WHAT IS A PERSONAL?

When you apply for a personal loan, you ask to borrow a specific amount of money from a lending institution like a bank or credit union. While funds from a mortgage must be used to pay for a house and you'd get an auto loan to finance a car purchase, a personal loan can be used for a variety of purposes. You may seek a personal loan to help pay education or medical expenses, to purchase a major household item such as a new furnace or appliance, or to consolidate debt.

Repaying a personal loan is different from repaying credit card debt. With a personal loan, you pay fixed-amount installments over a set period of time until the debt is completely repaid.

What to look for in a personal loan offer

Low APR

The annual percentage rate, or APR, of a loan is a measure of the cost of a loan, including the interest rate plus all fees. The lower the APR is on your loan, the less you’ll pay for the loan over its lifetime. That’s why you can save money by comparison shopping for the lowest possible APR for your financial situation.

Low fees

You can choose regular monthly payments for as long as you or a co-borrower live in the home as your primary residence.

Positive lender reviews

You wouldn’t make a big purchase without reading the reviews first, so you should treat a personal loan the same way.

Benefits of Personal Loan

You can spend the money from a personal loan on almost anything you want.

Consolidating Debt

If you owe money on credit cards with high interest rates, you can pay off those debts with a personal loan that has a lower rate. You can eliminate debt more quickly because less of each monthly payment goes toward interest costs.

Small Home Improvements

It’s common to use home equity loans for home improvement projects because you're reinvesting in your property. But if you don’t need a significant amount, a personal loan for home improvements may be less expensive and easier to apply for.

Expensive Purchases

When you need to buy something big or expensive that you don’t have the cash for, a personal loan could solve your need.

Investing in Yourself

Personal loans may be able to provide funding when you start a business or need to learn new skills for your career. However, some lenders limit how you can use loan proceeds. For example, some personal loans don't permit you to use them to pay for higher-education expenses.

Emergencies

Ideally, you have emergency savings available for life’s surprises. But sometimes there are no options besides borrowing. If you're facing steep medical expenses or another emergency, a personal loan might make sense.