Most people compare loans on one number — the monthly payment — which is exactly the number lenders can manipulate most easily. Stretch the term, the payment falls, the total cost rises. Here is the seven-point comparison that protects you, in the order a professional would run it.
1. Compare APR, never the interest rate
The interest rate is the cost of borrowing. The APR is the cost of borrowing plus mandatory fees, annualized. Two loans at “12% interest” can have APRs of 12% and 16% once origination fees enter. Federal law requires every lender to disclose APR — it exists precisely so you can compare across lenders. Use it.
2. Find the origination fee and how it’s charged
A 5% origination fee on a $10,000 loan means either you receive $9,500 (fee deducted) or you repay $10,500 (fee added). Both raise your true cost; the first also means you must borrow more to net your target amount. Some lenders charge zero — at the same APR, zero-fee wins.
3. Run total cost of repayment, not monthly payment
Multiply the payment by the number of payments. That’s the only number that lets you compare a 36-month offer against a 60-month offer honestly. A lower payment over a longer term frequently costs 50–80% more in total interest.
4. Check the prepayment terms
Plan to pay early even if you don’t think you will. “No prepayment penalty” should be explicit in the agreement. A lender that penalizes early payoff is telling you how it makes money.
5. Verify how (and whether) the lender reports to credit bureaus
If part of the loan’s value to you is rebuilding credit, confirm the lender reports to all three bureaus. Some subprime lenders don’t, which means your perfect payment history builds nothing.
6. Read the late fee and grace period terms
Late fees range from $15 flat to 5% of the payment, and grace periods range from 15 days to none. If your income timing is irregular, these terms matter more than half a point of APR.
7. Prequalify everywhere, apply once
Prequalification uses a soft credit pull: no score impact, real rate estimates. Prequalify with three to five lenders, line the offers up against points 1–6, then submit one full application. The rate spread between lenders for the same borrower routinely reaches 5–10 percentage points in the fair/poor credit market — fifteen minutes of comparison can be worth over a thousand dollars on a mid-size loan.
The comparison table to fill in
| Offer A | Offer B | Offer C | |
|---|---|---|---|
| APR | |||
| Origination fee | |||
| Amount you actually receive | |||
| Monthly payment | |||
| Number of payments | |||
| TOTAL repayment | |||
| Prepayment penalty? | |||
| Reports to all 3 bureaus? | |||
| Late fee / grace period |
Lowest total repayment with acceptable payment size wins. It’s rarely the offer with the lowest monthly payment.