Personal Loan Calculator
It calculates a personal loan payment and total interest, then shows the effective APR once an origination fee is deducted from what actually reaches you.
Monthly payment
$424.94
Monthly payment
$424.94
Origination fee
$1,000
You receive
$19,000
Total interest
$5,496
Total cost
$6,496
Effective APR
12.24%
The real rate is 12.24%, not 10%
The $1,000 fee means only $19,000 reaches you, but you repay interest on the full $20,000. Compare lenders on APR, which is defined to include fees.
Borrow the amount you need net of the fee, or the shortfall will surprise you. Credit unions frequently charge no origination fee at all, which can beat a lower headline rate.
What it calculates
It calculates a personal loan payment and total interest, then shows the effective APR once an origination fee is deducted from what actually reaches you.
Why it matters
An origination fee comes out of the money you receive but not out of the balance you repay, so the advertised rate is not what the loan actually costs.
Who it's for
Borrowers consolidating debt or funding a large expense, and anyone comparing offers where one lender charges a fee and another does not.
Formula
- A
- Loan amount as written in the agreement
- f
- Origination fee, as a percent of the amount
- N
- Net proceeds actually received
- APR
- Effective annual rate once the fee is included
Worked example
$20,000 at 10% over 5 years with a 5% fee
- 1Payment = $424.94 a month
- 2Fee = 20,000 × 5% = $1,000, so $19,000 arrives
- 3Solve for the rate that discounts 60 payments back to $19,000
An effective APR of 12.24%, not 10%
How the personal loan calculator works
The monthly payment comes from the standard annuity formula applied to the full loan amount, because interest is charged on the amount written in the agreement rather than the amount that reached your account. An origination fee is deducted at disbursement, so you receive less while repaying the same schedule. The true cost is the rate that discounts those payments back to what you actually received — solved here numerically — and on a five-year loan a 5% fee typically adds more than two percentage points to the effective rate.
Interest is charged on the amount written in the agreement, not the amount that reached your account. An origination fee is deducted at disbursement, so you receive less while repaying the same schedule.
The true cost is the rate that discounts those payments back to what you actually received — which is why APR, not the interest rate, is the figure to compare.
Common mistakes
- Comparing quoted interest rates when one lender charges an origination fee and another does not.
- Assuming the loan amount and the money received are the same figure.
- Choosing a longer term to lower the payment without checking the total interest.
- Overlooking prepayment penalties, which some lenders still apply.
Tips and best practice
- Compare offers on APR rather than interest rate; APR is defined to include fees.
- Borrow the amount you need net of the fee, or the shortfall will surprise you.
- Credit unions frequently charge no origination fee at all, which can beat a lower headline rate.
Frequently asked questions
What is an origination fee?
A charge for processing the loan, usually 1–8% of the amount, deducted before the money reaches you. You repay the full amount, so it raises the effective rate.
What is the difference between interest rate and APR?
The interest rate prices the balance only. APR includes fees as well, which is why it is the figure to compare when one lender charges an origination fee.
How is a personal loan payment calculated?
With the standard annuity formula, applied to the full loan amount over the term. Interest accrues on the agreement amount, not on the net proceeds.
Does a longer term make a loan cheaper?
It lowers the monthly payment but increases total interest, because the balance stays outstanding for longer. The loan costs more overall, not less.
How much does an origination fee really cost?
More than its face value. A 5% fee on a five-year loan at 10% raises the effective rate to about 12.2%, because you repay interest on money you never received.
Related calculators
Methodology & trust
- Formula source
- Truth in Lending Act APR definition and standard amortization
- Last updated
- 2026-07-28
- Privacy
- Every calculation runs in your browser. No inputs are sent to a server or stored.