What is being compared
Two offers can share the same advertised loan amount but have different cash cost because interest is paid over time and fees are paid immediately. This comparison holds the balance and term constant, which makes the result a comparison of financing terms rather than of two different purchases. The primary result is Offer A total minus Offer B total; a negative number means A costs less under the entered assumptions.
Formula and timing
For each offer, r is APR ÷ 12 and n is years × 12. The monthly payment is P × r(1+r)^n ÷ ((1+r)^n − 1). Total scheduled payments equal that payment times n; adding the upfront fee gives the displayed total. This is a cash-cost comparison, so a fee is not hidden inside the monthly amount. It also makes clear why a lower rate is not automatically a lower total.
Worked example with the displayed units
Enter $25,000, 60 months, 6.2% with a $600 fee and 5.8% with a $1,300 fee. Calculate each payment separately, multiply by 60, then add its fee once. The lower-rate offer reduces every month’s interest, while its larger fee happens at closing. The output quantifies which effect is larger, rather than relying on the APR headline alone. Keep cents until the final comparison because small monthly differences accumulate.
When to use this result
Use this when two lender disclosures quote the same amount and repayment length, such as an auto loan or a personal loan. It is especially useful before paying points or an origination fee to reduce a rate. Run a second case only after changing a real fact, such as the term or amount. If the loans have different terms, compare total cost and monthly cash flow separately; forcing them into one number obscures the timing difference.
Costs and conditions outside the fields
The model does not include optional insurance, dealer products, late charges, prepayment rules, a promotional rate that expires, taxes, or a fee financed into the loan balance. A lender can calculate APR under disclosure rules that include items this simple form calls an upfront fee. Read the official disclosure for whether a fee is paid in cash, withheld from proceeds, or added to principal; those three treatments produce different usable cash.
Mistakes that change the answer
Do not enter 0.062 for 6.2%, or put a monthly fee into the one-time fee field. The amount financed is the balance on which interest is charged, not necessarily the purchase price. Do not add the down payment to both offers unless it differs between them. A lower payment caused by a longer term is not proof of a lower cost, because it creates more months of interest.
Scope of this page
This page compares two complete loan offers. The amortization tool follows one balance after extra principal payments; it does not price a competing fee and rate. The calculation runs entirely in the browser and is an estimate, not a lender quote or financial advice.
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