Personal Loan Calculator
Work out the monthly payment, total interest and the effective APR on a personal loan once the origination fee is taken out of what you actually receive.
The quoted rate, before any origination fee.
Most personal loans run 24 to 60 months.
The 5.0% fee means you receive $14,250 but repay as if you borrowed $15,000. Measured against the cash you actually get, this loan costs 15.29% APR, not 12.5%.
What this calculator does
A personal loan quote comes with two numbers that look like they measure the same thing and do not: the interest rate and the APR. On a loan with an origination fee, they can differ by several percentage points, and the gap is entirely the part of the cost that is easiest to overlook.
This calculator gives you the monthly payment from the standard amortisation formula, then does the piece most calculators skip — it works out what the loan actually costs measured against the cash that reaches your account.
How the payment is calculated
Personal loans are fully amortising and fixed rate, so the payment comes from the same formula used for a mortgage or a car loan:
M = P × [ i(1 + i)^n ] / [ (1 + i)^n − 1 ]with i as the monthly rate and n as the number of payments. On $15,000 at
12.5% over 48 months that produces a payment of about $400, and roughly
$4,200 in total interest.
Because the term is fixed, the balance is guaranteed to reach zero on schedule. That is the structural advantage over revolving credit, and it is the main reason consolidation works when it works. The same formula and its consequences are covered in how mortgage payments are calculated.
The origination fee changes the real cost
Suppose that $15,000 loan carries a 5% origination fee:
- Fee: $750, withheld at funding
- Cash you receive: $14,250
- Payments: unchanged, based on the full $15,000
You are making payments sized for $15,000 while holding $14,250. Measured against what you actually received, the loan costs roughly 14.7% APR, not 12.5%.
Two things make the effect larger. A shorter term concentrates the fee over fewer months, so a 24-month loan with the same fee has a higher effective APR than a 60-month one. A larger fee obviously does the same. This is why comparing two offers on the headline rate alone can pick the more expensive loan.
The distinction between a nominal rate and the rate that reflects everything is the same idea explored in APR vs APY.
Where the money should be going first
A personal loan is a tool, and it is worth being honest about when it is the wrong one:
- Consolidating high-rate card debt is the strongest case. Moving a 24% card balance to a 13% fixed loan saves real money — provided the cards then stay at zero. The credit card payoff calculator shows what the existing balance costs if you do nothing.
- A necessary one-off expense with no cheaper option is a reasonable case.
- Funding a lifestyle gap is where personal loans go wrong, because the underlying shortfall is still there in month two, now with a payment attached.
If several debts are in play, the ordering question is covered in debt avalanche vs snowball. Before applying, it is worth knowing the figure lenders will compute about you — the debt-to-income calculator produces it, and above roughly 36% approval gets harder and pricing gets worse.
What this leaves out
The estimate is deliberately narrow. It does not model:
- Late fees and returned-payment charges, which vary by lender.
- Optional add-ons such as payment protection insurance, which are often presented at signing and materially raise the cost.
- Prepayment penalties. Most US personal loans have none, which makes overpaying a clean way to cut total interest — but confirm it in the agreement rather than assuming.
- Variable rates. Personal loans are usually fixed; if a quote is variable, this calculation only describes the opening rate.
- Your actual approved rate. The advertised rate is for the strongest applicants. Prequalify to see yours before planning around it.
Comparing offers properly
Line up quotes on three figures in this order: effective APR, then total cost of borrowing, then the monthly payment. The payment is the number lenders lead with because it is the easiest to make look good by stretching the term.
For a secured alternative, the auto loan calculator covers vehicle financing, where collateral usually buys a lower rate than any unsecured personal loan can offer.
How this is calculated
monthly payment = P × [ i(1+i)^n ] ÷ [ (1+i)^n − 1 ] where i = annual rate ÷ 12 and n = term in months fee = loan amount × origination fee % net proceeds = loan amount − fee effective APR solves: present value of payments = net proceeds
Frequently asked questions
- What is an origination fee?
- A one-off charge for making the loan, usually one to ten percent of the amount borrowed. It is almost always deducted from the money before it reaches your account, so a $15,000 loan with a 5% fee deposits $14,250. You still repay interest on the full $15,000.
- Why is the effective APR higher than the rate I was quoted?
- Because you are repaying a larger balance than you received. The interest rate is applied to the face amount while the cash in your hand is smaller by the fee. Measuring the payments against what you actually got produces a higher annualised cost, which is the honest comparison figure.
- Is a personal loan cheaper than a credit card?
- Usually, if your credit is reasonable. Personal loans are fixed-rate and fixed-term, so the balance is guaranteed to reach zero. Cards are variable and revolving, and minimum payments are sized to keep you in debt for years. Compare on total cost, not on the monthly payment.
- Does checking a rate hurt my credit score?
- Most lenders offer prequalification with a soft inquiry, which does not affect your score. The hard inquiry happens when you formally apply. Rate shopping within a short window is generally treated as a single inquiry by scoring models, so compare several offers close together.
- Should I take a longer term to lower the payment?
- Only if the shorter payment genuinely does not fit your budget. Extending the term lowers the monthly figure and raises the total interest, often substantially. Run both terms here and look at the total cost line rather than the payment line before deciding.