Personal loans offer fixed-rate financing for almost any purpose—debt consolidation, home improvement, major purchases, or emergencies. This calculator shows your monthly payment, total interest cost, and helps you compare loan options.
How This Calculator Works
This calculator analyzes personal loan costs:
- Loan Amount: How much you need to borrow
- Interest Rate (APR): Annual percentage rate including fees
- Loan Term: Repayment period (typically 2-7 years)
- Monthly Payment: Fixed payment amount
- Total Interest: Cost of borrowing beyond principal
- Amortization: How payments split between principal and interest
The Formula Explained
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1]
Where:
- P = Principal (loan amount)
- r = Monthly interest rate (APR ÷ 12)
- n = Number of months
Total Interest = (Monthly Payment × n) - Principal
Step-by-Step Example
$15,000 Personal Loan Comparison
| Term | APR | Monthly Payment | Total Interest | Total Paid |
| 3 years | 9% | $477 | $2,172 | $17,172 |
| 5 years | 10% | $319 | $4,120 | $19,120 |
| 7 years | 11% | $261 | $6,880 | $21,880 |
Shorter terms mean higher payments but less total interest.
Frequently Asked Questions
What is a personal loan?
A personal loan is an unsecured loan (no collateral required) with fixed interest rate and fixed monthly payments. You borrow a lump sum and repay over a set term (typically 2-7 years). Uses include debt consolidation, home improvement, medical bills, weddings, and large purchases.
What interest rate can I get on a personal loan?
Rates typically range from 6% to 36% APR based on credit score, income, and lender. Excellent credit (720+) qualifies for lowest rates (6-12%). Good credit (670-719) sees 12-18%. Fair credit (580-669) may see 18-25%+. Some lenders specialize in fair credit borrowers.
What's the difference between APR and interest rate?
Interest rate is the base cost of borrowing. APR (Annual Percentage Rate) includes interest plus fees (origination fees, etc.), showing total annual cost. APR is always slightly higher than the rate. Compare APRs between lenders for accurate cost comparison.
Are personal loans better than credit cards?
For debt consolidation or large purchases, personal loans often beat credit cards: (1) Lower rates—personal loans average 12% vs credit cards at 20%+. (2) Fixed payments—you know exactly when you'll be debt-free. (3) No temptation—can't keep charging. Credit cards are better for small, quickly-repaid purchases.
How long should my personal loan term be?
Choose the shortest term you can afford. Longer terms have lower monthly payments but cost more in total interest. Example: $10,000 at 10% over 3 years costs $1,616 in interest; over 5 years costs $2,748. Only extend terms if cash flow requires it.
Do personal loans have fees?
Many lenders charge origination fees of 1-8% of the loan amount. A 5% fee on $20,000 = $1,000. Some lenders charge no fees—always compare APR (which includes fees) rather than just interest rate. Avoid loans with prepayment penalties.
Will a personal loan affect my credit score?
Application: Hard inquiry causes small temporary drop (~5-10 points). Account opening: New account slightly lowers average age but adds credit mix. On-time payments: Positive impact builds over time. Lower utilization: If consolidating credit cards, utilization drops, helping score. Net effect is usually positive after a few months.
When should I NOT get a personal loan?
Avoid personal loans when: (1) You're borrowing for discretionary spending you can't afford. (2) High rates make it unaffordable (consider alternatives). (3) You'd use it to pay minimum bills each month (underlying budget problem). (4) You have equity available at lower rates (HELOC). (5) The debt would take 7+ years to repay.
Key Points to Remember
- Compare APR, not just rate: APR includes all fees
- Shorter terms save money: Even if payments are higher
- Pre-qualify first: Many lenders offer soft pull rate checks
- Fixed payments help budgeting: Know exactly what you'll pay monthly
- Avoid unnecessary debt: Only borrow what you truly need