Personal Loan Calculator

Before taking any personal loan, ask yourself: "If I put an extra $100 toward this loan every month, how much interest would I save?" The answer is usually shocking. On that $10k/3yr/15% loan, adding just $100/month cuts your payoff time from 36 months to 27 months and saves you $637 in interest. Most people can find $100/month by cutting subscriptions they forgot about.

— David Chen, CFA | "I've seen clients pay thousands in unnecessary interest because they thought the minimum payment was the only option. It's not."

1. Ignoring the Origination Fee: "Borrow $10,000 at 8% APR!" sounds great until you see the 5% origination fee. You only get $9,500 in your account, but you owe $10,000+interest. That's effectively 9.3% APR, not 8%.
2. Not Shopping Around: Your bank offers 12% APR. You assume that's the best you can get. Wrong. Credit unions often offer 2-4% lower rates to members. One phone call could save you $500-$1,500 over the life of the loan.
3. Borrowing More Than You Need: "They approved me for $15k!" Great. Do you NEED $15k, or do you need $10k? Every extra dollar you borrow costs you interest. Borrow the minimum necessary.
4. Confusing Interest Rate with APR: Interest rate = cost of borrowing. APR = interest rate + fees. A loan with 8% interest rate but 5% origination fee might have 9.3% APR. Always compare APRs, not interest rates.

Scenario: You need $10,000 for home repairs. You have three options:

Option 1: Bank Personal Loan (12% APR, 3 years) → $333/month → Total paid: $11,980 (interest: $1,980)

Option 2: Credit Union Personal Loan (8% APR, 3 years) → $313/month → Total paid: $11,269 (interest: $1,269)

Option 3: Credit Card (20% APR, minimum payments) → Estimated 7+ years → Total paid: $17,000+ (interest: $7,000+)

✅ Winner: Option 2 (Credit Union). Save $711 vs the bank, save $5,731 vs the credit card. Spend 30 minutes joining a credit union, save $711. That's $1,422/hour.

What credit score do I need for a personal loan?

Most lenders require a credit score of 580+ for approval, but the rate you get depends on your score. 760+ = excellent rates (5-7%), 700-759 = good rates (7-12%), 640-699 = fair rates (12-18%), 580-639 = high rates (18-25%+). Below 580, you'll struggle to get approved by traditional lenders. Pro tip: Check your score before applying—hard inquiries drop your score 5-10 points temporarily.

Should I pay off a personal loan early?

Usually yes, but check for prepayment penalties first. Some lenders charge 2-5% of the remaining balance if you pay off early (they lose interest income). If there's no penalty, paying early saves you interest. Example: $10k loan at 10% over 3 years = $1,616 interest. Pay it off in 2 years instead = $1,061 interest. You save $555. Always ask "Is there a prepayment penalty?" before signing.

Personal loan vs credit card: Which is cheaper?

Personal loans are almost always cheaper for large purchases. Credit cards: 18-25% APR, variable rate, minimum payment trap. Personal loans: 5-15% APR (with good credit), fixed rate, forced payoff timeline. Example: Borrow $5k for 3 years. Credit card at 20% APR paying $200/mo = 32 months, $1,394 interest. Personal loan at 10% APR = $161/mo, 36 months, $806 interest. You save $588 with the loan. However, credit cards are better for short-term debt (<6 months) you can pay off during a 0% intro APR period.

What fees should I watch out for?

Origination fee (1-8% of loan amount, deducted upfront—you get less than you "borrow"), Late payment fee ($25-50 per occurrence), Prepayment penalty (2-5% of remaining balance if you pay off early), Insufficient funds fee ($30-40 if a payment bounces). The origination fee is the sneakiest: On a $10k loan with 5% origination, you only receive $9,500 but owe $10,000+interest. Always ask for the APR (includes fees) not just the interest rate.