Loan calculator, 4 of 5
Loan comparison
The lowest rate is not always the cheapest loan once fees and the length of the term are counted. Put two or three offers side by side and compare what each one costs in total.
Side by side
| Measure | Loan A | Loan B | Loan C |
|---|---|---|---|
| Monthly payment | $400.76 | $395.08 | $351.33lowest |
| Amount borrowed | $20,000.00 | $20,000.00 | $20,900.00 |
| Total of payments | $24,045.51 | $23,704.90 | $25,295.53 |
| Interest | $4,045.51 | $3,704.90 | $4,395.53 |
| Upfront fees | $0.00 | $600.00 | $900.00 |
| Total cost (interest + fees) | $4,045.51lowest | $4,304.90 | $5,295.53 |
| APR estimate | 7.50%lowest | 8.18% | 8.07% |
What each loan costs in total
- Interest
- Fees
Educational use only — not financial advice. "Lowest" marks the smallest number among the offers you typed in, nothing more. No lender or loan is recommended here.
Rate, fees and the APR
The interest rate sets the payment. Upfront fees such as origination charges and points are paid on top, either at closing or by adding them to the loan, where they also collect interest. The CFPB describes the APR as the yearly cost that reflects the interest rate plus points, broker fees and other charges you pay to get the loan.
This calculator estimates an APR the way Regulation Z's Appendix J describes: it finds the monthly rate at which the scheduled payments are worth exactly the money you actually receive (the amount borrowed minus any fees paid upfront), then multiplies by 12. A lender's official APR may count a slightly different set of charges.
Worked example: $20,000 over 5 years at 7.5% with no fees costs $4,045.51 in interest. At 6.9% with $600 of fees the payment is lower, $395.08, but the total cost is $4,304.90 and the APR estimate is 8.19%. Loan C has the lowest payment because it runs a year longer, and the highest total cost.
Sources
- Consumer Financial Protection Bureau, What is the difference between a mortgage interest rate and an APR?
- Consumer Financial Protection Bureau, Regulation Z, Appendix J to Part 1026 — Annual Percentage Rate Computations for Closed-End Credit Transactions: the actuarial method and monthly unit periods.
Questions
Should fees be paid upfront or added to the loan?
Added to the loan, they cost nothing at closing but are repaid with interest, so the payment and total interest rise. Paid upfront, they cost cash now. Tick or untick "Fees added to the loan" to see both.
Why compare total cost rather than the payment?
A longer term lowers the payment but adds months of interest. Total cost (interest plus fees) shows what borrowing the money costs over the whole loan; the payment shows what fits the monthly budget. Both matter.
Where do I find the fees for a mortgage offer?
On a Loan Estimate, the origination charges and points are listed under loan costs. Lenders use the same standard form for most mortgages, which makes offers easier to line up.