Personal loan calculator

How to use this personal loan repayment calculator

1. Enter the amount you want to borrow under Loan amount.more info button
2. Write the loan term in years (not months) under Loan terms.more info button
3. Enter the loan’s interest rate if there are no fees under Interest rate.more info button Otherwise, write the annual percentage rate (APR), which includes interest and fees.
4. Hit Calculate.
5. Review your results.

In addition to the monthly payment, our personal loan repayment calculator also tells you how much you’ll pay back on the principal and the total interest you’ll pay. This total interest includes fees if you use your loan’s APR instead of its interest rate.

What’s the difference?

Principal. The amount that you currently owe from the money you borrow. Your loan principal is the same as your loan amount when you first take out your loan, and it decreases every time you make a payment.

Monthly payment. The amount of money you’re required to pay on your loan each month. Part of your monthly payment goes toward interest and the rest goes toward your principal.

Related: Looking for a loan? Compare personal loans

How to qualify for a personal loan

Each lender is unique, which means that how to qualify depends on who you work with. In general, you’ll need to meet the following requirements:

• Credit check. Most lenders require a hard credit check so they can evaluate your finances.
• Steady income. Lenders want to see that you have the income to manage your payments. Without a steady income, there’s a greater risk that you’ll default on a loan.
• Age of majority. You will need to be the age of majority in your province or territory to qualify.
• Be a Canadian citizen or permanent resident. Having a valid Canadian address and residency is often required for qualification.

How do I lower my personal loan monthly payments?

If you’re looking to take out a personal loan, here are a few ways to lower your monthly payments:

• Get a lower interest rate. In order to get a lower rate, you’ll need to look like an ideal borrower with a credit score above 660. Before applying for a loan, pay off your debts on time, correct any late payments and keep your credit balance low.
• Extend the loan term. If you don’t have time to improve your credit score first, lengthening the loan term is the easier and faster way to reduce your monthly payment amount. However, you’ll pay more interest over the life of the loan.
• Get a cosigner. A cosigner may help you get a personal loan with a lower interest rate. A cosigner is someone with strong finances who agrees to sign the loan agreement with you. If you don’t make your repayments, your cosigner is on the hook to pay them on your behalf.
• Make your payments on time. Personal loans often come with NSF fees and late payment fees. To avoid these additional costs, make your payments on time.
• Only borrow what you need. A lender may approve you for an amount higher than what you need. To reduce your loan costs, avoid borrowing more than what you need.
• Get a secured loan. A secured loan generally has lower rates than unsecured loans.

Is a lower monthly payment always better?

Not necessarily. A lower monthly payment might have less of an impact on your day-to-day expenses, but it can be more expensive in the long run. Why’s that? To get a lower monthly payment, you need a longer loan term. And the longer you take to pay back a loan, the more time there is for interest to add up. This can get particularly pricey if you have a high interest rate.

If you want to lower your total loan cost, look at your budget and figure out how much you can comfortably afford to pay each month. Look for a loan that offers a monthly repayment around that amount.

How are my interest rate and loan term determined?

Your interest rate is typically determined by your credit score and overall financial position. The lender’s eligibility requirements and risk tolerance affects the interest rate too. Before applying, it always helps to improve your financial position and boost your credit score.

The loan term is easier to negotiate with a lender than the interest rate. Normally, borrowers can request a certain term based on how much they want their monthly payment to be. However, some lenders may be more stringent about loan terms. It depends on who you finance with.

What’s considered a good interest rate on a personal loan?

Interest rate depends on a borrower’s personal factors, especially their credit score. If you have good to excellent credit above 660 and you want to take out an unsecured loan, aim to get an interest rate between 6% and 12%. If you have bad credit below 560, you may encounter a 20% to 47% range. But credit score is just one of many factors that lenders look at, and your rate can vary depending on your overall finances. Use the personal loan calculator above to work out how much even a minor difference in the interest rate can affect the total cost of a loan.

Personal loan interest rates in Canada

Example: Good credit vs bad credit monthly payments

Stacey has a credit score of 600. Stacey’s best friend, Martin, has a credit score of 730. Together, Stacey and Martin would like to invest in a leisure boat worth $20,000. They’ve decided to take out a $10,000 unsecured personal loan each to purchase the boat. Because Stacey and Martin have different credit scores, their loans and monthly payments look very different.

Stacey’s loan application was approved with a 30% interest rate due to her poor credit. Martin’s loan application was approved with a 10% interest rate due to his good credit. Below is a breakdown of their monthly payments and overall interest cost on a 3-, 5- and 7-year term.

	Stacey	Martin
Loan amount	$10,000	$10,000
Interest rate	30%	10%
Monthly payment on 3-year term	$424.52	$322.67
Total interest paid over 3-year term	$5,282.57	$1,616.19
Monthly payment on 5-year term	$323.53	$212.47
Total interest paid over 5-year term	$9,412.04	$2,748.23
Monthly payment on a 7-year term	$285.93	$166.01
Total interest paid over 7-year term	$14,018.10	$3,944.99

Where to get a personal loan

In general, there are two types of lenders: traditional lenders and alternative lenders. Traditional lenders include banks, credit unions and other financial institutions. These lenders typically have the strictest eligibility requirements, but they offer the best personal loan rates and terms.

Alternative lenders include financial services companies, online lenders and other non-traditional creditors. Usually, these lenders have looser eligibility requirements, but they charge higher interest rates and have less favourable terms because of the additional risk they take on.

Compare personal loans now

3 alternatives to personal loans

Personal loans are simply one way to finance. Before proceeding with a personal loan, consider the below alternatives to ensure you’re making the best financing decision:

• Line of credit. A line of credit allows you to flexibly borrow up to a certain approved limit. You are only required to make the interest payments and can pay down the principal when it’s convenient for you. This is a great option for individuals who don’t have steady income, such as business owners or seasonal workers.
• Credit card. If the amount you’re trying to finance isn’t large, a credit card is a good option. The interest rate on credit cards can be high, so make sure you can pay down the balance in a reasonable amount of time.
• Home equity loan/line of credit. Homeowners with positive equity in their property can use this option. Home equity loans or HELOCs use positive equity in your home as security for financing. Keep in mind that if you default on the loan or line of credit, you could lose your home.

Bottom line

If you want to take out a personal loan, finding out how much you can afford in monthly payments is an important first step. Use our personal loan calculator to find out what combination of loan amount, loan term and interest rate is the best fit for your financial situation. You should aim to get the shortest loan term possible with monthly payments that you can still manage, because the longer the term, the more you’ll pay in interest.