Loan Comparison Calculator United Kingdom
This loan comparison calculator puts two offers for the same amount side by side, showing the monthly payment and total cost of each and which is cheaper.
What it does
The Loan Comparison Calculator puts two loan offers of the same amount side by side, working out the monthly payment and the total you repay on each so you can see which one is genuinely cheaper — not just which has the lower headline rate.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
monthly = amount × i / (1 − (1 + i)^−n) where i is the monthly rate and n the number of months; total cost = monthly × n; savings = |total A − total B|
How it works
It applies the standard amortisation formula to each loan using the amount, interest rate (APR) and term you enter, then multiplies each monthly payment by its number of months to get the total repaid. The difference in totals is what the cheaper loan saves you.
Where it is used
- Choosing between two personal loan offers
- Seeing whether a lower rate over a longer term really costs less
- Weighing a shorter, higher payment against a longer, cheaper one
Worked example
Borrowing £10,000.00 at 6% over 36 months costs … a month against … for the second offer — a total-cost gap of ….
The interest rate alone does not tell you what a loan costs. The term, how many months you spread the repayments over, matters just as much, and a lower rate over a longer period can end up costing more. This calculator puts two offers for the same amount side by side and shows the monthly payment and the total you would repay on each.
Why the monthly payment can mislead you
The monthly payment is the most visible number on a loan offer and the one most people compare first. But a low monthly payment is easy to create: stretch the loan over more months. Spreading the same amount over 60 months instead of 24 cuts the monthly figure sharply, but you make far more payments and interest builds up over every extra month. An affordable payment matters, but it is not the same as the cheapest loan.
Total cost is the number that decides it
Multiply the monthly payment by the number of months to get the total repayment, the amount that leaves your account over the life of the loan. The gap between the two totals is what the cheaper offer saves you. A loan with a slightly lower rate but a longer term often ends up with the larger total. Whichever offer has the lower total cost is the cheaper one.
How rate and term pull in opposite directions
A higher rate costs more per pound borrowed each year. A longer term keeps more of the balance outstanding for longer, so even a low rate has more time to add up. The two can offset each other in ways that are hard to judge by eye: on £10,000, 6% over five years costs about £11,600 in total, while 8% over two years costs about £10,850, because the debt is cleared much faster. Running both offers through the same repayment formula, as this tool does, settles it.
A worked example
You need to borrow £10,000. Loan A is 6% APR over 36 months; Loan B is 8% APR over 48 months. Loan A costs about £304 a month and Loan B about £244, so on the monthly payment alone Loan B looks better. Loan A repays about £10,950 in total and Loan B about £11,720, so Loan B’s lower payment costs about £770 more overall. Loan A is cheaper even though its monthly payment is higher.
Choosing between cheapest and most affordable
The cheapest loan and the one with the lowest monthly payment are usually different. If your budget has room, the shorter loan clears the debt sooner and costs less. If money is tight, a longer loan with smaller payments may be worth the extra total cost. The calculator shows the trade-off in pounds so you can decide with the real numbers.
Assumptions and limitations
The calculator uses the standard repayment formula and assumes a fixed rate, equal monthly payments and no missed payments or overpayments. The rates and terms are taken from each lender’s offer, and the APR is divided by twelve to give a monthly rate, so results can differ by a few pence from a lender’s own figures. It does not add arrangement fees outside a loan’s APR or early settlement charges. Treat the results as a like-for-like comparison and check each lender’s credit agreement for the binding figures 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.
Frequently asked questions
How do I compare two loans that have different terms?
Can a loan with a lower rate still cost more?
What is APR and why does the calculator use it?
Does this calculator include arrangement or early-repayment fees?
Should I always choose the loan with the lowest total cost?
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