Bad Credit Loan Calculator

What this tool calculates

Subprime or bad-credit loans typically carry annual rates well above prime personal loan rates, and many add an origination fee that is paid out of the loan or added to the principal. This calculator takes the cash you would actually receive, the quoted annual rate, the term in months, and the origination fee, and returns the monthly payment, the total interest, the total paid, the all-in cost of borrowing, and the effective annual rate after fees and compounding.

How effective APR differs from the quoted rate

The quoted rate is what the lender prints on the offer. The effective APR is what the loan actually costs once the origination fee is treated as a cost of capital and monthly compounding is applied. For a 5,000 loan at 35% quoted, with a 250 fee added on top and a 24-month term, the effective APR works out to roughly 48.9% — about fourteen percentage points above the headline rate. The exact gap varies with the term, the fee size, and the rate.

How the calculation runs

The borrower receives the loan amount in cash and signs for the loan amount plus the origination fee. The amortised monthly payment is computed against that combined principal. The effective APR is then derived by solving for the rate that makes the present value of all 24 monthly payments equal to the cash received — that is the rate the borrower is genuinely paying on the money in hand. The compounded annualisation of that monthly rate is the figure shown.

What moves the effective APR most

Three inputs do most of the work: the origination fee as a share of the loan, the quoted annual rate, and the term length. A larger fee pushes the effective APR higher because the borrower repays as if the fee were principal but never received it. A longer term spreads the fee over more months and softens the effect. A higher quoted rate raises both the nominal cost and the compounding penalty.

Where the simulation simplifies

Late fees, NSF charges, prepayment penalties, and rate resets on variable-rate offers are outside the scope. Some lenders deduct the origination fee from the disbursed amount rather than adding it on top; this calculator assumes the fee is added on top with the loan amount field representing the cash received. Reading the loan agreement remains the only way to confirm which convention a specific offer uses.

Where to look for cheaper alternatives

Borrowers with mixed credit profiles often find lower rates through credit unions, secured borrowing against an existing asset, or formal debt management plans. Each has different eligibility and trade-offs, and direct comparison against the figure this calculator produces is more useful than comparing quoted APRs alone.