What Are the Monthly Payments on a $10,000 Personal Loan?

Personal loans can be a versatile and flexible way to borrow money. Typically, when you take out a personal loan, the lender just deposits the money in your checking account. You can do whatever you want with it once you have it.

Of course, you will have to pay back all you borrowed. So, before you move forward with taking out a personal loan, you'll need to consider the monthly costs you'll incur. If you are thinking about a $10,000 personal loan, here's what you can expect.

Here's the monthly payment if you borrow $10,000

There's not just one answer to the question of how much a monthly payment on a $10,000 personal loan will be because there are actually two factors that impact it:

• Your interest rate
• The repayment timeline

For example, the table below shows what your monthly payments would be at different interest rates with different repayment terms if you borrowed $10,000. It also shows total interest costs over time. This includes an 11.48% rate, which is the national average for personal loan rates as of July 10, 2023 according to the Federal Reserve.

As you can see, there's a huge difference in monthly payment costs and total costs based on your interest rate as well as the time it takes you to repay your loan.

And there's a tradeoff to be made. If you want lower monthly payments, you're going to have to accept higher costs over time. If you would prefer to be debt free sooner and pay less over time, you'll have to pay more each month.

Keeping your borrowing costs down is often the best approach

When it comes to taking out a personal loan, your goal should typically be to find a loan that provides the lowest total borrowing costs over time while still being affordable.

You don't want to make your payment so high that you risk defaulting. But you should choose the loan with the shortest payoff timeline that you can comfortably afford. This way you can become debt free faster. Plus keeping borrowing costs down means you send less money to the lender and keep more in your pocket. So, take a close look at your budget. If you can make a higher payment work without unsustainable sacrifice, choose the loan with the shorter payoff time.

Aside from picking a shorter loan term, you'll also want to do all you can to get a loan at the lowest possible interest rate. This can make a huge impact on your payments without any downsides. To get the best rate, you can:

• Shop around among different lenders. Get online quotes from banks, credit unions, and online lenders to see which offers you the most affordable loan. You'll need to input some basic information about how much you want to borrow and even your Social Security number, but many lenders will give you a quote without a hard credit check so you can compare your options. Try to get quotes from at least three lenders so you can get a good idea of what rates are available to you.
• Try to improve your credit before borrowing. Making extra monthly payments to reduce other debts can help you do that. You can free up the funds to do so by giving up a meal or two out for a few months or picking up a side gig for a few hours a week. Or you can try writing a goodwill letter to ask creditors to voluntarily remove negative information from your credit record.
• Consider a cosigner. If someone with better credit or more income will agree to share legal responsibility for your personal loan, you can often get a better rate.

If you take these steps, ideally your $10,000 personal loan will be affordable for you both monthly and over time.