Compare a HELOC and personal loan for the same cash need, including monthly payments, fees, and the later HELOC payment jump.
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How to use our HELOC vs Personal Loan Calculator
- Enter Cash you need ($), which is the amount you plan to borrow for either option.
- Enter "Personal loan interest rate (percent)" and "Personal loan term (months)" from the offer. Use the contract interest rate; enter fees paid separately in "Personal loan upfront fee ($)".
- Fill in HELOC APR (percent) and HELOC repayment time (years), then open Advanced options if you want to change HELOC draw time (years), HELOC closing costs ($), or Personal loan upfront fee ($).
- Select Calculate and read HELOC cost minus personal loan cost first: positive means the HELOC costs more, while negative means the HELOC costs less.
- Sanity-check the result by comparing HELOC draw-time payment with HELOC repayment-time payment; a very low draw payment can hide a large HELOC payment jump after draw time.
Definitions
Interest rate and APR: A personal loan APR can include fees as well as interest; enter its contract interest rate here and add fees separately. A HELOC APR generally represents its annual interest rate, with fees listed separately. A fixed rate stays constant; a variable rate can change [1].
HELOC: Home equity line of credit. It is a credit line that lets you borrow against home equity, often with a draw period and a repayment period.
Draw time: The period when this calculator assumes the HELOC payment is interest only and the borrowed balance is not paid down.
Repayment time: The period after draw time when the HELOC balance is paid back with principal and interest.
Payment jump: The increase from the HELOC draw-time payment to the HELOC repayment-time payment.
Interest and upfront fees: The borrowing cost used for the side-by-side comparison. Principal is left out because both options provide the same cash amount.
Common mistakes and quick fixes
Mistake: Entering your home value or HELOC credit limit in Cash you need ($) .
Fix: Enter only the amount you plan to borrow for this comparison.
Mistake: Leaving "Personal loan interest rate (percent)" or "HELOC APR (percent)" blank for a no-interest case. Fix: Enter 0 for a zero interest rate. Fees can still make the total borrowing cost positive.
Mistake: Mixing months and years in Personal loan term (months) or HELOC repayment time (years) .
Fix: Use months for the personal loan term and years for the HELOC repayment time exactly as labeled.
Mistake: Comparing only Personal loan monthly payment with HELOC draw-time payment .
Fix: Also check HELOC repayment-time payment and HELOC payment jump after draw time , because the draw-time payment is interest-only in this model.
Mistake: Leaving real lender charges out of HELOC closing costs ($) or Personal loan upfront fee ($) .
Fix: Add upfront fees you expect to pay outside the loan balance so Lower-cost option by interest and fees is fairer.
Limitations & Key Assumptions / Boundary Conditions
- The HELOC APR is kept the same during both draw time and repayment time. Real HELOC rates are often variable.
- The full Cash you need ($) is treated as borrowed at the start. The calculator does not model multiple draws over time.
- The HELOC draw-time payment is interest only. Extra principal payments during the draw time are not included.
- Only user-entered HELOC closing costs ($) and Personal loan upfront fee ($) are included. Taxes, insurance, appraisal charges, late fees, and payoff penalties are not added unless you include them in those fee fields.
- The comparison is based on interest and upfront fees, not approval odds, collateral risk, tax treatment, or whether a lender may freeze or reduce a credit line.
- Displayed dollar amounts are rounded to cents, so hand calculations using rounded payments can differ by a few cents.
Methodology
How the monthly payments are calculated
The personal loan payment uses the contract interest rate in the fixed-payment formula. Its disclosed APR can include fees and must not be substituted here. The HELOC calculation uses the annual interest rate represented by "HELOC APR (percent)" and models entered fees separately. Both rates are held constant; a zero monthly rate gives principal divided by months.
monthly_rate = annual_interest_rate_percent / 100 / 12
payment = principal * monthly_rate / (1 - (1 + monthly_rate)^(-months))
if monthly_rate = 0, payment = principal / months
The HELOC draw-time payment is interest only in this calculator.
heloc_draw_payment = cash_needed * heloc_monthly_rate
How total cost is compared
The cost comparison uses interest plus upfront fees. It does not add the borrowed principal because both choices start with the same cash need.
personal_total_interest_fees = personal_payment * personal_term_months - cash_needed + personal_upfront_fee
heloc_total_interest_fees = heloc_draw_payment * heloc_draw_years * 12 + heloc_repayment_payment * heloc_repay_years * 12 - cash_needed + heloc_closing_costs
cost_gap_heloc_minus_personal = heloc_total_interest_fees - personal_total_interest_fees
A positive cost gap means the HELOC has higher interest and fees. A negative cost gap means the HELOC has lower interest and fees.
How the HELOC payment jump is calculated
The payment jump compares the later HELOC repayment-time payment with the earlier draw-time payment.
heloc_payment_jump = heloc_repayment_payment - heloc_draw_payment
heloc_payment_jump_percent = heloc_payment_jump / heloc_draw_payment * 100
If the HELOC draw-time payment is $0, the percent jump is not shown because dividing by $0 is not valid.
Mini-example
For $12,000 borrowed at a 12% personal loan interest rate over 12 months, the monthly payment is about $1,066.19 and interest is about $794.23. A HELOC at 12% annual interest with 1 draw year and 1 repayment year has a $120.00 draw-time payment, then about $1,066.19 during repayment. With no fees, its interest is about $2,234.23. The $1,440.00 gap is the extra interest-only draw year. Any separately entered upfront fees are then added to the respective costs.