The full guide to personal loans
A personal loan comes down to two numbers: the APR you're offered and the monthly payment it produces. Everything else — the brand, the app, the marketing — is decoration on top of those two. Our curated shortlist is above; here's how to read an offer.
Start with APR, not the interest rate
Lenders quote an interest rate and an APR, and they are not the same number. The APR folds in the origination fee, so it's the only figure that lets you compare two lenders honestly. A 9% rate with a 5% origination fee costs more than a 10% rate with no fee — the APR is what shows you that.
Then translate the APR into a payment. Same amount borrowed, four different APRs:
What a $10,000 loan costs, by APR
The same $10,000borrowed at four different APRs. The rate you qualify for — not the lender’s brand — is what moves your payment.
| APR | 36 months | 60 months | ||
|---|---|---|---|---|
| Rate | Monthly | Total interest | Monthly | Total interest |
| 8% | $313 | $1,281 | $203 | $2,166 |
| 12% | $332 | $1,957 | $222 | $3,347 |
| 18% | $362 | $3,015 | $254 | $5,236 |
| 25% | $398 | $4,314 | $294 | $7,611 |
Illustration only — not an offer, and no lender is quoting these rates. Fixed-rate amortization on $10,000 with no origination fee; a fee is deducted from what you receive and raises your true APR. Your own rate depends on credit, income and term.
The spread between the top and bottom row is the whole reason to shop. On the same loan, for identical money in your pocket on day one, the difference runs to thousands of dollars in interest.
Term: the trade you're actually making
A longer term buys you a smaller monthly payment and charges you more total interest for it. Look across the two column groups above — stretching the same loan from 36 to 60 months cuts the payment by a quarter to a third and raises the total interest by about 70%. Neither is wrong. Pick the shortest term whose payment you can comfortably cover every month.
What to check before you sign
- APR, not the teaser rate. The advertised "rates from" figure is the best case for the strongest applicant. Yours is the one on your offer.
- Origination fee. Commonly 1–8%, deducted from your proceeds — you repay the full amount but a smaller amount lands in your account.
- Prepayment penalty. If you might pay it off early, a penalty cancels the benefit. Many lenders have none — confirm it.
- Fixed vs. variable. Fixed keeps the payment you budgeted for. Variable can move.
- Whether the check is soft. Prequalifying should show you a real rate without touching your score; only the final application should trigger a hard pull.
How to shop it
- Prequalify with three or four lenders in the same short window and compare the APRs you're actually offered — not the ranges they advertise.
- Line up the payment and total interest, not just the rate.
- Confirm the fees before you compare anything, since they sit inside the APR.
- Take the shortest term you can afford, then pay extra if you can.
Verify rates and terms with the lender before you apply.