How to compare personal loans
Two loans for the same amount can differ by thousands of dollars in total cost. These are the numbers to line up, in the order that matters.
1. Compare APR, not the interest rate
The annual percentage rate (APR) includes the interest rate plus most upfront fees, expressed as a yearly cost. It is the one number designed for comparing loans from different lenders. A loan with a lower interest rate but a large origination fee can cost more than a loan with a higher rate and no fee, and APR is what reveals that. Our APR guide works through an example.
Lenders advertise a range, such as 8% to 30%. Where you land in that range depends on your credit, income and existing debts. The lowest advertised rate goes to the strongest applicants only.
2. Look at the monthly payment you can actually keep up
The monthly payment is fixed for the life of most personal loans. Check it against your budget after rent, bills and other debts, not against your income alone. A payment that only works in a good month is a payment you will eventually miss.
3. Then look at the total cost
Stretching a loan over more months lowers the payment and raises the total you repay. The table shows a $10,000 loan at 12% APR over three different terms.
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 24 months | $470.73 | $1,297.63 | $11,297.63 |
| 36 months | $332.14 | $1,957.15 | $11,957.15 |
| 60 months | $222.44 | $3,346.67 | $13,346.67 |
Going from 24 to 60 months cuts the payment by more than half and more than doubles the interest. Pick the shortest term whose payment you can comfortably afford. You can try your own numbers in the payment calculator.
4. Check the fees
- Origination fee. A percentage of the loan, usually taken out of the money you receive. Borrow $10,000 with a 5% fee and $9,500 arrives in your account, while you repay the full $10,000 plus interest. If you need a specific amount in hand, you have to borrow more to cover the fee.
- Late fee. Charged when a payment is missed or late.
- Prepayment penalty. A charge for paying the loan off early. Many personal loans have none, which lets you save interest by paying ahead. Confirm before you sign.
5. Make sure the loan fits what you need
- Amount range. Lenders set minimum and maximum loan sizes.
- Funding time. Some lenders pay out within a day or two of approval; others take a week or more.
- Fixed or variable rate. Most personal loans are fixed. A variable rate can rise after you take the loan.
- Secured or unsecured. A secured loan uses something you own as collateral, which you can lose if you default.
- Co-borrowers. Some lenders allow a joint application, which can help you qualify or get a lower rate.
Check your rate without hurting your credit
Many lenders offer prequalification: you give some basic details and they show estimated rates using a soft credit inquiry, which does not affect your credit score. Prequalify with several lenders before choosing.
A formal application triggers a hard inquiry, which can lower your score by a few points for a time. Only apply formally once you have picked a lender. A prequalified rate is an estimate, and the final offer can change after the lender verifies your information.
Warning signs
- A lender that guarantees approval before looking at your details.
- Any request to pay a fee upfront before you receive the loan.
- Pressure to decide immediately.
- No clear APR, or an APR far above what other lenders quote you.
- Very short loans due in full within weeks. These often carry extremely high effective APRs.
A quick checklist. For each offer, write down the APR, monthly payment, term, total repaid, and fees. The best loan is usually the lowest total cost with a payment you can afford every month.
This guide is general information, not financial advice. Last reviewed October 2026.