Personal Loan Calculator

The payment is the standard amortized formula: P x r x (1 + r)^n / ((1 + r)^n - 1), using the full loan amount, because interest is charged on the amount borrowed rather than the amount received. The true APR is the rate that would produce this same payment on the money that actually reached you. There is no algebraic solution for it, so it is found by narrowing a range until the two payments match.

What is an origination fee?

A charge for making the loan, typically 1 to 8 percent, deducted from the amount handed over. Borrow 15,000 with a 5 percent fee and 14,250 arrives - but the payments, and the interest, are calculated on the full 15,000.

Is the APR the same as the interest rate?

Not when there are fees. The APR is meant to fold fees into a single comparable number, which is why it is the figure to compare between offers. A loan at 11.9 percent with a 5 percent fee costs more than one at 13 percent with no fee.

Should I borrow extra to cover the fee?

If you need a specific sum, yes, you have to - borrowing 15,000 net at a 5 percent fee means a loan of about 15,790. Just be aware the fee goes up with the loan, so it is slightly more than the arithmetic first suggests.

Does a longer term make a personal loan cheaper?

It lowers the payment and raises the cost. Every extra year is another year of interest on a balance that is falling more slowly. The shortest term whose payment you can comfortably cover is nearly always the right one.