Quick answer: compare total interest paid, not just the rate or monthly payment. Our free Loan Comparison Calculator shows both loans side by side instantly.
Why Rate Alone Is Misleading
A lower interest rate with a longer term can cost far more in total interest than a higher rate with a shorter term. For example, a $300,000 loan at 6.5% over 30 years costs roughly $382,000 in interest — while the same amount at 7% over just 15 years costs about $185,000, saving nearly $200,000 despite the higher rate.
What to Compare
- Monthly payment — can you actually afford it?
- Total interest — the real cost of borrowing.
- Total cost — principal plus interest combined.
Beyond the Numbers
This calculator compares principal and interest only. Also weigh origination fees, closing costs, prepayment penalties, and how the shorter-term option's higher payment fits your monthly budget before deciding.
Frequently Asked Questions
Should I always pick the loan with lower total interest?
Usually it's cheaper, but confirm the higher payment fits comfortably in your budget first — a loan you can't sustain isn't a good deal regardless of the math.
Can I compare loans with different terms?
Yes, each loan uses its own amount, rate, and term independently.
Does this include fees?
No, only principal and interest. Add fees separately when deciding.
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