Personal Loan Rates: How APR Works (and How to Compare Offers)
Comparing personal loan offers can feel like apples and oranges. Some lenders show a low starting APR, others focus on payment amount, and fees are tucked into fine print. Here’s a plain-English way to read offers so you know the true cost and pick an option that fits your budget.
APR vs. Interest Rate
APR includes many fees in addition to interest. It’s the most reliable single number for comparing loan cost across lenders.
A fixed APR stays the same through the term; a variable APR may change based on an index. See our Definitions for terms like APR, fixed APR, and origination fee.
What Drives Your APR
Credit score, DTI, income stability, employment history, bank activity, and loan amount all influence pricing.
Prequalification through a soft credit check lets you preview ranges without affecting your score. Final approval uses a hard pull.
Fees That Affect Cost
Common fees include origination, late, and sometimes prepayment penalties. A $300 origination fee on a $6,000 loan increases APR even if the nominal rate looks the same.
Check lender disclosures for all costs and timing—especially grace periods and late-fee policies.
How to Compare Two Offers in 5 Minutes
1) Note the APR, term, and payment. 2) Look for origination or monthly fees. 3) Add up total paid (payment × months) and compare.
If you expect to repay early, see whether there’s a prepayment penalty and how much interest you’ll actually save.
Funding Speed and Rails
Approval isn’t the finish line. Actual disbursement depends on the payment rail: ACH (1–3 business days), same-day ACH, push-to-debit (often minutes), or RTP (instant with participating banks).
Funding after bank cutoff typically lands the next business day.
Quick Checklist
- Get prequalified with a soft pull
- Confirm fees (origination, late, prepayment)
- Compare total cost, not just payment
- Ask about funding rail and cutoff time
- Read disclosures before you agree
FAQs
Does prequalification hurt my credit?
No. A soft pull does not affect your score. The final hard pull can cause a small, temporary drop.
Are origination fees negotiable?
Sometimes. You can ask for a lower fee or a higher amount to offset it, but approval criteria still apply.
Fixed or variable APR — which is better?
Most personal loans use fixed APR, which makes budgeting easier. Variable APR can move with the market.
Keep learning: See our Definitions page or compare more loan guides.
Related topics: When people search for bank account verification or prepayment penalty, they’re comparing loan scams with safer licensed lenders—use a soft credit check prequalification first. Check lender disclosures for credit report soft pull, grace period, and whether a bank cutoff time or loan approval odds applies so you know the loan term vs payment. Funding speed depends on rails: debt-to-income ratio and RTP vs ACH transfer time, plus your bank cutoff time.