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True Cost of a Loan
What that loan actually costs you over its lifetime.
APR vs interest rate
The interest rate is the base cost of borrowing. APR (Annual Percentage Rate) includes fees — origination fees, broker fees, etc. — and is the true cost of the loan expressed as an annual rate. Always compare loans using APR, not the quoted interest rate.
The real cost of a "low monthly payment"
Extending a loan term reduces the monthly payment but dramatically increases total interest paid. On a $15,000 loan at 12% APR: 3 years costs $2,884 in interest; 5 years costs $4,793 — 66% more, for a monthly saving of just $155. This tool makes that trade-off explicit.
Frequently asked questions
What is a good APR for a personal loan?
It varies by credit score. Excellent credit (750+) might get 6–10%. Good credit (700–749): 10–15%. Fair credit (650–699): 15–25%. Below 650: 25%+. Compare multiple lenders.
What is an origination fee?
A one-time upfront fee, typically 1–8% of the loan amount, deducted from the disbursement or added to the balance. A $15,000 loan with a 3% origination fee effectively costs you $450 upfront.
Is it better to pay off a loan early?
Usually yes — if there's no prepayment penalty. Every extra payment reduces principal, which reduces future interest. Even one extra payment per year significantly shortens a loan.
What's the difference between a personal loan and a credit card?
Personal loans have fixed terms, fixed payments and usually lower APRs. Credit cards are revolving credit with variable minimum payments — if you pay only minimums, a $5,000 balance at 20% APR can take 10+ years to repay.