How to use this calculator
The cheapest monthly payment is often the most expensive loan. This tool compares two offers at the same horizon — payments, remaining balances and the true borrower cost (fees + payments + remaining balance − original principal) — so a longer term cannot hide behind a lower payment.
Enter your own figures in the form above. A blank field is treated as missing — not as zero — so the tool will ask you to complete it. A genuine zero is accepted where it makes sense (for example, no HOA dues). Press Calculate for a breakdown, Load worked example to fill in the example below, or Reset to return to the defaults.
Formula and assumptions
Each loan is amortized from the same starting amount. Payment = amount × r ÷ (1 − (1 + r)−n). After the horizon months, balance is taken from the schedule. Borrower cost to that horizon = fees + payments made + remaining balance − original principal, which equals interest plus fees over the horizon.
Worked example
Worked example: both $100,000 at 0%, Offer A 120 months, Offer B 240 months, no fees, compared at month 60. Payments $833.33 vs $416.67; balances $50,000 vs $75,000; interest/fee cost $0 for both — the payment difference is entirely a balance difference, which is the point the horizon table makes visible.
Use the Load worked example button above to reproduce this example in the form, then change one input at a time to see what drives the result.
Limitations and common mistakes
APR is not invented from note rate plus fees here: APR computation depends on fee classification and timing rules that vary, so use the APR on each lender’s Loan Estimate for that comparison. Points, rate-lock timing and program features (prepayment, PMI, escrow) must be compared from the disclosures, not from this arithmetic alone.
Frequently asked questions
Why compare at a horizon instead of full term?
Because most borrowers do not hold a loan to term. The horizon comparison reflects the cost if you sell or refinance at that point.
What if one offer has higher fees but a lower rate?
That is exactly what borrower cost captures: fees are paid up front, rate savings accrue monthly. The horizon table shows which wins by your horizon.
Is the lower payment ever the right choice?
Yes — for cash-flow reasons, even when total cost is higher. This tool separates “cheaper per month” from “cheaper overall” so you can choose knowingly.
Sources
Estimates only. Results from this calculator are not a loan offer, appraisal, engineering design, equipment selection or contractor quote.