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HoldingCost

Loan comparison calculator

Compare up to three loan offers side-by-side and find the cheapest total cost.

Calculator loans

Logic updated April 2026

This calculator compares two or three loan offers side by side, ranking them by total cost — interest paid plus upfront fees. Headline interest rates are useful for short-listing, but the real cost depends on principal, term, and fees: a slightly lower rate can be more expensive over the life of the loan if the fees are high or the term is longer.

How this is calculated

Formula 

totalCost = totalInterest + upfrontFees ; rank = ascending order of totalCost

Step-by-step

  1. For each offer, convert the annual rate to a periodic rate using the chosen repayment frequency
  2. Calculate the periodic payment using standard amortisation on the offer's principal, rate, and term
  3. Multiply the periodic payment by the total number of periods to get the total repaid
  4. Subtract the principal to derive the total interest
  5. Add the offer's upfront fees to total interest to compute total cost
  6. Rank offers by total cost ascending — the cheapest offer has rank 1, and the difference from the best is shown for each loser
Rounding mode
ROUND_HALF_UP
Precision
20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
Logic last reviewed

Assumptions & limitations

What this calculator assumes

  • Fixed interest rate for each offer's term
  • Repayments are made at the end of each period
  • Fees are paid upfront and NOT financed into the loan
  • Total cost includes interest paid plus upfront fees
  • Offers may have different principals and terms

What this calculator doesn’t account for

  • Does not include ongoing monthly account-keeping fees or annual fees
  • Does not model variable-rate movements during the term
  • Does not include early-payout penalties or break costs
  • Does not factor in lender-specific features (offset, redraw, repayment flexibility) that may have monetary value
  • Does not include the lender's published comparison rate, which uses a standard methodology and may differ

Worked example

A borrower compares three offers for a $30,000 loan paid monthly: Offer A — 7% over 5 years, $200 fee. Offer B — 7.5% over 5 years, $0 fee. Offer C — 7% over 7 years, $200 fee.

Input Value
Offer A $30,000 @ 7% / 5 years / $200 fee
Offer B $30,000 @ 7.5% / 5 years / $0 fee
Offer C $30,000 @ 7% / 7 years / $200 fee

Rank 1: Offer A (~$5,839 cost). Rank 2: Offer B (~$6,012). Rank 3: Offer C (~$8,232).

Offer A wins despite the fee because the lower rate over the same term saves more interest than the fee costs. Offer B is close — a $200 fee saving doesn't beat 0.5% of extra rate over 5 years. Offer C, despite matching A's rate, costs significantly more because the longer term keeps the balance high for longer.

Frequently asked questions

What is a comparison rate?

A comparison rate is a single percentage that combines the headline interest rate with the standard upfront and ongoing fees on a representative loan amount and term. It's designed to make like-for-like comparisons easier. Different markets define comparison rates slightly differently — this calculator builds its own apples-to-apples figure by computing total cost (interest + upfront fees) directly from your inputs.

Why is the comparison rate higher than the advertised rate?

Because it includes fees. The advertised rate is the cost of the borrowed money; the comparison rate adds the fees the lender charges to set up and run the loan. The bigger the gap between the two, the more the fees are inflating the true cost — a small gap means the headline rate is close to what you'll actually pay.

How do fees affect the true cost?

Fees are charged in dollars while interest scales with principal and term, so on small or short loans, a flat fee can dominate the total cost. On a $5,000 1-year loan, a $300 fee is the equivalent of about 6% of extra interest. On a $50,000 5-year loan, the same fee is closer to 0.2%. Always look at total cost, not the rate alone.

Should I always pick the lowest comparison rate?

Usually yes for the pure cost comparison, but features matter too. A loan with offset, redraw, or unlimited extra repayments can save more than a slightly lower rate if you'll actually use those features. Run both options through this calculator at your expected payment behaviour, then weigh the cost difference against the feature value.

Why does a longer term cost more even at the same rate?

Interest is charged on the outstanding balance every period. A longer term means the balance reduces more slowly, so the bank earns interest on a higher balance for longer. Even at the same rate, doubling the loan term typically more than doubles the total interest — that's why short terms beat long terms on cost almost every time.

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