A personal loan is a loan where you borrow a certain amount and agrees to pay it back within a specified period. You must return the full amount, interest and applicable fees. You do this through periodic payments called installments. Personal loans are also known as long-term financing plans, installment loans, and consumer loans.
Personal loans are typically used for specific purchases such as home improvement, furniture and cars, or to consolidate other debt at a higher interest rate. Most personal loans range from $100 to $50,000 for 6 to 60 months.
Personal loans are available from traditional lenders such as banks and credit unions, as well as alternative lenders such as payday lenders, mortgage lenders, personal lenders and pawn shops.
Your lender may give you more credit than you need.
Be careful not to borrow more than you can repay.
If you're considering a personal loan, here's what you can expect:
What You Need to Provide to Your Lender
Generally, your lender will ask for proof that:
Your credit report helps lenders evaluate your ability to repay your personal loans.
Perhaps they will consider your debt.
Your credit report, credit score, and debt can affect your loan options, including your interest rate and the type of loan you may be eligible for.
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