The basic structure
Most personal loans provide a lump sum that is repaid in installments over an agreed term. Many are unsecured, meaning they do not require a specific asset such as a car or home as collateral. The lender prices the loan based on factors such as creditworthiness, income, loan amount and term.
APR versus interest rate
APR is designed to express the annual cost of credit and can reflect certain fees as well as interest. A loan with a lower stated interest rate can still be more expensive if it carries a meaningful origination fee, which is why comparing APR is usually more useful than comparing interest rates alone.
Before you apply
Estimate the payment, check whether the lender offers soft-pull prequalification, review the amount you will actually receive after fees, and read restrictions on permitted uses. Then compare at least a few offers on the same amount and term.
Use the Plandime calculator
A borrowing decision is easier to judge when you compare the monthly payment with the total cost.
Open calculator →Sources checked for this page
- Discover personal-loan glossary · Primary source · Checked 2026-08-25
- Discover: origination fees and APR · Primary source · Checked 2026-08-25
- Federal Reserve G.19 consumer credit · Primary source · Checked 2026-08-25