You have run eligibility checks, received two or three indicative rates, and now you need to decide which offer to accept. The decision looks simple: pick the lowest rate. But if the offers are for slightly different amounts or terms, the lowest rate does not always produce the lowest total cost. A 6.9% offer over four years can cost more in total than a 7.5% offer over three years. An offer with a £100 arrangement fee at a lower rate can cost more than a no-fee offer at a slightly higher rate.
This tool puts the offers side by side and compares them on the figure that matters: total cost. It also calculates the cost per £1,000 borrowed, which is the most useful normalised metric when offers are for different amounts. The cheapest offer by total cost is highlighted. If the lowest monthly payment and the lowest total cost are different offers, the tool flags this explicitly. All figures are illustrative. This tool is for informational purposes and does not constitute financial advice.
At a Glance
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Enter 2 or 3 offers with amount, APR, term, and any arrangement fee. The tool calculates the monthly payment, total interest, total cost, and cost per £1,000 for each.
Each offer is entered with its own sliders, so different amounts, rates, and terms can be compared directly. The results panel shows all the key figures side by side with the cheapest total cost highlighted. If an offer includes an arrangement fee, it is added to the total cost so the comparison is fair.
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The cost per £1,000 borrowed is the normalised metric for comparing offers at different amounts. It answers: how much does each £1,000 of borrowing cost in total?
If Offer A is £8,000 at 7% and Offer B is £10,000 at 6%, the total costs are not directly comparable because the amounts are different. The cost per £1,000 strips out the amount difference and shows the pure cost of borrowing: the offer where each £1,000 costs less to repay is the more efficient loan, regardless of the headline amount.
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The tool flags when the lowest monthly payment and the lowest total cost are different offers. This is the monthly-vs-total trap.
A longer term reduces the monthly payment but increases the total cost. If one offer has a lower monthly payment because of a longer term, but a higher total cost because of the extra interest, the verdict text flags the mismatch and shows the total cost difference. The borrower can then decide whether the lower monthly payment justifies the higher total cost.
Loan Offer Comparison Tool
Enter 2 or 3 offers. Each can have a different amount, APR, term, and fee. The tool compares them on total cost and highlights the cheapest. All figures are illustrative.
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About this tool
Designed for the decision stage: after eligibility checks have been run and indicative rates received, but before a formal application is submitted to the chosen lender.
Each offer shows monthly payment, total interest, total cost (including fees), and cost per £1,000 borrowed. The cheapest by total cost is highlighted. The verdict flags the monthly-vs-total trap if applicable.
When offers are for different amounts, the total cost is not directly comparable. The cost-per-£1,000 metric normalises the comparison: the offer where each £1,000 costs less to repay is the more efficient loan.
Enter the rates from soft-search eligibility checkers to compare the actual personal rates you have been indicated, not the advertised representative APRs.
How to use this tool
Set the amount, APR, term, and any arrangement fee for Offer 1. Use the personal rate from an eligibility check, not the advertised representative APR, for the most accurate comparison.
Offer 2 can have a different amount, rate, and term. If one lender offered £8,000 at 7% over 3 years and another offered £10,000 at 6.5% over 4 years, enter each as quoted. The tool handles the comparison.
Click “Add a third offer” to compare three options. This is useful when the existing bank, an online lender, and a second comparison result have each produced different rates.
The cheapest offer by total cost is highlighted in navy. If the lowest monthly payment is a different offer, the verdict explains the trade-off. The cost-per-£1,000 figure helps when amounts differ. Apply to the cheapest offer with one formal application.
Why cost per £1,000 matters
If all offers are for the same amount, the total cost comparison is straightforward: the offer with the lowest total cost is the cheapest loan. But if the offers are for different amounts (which happens when different lenders approve different maximums, or when the borrower is considering different amounts at different lenders), the total cost comparison is misleading because a larger loan naturally costs more in total.
The cost per £1,000 borrowed strips out the amount difference and shows the pure cost of borrowing. An offer of £8,000 with a total cost of £8,960 has a cost per £1,000 of £1,120. An offer of £10,000 with a total cost of £11,400 has a cost per £1,000 of £1,140. The first offer is more efficient (each £1,000 costs less), even though the second offer has a lower total cost in absolute terms (because it is for a larger amount).
This metric is particularly useful when comparing the existing bank’s offer (which may be for a specific pre-approved amount) against open-market offers (which may be for the amount the borrower actually requested). The guide to your bank vs the open market covers the broader comparison framework.
The monthly-vs-total trap in offer comparison
When comparing two offers, the one with the lower monthly payment is not always the cheaper loan. A lower monthly payment can result from a longer term, a lower rate, or both. If the lower payment comes from a longer term, the total cost may be higher because interest accrues for more months. The tool flags this by checking whether the cheapest-by-monthly and the cheapest-by-total are the same offer. If they are not, the verdict text explains the trade-off.
For example, Offer A at 6.9% over 3 years on £10,000 has a monthly payment of approximately £308 and a total cost of approximately £11,102. Offer B at 9% over 4 years on the same amount has a monthly payment of approximately £249 but a total cost of approximately £11,920. Offer B is more affordable per month (£59 less) but costs £818 more in total. Whether the lower monthly payment justifies the higher total cost depends on the borrower’s budget, but the tool ensures the trade-off is visible rather than hidden. The guide to top mistakes to avoid covers this as one of the five most costly personal loan errors.
Related tools
Model any individual offer at different terms to find the shortest affordable option before comparing across lenders.
See what the advertised rate actually means for your profile before entering rates into this comparison tool.
Explore the term trade-off for a single offer across all seven standard terms before locking in the term for comparison.
Looking for more loan resources?
Guides and tools covering secured loans, debt consolidation, and home improvementsFrequently asked questions
Should I always choose the offer with the lowest total cost?
In most cases, yes. The total cost is what the loan actually costs: the amount borrowed plus all interest and fees. However, if the lowest-total-cost offer has a monthly payment that is uncomfortably close to the budget limit, a slightly more expensive offer with a lower monthly payment may be the more practical choice. A loan that is technically cheaper but causes cash-flow stress every month is not the better option in practice.
The decision comes down to how much the total cost difference is worth. If the cheapest offer saves £50 but has a monthly payment that is £30 higher than the next option, the saving is real but small. If it saves £500, the higher monthly payment is almost certainly worth accommodating. The tool shows both figures so the trade-off is explicit rather than hidden.
What if the offers are for different amounts?
Use the cost-per-£1,000 figure to compare. This normalises the comparison by showing how much each £1,000 of borrowing costs in total at each offer. The offer with the lowest cost per £1,000 is the most efficient use of borrowed money, regardless of the headline amount. If you need a specific amount and only one offer provides it, the total cost of that offer is the relevant figure.
If one lender has offered more than you need, consider whether the extra amount is useful or whether applying for just the amount needed (possibly at a different rate band) would be cheaper. The APR band rate comparator shows how rates change by borrowing band.
Do I need to include arrangement fees?
Yes, if the lender charges one. An arrangement fee is a real cost that increases the total amount paid for the loan. A loan at 6.5% APR with a £150 fee may cost more in total than a loan at 7% APR with no fee, depending on the amount and term. The fee slider allows modelling this. Most mainstream unsecured personal loans do not charge arrangement fees, but some do, and omitting the fee from the comparison would make that offer appear cheaper than it is.
If the fee is added to the loan balance (rather than paid upfront), it also increases the monthly payment and the total interest, because interest is charged on the fee amount as well as the borrowing. In this case, enter the total amount (borrowing plus fee) as the offer amount for a more accurate comparison.
Can I use representative APRs or should I use personal rates?
Use personal rates from soft-search eligibility checkers wherever possible. The representative APR is the rate available to at least 51% of accepted applicants, but the rate offered to you may be different. Comparing representative APRs tells you which lender is cheapest for the strongest applicants. Comparing personal rates from eligibility checks tells you which lender is cheapest for you specifically.
If personal rates are not available (because the lender does not offer an eligibility checker), the representative APR can be used as a best-case scenario. The representative APR reality checker shows what the loan would cost if the rate offered is higher than the representative.
What if all three offers are very similar?
If the total cost difference between the offers is small (under £50 to £100), the choice may come down to non-cost factors: the speed of the lender, the quality of the online banking, the ease of making overpayments, or the early repayment terms. A £30 saving over three years is approximately 83 pence per month, which is not a meaningful financial difference. In this scenario, choosing the lender with the best service experience and the most flexible terms is a reasonable approach.
The cost-per-£1,000 figure can still help distinguish offers that appear similar in total cost. If one offer is for a slightly larger amount at a slightly lower rate, the cost per £1,000 may reveal a meaningful efficiency difference that the total cost figure obscures.
Squaring Up
The offer comparison tool is a decision-stage tool: it takes the indicative rates from eligibility checks and shows which offer costs the least in total. The cost per £1,000 metric handles offers at different amounts. The monthly-vs-total flag prevents the most common comparison mistake: choosing the lowest monthly payment without seeing the total cost difference. Enter the personal rates from eligibility checks, not the advertised representative APRs, for the most accurate comparison. Then apply to one lender with one formal application.
Explore all loan guides and tools
Everything in one place, across secured loans, debt consolidation, and home improvementsThis tool is for illustrative purposes only and does not constitute financial advice. All figures use the standard annuity formula. The rates entered are illustrative. The rate and terms offered on any loan depend on the borrower’s credit profile, income, existing commitments, and the lender’s own criteria. Missed repayments can affect your credit rating and may result in further action.
