Understanding the True Cost of a $100,000 Personal Loan

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Could you afford these payments?

Personal loans can be a great source of financing. Their interest rates tend to be low compared to those of other kinds of debt. Borrowers also have a lot of freedom in how they use the money, and they can often access loan funds quickly. Some personal lenders allow you to borrow a lot, with loans as high as $100,000 available to qualified borrowers.

If you're considering a large loan, perhaps to fund home improvements or a major purchase, it's a good idea to see what your monthly payments might look like.

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How much would the payments be on a $100,000 personal loan?

Since $100,000 is a lot of money, monthly payments for borrowing that much can be steep. Payments for a $100,000 loan vary depending on the interest rate, as well as how long it takes to pay back your loan.

The table below shows monthly payments for a $100,000 loan according to repayment time and interest costs.

Interest Rate 3-year repayment time 5-year repayment time 10-year repayment time 5% $2,997 $1,887 $1,061 10% $3,227 $2,125 $1,322 15% $3,467 $2,379 $1,613

As you can see, loans with a shorter payoff time have much higher monthly payments; when you make only 36 payments on a $100,000 loan, each individual payment is high.

The rate of interest you qualify for also has a huge impact on total costs. If you qualify for a more competitive rate, your monthly payments are hundreds of dollars less.

What are the total costs of a $100,000 loan?

You need to be sure your monthly budget supports your loan payments, but it's also a good idea to look at interest costs over time. Any money you pay in interest goes to the bank instead of to your other financial goals.

The table below shows total interest costs over time for $100,000 in debt.

Interest Rate 3-year repayment time 5-year repayment time 10-year repayment time 5% $7,895 $13,227 $27,279 10% $16,162 $27,482 $58,581 15% $24,795 $42,740 $93,602

While loans with shorter payoff times have higher monthly payments, the total interest costs are much lower with these loans. If you can make higher monthly payments and pay off your loan faster, you pay less for your personal loan over time.

Interest rates also profoundly affect total costs, with borrowers paying many thousands more over the life of the loan if their rates are higher. Shop around with multiple personal loan lenders to get the lowest rates. This is especially important when borrowing a large amount, since the larger the loan, the more difference the interest rate makes.

The Ascent's Best Personal Loans for 2021

The Ascent team vetted the market to bring you a shortlist of the best personal loan providers. Whether you're looking to pay off debt faster by slashing your interest rate or needing some extra money to tackle a big purchase, these best-in-class picks can help you reach your financial goals. Click here to get the full rundown on The Ascent's top picks.