The true cost of a loan isn't captured by any single number — it's the combination of the rate, any fees, and how long you'll be repaying. Here's how each piece fits together.
APR
The annual percentage rate combines the interest rate with certain required fees into one annualized figure, meant to make offers comparable. See our full guide to APR for more detail.
Interest
Interest is the ongoing cost of borrowing the principal, typically calculated as a percentage of the outstanding balance. The longer you carry a balance, the more interest accrues — which is why paying down principal faster, when you can afford to, reduces total cost.
Fees
Common fees include origination fees (charged to set up the loan, sometimes deducted from the amount you receive), late fees, and occasionally prepayment penalties. Always ask for a complete list of potential fees before accepting an offer.
Repayment period
A longer repayment term generally lowers your monthly payment, but extends the time interest has to accrue — which can raise the total amount you repay overall. A shorter term does the opposite: higher monthly payments, but typically less total interest.
| Factor | What it affects |
|---|---|
| APR | The all-in annualized cost, for comparing offers |
| Interest rate | Ongoing cost on the outstanding balance |
| Fees | One-time or conditional charges beyond interest |
| Term length | Trade-off between monthly payment and total cost |
Our loan payment calculator can help you see how changing the amount, APR or term shifts your estimated monthly payment and total repayment.
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