Compare the same things
For each offer, write down the amount, the annual percentage rate, the term in months or years, the monthly payment, any origination or other fees and whether there is a prepayment penalty. Then compare total cost: the payment times the number of months, minus the amount you borrowed, plus fees.
Worked example
Borrow $20,000. Offer A is 6% for five years: a $386.66 payment and $3,199.36 in interest. Offer B is 5.5% for seven years: a $287.40 payment and $4,141.67 in interest.
Offer B has the lower rate and a payment $99.26 lower each month, yet costs $942.31 more in interest because you owe money for two extra years. Which is better depends on your goal. If cash flow is tight, B may make sense. If you want the lowest cost, A does.
Mistakes to avoid
Comparing rates on loans of different lengths without looking at total interest. Ignoring fees that raise the real cost. Taking the first offer without a second quote. Skipping the fine print on penalties and what happens if you pay late.
Try the calculator
Run your own numbers in the free loan comparison calculator. It works in your browser and nothing you enter is saved or sent.
Sources
Common questions
What is APR?
The yearly cost of a loan including certain fees, expressed as a rate. It makes offers easier to compare than the interest rate alone.
Can I mix loan types?
The calculator assumes standard fixed-rate loans. Adjustable-rate or interest-only loans work differently.
Does a shorter term always win?
It usually costs less in interest but has a higher payment, so check that you can afford it.
This guide is general information, not financial, tax or legal advice. Rates, fees and rules change, so confirm current terms with the lender, store or agency involved. All dollar figures are invented examples.