To compare two loans fairly, use the same borrowing amount and calculate the monthly payment, total interest, and total repayment for each offer. Don’t assume that the loan with the lower monthly payment is automatically cheaper.
A longer repayment term can reduce the monthly payment while increasing the amount of interest paid. Meanwhile, a loan with a higher monthly payment may cost less overall because the balance is paid off sooner.
Also compare the APR and fees, because two loans with similar interest rates can have different total costs. If possible, compare offers using the same assumptions so you can see the true difference.
For example, if one lender offers a lower rate but a longer term, calculate both options using their actual terms rather than comparing the rates alone.
Our loan calculator can help you run multiple scenarios. Looking at monthly payment and total repayment gives you a much clearer picture of which loan better fits your financial situation.
