Loan Comparison – Pick the Cheaper Loan

Quick answer

Compare offers on payment and total cost: 25,000 at 9%/3y costs 794.7/month and 3,609 interest, while 11%/2y costs 1,164.8/month and 2,955.

Figures are estimates from this calculator’s standard formula — adjust the inputs in the tool below for your exact number.

How Does the Loan Comparison Calculator Work?

EMI = P × r(1+r)^n / ((1+r)^n − 1) | Total interest = EMI × n − P

Choosing between loan offers means pricing two things at once: what you can pay monthly and what the loan costs overall. This calculator runs both offers through the annuity formula and lays them side by side. Example: borrowing 25,000 at 9% for 3 years gives r = 0.0075 and n = 36, hence EMI ≈ 794.7 and total interest 794.7 × 36 − 25,000 ≈ 3,609. A second offer at 11% for 2 years gives EMI ≈ 1,164.8 but only ≈ 2,955 of interest. The shorter, pricier-rate loan saves 654 over the life of the deal while demanding 370 more each month — the right answer depends on whether cash flow or total cost rules your decision. Fees belong in the comparison too: a 2% arrangement fee on offer A adds 500, nearly erasing its disadvantage.

1
Step 1
Enter offer A: amount, APR and term.
2
Step 2
Enter offer B with its own APR and term.
3
Step 3
Read both EMIs computed with P × r(1+r)^n/((1+r)^n − 1).
4
Step 4
Compare total interest and total repaid before deciding.

Use Cases

Two bank pre-approvals

Deciding between competing personal loan approvals

Dealer finance vs bank

Pricing showroom finance against a direct bank loan

Rate vs term trade-off

Lower-rate-longer versus higher-rate-shorter

Refinance decision

Testing whether the new offer beats the current loan

Common Mistakes

Choosing on rate alone
Ignoring arrangement fees
Stretching to the smaller EMI

FAQs

How do I compare two loans with different rates and terms?

Compute each EMI with P × r(1+r)^n/((1+r)^n−1), then compare total interest = EMI × n − P. On 25,000: 9%/3y costs 3,609 interest vs 11%/2y at 2,955.

Which is better: lower rate or shorter term?

For total cost, the shorter term usually wins: 11% over 2 years (2,955 interest) beats 9% over 3 years (3,609). For monthly comfort, the longer term pays 794.7 versus 1,164.8.

Should fees be included in the comparison?

Always: add arrangement and insurance costs to each side. A 2% fee on the 9% offer adds 500 — reducing its cost advantage from 654 to just 154.

What is the total repayment difference in the example?

Offer A repays 28,609 (25,000 + 3,609 interest); offer B repays 27,951.5 — B is 657.5 cheaper overall but takes 370.1 more per month.

Does a smaller monthly payment mean a cheaper loan?

No — usually the opposite. Smaller EMIs come from longer terms, and time is what interest feeds on: the 794.7/month option costs 654 more in the end.

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