Personal loans are unsecured installment loans — typically $1,000 to $50,000 with fixed rates and 1–7 year terms. Understanding the payment math helps you compare offers and avoid overpaying.
What Determines Your Payment
Three factors set your monthly payment:
- Loan amount — more borrowed means higher payments
- Interest rate (APR) — higher rate means more interest and higher payments
- Term length — longer terms lower the payment but increase total interest
The Tradeoff: Payment vs Total Cost
A longer term makes the monthly payment smaller, but you pay more interest over the life of the loan. Example on a $15,000 loan at 12% APR:
- 3-year term: $499/month, $2,964 total interest
- 5-year term: $334/month, $5,019 total interest
- 7-year term: $264/month, $7,171 total interest
How to Compare Offers
When shopping for a personal loan, compare the APR — not just the monthly payment. APR includes both interest and fees, so it's the true cost. A lower payment with a higher APR usually means a longer term and more total interest.
When a Personal Loan Makes Sense
A personal loan can save money if you use it to pay off higher-APR credit card debt. A 10% personal loan replacing a 22% credit card cuts your interest in half. But only if you stop using the cards.
Calculate your personal loan payment and total interest with the Loan Calculator.