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A personal loan is an installment loan that can help borrowers meet a wide range of goals, including consolidating debt and covering big purchases. When you take out a personal loan, you’ll receive a lump sum that you’ll pay back in fixed monthly payments, over the course of a loan term that you choose.
Personal loan rates are often lower than credit card cash advance APRs but higher than what you’d pay if you qualified for a 0% APR credit card. Along with making sure you can afford the monthly payment, it’s important to know whether a personal loan is right for you.
Use the personal loan calculator below to see how much you’d pay, per month and overall, which will help you compare your options.
Personal Loan Calculator
FAQs
What can a personal loan be used for?
Personal loans are very flexible. Common reasons to apply for a personal loan include consolidating multiple debts into one; paying for home improvements or a major life event, like a move; or covering emergency expenses.
While it’s possible to use a personal loan to finance nearly any purchase, student loan and auto loan interest rates are typically lower than personal loan rates. So college costs and car financing may not be wise uses for a personal loan.
What are the requirements to get a personal loan?
Lenders of personal loans typically look at your credit score, income, debt-to-income ratio and, depending on the lender, potentially your education history and spending habits to determine your eligibility and rate. Some lenders work specifically with borrowers that are new to credit or have shaky credit histories. But in general, those with good-to-excellent credit scores will qualify for the lowest rates and best terms.
What contributes to the overall cost of a personal loan?
Personal loans are often unsecured, meaning they don’t require collateral to back them. As a result, their interest rates can be higher than rates for auto loans or mortgages, which are backed by your car or house. Personal loans also often come with origination fees, which can be deducted from the amount disbursed to you. Lenders may also charge late, application and prepayment fees.
What personal loan terms are available?
Personal loan terms typically last from one to seven years. The shorter the term you choose, the less interest you’ll pay overall. Opt for a term that will provide a monthly payment you can afford but that won’t significantly add to the cost of your purchase.
Where can I get a personal loan?
Personal loans are available from traditional lenders, including banks and credit unions, in addition to online lenders and peer-to-peer lending platforms. When comparing personal loan offers, check not only the APR you qualify for, but the fees you’ll be charged and the options available to you if you experience financial hardship and have trouble making payments.
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First Published: May 7, 2020, 12:45pm