 TITLE: Personal Loan Interest Rates and APRs: What’s the Difference? CONTENT: What Is an Interest Rate on a Personal Loan?\n--------------------------------------------\nInterest rates determine the amount you pay for borrowing money. They are expressed as percentages and applied to the loan principal—the amount of money you borrow. Interest rates can be fixed (remaining the same for the life of the loan) or variable (subject to change over the life of the loan). Variable rates, more common with mortgages than with personal loans, typically are higher than the prime interest rate or another published market index, and are adjusted over the life of the loan, typically once a year.\nFor explanation purposes, we'll use an example of a typical five-year personal loan for $10,000 with a fixed interest rate of 9%.\nOver the life of the loan, with monthly compounded interest, you'd expect to pay $2,455 in interest charges in addition to the principal $10,000, for a total of $12,455. Divided by five years of 12 payments each, your monthly loan charge would be $12,455\/60, or $207.58 per month. END