March 31, 2026
Loan Inputs
Loan A
Loan B
| Metric | Loan A | Loan B |
|---|---|---|
| Monthly Payment | $187.20 | $200.40 |
| Total Interest | $2,232 | $2,902 |
| Origination Fee | $100 | $200 |
| Total Cost (Including Fees) | $12,332 | $13,102 |
| Difference | Loan A saves $770 | |
How to Choose Between Two Loans
When comparing personal loans, don't just look at the interest rate or monthly payment in isolation. The true cost includes origination fees, the full APR (which includes rate and fees), and the total amount paid over the life of the loan.
What to Compare First: APR vs. Interest Rate
The APR includes both the interest rate and fees expressed as an annual percentage. This is your best tool for comparing loans because it accounts for everything. A loan with a lower APR is almost always the better choice.
Monthly Payment vs. Total Cost
A longer loan term reduces your monthly payment but increases total interest. For example, extending from 5 years to 7 years might save $50/month but cost $1,500 more in total interest. Choose based on your cash flow situation.
Hidden Costs to Watch
- Origination fees (usually 1-6%) are charged upfront and added to your loan balance
- Prepayment penalties (rare but check) charge extra if you pay off early
- Late fees (usually $15-$30) apply if you miss a payment
- Annual fees (uncommon for personal loans) charge yearly
Questions to Ask Lenders
- What's your APR range, and how is it determined?
- Are there any origination or closing fees?
- Can I pay off the loan early without penalty?
- What happens if I miss a payment?