Personal Loan Calculator
Updated: April 4, 2024
Advertising & Editorial Disclosure
How to Use MoneyGeek’s Personal Loan Calculator
Taking out a personal loan is a significant financial commitment that can impact your budget and financial well-being for years. It's crucial to understand the loan terms, including how much you'll be paying each month, so that you can make an informed decision.
Here’s a step-by-step guide on how to use MoneyGeek’s personal loan calculator.
Enter the loan amount
This is the principal sum you intend to borrow. Personal loan amounts can typically range from $1,000 to $100,000, depending on the lender and your creditworthiness. Be realistic about how much you need versus how much you can afford to pay back over time. Overestimating can lead to financial strain, while underestimating might result in a shortfall.
Enter the interest rate
This is the annual percentage rate (APR) you'll be charged for borrowing. Your credit score plays a significant role in determining this rate; a higher score usually results in a lower interest rate. Make sure to obtain the APR directly from the loan offer or lender, as even a slight variation in the rate can have a substantial impact on your monthly payments and the total interest you'll pay over the loan term.
Specify the loan term
This is the duration over which you'll repay the loan, typically in months or years. Shorter terms usually mean higher monthly payments but less interest over the life of the loan, while longer terms will lower your monthly payments but cost you more in interest.
Once you've entered all the required information into our personal loan calculator, it will generate several key figures. These numbers are invaluable for understanding the financial implications of the loan you're considering and can be used to compare different loan options effectively. Here's what you can expect to see:
Why Use a Personal Loan Calculator?
Using MoneyGeek’s personal loan calculator can be a strategic move that empowers you to take control of your financial future. By inputting your loan amount, interest rate and loan term, you get a customized snapshot of what your financial commitment will look like. This lets you align the loan with your budget and long-term financial goals.
Using our personal loan calculator, you can adjust variables like loan amount, interest rate and loan term to see how each change impacts your monthly payment and total interest. This flexibility allows you to explore various loan structures and terms, helping you determine the one that aligns best with your financial situation and goals.
What Is a Good Personal Loan Rate?
According to the Federal Reserve, the average interest rate for a 24-month personal loan is 12.17% as of August 2023. On the other hand, the National Credit Union Administration reports that the average interest rate for a 36-month personal loan is 10.02% at credit unions and 10.75% at banks as of March 2023.
While average rates can serve as a benchmark, a good rate is ultimately one that aligns with your financial capabilities and goals. It's a rate that allows you to make monthly payments without straining your budget while also enabling you to pay off the loan in a reasonable timeframe.
Finding a good personal loan rate depends heavily on your credit score. A higher credit score not only opens the door to loan approval but also helps you secure lower interest rates and better terms. Your debt-to-income ratio and income also influence the rate and terms you're offered.
What to Consider When Applying for Personal Loans
When you're shopping around for a personal loan, it's not just about finding a lender who will approve your application. It's about understanding the various factors that contribute to the cost of the loan so you can make an informed decision that aligns with your financial goals.
Here are some key factors that can significantly impact the overall cost of your personal loan:
Interest rate: The APR is one of the most direct factors that influence the cost of your loan. While it's tempting to go for the first loan offer you receive, it's crucial to shop around. Your credit score, income level and the lender's policies contribute to the interest rate you're offered, so comparing multiple offers can help you find a more favorable rate.
Loan term: The time you have to repay the loan also plays a significant role in its cost. A longer loan term might offer the allure of smaller monthly payments, but it usually comes at the cost of higher total interest paid over the life of the loan. Conversely, a shorter term means higher monthly payments but can save you money in the long run by reducing the total interest paid.
Fees and charges: Beyond the interest rate, additional fees can sneak up on you and inflate the cost of borrowing. These can include origination fees, late payment charges and even prepayment penalties if you decide to pay off the loan early. Always read the fine print and ask the lender about any additional fees that might apply to your loan.
Loan amount: While it might seem obvious, the amount you borrow will directly impact your monthly payment and the total interest accrued. It's essential only to borrow what you need and what you can realistically repay. Overborrowing not only increases your financial burden but can also make you less attractive to future lenders.
Your credit score: Although it's a factor in determining your interest rate, your credit score deserves special mention. A higher credit score can unlock lower interest rates and better terms, making the loan less costly over time. Regularly checking your credit report for errors and working to improve your score can pay off when you're shopping for a loan.
What Are the Types of Personal Loans?
When you’re shopping for a personal loan, expect to encounter a wide range of options. Understanding the different types of personal loans available can help you make an informed decision that aligns with your financial needs and goals.
Where to Get Personal Loans
The lender you choose can be as important as the type of personal loan you opt for. Different lenders offer varying interest rates, terms and fees, and different customer service experiences. Knowing your options can help you find a lender that not only meets your financial needs but also aligns with your preferences for customer service and convenience.
Traditional banks
These are long-standing financial institutions that often offer a wide range of loan products. While they may offer competitive rates for customers with strong credit histories, their criteria can be stringent, potentially making it challenging for those with less-than-perfect credit to get approved. However, if you're already a customer, you may enjoy added conveniences like integrated online banking.
Credit unions
These member-owned institutions often offer more personalized service and may have more flexible lending criteria. Because they're not-for-profit, they sometimes offer lower interest rates and fees. However, you'll typically need to be a member to apply for a loan, which could require meeting certain criteria like living in a specific area or working in a certain industry.
Online lenders
These digital-first institutions offer a streamlined application process that's often quicker than traditional methods. They may also use alternative data, like utility payments or rent history, to evaluate creditworthiness, making them a good option for those with lower credit scores. However, read reviews and check for accreditation to ensure you deal with a reputable lender.
Ultimately, the best choice for you will depend on your specific needs, creditworthiness and the kind of customer experience you're looking for. Take the time to shop around and compare offers to find the lender that's the best fit for you.
FAQ about Personal Loans
To guide you on your personal loan journey, we answered some frequently asked questions about personal loans.
A personal loan is a financial tool that provides you with a lump sum of money, which you are obligated to pay back in monthly installments over a set period. The repayment term can vary, often ranging from 12 to 60 months or more. The loan comes with an interest rate that is either fixed or variable, affecting the total amount you will repay over the life of the loan.
Personal loans are versatile and can be used for various purposes, including debt consolidation, home improvements, medical expenses, or even vacations. However, it's essential to use personal loans responsibly and only for needs, not wants, as you'll be committing to paying it back with interest.
Aside from interest rates, personal loans can come with other fees like origination fees, late payment fees and prepayment penalties. Always read the fine print and ask the lender about any additional charges that may apply to your loan.
Interest rates for personal loans tend to hover between 6% and 36% on average. A rate at the lower end of this spectrum is considered good, as it means you'll pay less over the life of the loan.
Yes, it's possible to get a personal loan even with bad credit. However, lenders may offer higher interest rates and stricter loan terms to offset the risk.
Most lenders allow you to pay off your loan early, but some may charge a prepayment penalty for doing so. This fee allows lenders to recoup some of the interest payments they would miss if you pay off your loan ahead of schedule. Read the fine print or directly ask the lender about any prepayment penalties.
Other Personal Loan Resources
About Christopher Boston
sources
- Federal Reserve. "Consumer Credit - G.19." Accessed October 19, 2023.
- National Credit Union Administration. "Credit Union and Bank Rates 2023 Q1." Accessed October 19, 2023.
The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.
Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, lender or other entity. Learn more about
our editorial policies and expert editorial team.