Personal Loans
A personal loan gives you a fixed lump sum you repay in equal monthly payments, usually with no collateral. Here is how they work, what they cost, and how to tell a good offer from an expensive one.
Typical APR
8% to 36%
Common terms
2 to 7 years
Loan amounts
$1,000 to $100,000
Collateral
Usually none
Figures above are typical ranges for general guidance only. Your actual rate and terms depend on your credit, income, and lender, and change over time. Confirm current numbers directly with a lender.
A personal loan is an installment loan: you borrow a set amount, then pay it back in equal monthly payments over a fixed term. Most are unsecured, which means you are not putting up your house or car as collateral. Because there is no collateral, the lender prices the loan mainly on your credit, your income, and how much other debt you already carry.
People use personal loans for two things above all: consolidating higher-rate debt into a single lower payment, and covering a large one-time expense like a medical bill or a home repair. Consolidation is where the math is often clearest. If you are carrying credit card balances at 24% and you qualify for a personal loan at 12%, moving the balance can cut your interest roughly in half while giving you a fixed payoff date.
The rate you are quoted depends heavily on your credit score. Borrowers in the high-700s see the bottom of the range; scores in the low-600s see the top, and some lenders decline below the mid-500s. Before you apply anywhere, check whether the lender offers prequalification with a soft credit pull, so you can see your likely rate without dinging your score.
When it makes sense
- You want to consolidate credit card debt into one fixed, lower payment.
- You have a large, planned expense and want a predictable payoff date.
- Your credit is good enough to beat the rate on the debt you already hold.
What to watch for
- Origination fees of 1% to 8% are common and come straight out of your loan proceeds.
- A longer term lowers the monthly payment but raises the total interest you pay.
- Consolidating cards only helps if you then stop running the balances back up.
Our picks
Best Personal Loans of March 2026
See how the leading lenders compare, scored on rate, fees, and service.
Guides on personal loans
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5 min readFrequently asked questions
What credit score do I need for a personal loan?
Most mainstream lenders look for a score in the mid-600s or higher, and the best rates go to scores in the 720-plus range. Some lenders work with scores in the high-500s, but expect a much higher rate. Prequalifying with a soft pull is the safest way to find out where you stand.
Is a personal loan better than a credit card?
For carrying a balance, usually yes. Personal loans charge a fixed rate that is typically well below credit card APRs, and they give you a set payoff date. A credit card is better for short-term spending you will pay off in full each month.
How fast can I get the money?
Many online lenders fund within one to three business days of approval, and some offer same-day funding. Banks and credit unions can take a little longer.