The lowest interest rate is not always the cheapest loan. Arrangement fees, processing charges and the length of the term all change what you really pay. Enter two offers below to compare the monthly payment, total cost and true annual rate side by side.
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Estimates only. Lenders use their own methods, rates and fees. Results update as you type; nothing you enter leaves your browser.
How to compare business loan offers
- Total cost of borrowing: all interest plus all fees. This is the clearest answer to “which loan costs less?” when the terms are the same.
- True annual rate: the rate that includes upfront fees. It lets you compare offers of different sizes or structures on one scale.
- Monthly payment: what your cash flow must carry. A cheaper loan over a shorter term can still strain your working capital.
Worked example
Two banks offer $100,000 over 60 months. Offer A charges 11% with a 2% fee; Offer B charges 12% with a 0.5% fee. Offer A’s payment is about $2,174 a month, with $30,455 of interest and $2,000 of fees, a total cost of about $32,455. Offer B’s payment is about $2,224, with $33,467 of interest and $500 of fees, about $33,967 in total. Offer A is about $1,512 cheaper, and its true annual rate (11.88%) is lower than Offer B’s (12.22%), even with the higher fee.
Shorten the term to 24 months and the gap narrows, because the fee is spread over fewer payments. That is why the comparison has to be run on your real terms.
Costs this calculator does not capture
- Prepayment penalties if you repay early
- Commitment fees on unused credit lines
- Valuation, legal and insurance costs for security
- Floating rates that can rise over the term
- Covenants that restrict dividends, new borrowing or asset sales
Always ask for the full term sheet. Our guide on how to read a bank term sheet lists the clauses to check.
Frequently asked questions
Is the true annual rate the same as APR?
It is calculated the same way as an APR: the rate at which the cash you receive equals the present value of your payments. Official APR rules differ by country and may include other charges.
Should I always choose the lower total cost?
Usually, if you can afford the payment and the other terms are similar. Flexibility, security required and the bank relationship can justify paying a little more.
Can I negotiate the fee?
Often, yes, especially if your DSCR and security are strong. Showing a competing offer is one of the most effective ways to do it.
Price a single loan in detail with the business loan calculator.
These figures are estimates for planning. They are not financial advice or an offer of credit. See our disclaimer.