How to use this personal loan calculator
Enter the loan the way a lender quotes it, then add the fees. The repayment comes from the amount, rate and term. The effective APR comes from the fees, and that is the number to compare between lenders.
- Loan amount: the amount on the loan contract.
- Interest rate: the advertised yearly rate, before fees.
- Loan term: in years, or switch Term in to months for terms like 18 or 30 months.
- More options: enter the origination / upfront fee as a percentage, choose whether it is deducted from the payout or added to the loan, and add any monthly account fee.
The results show your monthly repayment, the effective APR with fees, total interest, total fees and the total cost of borrowing: everything you repay minus the cash you actually receive. The chart shows how each year's payments split between principal, interest and fees.
How the repayment and the effective APR are worked out
The repayment uses the standard loan formula on the amount you owe:
M = P × r ÷ (1 − (1 + r)−n) M = monthly repayment · P = loan amount (plus the fee, if it is added to the loan) · r = yearly rate ÷ 12 · n = number of months
The effective APR then finds the single monthly rate that makes the cash you receive equal to the value of everything you pay back:
Cash received = (M + monthly fee) × (1 − (1 + i)−n) ÷ i, APR = i × 12 i = the monthly rate that balances the equation, found by trial and error (an internal rate of return)
This is the same idea behind the APR that US lenders must disclose under the Truth in Lending Act, and behind Australia's comparison rate. The monthly rate is multiplied by 12, which is the standard way these rates are quoted.
Worked example
You borrow $15,000 at 12% over 3 years, with a 5% origination fee taken from the payout. The monthly rate is 1%, so 36 repayments of $498.21 clear the loan. Those repayments add up to $17,936, which includes $2,936 of interest.
The fee is $750, so only $14,250 reaches your account. You repay $17,936 for $14,250 in hand, a total cost of borrowing of $3,686. The monthly rate that links those two amounts is about 1.30%, which gives an effective APR of 15.61%, 3.61 percentage points above the advertised rate.
If the same fee is added to the loan instead, you owe $15,750, the repayment is $523.13 and the APR is 15.43%. Repay the original loan after just one year and the upfront fee pushes the APR to 18.32%.
How fees change the real cost
Here is the effective APR on a $15,000 loan at 12%, with the fee deducted from the payout:
| Upfront fee | 1-year loan | 3-year loan | 5-year loan |
|---|---|---|---|
| None | 12% | 12% | 12% |
| 1% | 13.91% | 12.70% | 12.44% |
| 3% | 17.82% | 14.13% | 13.35% |
| 5% | 21.86% | 15.61% | 14.28% |
| 8% | 28.14% | 17.90% | 15.74% |
Two things stand out. First, fees hurt most on short loans, because the same dollar fee is spread over fewer months. A 5% fee adds almost 10 points to a 1-year loan but just over 2 points to a 5-year one. Second, a lower APR on a longer loan does not mean a cheaper loan. With the 5% fee, the 5-year loan costs $5,770 in interest and fees, against $3,686 for the 3-year loan, because you pay interest for two more years.
Compare APRs, then totals. Use the APR to rank offers with the same term, and the total cost of borrowing to compare different terms. A low headline rate with a big fee can easily be the more expensive loan.
Fee deducted from the payout, or added to the loan?
Deducted from the payout is how most US origination fees work. You sign for $15,000, receive $14,250 and repay $15,000 plus interest. If you need a set amount in hand, borrow enough to cover the fee: $15,000 ÷ 0.95 is about $15,790.
Added to the loan means you receive the full amount but owe the fee on top, and pay interest on it for the whole term. In the example the APR is slightly lower, 15.43% against 15.61%, because the fee is 5% of the cash you receive rather than 5.26% of it. In dollars, though, you pay $3,833 in interest and fees instead of $3,686, since you are borrowing more.
Is a personal loan the right tool?
- Paying off credit cards: a personal loan at a lower APR can cut interest and gives you a fixed end date. See what your cards cost now with the credit card payoff calculator, or plan several debts with the debt payoff planner.
- Buying a car: a secured car loan is often cheaper than an unsecured personal loan. The car loan calculator handles trade-ins, sales tax and balloons.
- Comparing quotes: put two offers side by side in the loan comparison calculator, or see a payment-by-payment schedule in the loan calculator.
APR, comparison rate and representative APR
Different countries use different names for the rate that includes fees:
| Country | Name | What to know |
|---|---|---|
| United States | APR | Must be disclosed before you sign and includes finance charges such as origination fees. |
| Australia | Comparison rate | Shown beside advertised rates, but calculated for a standard $30,000, 5-year loan rather than yours. |
| United Kingdom | Representative APR | At least 51% of accepted applicants must get this rate or better, so your offer may be higher. |
Frequently asked questions
What is an origination fee?
Why is my APR higher than my interest rate?
What is a good APR for a personal loan?
Does paying off a personal loan early save money?
Should I choose a fixed or variable rate personal loan?
Is the effective APR the same as an Australian comparison rate?
This calculator gives estimates for education and planning. It is not financial advice, and your lender's figures may differ. See how we calculate.