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A personal loan allows you to borrow money from a lender for almost any purpose typically with a fixed term, a fixed interest rate, and a regular monthly payment schedule.
A personal loan is a flexible type of loan that you can use for just about anything at your discretion. They’re offered by both traditional institutions like banks as well as by online providers. Personal loans typically have fixed interest rates, fixed repayment terms, and set monthly payments. Unlike secured loans, like mortgages, personal loans don't require you to put up collateral, so they’re a popular choice for those that need access to funds.
According to our data, more than half of Americans don’t have enough savings to cover a $1000 expense, so it’s no wonder that approximately the same percentage have taken out a personal loan at some point in their lives.
The interest rate on a personal loan is largely determined by your credit score. Aside from your annual income, you should also consider the amount you need to borrow. When choosing a loan, it's a good idea to compare rates from different lenders. Try lowering your loan amount if you're not getting the rate you want. In the table below, you’ll find the average APR for each credit score based on stats from brands we’ve reviewed on Lendstart.
|Credit Score||Rating||Average APR|
|720 - 840||Excellent||10.3%|
|680 to 719||Good||13.5%|
|640 to 679||Fair||17.95%|
To get a personal loan, you'll need to follow these steps:
As a borrower, your credit history, income, and debt-to-income ratio will determine your eligibility and interest rate for your personal loan. If you do decide to take out a personal loan, here some common uses of personal loans:
As always when making a financial decision, it’s important to consider your unique financial situation, life circumstances and expenses. If you decide that taking on a personal loan is right for you, shop around to get the best APR and loan terms.
You can use a personal loan for one of various reasons, including debt consolidation, a vacation, a wedding, a major expense, an emergency, or to pay for education. You are not limited as to how the money may be used.
To qualify for a personal loan, you should be at least 18 years old, have a bank account, and show proof of income. To qualify for a secured personal loan, you will need to show some form of collateral, such as jewelry or a car. Otherwise, to obtain an unsecured personal loan, the lender will look at your credit score, payment history, your income, and debt-to-income ratio.
Usually, you will need to supply the lender with your contact information, bank account details, pay stubs, and a form of identification, such as a state I.D., passport, or state driver’s license.
Repayment terms usually average from 36 months to 60 months. Some terms may be shorter. You can borrow, on average, from $1,000 to $100,000, depending on your financial profile and the lending source.
Yes, you can refinance a personal loan. When you refinance a personal loan, you replace a current loan with a new loan. This type of strategy may work out well for you if you refinance the loan at a lower interest rate.
No, not all personal loans originate from banks. You can obtain personal loans, online from marketplace lenders who will service the loan and receive payments from you during the loan’s life. Several popular loan vendors feature their services online – services that match you with a lending source that meets with your lending needs and profile.
To obtain a personal loan, you need to be at least 18 years old, show proof of income, and demonstrate that you have a stable employment history. You should also show that you have lived at your current address for, at least, several years. Depending on the loan amount, the lender will determine your eligibility for funding, based on your credit score, utilization of debt, and financial history.
Best Personal Loan Reviews