Personal Loan Calculator
Typical APR range: 10% - 18%
Personal Loan Tips
- ✓Check your credit score before applying
- ✓Compare APRs from multiple lenders
- ✓Watch out for origination fees
- ✓Check for prepayment penalties
Understanding Personal Loans
What is a Personal Loan?
A personal loan is an unsecured loan that can be used for almost any purpose - debt consolidation, home improvements, medical expenses, or major purchases. Unlike a mortgage or auto loan, no collateral is required.
Interest Rates by Credit Score
| Credit Score | Rating | Typical APR Range |
|---|---|---|
| 720+ | Excellent | 6% - 12% |
| 680-719 | Good | 10% - 18% |
| 640-679 | Fair | 15% - 25% |
| 580-639 | Poor | 20% - 36% |
Common Uses for Personal Loans
Good Uses
- Consolidating high-interest debt
- Home improvements (increases value)
- Major necessary expenses
- Medical bills
- Emergency expenses
Risky Uses
- Vacations or luxury items
- Investing or gambling
- Covering routine expenses
- Wedding expenses
- Items that depreciate quickly
Understanding Fees
Origination Fee
A one-time fee (typically 1-8%) deducted from your loan amount before disbursement. If you borrow $10,000 with a 3% fee, you receive $9,700 but repay $10,000.
Prepayment Penalty
Some lenders charge a fee for paying off your loan early. Look for loans with no prepayment penalty if you might pay off early.
Late Payment Fee
Typically $25-$50 or a percentage of the payment. Set up autopay to avoid these fees.
Personal Loan vs. Credit Card
| Feature | Personal Loan | Credit Card |
|---|---|---|
| Interest Rate | Usually lower (6-36%) | Usually higher (15-25%+) |
| Rate Type | Fixed | Usually variable |
| Repayment | Fixed monthly, set term | Minimum payment, revolving |
| Best For | Large, planned expenses | Short-term, variable needs |
Debt Consolidation Example
Credit card debt: $15,000 at 22% APR
Minimum payment: $450/month = 47 months to pay off
Total paid: $21,150 ($6,150 in interest)
Personal loan: $15,000 at 10% APR for 36 months
Monthly payment: $484 = 36 months to pay off
Total paid: $17,424 ($2,424 in interest)
Savings: $3,726 and 11 months!
Before You Apply
- Check your credit report for errors
- Get pre-qualified with multiple lenders (soft credit check)
- Compare total cost, not just monthly payment
- Read all terms including fees and penalties
- Only borrow what you need and can afford to repay
Frequently Asked Questions
What credit score do I need for a personal loan?
Credit requirements vary by lender. Excellent credit (720+) gets the best rates (6-12% APR). Good credit (680-719) qualifies for 10-18% APR. Fair credit (640-679) may see 15-25% APR. Some lenders work with poor credit (580-639) at 20-36% APR. Check your score before applying to know what to expect.
What is an origination fee on a personal loan?
An origination fee (typically 1-8% of the loan amount) is deducted from your loan before disbursement. If you borrow $10,000 with a 3% fee, you receive $9,700 but repay $10,000. This increases your effective APR, so compare total costs including fees, not just interest rates.
Is a personal loan better than a credit card for debt consolidation?
Usually yes. Personal loans typically have lower fixed rates (6-36% vs 15-25%+), fixed payments, and a set payoff date. Consolidating $15,000 in credit card debt from 22% to a 10% personal loan can save $3,700+ in interest. Just don't run up new credit card debt after consolidating.
How long should my personal loan term be?
Choose the shortest term you can afford. Longer terms lower monthly payments but cost more in interest. A $10,000 loan at 10%: 3-year term costs $1,616 interest; 5-year term costs $2,748 interest. Only extend the term if you truly need the lower payment for budget reasons.