A personal loan is a type of loan that allows you to borrow money for personal use, including consolidating other debts, paying for unexpected expenses, starting a business, or financing a large purchase.
Unlike a mortgage or a car loan, personal loans are unsecured, which means they don’t require collateral.
Applying for a Personal Loan
When you apply for a personal loan, you’ll typically do it online via a lender’s website. You may need to provide information about your income, employment history, and credit score. The lender will use the information you provide to determine your creditworthiness and decide whether to approve your loan application.
If your application is approved, the lender will offer you a loan amount, interest rate, and repayment term. The loan amount will be the amount of money you’re able to borrow and the interest rate will be the cost of borrowing the money.
The repayment term is the amount of time over which you’ll pay the loan back. The loan term could be a few months to several years depending on the lender you’re working with and the amount you’re borrowing.
Some lenders may add origination fees to the starting loan amount.
Common Loan Terms
Personal loans have various terms depending on the lender you’re working and your creditworthiness. Most lenders offer:
- Loan amounts from a few thousand dollars up to $100,000 or more, depending on the lender and your creditworthiness.
- Interest rates as low as 3% for borrowers with excellent credit to as high as 36% or more for borrowers with poor credit.
- Repayment terms that range from a few months to several years, depending on the lender and loan amount.
Personal loans commonly also have added fees, including origination fees, prepayment penalties, and late fees. Be sure to read the fine print before you accept a loan offer.
We recommend comparing various lenders and loan offers to find the best personal loan for your needs. You may wish to consider factors like interest rates, repayment terms, fees, and customer reviews when choosing a lender to work with.
Where to Find a Personal Loan
Are you read to check out your options? You can check current rates here.