Interest Payment Calculator: Compare Real Loan Costs Across Types

Mortgage Loans

Ever wonder what's likely the biggest debt you'll ever take on? That's right - it's your mortgage.

Mortgage loans, used for purchasing or refinancing residential real estate, represent the largest component of household debt in the United States. You might encounter them as standard home purchase mortgages, refinancing options, Home Equity Lines of Credit (HELOCs), or reverse mortgages.

Typical APR Ranges

When it comes to mortgage interest rates, nothing stays the same for long. Your rate will depend on market conditions, loan type, term length, and how impressive your credit score looks to lenders.

30-Year Fixed-Rate Mortgage (FRM): This is America's favorite mortgage flavor. Historically, the average rate over several decades has hovered around 7.71%.

But rates have been on quite the roller coaster ride. Remember that jaw-dropping low of 2.65% in early 2021? More recently, rates have bounced between approximately 6.0% and 7.5%.

What does this volatility mean for you? While long-term averages provide helpful context, what really matters is the market conditions when you lock your rate. The difference can dramatically impact affordability - just ask anyone who bought between 2019 and 2023, when the double whammy of rising home prices and climbing interest rates made comparable homes substantially more expensive.

15-Year Fixed-Rate Mortgage: Want to pay less interest? These typically feature lower rates than their 30-year cousins because you're borrowing for half the time. Recent rates have generally fallen between 5.15% and 6.47%.

Home Equity Lines of Credit (HELOCs): Already own a home with equity? These revolving credit lines let you borrow against that value. Their APRs usually dance to the tune of the U.S. Prime Rate (as published in the Federal Reserve's H.15 release).

Looking at recent examples, you'll find APRs ranging from approximately 7.99% to 15.85%. Your specific rate depends on how much you borrow and your financial credentials. Most lenders cap maximum APRs, often around 18.0%. After hitting some lows, HELOC balances have been growing recently.

Common Loan Terms

How long will you be paying? The classic term for a primary home mortgage is 30 years, though 15-year terms are popular for those who can swing higher payments.

With HELOCs, the structure is different - you'll typically get a draw period (often 10 years) when you can access funds, followed by a repayment period when you must pay down the outstanding balance.

Associated Fees

Think the interest rate is all you need to worry about? Think again. Obtaining a mortgage involves various fees that can significantly impact your upfront costs.

Origination Fees: These are what lenders charge for processing, underwriting, and funding your loan. Expect to pay between 0.5% and 1% of your total loan amount.

What does that look like in real money? A 1% origination fee on a $250,000 loan comes to $2,500. Can you negotiate these fees down? Sometimes - but the lender might offset your "savings" with a higher interest rate.

Closing Costs: Here's where things really add up. This bundle of fees paid at closing typically ranges from 2% to 6% of your mortgage amount.

For perspective, that means you'll need $8,000 to $24,000 in cash for a $400,000 loan - and that's on top of your down payment. What's included? Appraisal fees, title insurance, settlement fees, recording fees, survey fees, and possibly prepaid items like property taxes and homeowners insurance premiums for your escrow account.

Can you shop around for some of these costs? Yes, particularly for third-party services. And good news - you have the right to review your Closing Disclosure form at least three business days before closing.

Points (Discount Fees): Want a lower interest rate? You can buy it upfront through points. Each point typically costs 1% of your loan amount and lowers your ongoing interest rate.

Private Mortgage Insurance (PMI): Putting down less than 20%? Expect to pay PMI, which protects the lender (not you) against the risk you might default. This fee typically gets rolled into your monthly payment, though other payment structures exist.

Other Potential Fees: Watch out for charges covering credit reports, flood certifications, tax servicing, document preparation, and home warranties.

Be especially wary of what some call "junk fees" - like excessive late fees or unnecessary property inspection fees (which can range from $10 to $50).

Illustrative Total Interest Paid

Ever wondered how much interest you'll actually pay over the life of your mortgage? The answer might shock you.

The total depends heavily on your principal amount, APR, and loan term. Given how long mortgages typically last (15 or 30 years), the interest often amounts to a staggering sum - sometimes exceeding what you initially borrowed, especially with 30-year loans.

How big are typical mortgages? The overall U.S. average was around $252,505 in 2024, but that includes older loans taken out when homes cost less. New mortgage applications tend to be much higher, averaging between $380,000 and $450,000. The median existing home price hovered near $390,000 in late 2023.

Location matters enormously - in many cities, average mortgage balances exceed $1 million.

Mortgage Qualification Context

Remember when lenders wouldn't approve your mortgage if your debt-to-income ratio exceeded 43%? That rule has changed.

Historically, the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule specified that a borrower's Debt-to-Income (DTI) ratio generally couldn't exceed 43% to qualify for a General QM loan. But that strict limit has been replaced by a price-based threshold.

What's the new standard? A loan's QM status now comes down to how its APR compares to the Average Prime Offer Rate (APOR) for similar transactions. For a standard first-lien loan to meet the General QM definition, its APR can't exceed APOR by more than 2.25 percentage points. Want stronger legal protections? Your loan gets "safe harbor" status if its APR doesn't exceed APOR by more than 1.5 percentage points.

Does this mean your DTI doesn't matter anymore? Not at all. Lenders still must evaluate your income, assets, debts, and DTI ratio when assessing your ability to repay. DTI remains crucial in mortgage underwriting - it's just no longer the single determining factor for QM status.

Typical Mortgage APR Ranges (Illustrative Long-Term Norms)

Note: These ranges reflect historical data and recent norms for borrowers with good credit. Your actual rate will depend on current market conditions, your chosen lender, and your personal financial profile.

Common Mortgage Fees

Note: Many fees are negotiable or vary significantly depending on where you live and which providers you use. Always review your Loan Estimate carefully.

Auto Loans

That shiny new car in your driveway? For most Americans, it represents the second-biggest loan they'll ever take.

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    B --> |Credit Score| C["Excellent Credit: Below 5%
    Median Score: 711
    Poor Credit: Over 18%"]
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    Used Vehicles: Higher Rates
    Rate Range: 5.19% - 18.00%"]
    B --> |Lender Type| E["Commercial Banks: 7.8% - 8.7%
    Credit Unions: 5.19% - 18.00%
    Finance Companies: 6.0% - 7.0%
    Dealerships: Potentially Highest Rates"]
    
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    36, 48, 60, 72 months
    Trending Longer: 65-66 months
    Extended Terms: Up to 84 months"]
    
    H[Associated Fees] --> I["Origination Fees: $25-$500
    Documentation Fees: Up to $800
    Title/Lien Fees: Varies by State
    Late Payment Fees: $5-$30 or 1.5%-15%"]
    
    A --> F
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Auto loans finance the purchase of new or used vehicles and constitute a significant portion of non-revolving consumer credit. You might also use them to refinance an existing auto loan when rates improve or your credit score jumps.

Typical APR Ranges

Your auto loan's interest rate isn't just pulled from thin air. It's influenced by several key factors: your credit score (the big one), the loan term, whether you're buying new or used, and who's lending you the money.

Credit Score Impact: Wonder why your friend got a much better rate than you did? Creditworthiness is the dominant factor. Data consistently shows wide APR ranges for identical loans, reflecting differences in borrower risk profiles.

How wide? Rates might span from below 5% if your credit is excellent to over 18% if your credit history looks like a financial horror story. The median credit score for auto loan borrowers hovers around 711, meaning if you're below that, you'll likely pay above-average rates.

New vs. Used: Why do used cars cost more to finance? Loans for pre-owned vehicles generally carry higher interest rates than those for new ones.

For example, one credit union's rate sheet shows new car loans ranging from 5.19% to 18.00% APR, while used car loans for the same terms start higher at 5.39% and still top out at 18.00% APR.

Lender Type

Commercial Banks: According to Federal Reserve G.19 data from late 2023/early 2025, average rates for 60-month new car loans were running about 7.8% to 8.2%, while 72-month loans climbed to 7.9% to 8.7%.

Want some historical perspective? The 48-month new car rate has been on quite a journey - from over 17% in 1981 to around 4% in 2015.

Credit Unions: Looking for a better deal? Credit unions often offer lower rates than banks or dealerships. One example showed new vehicle APRs ranging from 5.19% to 18.00%.

Finance Companies: These lenders might cater to different credit profiles. G.19 data revealed average rates on new car loans from finance companies around 6.0% to 7.0% in recent periods.

Dealerships: That convenient financing offered right at the dealership? It might come with higher rates or hidden fees compared to direct lenders like banks or credit unions.

Here's what happens: Dealerships often mark up rates offered by third-party lenders or include additional charges. That's why securing pre-approved financing from a bank or credit union before visiting a dealership gives you valuable negotiating leverage.

Common Loan Terms

How long will you be paying for that vehicle? Typical auto loan terms include 36, 48, 60, and 72 months.

Longer terms, such as 84 months, are sometimes available but usually come with higher rates and are less common, especially for used vehicles. The average maturity for new car loans from finance companies has been trending longer, recently around 65-66 months, compared to approximately 61-63 months a decade earlier.

Why does the term matter so much? While longer terms reduce your monthly payment (tempting!), they typically involve slightly higher APRs and lead to substantially more total interest paid over the loan's life.

The trend toward longer terms often reflects affordability challenges. By stretching payments over more time, you might make the monthly bill manageable, but you're potentially increasing the overall cost of vehicle ownership.

Associated Fees

The interest rate isn't the only cost to consider when financing a vehicle. Various fees can add to your total expense:

Origination Fees: Some lenders, particularly finance companies or dealerships, may charge origination fees. These can be flat amounts ($25-$500) or a percentage of the loan (1%-10%), varying by state and lender.

Banks and credit unions are often your friends here - they may skip these fees entirely or charge lower amounts.

Documentation ("Doc") Fees: Ever wondered about that mysterious "doc fee" on your car purchase? Dealerships charge these to cover the costs of preparing sales and financing paperwork.

These fees vary dramatically depending on state regulations. Some states cap the fee (California keeps it around $85), while others have no limit, allowing fees to reach $500-$800 or more in some markets (looking at you, Florida). Dealerships often present these fees as non-negotiable.

Title and Lien Recording Fees: These governmental fees are required to title the vehicle and record the lender's lien, typically passed on to you as the borrower.

Late Payment Fees: Miss a payment? Standard fees apply, often a flat amount ($5-$30) or a percentage (1.5%-15%) of the payment due, subject to state regulations.

Other Potential Costs: Dealership financing sometimes includes hidden charges, such as "acquisition fees" or the bundling of ancillary products like extended warranties or insurance into the loan amount.

Illustrative Total Interest Paid

The total interest cost depends on three key variables: your APR, loan amount, and term.

How much are people typically borrowing? Average loan amounts financed for new cars have recently been around $39,000 to $40,000, while average used car loan amounts are lower, typically in the $20,000 to $27,000 range.

One thing is certain: longer terms significantly increase the total interest paid. That smaller monthly payment comes at a price.

Typical Auto Loan APR Ranges (Illustrative, Good Credit)

Note: These ranges are illustrative and heavily dependent on your credit score, lender type, and market conditions. Lower rates are often available through credit unions.

Common Auto Loan Fees

Note: Always review the loan agreement and purchase contract for all applicable fees before signing.

Personal Loans (Unsecured)

Need cash but don't have a home or car to use as collateral? That's where unsecured personal loans come into play.

These loans provide funds for various purposes without requiring collateral, relying instead on your creditworthiness. People use them for everything from consolidating high-interest debt to covering medical expenses, financing home improvements, paying for large purchases, or handling emergencies.

This category includes general installment loans and smaller-dollar loans offered by banks, credit unions, finance companies, and online lenders.

Typical APR Ranges

How much will borrowing cost you without collateral? APRs for personal loans vary significantly based on your credit score, the lender type, loan amount, and loan term.

Lender Type Variation

Banks: According to Federal Reserve data, average rates for 24-month personal loans have been in the approximate range of 9.4% to 12.5% in recent years. Looking at specific offers, you might see anything from around 6% to 25% APR.

Credit Unions: Want a better deal? Credit unions generally offer lower rates than banks. The average rate for a 3-year credit union loan was reported around 10.8% in late 2024. Offers typically range from roughly 8% to 18% APR.

Online Lenders/Fintechs: These newer players provide a wide spectrum of rates, often catering to borrowers across the credit spectrum. Typical ranges run from approximately 6% to 36% APR.

Why 36%? This level is frequently cited as a ceiling for many lenders and is often considered by consumer advocates as the upper limit for reasonably affordable unsecured credit. Rates above this threshold may belong to different product categories like payday loans.

Credit Score Segmentation: The market is highly segmented by risk - your credit score creates different lending universes.

Borrowers with excellent credit (e.g., 720+ FICO score) might qualify for rates at the lower end of the spectrum (e.g., average ~12.7% from aggregated online offers). Those with fair (e.g., 630-689) or poor credit (<630) face significantly higher rates (e.g., averages ~19.9% and ~21.6%+ respectively).

Subprime borrowers constitute a large portion of the market for small-dollar loans. Finance companies often specialize in lending to nonprime consumers.

Common Loan Terms

How long do you get to repay? Personal loan repayment terms typically range from 1 to 7 years. Terms of 24 months (2 years) and 36 months (3 years) are common benchmarks used in financial reporting. Peer-to-peer lending platforms often feature median maturities of 3 or 5 years.

Associated Fees

Beyond interest rates, what other costs should you watch for?

Origination Fees: These are common, particularly among online lenders and for borrowers with lower credit scores. The fee covers the lender's cost of processing and underwriting your loan.

It's typically charged as a percentage of the total loan amount, commonly ranging from 1% to 6%, but can reach 8% or even 10% in some cases. Some lenders may offer loans with no origination fees, though this might correspond to a slightly higher interest rate.

Here's the catch: origination fees are often deducted directly from the loan proceeds before the funds are disbursed to you. This means you receive less cash than the total loan amount you're obligated to repay.

For example, a $10,000 loan with a 5% origination fee ($500) would result in you receiving only $9,500 but repaying the full $10,000 plus interest. This upfront deduction impacts the effective cost of the loan and the usable funds you actually get.

Late Payment Fees: These standard charges apply for payments made after the due date, typically in ranges similar to auto loans ($5-$30 flat fee or a percentage of the payment).

Non-Sufficient Funds (NSF) Fees: If a scheduled payment is returned due to lack of funds in your account, you'll likely face a fee ranging from $10 to $50.

Prepayment Penalties: Want to pay off your loan early? The good news is these penalties are less common on unsecured personal loans compared to some other loan types, but you should always verify if any exist.

Illustrative Total Interest Paid

Total interest depends on your APR, amount borrowed, and term. Average personal loan balances per borrower show some variation in reporting, ranging from approximately $11,800 to $19,400.

However, the average amount borrowed for a new personal loan may be smaller; survey data suggests an average recent loan size around $5,200, and Federal Reserve data indicates median balances for small-dollar loans (under $1,000) are around $500. Peer-to-peer platforms report a median loan size of $12,000.

Typical Unsecured Personal Loan APR Ranges by Credit Tier (Illustrative)

Note: These ranges are highly illustrative and vary significantly by lender, loan term, and individual borrower profile. The 36% APR is often considered the upper limit for affordable loans.

Common Personal Loan Fees

Note: Some lenders offer no-origination-fee loans. Always check your loan agreement for all applicable fees.

Student Loans

Is higher education worth the price tag? For millions of Americans, that question comes down to the terms of their student loans.

Student loans finance postsecondary education costs and represent the second-largest category of U.S. household debt. They fall into two main camps: federal loans (issued by the Department of Education) and private loans from banks, credit unions, and specialized lenders.

Federal Student Loan APRs (Fixed)

Unlike most other loan types, federal student loan interest rates aren't based on your credit score. So how are they determined?

Each year, Congress sets these rates based on the 10-year Treasury note yield plus a fixed margin that varies by loan type and borrower level (undergraduate vs. graduate/parent). These rates take effect on July 1st each year and apply to loans disbursed during the following academic year.

For all federal Direct Loans disbursed after July 1, 2006, the interest rate is fixed for the life of the loan. This means if you took out loans over multiple academic years, you likely have several loans, each with a different fixed interest rate corresponding to the year it was disbursed.

Direct Subsidized Loans (Undergraduate): These are the most borrower-friendly federal loans. Why? The government pays your interest while you're enrolled at least half-time, during the grace period, and during deferment periods.

Rates have fluctuated considerably; for loans disbursed between July 2016 and June 2025, fixed rates ranged from a low of 2.75% (2020-21) to a high of 6.53% (2024-25).

Direct Unsubsidized Loans (Undergraduate): Available regardless of financial need, but interest accrues at all times - even while you're in school. Since the 2013-14 academic year, these loans have carried the same fixed rates as Direct Subsidized Loans for undergraduates. Before that, rates could differ.

Direct Unsubsidized Loans (Graduate/Professional): Why do grad students pay more? These loans carry a higher fixed interest rate than undergraduate loans due to a larger statutory margin over the Treasury yield.

For loans disbursed between July 2016 and June 2025, rates ranged from 4.30% (2020-21) to 8.08% (2024-25).

Direct PLUS Loans (Parents and Graduate/Professional Students): These have the highest fixed rates among federal loans, reflecting the highest statutory margin. They also require credit checks.

For loans disbursed between July 2016 and June 2025, rates ranged from 5.30% (2020-21) to 9.08% (2024-25). This consistent premium in both interest rate and origination fee makes PLUS loans a more expensive federal borrowing option.

Federal Perkins Loans: This program was discontinued, but existing loans have a fixed interest rate of 5%.

Private Student Loan APRs

Don't qualify for enough federal aid? Private student loans work differently. Their rates are set by individual lenders and depend heavily on your (and potentially your cosigner's) creditworthiness, your choice between fixed or variable rates, the repayment term, and prevailing market conditions.

Fixed Rates: Want payment stability? Fixed rates don't change over the life of your loan. Recent observed ranges for borrowers with good credit (often requiring a cosigner) are approximately 3.4% to 18.0% APR. Rates below 8% might be considered favorable.

Variable Rates: Willing to gamble on future interest rates? Variable rates can fluctuate over the loan term, typically tied to an index like SOFR or Prime. They often start lower than fixed rates but carry the risk of future increases. Recent observed ranges are approximately 4.1% to 18.0% APR. Rates below 7% might be considered favorable.

The key difference between federal and private loans isn't just the rates. Federal loans offer standardized rates (within loan type) regardless of credit score and provide important borrower protections like income-driven repayment (IDR) plans and potential forgiveness options.

Private loans require strong credit (or a creditworthy cosigner) to qualify for the best rates, which can sometimes be lower than federal rates, but they lack the extensive protections of federal loans.

Common Loan Terms

How long will you be paying for that degree?

Federal: The standard repayment plan is 10 years. However, various income-driven repayment plans extend repayment to 20 or 25 years, basing payments on your income and family size. Federal consolidation loans can also offer longer terms.

Private: Common terms include 5, 7, 10, 15, and sometimes 20 years. Lenders typically offer lower interest rates for shorter repayment terms.

Associated Fees

Interest isn't the only cost to consider when borrowing for education:

Federal: Origination fees, officially called "loan fees," are charged as a percentage of the loan amount and deducted from each disbursement. For loans disbursed between October 1, 2020, and October 1, 2025, the fee is 1.057% for Direct Subsidized and Unsubsidized loans, and a significantly higher 4.228% for Direct PLUS loans.

Private: Many private lenders advertise no origination fees, though some may charge them. Other potential fees include late payment fees and returned payment (NSF) fees. Good news - prepayment penalties are generally not permitted on student loans.

Illustrative Total Interest Paid

The total interest you'll pay varies based on your loan amount, APR, and repayment term. Average federal student loan debt per borrower stands at approximately $38,000. When including private loans, the total average may approach $41,000.

The average amount borrowed to attain a bachelor's degree typically falls in the $30,000-$34,000 range. Debt levels increase significantly with higher degrees; for example, the average debt for a master's degree is around $69,000. There's also considerable variation in average debt by state.

Federal Student Loan Fixed Interest Rates & Fees (Disbursed July 1, 2022 - June 30, 2025)

Note: Rates are fixed for the life of the loan disbursed within the indicated academic year.

Typical Private Student Loan APR Ranges (Illustrative)

Note: These ranges are illustrative. Getting the best rates requires strong credit or a cosigner. Shopping around is essential.

Other Consumer Credit

What about all those other ways to borrow money? Beyond mortgages, auto loans, and student loans, several other forms of credit help fuel household spending.

Credit Cards

Those little plastic rectangles in your wallet represent revolving lines of credit, allowing you to borrow up to a pre-set limit and repay the balance over time. They're the primary form of revolving debt for most Americans.

APRs: Ever wonder why credit card interest rates seem so high? Credit card APRs are typically variable and often tied to the Prime Rate. Rates vary widely based on your creditworthiness and the specific card product (rewards cards, balance transfer offers, secured cards, etc.).

Federal Reserve data from early 2025 showed the average APR across all credit card accounts was around 21.4%, while the average APR for accounts actually assessed interest (i.e., carrying a balance) was higher, around 21.9%.

How does that compare historically? This represents a significant increase from levels around 13% observed a decade prior. APRs on new card offers may average even higher, potentially around 24%.

The high average rates assessed on carried balances make credit card debt one of the most expensive forms of common consumer borrowing when not paid in full each month.

Fees: That rewards card might be costing you in ways you don't realize. Common fees include annual fees (especially for rewards cards), late payment fees, over-limit fees, balance transfer fees (often 3% to 5% of the transferred amount), and cash advance fees (which often come with a higher APR as well).

Buy Now, Pay Later (BNPL)

"Why wait when you can pay later?" These increasingly popular services offer short-term installment financing, typically at the point of sale.

The most common structure is a "pay-in-four" plan: 25% down payment, followed by three equal installments paid every two weeks, often with zero interest if payments are made on time. BNPL usage has grown rapidly, particularly among consumers with lower credit scores.

While often marketed as interest-free, the ease of use can lead individuals to accumulate multiple small BNPL debts simultaneously across various providers. Think about it - that seemingly harmless $25 payment every two weeks might actually be one of five or six similar payments to different BNPL providers.

Data suggests BNPL users tend to carry higher balances on other forms of credit compared to non-users with similar profiles. This indicates that while individual BNPL plans may seem low-cost, their cumulative use can contribute to overall debt burdens.

APRs/Costs: Standard pay-in-four plans are typically zero-interest. Longer-term BNPL plans may charge interest.

Fees: Late fees are charged if installments are missed.

Other Small-Dollar Loans (including Payday Loans)

When the car breaks down unexpectedly or a surprise medical bill arrives, where do people turn if they don't have savings or available credit?

This category includes various short-term, small-principal loans (often under $1,000) used to cover fluctuating income or unexpected expenses. They can be unsecured and include traditional payday loans (due in full by the borrower's next paycheck, typically within two weeks) and installment loans offered by payday lenders or other finance companies.

These products are often used by nonprime or subprime borrowers and are subject to specific regulations.

APRs/Costs: There is a wide cost spectrum. Traditional payday loans are known for extremely high effective APRs when fees are annualized, often reaching triple digits.

In contrast, regulated small-dollar installment loans offered by some banks or credit unions (like Payday Alternative Loans or PALs) may have significantly lower costs, with capped interest rates (e.g., up to 28% for CU PALs) and potentially flat fees.

Fees: Can include origination fees, and for payday loans, high fees for borrowing or rolling over the loan.

Business Loan Benchmarks

Ever wondered how businesses finance their dreams? From the corner bakery to the manufacturing plant down the road, businesses need capital for everything from covering daily operations to expanding into new territories.

SBA Loans

Think of SBA loans as lending with a safety net. These loans, guaranteed by the U.S. Small Business Administration (SBA), are designed to facilitate access to capital for small businesses, particularly those that might not qualify for conventional financing on reasonable terms.

How do they work? The SBA guarantee reduces risk for participating lenders (banks, credit unions, etc.), encouraging them to say "yes" when they might otherwise say "no."

SBA loans are frequently sought after, and for good reason. Loan proceeds can fund diverse business needs, including working capital, equipment purchases, real estate acquisition or improvement, business expansion, and debt refinancing.

How much do businesses typically borrow? Average SBA loan amounts vary greatly by specific program, from around $16,000 for microloans to over $1 million for 504 loans, with an overall average across programs cited around $437,000.

SBA 7(a) Loans: This is the SBA's primary and most common loan program. It offers versatility for general business purposes.

Loan Amount: Maximum loan amount is $5 million. The average Standard 7(a) loan size is substantial, around $760,000.

APR Ranges: Interest rates are negotiated between the borrower and lender but are capped by SBA maximums. Rates are typically pegged to a base rate, such as the Wall Street Journal Prime Rate (e.g., 7.50% used in examples), plus a permissible spread.

Loans can have either variable or fixed rates. Fixed rates offer payment stability but generally have higher maximum allowable spreads than variable rates. This presents borrowers with a choice between potentially lower initial costs (variable) and payment predictability (fixed).

Maximum Variable Rate Spreads: Range from Base Rate + 3.0% (for loans >$350k) to Base Rate + 6.5% (for loans <=$50k). With a 7.5% Prime Rate, this implies maximum variable APRs of roughly 10.5% to 14.0%.

Maximum Fixed Rate Spreads: Range from Base Rate + 5.0% (for loans >$250k) to Base Rate + 8.0% (for loans <=$25k). With a 7.5% Prime Rate, this implies maximum fixed APRs of roughly 12.5% to 15.5%.

Loan Terms: Maximum maturity depends on the use of funds. Generally up to 10 years for working capital, inventory, or equipment, and up to 25 years for real estate.

Fees: SBA 7(a) loans involve a complex fee structure beyond the interest rate.

SBA Guarantee Fee: Paid by the lender but typically passed to the borrower. This fee compensates the SBA for the risk of guaranteeing the loan (typically 75% to 85% of the loan amount).

The fee percentage is calculated on the guaranteed portion of the loan and varies based on the loan amount and repayment term. Importantly, these fees are set annually by the SBA and can change from year to year.

For the 2024 fiscal year (October 1, 2023 - September 30, 2024), the upfront guarantee fee was 0% for loans of $1 million or less. For loans over $1 million with terms exceeding 12 months, fees ranged from 1.45% to 3.75% applied in tiers to the guaranteed portion.

SBA Annual Service Fee: An ongoing fee charged by the SBA to the lender, which may be passed on. Example rate: 0.55% of the outstanding guaranteed balance for loans over $1 million.

Lender Fees: Lenders may charge fees for specific services, subject to SBA limits. These can include packaging fees (e.g., $2,000-$4,000 or up to 5% on small loans), closing costs (appraisals, legal fees, title fees, etc.), and late payment fees. Lenders are not permitted to charge a separate "origination fee" on 7(a) loans.

Prepayment Penalties: Apply only to 7(a) loans with terms of 15 years or longer if more than 25% of the balance is prepaid within the first three years. The penalty is 5% of the prepayment amount in year 1, 3% in year 2, and 1% in year 3.

SBA 504 Loans: Need to finance major fixed assets? These loans are designed specifically for financing major fixed assets like land, buildings, and long-life machinery and equipment that promote business growth and job creation.

These loans have a unique structure involving three parties: the small business (typically contributing at least 10% equity), a Certified Development Company (CDC - a non-profit entity that processes the SBA-guaranteed portion), and a third-party lender (usually a bank, providing about 50% of the financing via a conventional loan). The CDC provides up to 40% of the financing through an SBA-guaranteed debenture.

Loan Amount: The maximum for the CDC (SBA-guaranteed) portion is typically $5 million, or $5.5 million for certain energy or manufacturing projects. The total project cost can be much higher. The average 504 loan debenture size is over $1 million.

APR Ranges: The interest rate on the CDC portion is fixed for the entire loan term (10, 20, or 25 years). It is determined at the time the debenture funding the loan is sold and is pegged to an increment over the market rate for 10-year U.S. Treasury bonds.

Historical effective rates (which include ongoing fees) have fluctuated; data from one CDC shows rates ranging from lows around 2.4%-3.0% in 2021 to highs near 5.9%-7.2% in 2023, with rates in mid-2025 around 6.3%-6.6%. The interest rate on the bank's portion of the financing is negotiated separately and may be fixed or variable.

Loan Terms: The CDC portion has terms of 10, 20, or 25 years. The bank loan term is negotiated separately.

SBA Guarantee Fee (Upfront): Applied only to the CDC portion. For the 2024 fiscal year, this fee was set at 0%. This fee is subject to change in subsequent fiscal years.

SBA/CDC Annual Service Fee: An ongoing fee applied to the outstanding balance of the CDC portion, which can be passed to the borrower. Recent examples range from 0.331% to 0.4405%.

CDC Fees: CDCs charge fees for their services, including a processing/packaging fee (up to 1.5% of the CDC loan amount), a closing fee (variable, covers legal/appraisal costs), an underwriter's fee (approx. 0.4%), and late payment fees.

Third-Party Lender Fees: The bank providing the senior loan will charge its own customary fees (origination, appraisal, etc.).

Prepayment Penalty: Applies to the CDC portion, typically for the first half of the loan term (e.g., first 10 years of a 20-year loan). The penalty amount declines annually.

SBA Microloans: Starting small? These provide smaller loan amounts, up to $50,000, often utilized by startups or businesses needing capital for working capital, inventory, supplies, or equipment. These loans are delivered through designated non-profit intermediary lenders, not directly by the SBA or banks.

Loan Amount: Up to $50,000. The average microloan size is considerably smaller, around $13,000 to $16,000.

APR Ranges: Rates are negotiated between the borrower and the intermediary lender, subject to SBA-set maximums. Typical rates generally range from 8% to 13%. While potentially higher than prime-based 7(a) rates, microloans can offer access to capital for businesses that may not qualify for larger loans.

Loan Terms: Maximum repayment term is typically 6 years.

Fees: There is no SBA guarantee fee for microloans. The intermediary lender may charge packaging or closing fees.

SBA Express Loans: Need funding fast? This variant of the 7(a) program offers expedited processing and approval times (initial response often within 36 hours) for loans up to $500,000.

Loan Amount: Up to $500,000. Average Express loan size is around $100,000.

APR Ranges: Subject to SBA maximums, but these maximums allow for higher spreads over the base rate compared to Standard 7(a) loans. This is because the SBA provides a lower guarantee percentage (50% for Express vs. 75-85% for Standard 7(a)).

Maximum variable rate spreads are typically Base Rate + 4.5% to Base Rate + 6.5% (applied within the Express loan size limits).

Loan Terms: Similar flexibility as Standard 7(a), with terms up to 10 years for lines of credit or working capital, and up to 25 years for real estate. Revolving lines of credit are permitted.

Fees: Lenders primarily use their own application forms and procedures. The SBA guarantee fee structure applies based on the loan amount and term, using the tiers relevant to 7(a) loans.

The different SBA programs present trade-offs. Standard 7(a) and 504 loans offer potentially the lowest capped interest rates but generally involve more documentation and longer processing times. SBA Express prioritizes speed but allows for higher potential interest rates due to the lower guarantee. Microloans cater to smaller funding needs and may be accessible to startups or those with weaker credit, but rates can be higher than 7(a) or 504 loans.

SBA 7(a) Loan Benchmarks

Note: Spreads are maximums allowed over base rate (e.g., Prime). Guarantee fees apply to the guaranteed portion and change annually.

SBA 504 Loan Benchmarks (CDC Portion)

Note: APR range reflects historical effective rates including fees. Guarantee fees change annually. Bank portion rate/fees negotiated separately.

Conventional Business Loans (Non-SBA)

Don't qualify for an SBA loan or prefer a different route? Businesses also frequently utilize non-SBA guaranteed loans directly from banks or alternative lenders. Common forms include term loans and lines of credit, which can be either secured by collateral or unsecured.

Term Loans: Need a lump sum for a specific purpose? These provide a lump sum of capital repaid in installments over a predetermined period.

APR Ranges: Rates depend significantly on the lender type, loan size, term length, presence of collateral, and the business's financial health and credit history.

Banks: Often offer more favorable rates but typically have stricter underwriting requirements, often requiring several years of operating history. Federal Reserve survey data for Q4 2024 indicated average rates for new small business term loans from banks were around 7.31% for fixed-rate loans and 7.61% for variable-rate loans.

Online/Alternative Lenders: In a hurry or have less-than-perfect credit? These lenders tend to offer faster funding and may be more accessible to newer businesses or those with less-than-perfect credit, but often at substantially higher costs.

APRs can range widely, potentially from 9% up to 50%, 75%, or even higher, particularly for short-term financing or borrowers with poor credit. Some alternative lenders use factor rates instead of APRs, which can obscure the true borrowing cost. Converting factor rates (e.g., 1.1 to 1.5) to an equivalent APR often reveals very high annualized costs, making direct comparison crucial.

Loan Terms: Typically range from 1 to 5 years, although longer terms are possible. Short-term loans with repayment periods under 24 months are common, especially from online lenders.

Fees: Origination fees are common, potentially ranging from 0.5% to 5% or more of the loan amount. Other potential fees include underwriting fees, closing costs, late payment fees, and prepayment penalties, which can sometimes be substantial.

Lines of Credit (LOC): Need financial flexibility? These provide revolving access to funds up to a certain limit, offering flexibility for managing cash flow or ongoing expenses. Usage reported increased in late 2024.

APR Ranges: Typically carry variable interest rates tied to a benchmark like the Prime Rate plus a margin. Federal Reserve data from Q4 2024 showed average rates for new small business lines of credit from banks around 7.4% (rural) to 7.9% (urban) for variable rates, and 6.5% (urban) to 7.1% (rural) for the less common fixed-rate lines. The median spread over the benchmark rate was reported around 3.13%. Online lenders may offer LOCs at higher rates.

Loan Terms: Often structured as revolving lines for 1 to 5 years, sometimes with the option to convert the outstanding balance to a term loan afterward.

Fees: Common fees include annual fees (e.g., $50 to several hundred dollars), draw fees (charged per withdrawal), potential origination fees, late payment fees, and sometimes unused line fees (a small percentage charged on the undrawn portion of the credit line).

The choice between bank and online lenders often involves a trade-off: banks may offer lower costs but require stronger credentials and involve longer application processes, while online lenders provide speed and potentially broader accessibility at a higher price point.

Furthermore, the prevalence of variable rates, especially for lines of credit, exposes businesses to interest rate risk, meaning payments can fluctuate with market conditions, impacting financial planning.

Typical Conventional Business Loan APR Ranges (Illustrative)

Note: Ranges are illustrative and highly dependent on business financials, credit, collateral, loan term, and lender.

Equipment Financing

Need new machinery or vehicles? Equipment financing allows businesses to acquire necessary machinery, vehicles, or technology through loans or leases.

It's a common financing method, particularly in industries like construction, manufacturing, and transportation. Leasing is a particularly popular method, followed by secured loans.

Types:

Equipment Loans: The lender provides funds to purchase the equipment, which then serves as collateral for the loan.

Equipment Leases: The business pays to use the equipment for a specified period, without necessarily owning it at the end (though buyout options may exist).

APR Ranges: Rates are influenced by economic conditions, borrower creditworthiness, the type and age of the equipment, and lender competition. Because the equipment serves as collateral, rates may be more favorable than unsecured loans for similar borrowers.

Typical interest rates for equipment loans are often cited in the range of 6% to 12%. New equipment generally commands lower rates than used equipment due to its higher collateral value and lower perceived risk. Lease rates (often expressed as a lease factor rather than APR) vary widely based on lease structure and residual value assumptions.

Loan Terms: Often structured to align with the equipment's expected useful life, commonly ranging from 3 to 7 years, but can be shorter or longer depending on the asset. Lease terms vary based on the agreement.

Fees and Requirements: Origination fees and documentation fees may apply. For equipment loans, down payments are often required, typically in the range of 10% to 20% of the purchase price. Credit score minimums (e.g., 600-650), minimum time in business (e.g., 2-5 years), and minimum annual revenue (e.g., $50k-$100k) are common qualification criteria.

The decision between leasing and buying via loan depends on factors like cash flow, desired ownership, tax implications, and the risk of equipment obsolescence.

Typical Equipment Financing Benchmarks (Loans)

Note: Lease terms and costs vary significantly and are structured differently.

Commercial Real Estate (CRE) Loans

Investing in commercial property? CRE loans finance the acquisition, development, or refinancing of income-producing properties, including office buildings, retail centers, industrial facilities, multifamily apartment buildings, and hotels.

APR Ranges: CRE loan rates are highly specific to the deal and depend on property type, location, tenant quality, loan size, loan term, lender type (Bank, CMBS, Life Insurance Company, Agency - for multifamily, SBA - for owner-occupied), borrower strength, and prevailing market conditions. Recent indicative rates (early-mid 2025) suggest ranges such as:

Banks: Approximately 5.9% to 8.9%. Banks hold a large share of CRE debt.

CMBS (Conduit): Approximately 5.9% to 7.5%.

Life Insurance Companies: Approximately 5.4% to 7.9%.

Construction Loans: Typically higher due to increased risk, potentially 6.0% to 11.0% or more.

Loan Terms: Conventional CRE loans often have terms of 5, 7, or 10 years, frequently with amortization schedules longer than the term (e.g., 20-30 years), resulting in a balloon payment due at maturity.

Fully amortizing loans are also available, particularly through programs like SBA 504 (10, 20, 25 years) or certain agency (multifamily) or life company loans. Construction loans are short-term, typically 1 to 3 years.

Associated Fees: Include origination fees, appraisal fees (which can be costly for commercial properties), environmental site assessments, legal fees, title insurance, recording fees, and potentially significant prepayment penalties (often structured as yield maintenance or defeasance).

Key Underwriting Metrics: Loan approval and pricing are heavily influenced by property-specific metrics:

Loan-to-Value (LTV) Ratio: The loan amount as a percentage of the property's appraised value. Lenders typically require significant equity, with maximum LTVs often in the 50% to 75% range.

Debt Service Coverage Ratio (DSCR): The property's net operating income (NOI) divided by its annual debt service (principal and interest payments). Lenders require NOI to exceed debt payments by a certain margin, with minimum DSCRs often set at 1.20x, 1.25x, or higher. More conservative underwriting might seek DSCRs above 2.0x.

The CRE market, particularly the office sector, has faced challenges due to factors like remote work adoption and rising interest rates, leading to increased lender caution and higher delinquency rates in some segments. A significant volume of CRE debt is scheduled to mature in the coming years, potentially creating refinancing challenges.

Typical Commercial Real Estate Loan Rate Ranges by Lender Type (Illustrative Fixed Rates)

Note: Ranges are highly illustrative, based on recent data, and vary significantly by property type, location, sponsorship, and specific deal terms.

Key Financial Indicator Benchmarks

Debt-to-Income (DTI) Ratios

Ever wonder why lenders seem so interested in your monthly income? It all comes down to this critical number.

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    A[DTI Ratio Categories] --> B["≤ 36%\n(Ideal/Good)\nLow Risk\nEasy Credit Approval"]
    A --> C["37% - 43%\n(Acceptable)\nModerate Risk\nMay Require\nAdditional Scrutiny"]
    A --> D["44% - 50%\n(High Risk)\nLimited Borrowing\nOptions"]
    A --> E["> 50%\n(Very High Risk)\nDifficult Credit\nAccess"]
    
    style A fill:#f9f,stroke:#333,stroke-width:4px
    style B fill:#90EE90,stroke:#333
    style C fill:#FFFFE0,stroke:#333
    style D fill:#FFA500,stroke:#333
    style E fill:#FF6347,stroke:#333

The Debt-to-Income (DTI) ratio is a key personal finance metric used by lenders to assess your capacity to manage monthly debt payments relative to your income.

How is it calculated? Simply divide your total recurring monthly debt payments (including housing payments like mortgage or rent, minimum credit card payments, student loan payments, auto loan payments, and other installment loans, plus obligations like child support or alimony) by your gross monthly income (income before taxes and deductions). The result is expressed as a percentage.

General Lender Guidelines

Lenders view DTI as an indicator of borrowing risk. While specific thresholds can vary by lender and loan type, general guidelines exist:

36% or Less: Often considered a good or ideal DTI ratio, suggesting that your debt levels are manageable and you likely have capacity to take on new debt comfortably.

37% to 43%: May be considered acceptable, particularly for mortgages, but indicates less flexibility in your budget. The 43% level was historically significant as the general ceiling for Qualified Mortgages (QMs) under the Consumer Financial Protection Bureau's (CFPB) rules.

44% to 50%: Considered high risk. While some mortgage programs (like FHA or those using specific automated underwriting systems) might allow DTIs in this range or even slightly above 50% under certain compensating factors, it generally limits your borrowing options.

Over 50%: Typically viewed as too high by most lenders, significantly restricting access to new credit.

Specific recommendations sometimes exist: for renters, a DTI (excluding rent) of 15-20% or less is suggested. For student loan refinancing, lenders often prefer a DTI of 40% or lower.

Mortgage-Specific DTI Context (Post-QM Rule Change)

Remember that strict 43% DTI limit for defining a General QM loan? It's been replaced by a price-based standard (APR relative to APOR). This regulatory change means that a loan can potentially qualify for QM status even if the DTI exceeds 43%, provided its pricing falls within the specified thresholds.

However, the rule still mandates that lenders must consider and verify the borrower's DTI (or residual income) as part of assessing their ability to repay. Therefore, while the 43% DTI is no longer a rigid QM rule, the DTI ratio itself remains a fundamental component of mortgage underwriting.

Lenders continue to use it, alongside other factors like credit score, assets, and the loan's pricing, to evaluate risk and make lending decisions.

Additionally, mortgage lenders often evaluate not just the total (back-end) DTI, but also the housing expense (front-end) ratio, which compares only the proposed monthly housing payment (principal, interest, taxes, insurance - PITI) to gross monthly income.

A common guideline for this front-end ratio is 28% or lower, although some lenders may allow up to 35%. Meeting the overall DTI guideline might not suffice if the housing payment alone represents too large a share of your income.

Conclusion

Let's cut to the chase: knowing loan benchmarks is your financial superpower.

For personal loans, your credit score is the primary driver of what you'll pay. That 30-year mortgage might be the gold standard, but rates bounce between historic lows (2.65% in 2021) and nearly triple that amount. Your auto loan's term—whether 48 or 72 months—dramatically affects total cost, while unsecured personal loans span from reasonable (9%) to eye-watering (36%) based largely on your credit tier.

Student loan rates depend not on your score, but on when you borrowed. Federal loans taken in 2020 (2.75%) cost less than half what 2024 borrowers pay (6.53%).

For businesses, SBA loans offer government backing with defined rate caps, while conventional bank loans demand stronger financials but deliver lower rates than speedy online alternatives.

The common thread? Additional fees beyond the APR—origination fees, closing costs, guarantee fees—often significantly impact your total outlay.

Understanding these benchmarks transforms interest calculators from abstract tools into powerful decision engines for your financial life.