Comparing loans based only on the advertised interest rate can be misleading, especially when the loans have different repayment periods or fees. Start by looking at the APR, which can provide a broader view of the borrowing cost, then compare the repayment term, monthly payment, upfront fees, and total amount you will repay.
For example, a longer-term loan may have a lower monthly payment than a shorter loan, but you could pay considerably more interest over time. Conversely, a higher monthly payment on a shorter term may result in a lower overall borrowing cost.
Try calculating both loans using the same borrowing amount. Compare how much you would pay each month and how much you would pay in total by the end of the loan. Our loan calculator can help you run these scenarios. This gives you a clearer picture of whether a lower payment actually represents a better deal.
