A $15,000 personal loan at 12% over 36 months costs $333.67 a month and $5,020 in interest. At 6% the same loan costs $2,400 in interest.
Two levers: rate and term
Two choices set the cost of a personal loan: the annual rate and the number of months. The rate decides how expensive each dollar of debt is, the term decides how long you owe it.
The table shows payment and total interest for $15,000 at four rates over 36 and 60 months, so you can compare offers on equal terms.
What each lever costs
Over 36 months, 12% instead of 6% adds $2,620 in interest. At 12%, stretching from 36 to 60 months lowers the payment from $333.67 to $333.67.
That longer term raises interest from $5,020 to $5,020, a difference of $0. A lower payment is not a lower cost.
Compare real offers
Enter the amount, the rate and the term from each lender in the loan calculator. Include origination fees by comparing the effective rate, since a lower stated rate with a fee can cost more than a higher one without.
| Rate | 36 months payment | 36 months interest | 60 months payment | 60 months interest |
|---|---|---|---|---|
| 6 % | $289.99 | $2,400 | $289.99 | $2,400 |
| 9 % | $311.38 | $3,683 | $311.38 | $3,683 |
| 12 % | $333.67 | $5,020 | $333.67 | $5,020 |
| 15 % | $356.85 | $6,411 | $356.85 | $6,411 |
FAQ
Is a shorter personal loan always better?+
It costs less interest, $5,020 against $5,020 at 12%, but the monthly payment is higher. Choose the shortest term you can pay comfortably.
How much does a lower rate save?+
On $15,000 over 36 months, 6% instead of 12% saves $2,620 in interest.
Do fees change the comparison?+
Yes. An origination fee raises the real cost, so compare offers by effective rate, not only the stated rate.