You’ve done the research, applied, and were prequalified for two different loans with monthly payments you can manage. But which is the better deal? 

A low monthly payment certainly has appeal, but you also need to consider each loan’s upfront fees, how long you’ll be repaying the loan, and the total cost when it’s all said and done. 

Here I’ll give you a straightforward way to evaluate loan offers side by side so you can spot the best loan offer for you and your finances. Let’s get started.

Start With a Side-by-Side Comparison 

It’s time to take a closer look at the loan offers you received when you applied through a lending network. As BadCredit.org explains, you’re under no obligation to accept a loan offer, and you should understand the interest rate, fees, and other terms before agreeing to a loan.

Be sure to distinguish advertised rates and review information from the personalized terms you receive. Also check whether an offer is preliminary or final. Compare the same requested loan amount whenever possible. Doing so will give you a better sense of how the loans match up.  

Look at the APRs and Fees

An interest rate is the cost of borrowing the principal amount in a loan. An annual percentage rate, or APR, includes interest plus certain loan fees, making it a useful comparison tool for comparing loans.

A loan may come with an origination fee, a one-time, upfront charge billed to borrowers by some lenders. An origination fee may be deducted from the loan’s proceeds, reducing the cash received.

For example, let’s say a $5,000 loan comes with a 5% origination fee. This origination fee would come to $250, and the loan proceeds would be $4,750, $250 less than the loan amount.

Check for late fees and any prepayment penalties separately. Don’t attempt to add an origination fee to an APR. Rather, look at a loan’s disclosed APR and then review an origination fee’s impact on the cash you’ll actually receive.

Weigh the Monthly Payment Against the Total Cost

One way to lower a loan’s monthly payment amount is by extending the loan’s repayment term. But doing so will increase the total interest owed on the loan.

Here is an example using two hypothetical loans with the same $10,000 amount, a fixed 10% interest rate, and no fees, but with different repayment terms. All figures below are illustrative. 

Loan Amount	Repayment Term	Monthly Payment	Total Repayment
$10,000	4 years	$253.63	$12,174.04
$10,000	5 years	$212.47	$12,748.23

When considering loan terms, you will want to weigh your options carefully. A shorter loan term may cost less overall, but the payment still needs to fit in your monthly budget. A longer loan term may give you a more affordable monthly payment, but you’ll pay more overall. 

What makes the most sense for your budget? Are you OK choosing a smaller monthly payment and paying more overall interest? Or would you rather pay a little more each month and have a shorter loan term? Consider your personal budget and choose wisely.

If you plan to pay extra, check for prepayment penalties and ask how to direct additional payments toward principal rather than simply advancing your next due date.

Consider Funding Timing and Repayment Flexibility

Approval timing is how long it takes a lender to provide loan funding to you after a loan has been approved. It could take minutes or days. If you have an urgent expense, you may wish to choose a lender that prides itself on disbursing loan proceeds to borrowers quickly.

Deposit timing is how long it takes for a deposit from a lender to be transferred to your account after you sign a loan agreement. With some online lenders, this could be minutes or hours, but the standard practice is 1 to 2 business days.

When deciding on a loan, there are several practical features worth checking, including payment due date options, extra payment policies, and available hardship assistance. 

Hardship assistance may come in handy if you should get laid off from your job during your loan’s repayment term. Choosing a due date close to payday is a smart way to make sure there is enough money in your account to cover a loan payment. Extra-payment policies are worth reviewing if you plan to pay ahead on your loan payments.

A lender’s advertised discounts may come with certain conditions, such as enrolling in autopay. Be sure to check. If you are comfortable making automatic loan payments, this is a good way to qualify for a lower interest rate.

Closely Review the Final Terms Before You Accept

Here’s a short checklist that will help you stay on track when choosing your next loan:

• How much money will actually reach your account?
• What are the APR, monthly payment amount, and repayment term?
• What is the total repayment amount?
• Are there additional fees or discount conditions?
• Can you afford the payment alongside existing expenses?

Choosing a loan that makes sense for your finances means selecting one with a monthly payment that fits your budget, a manageable overall cost, and services that meet your needs. With these items in place, you’ll be ready to land the loan that is right for you and your bottom line.