How a personal loan payment is calculated
Personal loans are usually fixed-rate, simple-interest installment loans. The lender applies the same monthly payment formula used for any amortizing loan: interest is calculated on the current balance, and the rest of the payment reduces principal.
Enter the amount you want to borrow, the APR, and the term. The calculator returns the exact monthly payment, the total interest, and the date the loan is paid off.
Personal loan rates and what affects them
Rates typically range from roughly 7% for borrowers with excellent credit to over 30% for poor credit. The rate depends on your credit score, income, debt-to-income ratio, loan amount, and term. Shorter terms usually have lower rates than longer ones.
Because personal loans are unsecured — no collateral — the rate is often higher than auto or home loans, but usually lower than credit cards. That makes them a popular tool for consolidating high-interest card debt.
Origination fees and APR
Many lenders charge an origination fee of 1% to 10%, deducted from the loan proceeds. A $10,000 loan with a 5% fee means you receive $9,500 but owe payments on $10,000. This is why the APR is higher than the stated interest rate. Always compare offers using APR, not the interest rate alone.
Common mistakes
Borrowing more than you need because the payment looks affordable, ignoring the origination fee, and choosing the longest term without checking the total interest. A personal loan can save money on card debt, but only if you stop adding new charges to the cards.