— Loans & Debt
Personal Loan Calculator
Personal loans hide their cost in the fees. See the real monthly payment, the effective APR after the processing fee, and whether prepaying actually pays.
Monthly payment
$664.29
- Effective APR (incl. fees)
- 13.41%
- Total cost incl. fees
- $24,314.30
- Total interest
- $3,914.30
- Total of payments
- $23,914.30
- Total fees
- $400
— Yearly breakdown
| Year | Principal paid | Interest paid | Balance |
|---|---|---|---|
| Year 1 | $5,888.31 | $2,083.12 | $14,111.69 |
| Year 2 | $6,635.1 | $1,336.34 | $7,476.59 |
| Year 3 | $7,476.59 | $494.84 | $0 |
— True cost breakdown
Download— How it works
Payment from the standard amortization formula; effective APR is the rate that equates the amount received (loan − fees) to the payment stream.
The headline rate is not the cost
Personal loans are unsecured, so they carry higher rates than home or car loans — and they layer on fees that the advertised rate ignores. An origination fee of 1–6%, sometimes an insurance premium, and any tax on top, are often deducted up front, so you receive less than you borrow but repay on the full amount. The result is that the rate you actually pay — the effective APR — is meaningfully higher than the number on the brochure. This calculator puts that true cost front and centre.
The effective APR is computed properly: it is the rate that makes the money you actually receive (loan minus fees) equal the stream of payments you pay back — the internal rate of return on the loan’s real cash flows. It is the only fair way to compare two offers with different fees.
Worked example — $20,000 at 12% over 3 years, 2% origination fee: Monthly payment ≈ $664; total interest ≈ $3,914. The $400 fee means you receive $19,600 but repay on $20,000 — so the effective APR is about 13.4%, not 12%.
Does prepaying pay off?
Closing a personal loan early saves the remaining interest — and while many lenders charge nothing to prepay, some levy a penalty: a percentage of the outstanding balance that eats into the saving. Whether it is worth it depends on how much interest is left versus the size of any charge. Enter a prepayment charge and the year you would close, and the calculator shows the net benefit: interest saved minus the penalty. A positive number means prepaying wins; a negative one means the penalty outweighs the saving.
Because interest is front-loaded, paying off early in the loan usually saves the most — but that is also when the outstanding balance, and so any percentage charge, is largest, which is exactly the trade-off the figure captures.
Can you afford it? The payment-to-income check
Lenders do not just look at the payment — they look at it relative to your income. This calculator shows this loan’s monthly payment as a share of your monthly income — a payment-to-income ratio. Lenders fold that into the broader debt-to-income ratio (DTI), which adds up every monthly debt payment and is usually capped around 40–50%; because this tool counts only the new loan, your full DTI will be higher. Enter your monthly income and the calculator flags whether this payment alone looks comfortable.
It is a guide, not a guarantee — lenders also weigh your existing debts, credit score and how stable your income is — but if your DTI is already high before this loan, approval (or a good rate) gets harder.
— Reader questions
Why is the effective APR higher than the interest rate?
Because the origination fee (and any insurance or tax) is money you pay to borrow, but you still repay on the full loan amount. Spreading that fee across the payments raises the true annual cost above the quoted rate — often by 1–2 percentage points on a short personal loan.
How is the effective APR calculated?
It is the rate that makes the amount you actually receive — the loan minus the up-front fees — equal the present value of all your payments. That internal rate of return has no closed-form solution, so the calculator solves it numerically, the same way an XIRR is found.
Should I pay off my personal loan early?
It depends on any prepayment charge versus the interest left. Enter both and the calculator shows the net benefit — interest saved minus the penalty. If it is positive, closing early saves money; if negative, the charge outweighs the saving. Many lenders charge nothing, in which case paying off early always helps.
What is DTI and why does it matter?
DTI — debt-to-income ratio — is your total monthly debt payments as a percentage of income, and lenders typically want it under 40–50% including a new loan. This calculator shows just this loan’s payment as a share of your income (a payment-to-income ratio); your full DTI also includes any other debts, so it will be higher. Enter your income to see where this payment sits on its own.
What counts as a normal personal-loan rate?
Personal loans are unsecured, so rates are higher than secured loans — commonly 8–20% depending on your credit profile, income and lender. A strong credit score and stable income fetch the lower end; thin or weak credit, the higher end.
Is a personal loan cheaper than a credit card?
Usually yes. Credit-card revolving interest is often 20–30% a year, so consolidating card debt into a personal loan at a lower rate can cut the cost sharply — just factor in the origination fee, which this calculator includes in the effective APR.