Personal Loan Calculator

A personal loan is a fixed-sum instalment loan: you borrow once, repay in equal monthly payments, and the rate is usually fixed for the term. Because it is unsecured — no house or car backs it — the rate depends heavily on your credit history, ranging from single digits for excellent credit to well over twenty per cent for borrowers with a thin or damaged file.

The number advertised is the interest rate, but the number that matters is the annual percentage rate. That is because most personal loans carry an origination fee, typically one to six per cent of the amount borrowed, which is deducted from the money you receive. Borrow ten thousand dollars with a three per cent fee and you get nine thousand seven hundred, while your repayments are calculated on the full ten thousand. The gap between the quoted rate and the true cost of the money you actually got is the APR, and it is always higher than the headline rate.

This is the single most useful thing to check when comparing offers. Two loans at the same interest rate but different fees are not the same loan, and a slightly higher rate with no fee can beat a lower rate with a large one. Ask each lender for the APR and the total of payments, then compare those two figures rather than the marketing rate.

A few practical points. Check whether the loan carries a prepayment penalty; if it does, you will be charged for paying it off early, which removes one of the main advantages of a personal loan over credit cards. Consider the term carefully — a longer term reduces the monthly payment but increases total interest, and personal loans are often used to consolidate credit card debt, where stretching the repayment over five years can end up costing more than the cards did. And be careful about consolidating card balances into a loan and then running the cards up again, which is a common way to end up with both.

Secured loans using a car or savings as collateral offer lower rates, but you risk the asset if you default. This calculator produces general estimates; your lender's disclosure is the authoritative figure.

This calculator returns estimates for general information only. It is not financial, investment, tax or legal advice, and it cannot replace guidance from a qualified professional who knows your circumstances. Figures such as loan payments, investment growth and retirement projections are simplified models based on the inputs and assumptions you provide, not guarantees of future results.