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Updated November 3, 2026 · FinanceEspresso Editors
A personal loan lets you borrow a set amount of money and pay it back in fixed monthly payments over a set time. People use them to pay off credit cards, cover a big expense or handle an emergency. This guide explains what they really cost and how to compare offers.
What a personal loan costs
Two numbers matter most:
- Interest rate: what the lender charges you to borrow.
- APR (annual percentage rate): the interest rate plus certain fees, like an origination fee charged when the loan is made.1
What rates look like right now
The Federal Reserve tracks what commercial banks charge on 24-month personal loans. In the second quarter of 2026, the average was 11.86%.2 Your rate could be higher or lower depending on your credit, income and the lender.
How to compare offers
- Decide how much you really need. Borrowing less means smaller payments and less interest.
- Check your rate with several lenders. Many lenders let you see a rate first. Ask whether they use a soft inquiry, which doesn’t affect your credit scores. A hard inquiry, made when you formally apply, can lower your scores.3
- Line up the APRs, monthly payments and total cost for the same loan amount and term.
- Read the fine print for origination fees, late fees and whether there’s a penalty for paying early.
Watch out for loan scams
Be careful with anyone who guarantees you a loan no matter your credit, or asks for an upfront fee labeled “insurance,” “processing” or “paperwork.” The FTC warns that no legitimate lender will ask you to pay for a promise of a loan.4
Sources
- Consumer Financial Protection Bureau, What is the difference between a loan interest rate and the APR?.
- Federal Reserve, G.19 Consumer Credit, released October 7, 2026.
- Consumer Financial Protection Bureau, What is a credit inquiry?.
- Federal Trade Commission, What to know about advance-fee loans.