How it works
A personal loan gives you a lump sum upfront that you repay in fixed installments over a set number of months. This calculator shows your monthly obligation, total interest charges, and the all-in cost after an origination fee — the upfront charge many lenders deduct from your disbursement before you ever see the money.
Unsecured personal loans carry noticeably higher rates than auto loans or mortgages for one reason: there is no collateral backing them. If you stop paying a car loan the lender repossesses the vehicle; with an unsecured note they must pursue collection through other means. That extra risk shows up directly in the rate you are quoted.
| Loan Type | Typical Collateral | Relative Rate |
|---|---|---|
| Mortgage | Real estate | Lowest |
| Auto | Vehicle | Moderate |
| Unsecured personal | None | Highest |
The formula
M = P × [r(1 + r)^n] / [(1 + r)^n − 1]
Where P is the borrowed amount, r is the monthly rate (annual percentage divided by 12), and n is the term in months. Total interest equals (M × n) − P. The origination fee is calculated separately on the original principal and added to your overall cost.
Worked example
Imagine consolidating $10,000 in credit-card balances into a single unsecured personal loan. There is no collateral — the lender approves you based on credit history and income alone. The quoted rate is 14.9% APR over a 36-month term, with a 3% origination fee.
First convert the annual rate to its monthly equivalent:
r = 0.149 ÷ 12 = 0.012417
Now plug everything into the amortization equation:
M = 10,000 × [0.012417 × (1 + 0.012417)^36] / [(1 + 0.012417)^36 − 1]
M = 10,000 × [0.012417 × 1.56394] / [1.56394 − 1]
M = 10,000 × 0.019414 / 0.56394
M = 10,000 × 0.034423 ≈ $344.23
Over 36 months you send the lender a total of:
Total paid = 344.23 × 36 = $12,392.28
Subtract the original $10,000 to find the interest portion:
Interest = 12,392.28 − 10,000 = $2,392.28
The origination fee is 3% of the principal, deducted upfront:
Origination fee = 10,000 × 0.03 = $300
So your true all-in cost — interest plus that upfront charge — is:
True cost = 2,392.28 + 300 = $2,692.28
Note that you actually receive only $9,700 after the fee comes out, yet you repay based on the full $10,000 balance. That gap is why comparing personal loans on rate alone is misleading.
Things to watch
- Fee timing matters. Some lenders subtract the origination charge from your disbursement (you get $9,700 but owe on $10,000). Others add it to the balance. Both shape your effective cost differently, so check the paperwork.
- Prepayment penalties. Paying off a debt-consolidation loan early saves interest, but a few lenders charge a fee for doing so. Confirm this before signing.
- Fixed vs. variable. This tool assumes a fixed rate for the entire term. Variable-rate personal loans exist and can shift mid-repayment, which changes every subsequent installment.
This calculator gives an estimate based on the figures you enter, not professional financial advice. Real lenders may structure fees, disbursements, and APRs differently — read your disclosure documents carefully.