How much money do you actually get after an origination fee?
You get the loan amount minus the fee, yet you repay the whole loan with interest. A 4% fee on $15,000 removes $600 on day one. Federal rules treat it the same way: your Truth in Lending disclosure subtracts a prepaid finance charge when it shows the "amount financed."
| Fee | You receive | True APR | Borrow this to net $15,000 | Payment on that loan |
|---|---|---|---|---|
| 0% | $15,000 | 12.5% | $15,000 | $501.80 |
| 1% | $14,850 | 13.2% | $15,152 | $506.87 |
| 3% | $14,550 | 14.64% | $15,464 | $517.32 |
| 5% | $14,250 | 16.12% | $15,789 | $528.22 |
| 8% | $13,800 | 18.42% | $16,304 | $545.44 |
| 10% | $13,500 | 20.01% | $16,667 | $557.56 |
If you need an exact sum, divide it by one minus the fee.
Loan to request = amount you need ÷ (1 − fee rate)Adding the percentage on top falls short. $15,000 plus 4% is $15,600, and the fee on that leaves $14,976. The right request is $15,625. Choose "Borrow extra to cover it" and the calculator does this for you. Ask each lender how it collects the fee.
Is a 3-year, 5-year, or 7-year personal loan cheaper?
The shorter loan costs fewer dollars, even though its APR looks worse. Over 1 year, this loan's APR is 20.33% and its interest is $1,035. Over 7 years, the APR drops to 13.87% while interest climbs to $7,581.
| Term | Monthly | Total interest | True APR |
|---|---|---|---|
| 1 yr | $1,336.24 | $1,035 | 20.33% |
| 2 yrs | $709.61 | $2,031 | 16.66% |
| 3 yrs | $501.80 | $3,065 | 15.37% |
| 4 yrs | $398.70 | $4,138 | 14.72% |
| 5 yrs | $337.47 | $5,248 | 14.32% |
| 7 yrs | $268.82 | $7,581 | 13.87% |
The fee explains the odd result. It's a one-time charge, so APR spreads it over more months on a long loan. Use APR to compare offers with the same term, as the APR calculator does side by side, and use total dollars to choose between terms.
Will a personal loan to consolidate debt save money?
Only if the rate is lower and you don't stretch the payoff too far. Take $18,000 of card debt at 24% with a steady $600 payment. It clears in 3 yrs 11 mos and costs $9,764 in interest. Now compare a 13% loan with a 4% fee, sized at $18,750 so the cards reach zero.
| New loan term | Monthly | Interest plus fee | Compared with the cards |
|---|---|---|---|
| 3 yrs | $631.76 | $4,743 | $5,020 saved |
| 4 yrs | $503.02 | $6,145 | $3,619 saved |
| 5 yrs | $426.62 | $7,597 | $2,167 saved |
| 7 yrs | $341.10 | $10,652 | $888 more |
This is the trap. The rate almost halves and the payment falls to $341.10, yet the 7-year loan costs $888 more than the cards. Moving from 4 to 5 years also gives up $1,453 of savings. The lower payment comes from paying longer. The fix is simple: take the 4-year loan and keep paying $600. You'd finish in 3 yrs 3 mos, with $5,015 in interest and fee, which saves $4,748.
- Pick the right fee setting. With "Taken from the loan," you'd receive $17,280 and leave $720 on the cards, while the savings figure still assumes the whole debt is gone. Use "Borrow extra to cover it" for consolidation.
- Check for a teaser rate. The CFPB warns that low consolidation rates may last only for a certain time.
- Think hard before using your home as collateral. A home equity loan may have a lower rate, but you could lose the house if you can't repay.
- Leave the cards at zero. The comparison assumes no new debt. If balances come back, you'd owe the loan and the cards.
How big of a personal loan can I get?
Your lender sets the limit, but your budget should set it first. A $400 payment supports $12,043 over 3 years at an example 12% rate, and only $10,196 at 24%.
| Rate | 2 yrs | 3 yrs | 5 yrs | 7 yrs |
|---|---|---|---|---|
| 8% | $8,844 | $12,765 | $19,727 | $25,664 |
| 12% | $8,497 | $12,043 | $17,982 | $22,659 |
| 16% | $8,169 | $11,378 | $16,449 | $20,139 |
| 20% | $7,859 | $10,763 | $15,098 | $18,013 |
| 24% | $7,566 | $10,196 | $13,904 | $16,210 |
| 30% | $7,154 | $9,423 | $12,363 | $13,989 |
This calculator has no credit score field, because it can't predict the rate a lender will give you. Enter a rate from an actual quote. To scale the table, divide your own payment by $400 and multiply. For example, $600 a month is 1.5 times each figure.
Can you pay off a personal loan early, and do you get the fee back?
Paying early cuts future interest, but don't count on getting back a fee you've already paid. Adding $100 a month to the $15,000 loan saves $607 and ends it 6 mos early.
A full payoff makes the fee weigh more. Clear this loan after 12 months and the true APR on what you actually borrowed rises from 15.37% to 17.53%, because the same $600 fee covers one year instead of three. Unless a charge applies for paying early, it still costs fewer dollars than staying in the loan. Before you sign, check your Truth in Lending disclosure, which must state whether a charge can apply for paying early.
When a new loan won't fix the problem
If you spend more than you earn each month, consolidation won't close that gap. A nonprofit credit counselor can review your budget and debts with you. The FTC suggests interviewing a few and avoiding any that charge before they've helped you.
One option a counselor may raise is a debt management plan. Your creditors may lower rates or waive fees, and you make one monthly deposit. These plans cover unsecured debts such as credit cards, can run 48 months or more, and may require you to stop using new credit. Be wary of debt settlement companies that charge upfront and tell you to stop paying your creditors. The CFPB calls that risky.
This calculator assumes a fixed rate and steady payments, and your actual rate and fee depend on your lender. To plan several debts at once, try the debt payoff calculator.
Common questions
How do I calculate a personal loan monthly payment?
Use M = P × r(1 + r)^n ÷ ((1 + r)^n − 1), where P is the full loan amount before any fee, r is the annual rate divided by 12, and n is the number of months. For $15,000 at 12.5% over 36 months, r is 0.010417 and the payment is $501.80.
What is the monthly payment on a $10,000 personal loan?
At an example 12.5% rate, it's $334.54 over 3 years or $224.98 over 5 years. A fee taken from the loan doesn't change the payment, only the cash you receive.
Is a no-fee loan always cheaper?
No. Compare the same cash and term. Getting $14,400 from the 4% fee loan at 12.5% costs $501.80 a month. A no-fee loan for $14,400 at 16% costs $506.26 a month. Here the fee loan wins, since its 15.37% APR is below 16%. A no-fee rate below 15.37% would beat it.
Is a personal loan better than a balance transfer?
It depends on how fast you can pay. A transfer usually has a fee, either a percentage or a fixed amount, and the promotional rate ends. An example 3% fee on $18,000 is $540. The credit card payoff calculator can model the transfer so you can compare it with the loan above.
Can I calculate a personal loan for 10 or 15 years?
The term choices here stop at 7 years. For a longer term, use the loan calculator. A 10-year $15,000 loan at 12.5% would cost $11,348 in interest, against $3,065 over 3 years.
Sources
- What do I need to know about consolidating my credit card debt? · Consumer Financial Protection Bureau
- How to get out of debt · Federal Trade Commission
- Regulation Z § 1026.18: Content of disclosures · Consumer Financial Protection Bureau
- What is the difference between a loan interest rate and the APR? · Consumer Financial Protection Bureau