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Personal loan rates vary depending on your credit score, current financial status, employment, credit score and other outstanding debts you have.

Personal lenders are offering loans with interest rates that are all over the map — from under 5 percent to 30 percent or more — depending on the loan terms and borrower’s background. The better your credit score and financial history, the lower your interest rate will be.

All other things being equal, loans with shorter terms generally carry lower interest rates. But because there are fewer monthly payments to pay off a short term loan, each payment will be greater than if repayment were spread out over a greater length of time.

There are plenty of negative connotations around the word “loan.” In some people’s minds, loans are associated with shady institutions running scam operations, and desperate people who can’t manage their own finances.

In reality, loans have long been a powerful tool enabling people to create new businesses, get an education or finance a home for their family.

Personal loans are one of the most common types of loans made by creditors. Credit cards are a kind of personal loan which enables people to make purchases more efficiently and conveniently. There are also direct personal loans offered by traditional financial institutions, and new financial technology startups that offer loans through online platforms.

Typically, personal loans are taken out to fund major purchases like a car or house, refinance credit card debt, consolidate debt, or pay for medical expenses.

Regardless of the reason for taking a personal loan, you’ll want to be vigilant when looking at the terms and conditions of the loan. The most important term of a personal loan is probably the interest rate, an annual percentage applied to the outstanding debt (principal) still owed.

Shopping around for the best personal loan rate is important, because a higher rate will increase both your monthly payments and the total amount you will pay.

Let’s say you take out a personal loan of $5,000 that you pay off over 36 months. At an interest rate of 4.5 percent, your monthly payments would be $148.73 and you would pay $5,354.45 in total. The reason you end up paying more than the amount you borrowed is because interest is accrued on your debt.

If we were to change the interest rate in the above example to 7.5 percent, or 3 percentage points, your monthly payment would jump to $155.53 and you would pay a total of $5,599.12.

Another key factor to consider is the accumulation of interest. If you’re unable to pay off your loan on time, or there is no set time limit for the loan, the interest on your loan could compound upon itself and get out of control.

In the first example we had an interest rate of 4.5 percent. Let’s say you ran into some financial setbacks and neglected to pay off your loan in full. Let’s say you take 10 years to pay off the debt in full. At this schedule, you would pay $6,218.30 in total, or $863.85 more than the first example.

At an interest rate of 7.5 percent, you would end up paying $7,122.11 in total, or $1,522.99 compared to the second example. You can see from these examples that interest rates will accumulate extra debt and payments over time.

Credible is a marketplace where lenders including Avant, LendingClub, PAVE, Prosper and Upstart compete for your business. You can compare personalized offers from multiple lenders on Credible.com without sharing your personal information with lenders or affecting your credit score. Ryan Kennedy is a financial analyst, writer and digital nomad.