A personal loan is a type of loan, typically unsecured, that you can get within days or hours from some banks, credit unions, and online lenders. Loan funds are typically deposited in your bank account and can be used for almost anything, depending on the lender’s guidelines, such as paying for a vacation, wedding, home improvements, or consolidating debt.
Interest rates are most often fixed, which means your payments won’t change for the life of the loan. Repayment terms typically range between 1 and 7 years, but can extend well over 10 years for certain loan purposes, like home improvements. Loan amounts are available from under $1,000 to $200,000, depending on your credit score, the loan’s purpose, and the lender.
Personal loan rates are impacted by the current interest rate environment, plus individual factors like your credit score, income, and debt. You can prequalify with multiple lenders to get an estimate of the personal loan rates you may qualify for.
Prequalification isn’t an offer of credit and won’t hurt your score; but once you apply for a loan, your score may temporarily drop by a few points since most lenders conduct a hard credit inquiry.
Personal loans can serve various financial needs. Here are some popular reasons people apply for them:
Note: When applying, you’ll be asked to specify how you plan to use the funds. Not every lender allows every type of use.
Most lenders do not allow personal loans to be used for the following:
While a few lenders may offer loans for business needs, it's not commonly approved.
Personal loans are installment loans, meaning you receive a lump sum upfront and pay it back in fixed monthly payments over a predetermined period. Unlike credit cards, the interest rate is typically fixed, so your payments remain consistent even if market rates increase.
Because of their fast approval and payout process, personal loans are a convenient option for those who qualify — especially individuals with strong credit profiles.