The lowest advertised rate is not always the least expensive option. A useful comparison starts with offers for the same amount and purpose, then examines APR, fees, term, and total repayment.
Personal-loan comparison worksheet
| Item | Offer A | Offer B |
|---|---|---|
| Amount financed | Write it down | Write it down |
| APR | From disclosure | From disclosure |
| Monthly payments | Amount × number | Amount × number |
| Origination fee | Dollar amount | Dollar amount |
| Net proceeds | Cash received | Cash received |
| Total of payments | Full scheduled total | Full scheduled total |
Step 1: normalize amount and term
A 36-month offer and a 60-month offer answer different budget questions. Compare identical terms first when possible. If the terms differ, evaluate both the monthly-payment difference and the additional cost caused by more payments.
Step 2: use APR appropriately
The CFPB explains that an interest rate is the cost of borrowing principal, while APR includes the interest rate plus additional fees made with the loan. APR is especially useful for comparing offers with similar amounts and terms.
Step 3: calculate net proceeds
An offer for $15,000 with a $750 fee deducted may put only $14,250 in your account. If another lender advances the full $15,000, the headline loan amounts do not represent the same usable cash.
Step 4: read the non-price terms
- Is the rate fixed?
- Is there a penalty for early repayment?
- Does the rate depend on autopay?
- When do late charges apply?
- Are credit insurance or other add-ons truly optional?
Step 5: verify the winner against your budget
The lower total-cost offer is not workable if its payment is unaffordable. Review normal and irregular expenses, and avoid relying on hoped-for income. Keep copies of the disclosures you used.
Enter both sets of numbers into the Loan2Us personal-loan comparison calculator to estimate payment, fee, net proceeds, total repayment, and borrowing cost.
Primary sources: CFPB: interest rate vs. APR and CFPB: personal installment loan fees.