How the Loan Comparison Calculator Works (With a Worked Example)
Compares the total cost of two loans with different rates and fees. This guide walks through what each input means, the formula behind the answer and a worked example using typical Australian figures. You can follow along in the free Loan Comparison Calculator.
Why it matters
Personal credit in Australia covers car loans, personal loans, credit cards and buy now pay later. Lenders must quote a comparison rate alongside the headline rate, which bundles most fees into a single figure for a standard loan size.
What you need to enter
The calculator asks for 6 inputs. The table shows each one with the example value used later in this guide.
| Input | Example value |
|---|---|
| Loan amount ($) | 30000 |
| Loan term (years) | 5 |
| Loan A rate (%) | 7 |
| Loan A fees ($) | 500 |
| Loan B rate (%) | 6.5 |
| Loan B fees ($) | 1200 |
The formula
Total cost = monthly repayment × months + fees for each loan.
Worked example
Entering the example values above gives these results:
| Result | Value |
|---|---|
| Cheaper option | Loan A by $276.91 |
| Loan A total cost | $36,142.16 |
| Loan B total cost | $36,419.07 |
The headline figure is Loan A by $276.91 (cheaper option). Change any input in the calculator and every result updates instantly, so you can test different scenarios side by side.
How the cheaper option changes with loan amount
The table below keeps every other input at the example value and moves only “Loan amount ($)” up and down by 10% and 20%. It shows how sensitive the cheaper option is to that one figure.
| Loan amount ($) | Cheaper option |
|---|---|
| 24,000 | Loan A by $361.53 |
| 27,000 | Loan A by $319.22 |
| 30,000 | Loan A by $276.91 |
| 33,000 | Loan A by $234.60 |
| 36,000 | Loan A by $192.29 |
At 24,000 the result is Loan A by $361.53; at 36,000 it is Loan A by $192.29. If a small change in this input moves the answer a lot, it is worth double-checking that figure before you rely on the result.
A practical tip
On small or short loans, fees often matter more than a small difference in rate.
Keep going
Before relying on the number, read Getting the Most From a Loan Comparison Calculator: Tips and Common Errors. You might also find these guides useful:
- Loan Payoff Time Calculator: Formula, Example and What the Result Means
- Using a Credit Card Minimum Repayment Calculator in Australia: A Step-by-Step Guide
- Simple Interest Loan Calculator Explained for Australians
Frequently asked questions
- What is a comparison rate?
- It combines the interest rate and most fees into one annual rate, usually based on a $30,000 loan over five years, to make loans easier to compare.
- Do the results include fees?
- Only where a fee input is shown. Add any known fees for a more realistic total.
- Where can I get help with debt?
- The National Debt Helpline (1800 007 007) offers free, confidential financial counselling.
Run your own numbers in the Loan Comparison Calculator.
Open the calculatorGeneral information only. Rates and thresholds change, usually on 1 July. Confirm current figures with the ATO or the relevant authority, and get personal advice for decisions about your situation.