The term “annual percentage rate” is commonly used for lending products such as mortgages, credit cards and personal loans.
The APR for a personal loan is the combined total of the interest rate plus the origination fee, calculated on a yearly basis and expressed as a percentage. If there are no fees, the APR equals the interest rate.
» MORE: Best personal loans with no origination fees
How does APR work on a personal loan?
When you’re shopping for personal loans, the APR provides an apples-to-apples cost comparison. The interest rate or monthly payment alone does not reflect the true cost of the loan.
Personal loans are fixed-rate installment loans, meaning your interest rate won't change over the loan term. Terms are typically two to seven years, and you pay the loan back in equal, monthly installments. Lenders assign an interest rate based on your credit score, credit history and debt-to-income ratio, among other factors.
» MORE: What is my debt-to-income ratio?
Personal loans can come with an origination fee ranging from 1% to 10% of the loan amount. Lenders consider factors like credit score, loan amount and income when calculating the fee. When the interest rate and fee are combined, you get the APR.
Before formally applying for a personal loan, many lenders let you pre-qualify to check your estimated APR without affecting your credit score.
APR vs. interest rate
Let’s see how APR helps you choose a loan. Assume you want to borrow $5,000 and repay it over three years. You pre-qualify with two lenders and receive the following rates:
Lender 1 | Lender 2 | |
|---|---|---|
Interest rate | 10%. | 11%. |
Origination fee | $250 (5% fee). | $100 (2% fee). |
Monthly payment | $161. | $164. |
APR | 13.4%. | 12.4%. |
Total cost | $1,058. | $993. |
Initially, it’s hard to know which loan is cheaper. One lender offers a lower interest rate but charges a higher fee. The monthly payment is almost equal.
That’s when APR comes in: The first loan has an APR of 13.4% and the second loan has an APR of 12.4%. The loan from Lender 1 has a higher APR and higher total loan cost, making Lender 2 the less expensive option overall.
NerdWallet generally recommends picking the loan with the lowest APR for a given loan term because it’s always the cheapest option.
In some cases, it can make sense to choose a loan with a higher APR — if the monthly payment is a better fit for your budget, for instance, or if the origination fee is lower. Some lenders deduct this fee upfront, so even if you get approved for a $5,000 loan, you may get less in hand.
» MORE: How to get a personal loan
Compare APRs for personal loans
Typically, personal loan APRs are from 6% to 36%. Use our personal loan calculator to see your estimated APR, monthly payment and total interest based on your loan amount, interest rate and desired loan term.
Loan details
2024
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Your loan estimate
Monthly payment
$212.47
Total principal
$10,000
Total interest payments
$2,748.23
Total loan payments
$12,748.23
Payoff date
05 / 2029
Show amortization schedule
2024
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| Payment date | Principal | Interest | Monthly payment | Principal balance |
|---|---|---|---|---|
| May 2024 | $129.14 | $83.33 | $212.47 | $9,870.86 |
| Jun 2024 | $130.21 | $82.26 | $212.47 | $9,740.65 |
| Jul 2024 | $131.30 | $81.17 | $212.47 | $9,609.35 |
| Aug 2024 | $132.39 | $80.08 | $212.47 | $9,476.96 |
| Sep 2024 | $133.50 | $78.97 | $212.47 | $9,343.46 |
| Oct 2024 | $134.61 | $77.86 | $212.47 | $9,208.85 |
| Nov 2024 | $135.73 | $76.74 | $212.47 | $9,073.12 |
| Dec 2024 | $136.86 | $75.61 | $212.47 | $8,936.26 |
| Jan 2025 | $138.00 | $74.47 | $212.47 | $8,798.26 |
| Feb 2025 | $139.15 | $73.32 | $212.47 | $8,659.11 |
| Mar 2025 | $140.31 | $72.16 | $212.47 | $8,518.80 |
| Apr 2025 | $141.48 | $70.99 | $212.47 | $8,377.32 |
| May 2025 | $142.66 | $69.81 | $212.47 | $8,234.66 |
| Jun 2025 | $143.85 | $68.62 | $212.47 | $8,090.81 |
| Jul 2025 | $145.05 | $67.42 | $212.47 | $7,945.76 |
| Aug 2025 | $146.26 | $66.21 | $212.47 | $7,799.51 |
| Sep 2025 | $147.47 | $65.00 | $212.47 | $7,652.03 |
| Oct 2025 | $148.70 | $63.77 | $212.47 | $7,503.33 |
| Nov 2025 | $149.94 | $62.53 | $212.47 | $7,353.39 |
| Dec 2025 | $151.19 | $61.28 | $212.47 | $7,202.20 |
| Jan 2026 | $152.45 | $60.02 | $212.47 | $7,049.74 |
| Feb 2026 | $153.72 | $58.75 | $212.47 | $6,896.02 |
| Mar 2026 | $155.00 | $57.47 | $212.47 | $6,741.02 |
| Apr 2026 | $156.30 | $56.18 | $212.47 | $6,584.72 |
| May 2026 | $157.60 | $54.87 | $212.47 | $6,427.12 |
| Jun 2026 | $158.91 | $53.56 | $212.47 | $6,268.21 |
| Jul 2026 | $160.24 | $52.24 | $212.47 | $6,107.98 |
| Aug 2026 | $161.57 | $50.90 | $212.47 | $5,946.41 |
| Sep 2026 | $162.92 | $49.55 | $212.47 | $5,783.49 |
| Oct 2026 | $164.27 | $48.20 | $212.47 | $5,619.22 |
| Nov 2026 | $165.64 | $46.83 | $212.47 | $5,453.57 |
| Dec 2026 | $167.02 | $45.45 | $212.47 | $5,286.55 |
| Jan 2027 | $168.42 | $44.05 | $212.47 | $5,118.13 |
| Feb 2027 | $169.82 | $42.65 | $212.47 | $4,948.31 |
| Mar 2027 | $171.23 | $41.24 | $212.47 | $4,777.08 |
| Apr 2027 | $172.66 | $39.81 | $212.47 | $4,604.42 |
| May 2027 | $174.10 | $38.37 | $212.47 | $4,430.32 |
| Jun 2027 | $175.55 | $36.92 | $212.47 | $4,254.76 |
| Jul 2027 | $177.01 | $35.46 | $212.47 | $4,077.75 |
| Aug 2027 | $178.49 | $33.98 | $212.47 | $3,899.26 |
| Sep 2027 | $179.98 | $32.49 | $212.47 | $3,719.28 |
| Oct 2027 | $181.48 | $30.99 | $212.47 | $3,537.81 |
| Nov 2027 | $182.99 | $29.48 | $212.47 | $3,354.82 |
| Dec 2027 | $184.51 | $27.96 | $212.47 | $3,170.31 |
| Jan 2028 | $186.05 | $26.42 | $212.47 | $2,984.25 |
| Feb 2028 | $187.60 | $24.87 | $212.47 | $2,796.65 |
| Mar 2028 | $189.17 | $23.31 | $212.47 | $2,607.49 |
| Apr 2028 | $190.74 | $21.73 | $212.47 | $2,416.75 |
| May 2028 | $192.33 | $20.14 | $212.47 | $2,224.42 |
| Jun 2028 | $193.93 | $18.54 | $212.47 | $2,030.48 |
| Jul 2028 | $195.55 | $16.92 | $212.47 | $1,834.93 |
| Aug 2028 | $197.18 | $15.29 | $212.47 | $1,637.75 |
| Sep 2028 | $198.82 | $13.65 | $212.47 | $1,438.93 |
| Oct 2028 | $200.48 | $11.99 | $212.47 | $1,238.45 |
| Nov 2028 | $202.15 | $10.32 | $212.47 | $1,036.30 |
| Dec 2028 | $203.83 | $8.64 | $212.47 | $832.47 |
| Jan 2029 | $205.53 | $6.94 | $212.47 | $626.93 |
| Feb 2029 | $207.25 | $5.22 | $212.47 | $419.69 |
| Mar 2029 | $208.97 | $3.50 | $212.47 | $210.71 |
| Apr 2029 | $210.71 | $1.76 | $212.47 | $0.00 |
See if you pre-qualify for a personal loan – without affecting your credit score
Just answer a few questions to get personalized rate estimates from multiple lenders.
Learn more about pre-qualifying
on NerdWallet
What is a good APR for a personal loan?
Borrowers with good to excellent credit scores (690 and higher) will likely receive the lowest rates. Your credit score isn’t the only factor lenders review on an application, but it’s often an important one.
» MORE: Get your free credit score
Here’s what personal loan interest rates look like, on average:
Borrower credit rating | Score range | Estimated APR |
Excellent | 720-850. | 12.37%. |
Good | 690-719. | 14.87%. |
Fair | 630-689. | 18.40%. |
Bad | 300-629. | 21.93%. |
Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified through NerdWallet from April 1, 2024, through April 30, 2024. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 — are unlikely to qualify. Information in this table applies only to lenders with maximum APRs below 36%.
» MORE: Best personal loan rates
Bad-credit loan APRs
If you have bad credit (a score of 629 or lower), you may still qualify for a personal loan. Some lenders work specifically with bad-credit applicants and consider other factors on your application, like your monthly free cash flow, education level or employment history. It's especially important to compare multiple lenders if you have bad credit.
» MORE: See bad-credit loan options
Bad-credit borrowers will likely receive an interest rate on the high end of a lender's range. Look for an APR below 36%, which consumer advocates agree is the highest rate an affordable loan can have, and make sure the monthly payments fit comfortably in your budget.
