Loan Comparison Calculator (Canada)

What the loan comparison calculator does

The calculator puts two or three Canadian loan offers side by side and works out what each really costs. For each offer, enter the amount, annual interest rate, term in months and any up-front fees. The tool returns the monthly payment, total interest, total cost of credit and an effective annual rate that includes the fees, then identifies the cheapest offer and the saving against the most expensive. Leave offer C’s amount at zero to compare two offers.

Why the posted rate is not the whole story

Lenders compete on the advertised interest rate, which says how expensive the money is per year but not how long you borrow it or what you pay to get it. Three things move the real cost:

• The term. Going from 60 to 84 months lowers the payment and raises total interest, often a lot.
• Fees. An origination or administration charge comes out of an advance you have not yet used.
• The amount. A lender may approve less than you asked for, which changes everything else.

How the comparison works

Each offer is amortized separately with the standard payment formula. Total interest is all payments minus the principal. Total cost of credit adds the up-front fees to the interest: everything the loan costs beyond repaying what you borrowed. The effective rate treats the fee as reducing the advance and finds the annual rate at which the payments are worth exactly the amount you receive, which is how the cost of borrowing is meant to be disclosed in Canada. With no fees, the effective rate equals the posted rate.

A worked example

$30,000 borrowed two ways. Lender A offers 7.5% over 60 months with a $250 fee: about $601.14 a month. Lender B offers 6.9% over 72 months with a $600 fee: about $510.03 a month. On the headline numbers B looks better on both rate and payment.

The calculator reverses that. A costs about $6,318 in total credit charges, B about $7,322, because twelve extra months of interest and the larger fee outweigh the 0.6-point rate advantage. A saves about $1,004. The effective rates, 7.85% for A and 7.62% for B, are closer together than the posted rates because B’s larger fee is spread over a longer term.

A rate advantage is small and steady, while a longer term keeps adding interest. When an offer pairs a better rate with a longer term, assume it costs more in total until the numbers show otherwise.

Total cost of credit against monthly payment

These two figures often disagree, and that is the point. Comparing only payments, you will pick the long loan every time and pay for it over years; comparing only total cost, you may pick a payment that does not fit the budget. Looking at both makes the trade clear: this much less per month for this much more overall.

Comparing loans of different sizes

If one lender approves $25,000 and another $30,000, compare the effective rates rather than total cost, since the effective rate does not depend on the amount. If one lender adds the fee to the loan and the other charges it separately, enter each as presented and let the effective rate decide.

Which fees belong in the fee box

Include one-time charges required to get the loan: application, origination, setup and administration fees, broker commissions, and registration or lien fees on a secured loan. Leave out optional creditor insurance, monthly charges, and penalties such as late or NSF fees.

What the tool leaves out

It assumes a fixed rate and schedule for the whole term; a variable-rate loan is modelled at today’s rate held constant. It ignores prepayment: many Canadian personal loans allow early repayment without penalty, which can be worth more than a small rate difference, while some auto and secured loans charge a penalty. It does not consider whether you should borrow at all.

Results are an estimate for comparing offers; lenders use their own day-count and payment-timing conventions, so quotes may differ slightly. This is not lending or financial advice. Read each offer’s disclosure statement before you sign.

About This Loan Comparison Calculator

Use this loan comparison calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.