Loan comparison calculator

How do I compare loan options and choose the perfect loan?

All loans are different. Any one you choose will have an impact on your finances, so when it comes to comparing loans, it’s important for you to get a clear picture of all relevant costs.

For instance, the interest rate and annual percentage rate (APR) are important considerations when determining which is the best loan for you. Comparing them will help you decide exactly which loan would cost you more in the long run.

However, it’s tough to compare variable interest rate loans to fixed rate loans. In most cases, your choice will depend on whether you’re OK with interest volatility over the loan period, as well as the actual monthly payment.

Finding the best and cheapest loan can be a lot of work. You need to consider several factors, including loan terms, interest amounts and monthly payments.

It’s best to understand some basic terms and concepts before choosing the perfect loan for you.

Loan amount

This is the amount you receive from a lender, minus any origination fee. Keep in mind that borrowers with an excellent credit score usually secure a higher loan amount than a person with a not-so-perfect score.

Monthly payment

This is the amount you need to pay the lender each month. You need to evaluate exactly what you can afford. It’s a good idea to choose a loan with the lowest interest rate/APR and shortest loan term. Of course, you need to be able to afford the high monthly payment.

Loan period in years (aka loan term)

The loan period is the time (in years) between the first payment on your loan and its maturity. Selecting the shortest loan term available to you is a wise decision. Although it will increase your monthly payments, you’ll end up paying a lower amount of overall interest.

Payment frequency

That is the repayment schedule for your loan. Most loan firms offer you a choice between monthly, bi-monthly or bi-weekly loan payments

Interest rate/Annual Percentage Rate (APR)

This is the annual interest rate levied on the borrowers and paid to the investors. APR is the percentage representing the actual annual cost of the funds over the duration of a loan. It’s the income earned from an investment. Comparing the interest rates and APRs will help you determine the best loan for your requirements.

Total interest amount

This is the total amount you will pay on interest alone. It’s an additional amount that’s to be paid on top of the sum of money borrowed.