Personal Loan Calculator

A personal loan is unsecured, meaning you do not pledge any collateral. A mortgage is secured by the house and an auto loan is secured by the car, so if you stop paying the lender can repossess the asset and sell it to recover the debt. Because a personal loan lender has no asset to seize, they price in higher default risk: typical APRs run 7% to 36% versus roughly 6% to 8% for a mortgage and 5% to 10% for a new car loan with strong credit. The upside of being unsecured is flexibility: you can use the money for almost any legal purpose, the application is faster (often funded in 1 to 7 business days), and a missed payment hurts your credit but does not cost you a house or car.

An origination fee is a one-time charge the lender deducts for processing and underwriting the loan. Personal-loan origination fees typically run 0% to 8% of the loan amount. LendingClub charges 1% to 8%, Best Egg 0.99% to 8.99%, Upstart 0% to 12% in some cases, and SoFi advertises no origination fee at all. On a $15,000 loan a 5% origination fee equals $750. The fee can either be deducted from the cash you receive at disbursement (so you net $14,250) or rolled into the loan balance (so you receive the full $15,000 but repay interest on $15,750). Either way it pushes the true APR above the quoted interest rate, which is why the federal Truth in Lending Act requires APR, not interest rate, to be the disclosed cost figure.

The interest rate is the cost of borrowing the principal expressed as an annual percentage. The APR (annual percentage rate) is the all-in cost of the loan including the interest rate plus origination fees, application fees, and other lender charges, also expressed as an annual percentage. On a fee-free loan they are identical. On a loan with a 5% origination fee, a 10% interest rate over 60 months works out to roughly a 12.3% APR. Federal Truth in Lending requires lenders to display the APR prominently exactly so borrowers can compare offers on a single apples-to-apples number, regardless of how each lender structures fees. Always compare APRs across lenders, never quoted interest rates.

Debt consolidation is the top use, accounting for roughly 40% to 60% of personal loans depending on the survey (LendingTree and the Federal Reserve both report similar figures). The math works when the new loan APR is lower than the weighted APR of the credit cards or other debts being refinanced. After consolidation, the most common uses are medical and dental bills, home improvement projects, weddings, moving costs, major appliance replacement, and emergency expenses like car repairs. Personal loans are also used for vacations and large purchases, though most personal-finance writers consider those poor uses because the loan term outlasts the experience or the asset.

A shorter term always costs less in total interest, a longer term always costs less per month. On a $15,000 loan at 12% APR, 36 months runs about $498 per month and $2,940 in total interest; 60 months runs about $334 per month and $5,026 in total interest, $2,086 more interest in exchange for $164 lower monthly payment. The right answer depends on cash flow: if your budget can absorb the higher 36 month payment without forcing you back onto credit cards, take the shorter term. If a tight monthly budget would make the larger payment unsustainable, the 60 month term is cheaper than missed payments or new revolving debt.

Most do not. The major US personal-loan lenders (SoFi, LightStream, Marcus by Goldman Sachs, LendingClub, Best Egg, Upstart, Discover, Wells Fargo) all advertise no prepayment penalty, meaning you can pay extra against principal or pay the loan off entirely at any time without an additional charge. A small number of subprime and smaller regional lenders still include them, so the only safe practice is to read the loan agreement (or the federal Truth in Lending disclosure) before signing. Even on a loan with no penalty, only the unpaid portion of interest is saved by paying early: the origination fee is non-refundable, so paying off a fee-loaded loan in month 3 still costs you the full fee.