.
The “You Receive” row highlights an often-overlooked asymmetry: if both offers are for $10,000 but Offer B charges a 5% fee, you actually receive $9,500 from Offer B versus $10,000 from Offer A. If you need the full $10,000, you would need to borrow more from Offer B to net the same amount — further increasing the cost.
The total cost bars at the bottom provide the simplest comparison. The green bar marks the winner; the shorter bar is the cheaper loan. This visual cuts through the complexity of comparing different rates, terms, and fees simultaneously.
Fee vs No-Fee Lenders: When Does the Fee Win?
| Scenario | No-Fee Lender APR | Fee Lender APR + Fee | Winner ($10K, 36 mo) |
|---|---|---|---|
| Small rate gap, small fee | 11.00% | 9.99% + 2% | Fee lender (saves $72) |
| Small rate gap, large fee | 11.00% | 9.99% + 6% | No-fee lender (saves $238) |
| Large rate gap, medium fee | 14.00% | 8.99% + 5% | Fee lender (saves $341) |
| Equal rates, fee vs no fee | 10.00% | 10.00% + 3% | No-fee lender (saves $300) |
| Short term, large rate gap | 15.00% (12 mo) | 8.99% + 8% (12 mo) | No-fee lender (saves $447) |
Results based on $10,000 loan amount. Short-term loans amplify the fee impact because the fee is amortized over fewer months.
Frequently Asked Questions
Should I compare loans by monthly payment or total cost?
Total cost is the better metric for comparing two offers at the same loan amount. Monthly payment matters for budgeting, but a lower payment often just means a longer term — which increases total interest. The total cost row in the calculator (interest plus origination fee) is the definitive comparison number.
What if the two offers are for different loan amounts?
Enter the actual amounts from each offer. If one lender approved you for $10,000 and another for $15,000, enter those amounts. The calculator compares total cost on the amounts you actually plan to borrow. If you need $10,000, compare both at $10,000 — but remember to increase the fee-lender amount if you need to net $10,000 after the fee deduction.
Why does the lower APR offer sometimes lose?
Because of the origination fee. A 3%–8% fee deducted upfront is a real cost that the quoted APR does not capture. The effective APR in the comparison table reveals the true annualized cost including the fee. When the fee is large relative to the rate advantage, the “cheaper” quoted rate actually costs more.
How important is the loan term in the comparison?
Very important. A shorter term at a slightly higher rate often costs less total than a longer term at a lower rate. For example, a $10,000 loan at 12% for 36 months ($332/mo, $1,957 total interest) costs less than the same loan at 10% for 60 months ($212/mo, $2,748 total interest). The calculator handles different terms on each side for exactly this type of comparison.
What is the effective APR?
The effective APR is the true annualized cost of a loan when an origination fee is charged. It is calculated by finding the interest rate that would produce the same payment on the actual disbursed amount (loan minus fee). For example, a $10,000 loan at 9% with a 5% fee disburses $9,500, but you pay as if you borrowed $10,000. The effective APR on $9,500 that produces the same payment is approximately 12.4% — significantly higher than the quoted 9%.
Should I always choose the offer with no origination fee?
Not necessarily. If the fee-charging lender offers a rate that is 3+ percentage points lower and the term is 36 months or more, the lower rate can save more than the fee costs. The decision depends on the rate gap, fee size, and term length. Use this calculator to check the exact numbers rather than assuming.
References & Further Reading
- CFPB — Interest Rate vs APR
- CFPB — What Is an Origination Fee?
- Federal Reserve G.19 — Consumer Credit
Keep Reading
- Personal Loan Fees Explained — Which lenders charge fees and how much
- How to Prequalify — Get multiple offers to compare
- Personal Loan Calculator — Full amortization for a single offer
- APR vs Interest Rate Calculator — Understand the difference
- Best Personal Loans — Compare top lenders
- All PrimeRates Calculators