A personal loan is an amount of money loaned to an individual typically without any collateral, though some lenders do require collateral depending on your credit situation. Personal loans used to be seen as a solution for people in dire financial straits, today the options and terms are better than ever and more and more everyday people are taking out personal loans. A personal loan can be a great idea if you have outstanding credit debt and a less than stellar credit score. If you use the personal loan to pay off the credit card, it could improve your credit score by making on time payments of your personal loan. Even if you don’t have credit debt, taking out a personal loan and repaying it could potentially be a good way to establish positive credit and help you down the road when you apply for a car or house loan.If you have multiple outstanding debts - or just one - at a high interest rate that’s taking a real bite out of your paycheck each month, then a personal loan could be a good option. A good way to start would be to compare lenders and identify who can provide a personal loan with a friendlier interest rate, and then use that to pay off the other debts. A personal loan may help pay for home renovations, which, in some cases can improve the value of a home. This can potentially pay off if you’re looking to sell the house in the near future, or if you’d like to increase the value of your home in order to borrow against the equity.Things don’t always go as planned, and sometimes we need a little extra help. A personal loan may be used to help handle unexpected medical bills, home repairs following a flood or a fire, or a sudden expense like a funeral. When hard times come, having some financial peace of mind can make things a little bit easier, and that’s no small thing.

Many people apply for a low-interest personal loan to consolidate high-interest credit card debt. These loans can also be used to fund major life purchases or expenses, like home improvements, weddings, unexpected medical expenses, moving expenses, or funerals.

Our lenders offer between $1,000-$50,000

1. What’s my credit score?

Your credit score is calculated based on your loan repayment history, credit card usage, and other financial markers that can give lenders a rough guide of how responsible you are with money and how much of a default risk you are. Even though some lenders may choose to not look at credit scores when qualifying you for a loan, it is still a good idea to keep track of yours and know where you stand. Typically, the higher your credit score the more likely you will be to receive loans. Also, because with high credit you are considered less of a risk, your interest rates will tend to be lower.

That doesn’t mean that less than great credit is a deal-breaker, but it's good to know what the numbers mean:

Credit score rating

Excellent: 720 - 850

Good: 690-719

Fair: 630 - 689
Poor: 629 and below

Having no debt history is not a good thing when it comes to your credit score. Most of the leading personal loan companies like to see that you’ve had debts in the past and that you’ve made your payments, and can be trusted to do so again.

2. What if I have bad credit?

Some lenders may be able to provide loans to individuals who have bad credit, though they may face tougher interest rates and less leeway with the loan amount and repayment Terms. It's generally believed that anything under 630 may be considered a bad credit rating, and even when people in this range do get loans, they may end up with a 28.5% - 32.0% APR on average. If someone in this range has collateral to put up, it may help secure a loan despite a lower credit rating. In addition, many lenders may allow cosigned loans. These are loans where someone with better credit co-signs the loan with you. While this may allow you to get a loan that you’d be shut out from otherwise, there are some caveats. Mainly, the person who cosigned for the loan is on the hook too so if you default on the payment, it could potentially hurt their credit as well as your own.

3. How do interest rates work?

The interest rate is how much the lender charges in interest to a borrower for a loan. It is normally expressed as a percentage of the amount borrowed. If you’re consolidating debt and the interest rate is still lower than your earlier loan, it's likely that you're in good shape. If not, you may need to examine if the interest rate makes the loan worthwhile for you.The interest rate is going to be one of the most important things to look at when considering a personal loan. It can add a significant amount to the overall repayment terms, and even just one percentage point here or there can make a big difference. We also recommend you consider the APR which includes fees and charges. APR is discussed below. 

4. What affects interest rates?

Variable vs fixed rate loan - With a variable rate loan, the interest rate can fluctuate as the market changes, and typically has lower interest rates than a fixed loan, which stays at the same rate throughout the repayment of the loan. 

The length of the repayment - The longer the repayment term the more interest you will pay over the lifetime of the loan. If you can keep up with a higher monthly payment over a shorter period of time, then you can find loan terms that will save you money on interest. It's crucial though that you first look at your monthly budget and determine how big of a loan you can stay ainsrhead of, so you don’t dip further into debt paying off the new loan.

Your credit score - A better credit score may help you get a lower interest rate.  Though some lenders don’t use credit score when considering you for a loan.  Lenders will also look at your past financial history to look for any delinquent loans, foreclosures, bankruptcies, and other red lights that could make you a high-risk borrower before they determine the interest to assign you. Your income - or lack thereof - will always be a central factor in determining your interest rate.

5. What is an APR?

APR is an acronym for annual percentage rate. It combines the charges, fees, and payments to tell you the grand total of what your loan will cost you per year. The lower the APR, the less you are going to pay in the long run.

The APR calculation on personal loans will vary depending on your lender, but it will typically be lower than what you would receive from a short-term loan – usually starting at 3% and capping at 35.99%. It is not ideal to owe any money, but if you require a loan, then a personal loan could certainly be a viable option.APR rates mentioned include associated fees.

Full repayment for the loans displayed range between 61 days to 180 months.

Representative example: assuming a loan of $10,000 over 60 months at a fixed rate of 3.1% per annum and fees of $60.00. This would result in a representative rate of 3.3% APR, with monthly repayments of $180.80, for a total amount paid of $10,868.00.

6. How much can I get approved for?

There isn’t a clear right or wrong answer to this question - it all depends on your needs, your income and your abilities. If you’re trying to consolidate debt, experts suggest that your loan should be the same or larger than the outstanding loans you’re covering, and if you need to cover an expense like medical bills or home renovations, then it's recommended that loan meets your needs, so you don’t have to go through the hassle or expense of securing another loan. At the same time, it's a good idea to make sure that the payments aren’t too heavy for you to keep up with. After all, there’s no sense taking out a loan to cover another debt, only to find yourself unable to keep up with the payments on the new loan.

7. What loan term should I take?

This is a pretty simple calculation, but what works for you can be anything but simple. If you decide to go for a lender that offers short term loans you will have higher monthly payments but will pay less interest over the life of the loan. If you spread it out over a longer loan term, your monthly payments will be lower, but the overall interest you pay will be higher.Paying more interest may not be a bad idea if it means that you can lock down a monthly payment that you know you can make.

Funds are usually disbursed within one business week of loan approval, but can take as little as 24 hours.