Personal Loan: How to Compare Offers and Avoid Costly Mistakes
thecalculator.tech
10 June 2026 · 5 min read
Learn to compare personal loans using the APR, understand the amortisation schedule and avoid the most common mistakes that make a 'cheap' loan end up expensive.
First mistake: focusing on the monthly payment
A loan with a low monthly payment is not necessarily cheaper: it may simply have a longer term and you end up paying much more in total interest. Always compare the total cost of the loan (payment × number of payments) and the APR, not just the monthly payment.
What the APR includes in personal loans
Unlike deposits (where it only includes interest), the APR on a personal loan includes: the nominal interest rate, the opening fee and any other mandatory charges. It does not include life or payment protection insurance if optional — but if they are compulsory to obtain the loan, they must be included.
The amortisation schedule
The amortisation schedule breaks down each payment: how much goes to interest and how much reduces the capital. In the first few months, almost everything is interest. If you make an early repayment in the first months of a personal loan (without a fee), the interest saving is at its maximum.
When does a personal loan make sense?
Personal loans make sense for specific expenses with a clear purpose: home renovations, vehicle purchase, funding studies or consolidating higher-rate debts. They do not make sense for recurring expenses or to fund consumption that generates no value.
Always compare APRs across lenders and read the small print before signing.
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