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APR reflects the total annual cost of a personal loan, including both fees and interest.
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Many lenders state their APR online to make it easier to compare before you apply.
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Your APR will be based on your credit score, income and other financial factors.
The annual percentage rate, or APR, on a personal loan reflects the total cost of borrowing money. It combines the personal loan rate you’re offered with any additional fees the lender charges, such as origination fees.
A loan’s APR is one of the most important factors when comparing personal loan offers from multiple lenders. If there’s a significant difference between the rate and APR you’re quoted, that’s a sign the lender’s fees may be expensive. APR varies widely depending on the lender you choose, the amount you borrow, your credit score and your repayment term.
To calculate your APR, the lender starts with the interest rate it’s willing to offer you and adds any relevant finance charges. These typically include origination fees and administrative fees, which are often a percentage of your loan amount.
Many lenders list their APRs online. Make sure you read the fine print to understand the fees you’ll be assessed.
If you want to crunch the numbers yourself, you can take the following steps:
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Express your interest rate as a decimal (divide it by 100)
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Multiply your rate by the principal amount you’re borrowing
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Multiply this number by the term (in years)
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Add the loan fees
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Divide this number by the loan amount
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Divide this number by the number of days in your loan term
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Multiply by 365
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Multiply by 100 to get your APR
Interest rate to APR example
Let’s say you borrowed a $15,000 personal loan with a 13% interest rate, a three-year term and a 9.99% origination fee. The origination fee is calculated as a percentage of your loan amount, and in this case, the lender will withhold $1,498.50 in fees from your loan funds to cover the fee.
Using the steps outlined above, here’s how to calculate your APR:
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Interest rate as a decimal: 0.13
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0.13 x $15,000 = $1,950
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$1,950 x 3 = $5,850
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$5,850 + $1,498.50 = $7,348.50
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$7,348.50 / $15,000 = 0.4899
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0.4899 / 1,095 (days) = 0.000447397
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0.000447397 x 365 = 0.1633
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0.1633 x 100 = 16.33
So, although your interest rate is just 13% , the true cost of your loan (when factoring in the cost of the origination fee) is 16.33% APR.
The primary difference between APR and interest rate is that APR considers all the costs of your loan, while your interest rate does not. When lenders display an interest rate, it only reflects the percentage they collect monthly on the amount you borrow.
APR, on the other hand, is a combination of the interest rate plus additional costs. It’s designed to show consumers and regulators the total cost of the loan, including any applicable fees.
Comparing APRs is the best way to gauge whether you’re really getting the best deal on a personal loan. If the rate you’re offered is significantly lower than the APR, you’ll pay more in upfront fees. Personal loan origination fees can be over 10% of your loan amount and are deducted from your loan funds.
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What you should know about APRs
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What you should know about interest rates
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It reflects the total cost of your loan, including rates and fees
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It only reflects the interest you’ll pay
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APR is not used to calculate your monthly payment
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Your interest rate may be simple or amortized, and determines your monthly payment
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Costs related to APRs are usually deducted upfront from your loan funds
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Interest related to your loan is collected on a set payment schedule until your loan balance is paid in full
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If a lender doesn’t charge any additional fees, the APR will be the same as the interest rate. No-fee loans are less common — you’re more likely to qualify for them with an excellent credit score.
Bankrate tip
Some lenders may use APR and interest rate interchangeably. This may be a red flag that you’re dealing with a predatory lender. Federal lending laws require lenders to clearly state APR and interest rates in disclosures. Watch for last-minute changes to your APR before signing — it could be a sign that last-minute fees are being added to your loan.
A good personal loan APR is typically below the national average. But to qualify for it, you’ll likely need a credit score above 670 and a stable source of income — or a creditworthy cosigner that meets these requirements.
Securing a low APR can save you thousands of dollars over the life of a loan. For example, if you borrow $10,000 for five years, you’ll pay over $3,000 less with an APR of 8% versus an APR of 18%.
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APR
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Monthly payment
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Total interest costs
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8%
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$203
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$2,166
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13%
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$228
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$3,652
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18%
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$254
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$5,236
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Bankrate tip
Use a personal loan calculator to understand your monthly and overall borrowing costs.
According to Bankrate data, the average APR for a personal loan is 12.20% as of Jan. 7, 2026 APRs for personal loans can range from around 7% to 36%.
As the Federal Reserve makes decisions about the fed rate, keep an eye on changes to advertised rates online — rates may drop if the Fed cuts its target rate. As always, you’ll need excellent credit to qualify for the lowest rates. Check the APRs to make sure those low rates don’t come with high fees.
“Bad credit” generally means a credit score below 580, though some lenders consider anything under 600 to be subprime. Borrowers with bad credit face higher APRs to offset the lender’s risk — sometimes as high as 36%. You may also receive a lower borrowing amount and shorter repayment term if you have bad credit.
Borrowing a personal loan with bad credit can be very expensive. Continuing the example above, let’s look at the same $10,000, five-year loan through the lens of credit. A good-credit borrower may receive a rate close to the national average (13%), while a borrower with poor credit is likely to receive a rate closer to 30%.
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APR
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Monthly payment
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Total interest costs
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13%
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$228
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$3,652
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30%
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$324
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$9,412
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A higher APR dramatically increases both your monthly payments and total interest costs. If your credit needs work, compare multiple bad credit loan offers or consider improving your credit before borrowing.
Understanding what influences your APR can help you secure better loan terms:
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Credit score: This three-digit number represents your history of managing credit. A higher score demonstrates a history of responsible credit usage and is the key to unlocking lower APRs.
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Income and DTI ratios: Stable income and a low debt-to-income ratio reassure lenders that you’ll be able to repay the loan amount, often resulting in better rates.
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Loan term: Shorter repayment terms often come with lower APRs, though monthly payments are higher since repayment is spread across fewer months. Generally, it’s wise to select the shortest repayment term you can reasonably afford.
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Collateral: Secured personal loans are backed by assets, like savings or investments. Since the lender can seize your pledged collateral if you default on the loan, the lender’s risk is reduced — as a result, secured loans often have lower rates.
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Lender policies: Each lender sets its own rates and eligibility requirements, determined in part by its appetite for risk.
When you’re comparing personal loans, be sure you’re getting an apples-to-apples look at the loans. It wouldn’t be accurate, for example, to compare one loan’s APR with another loan’s interest rate.
The APR can help you get a sense of what your loan will cost, but it’s just one of many factors to consider when you’re shopping for a personal loan.
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Loan term: Your APR will be based (in part) on the length of your repayment term. Lower rates are generally offered for shorter terms.
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Fees: Lender fees vary, but many charge origination fees between 1% and 12%. Late fees and prepayment penalties aren’t factored into the APR but can impact your total out-of-pocket costs.
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Eligibility: Lenders may set eligibility criteria for qualifying, including restrictions on whether you can add a cosigner or co-borrower. Some lenders only do business in certain states. Others only offer personal loans for specific purposes, like consolidating debt.
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Additional features: Consider other features that might make your borrowing experience smoother. These can include easy online applications, prequalification tools, a range of customer service hours, discounts and unemployment protection.
When choosing any type of personal loan, make sure you’ve reviewed both the APR and the interest rate. Knowing the APR may keep you from paying exorbitant fees on a personal loan, so you get as much of the money you borrow as possible.
Having good credit, a low DTI ratio and a stable source of income can help you secure a low APR. If you have less-than-perfect credit, consider applying with a co-borrower or cosigner.
