Personal Loan Calculator

Personal loans are unsecured loans, meaning they do not require collateral like a house or car. Because they carry higher risk for lenders, interest rates are typically higher than secured loans -- ranging from about 6% for excellent credit to over 35% for poor credit. Most personal loans have fixed interest rates and fixed monthly payments.

One critical but often overlooked cost is the origination fee. Many lenders charge 1-8% of the loan amount as an origination fee, which is deducted from your disbursement. This means if you borrow $15,000 with a 3% origination fee, you only receive $14,550 but must repay the full $15,000 plus interest. This gap between the stated rate and the effective APR can be significant.

The effective APR accounts for both the interest rate and fees, giving you the true cost of borrowing. When comparing lenders, always use APR rather than the stated interest rate. A loan with a lower interest rate but higher fees may actually cost more than one with a slightly higher rate and no fees.

Common uses for personal loans include debt consolidation, home improvements, medical expenses, and major purchases. When used for debt consolidation, a personal loan can simplify multiple payments into one and potentially lower your overall interest rate if you qualify for a competitive rate.

Before applying, check your credit score, shop around with at least 3-5 lenders (including your bank and online lenders), and avoid borrowing more than you need. Pre-qualification with a soft credit check lets you compare rates without impacting your credit score.