Personal & Business Loan Guide
Whether you're consolidating debt, starting a business, or paying for a wedding, understanding the mechanics of a loan can save you money. Use this calculator to see how interest rates and loan terms affect your monthly payments.
Principal
The raw amount of money you borrow. If you borrow $10,000, your principal is $10,000.
Term
How long you have to pay it back. Longer terms = lower monthly payments, but higher total interest costs.
APR
Annual Percentage Rate. It includes the interest rate PLUS any fees the lender charges. Always compare APR, not just interest rate.
Secured vs. Unsecured Loans
- Secured Loans: Backed by collateral (like a car or house). These usually have lower interest rates because they are less risky for the lender. If you default, they take the asset.
- Unsecured Loans: No collateral required (like credit cards or most personal loans). Rates are higher because the lender is taking more risk.
Top Reasons to Get a Personal Loan
Debt Consolidation
If you have credit card debt at 20% APR, taking a personal loan at 10% APR to pay it off can save you thousands in interest.
Home Improvement
Funding renovations that increase your property value (e.g., a new kitchen) can be a smart investment.
Pro Tip: Pre-payment
Check if your lender charges a "pre-payment penalty." Ideally, you want a loan that allows you to pay it off early without a fee, saving you interest.
