Once you have three or four prequalified offers, the temptation is to take the smallest monthly payment. That is almost always the most expensive choice, because payment size is a function of term, not price.
Work through these seven points instead.
1. APR, not interest rate
APR folds in origination fees. It is the only number that lets you compare two offers directly. See APR vs interest rate for the arithmetic.
2. Total cost to payoff
Multiply the monthly payment by the number of months. A 60-month loan at 14% costs far more overall than a 36-month loan at 16%, even though the payment is lower and the rate looks better.
3. Amount actually disbursed
If the origination fee is deducted up front, borrowing $10,000 at a 6% fee nets you $9,400. If you need $10,000 in hand, you must borrow about $10,640 — which changes every other number.
4. Term flexibility
Shorter terms cost less in total but require larger payments. Choose the shortest term whose payment fits your budget with a genuine margin, not the shortest one you can theoretically manage.
5. Funding speed
If the money is for an urgent repair, a lender that funds in one business day may be worth a point of APR over one that takes five. If it is not urgent, this should not influence the decision at all.
6. Prepayment penalty
Most U.S. personal lenders do not charge one, but confirm it in writing. Without a penalty, you can pay extra whenever cash allows and cut the total interest substantially.
7. Hardship and late-payment policy
Rarely read, occasionally decisive. Check the late fee amount, the grace period, whether the lender offers deferment for job loss, and whether autopay earns a rate discount (commonly 0.25%-0.50%).
A quick scoring grid
| Factor | Lender A | Lender B | Lender C |
|---|---|---|---|
| APR | | | |
| Total repaid | | | |
| Net disbursed | | | |
| Term | | | |
| Funding time | | | |
| Prepay penalty | | | |
| Autopay discount | | | |
Fill it before you accept anything. Ten minutes here regularly saves several hundred dollars.
Start with side-by-side offers on the comparison page.