What a personal loan is, how interest and fees work and how to decide if one is the right tool.
The basics
A personal loan gives you a lump sum that you repay in fixed monthly instalments over a set term. Most are unsecured, meaning no asset such as a car or house backs the loan. The lender decides your rate based on your credit history, income and existing debts.
Where the cost comes from
The main cost is interest, shown as an APR. Some lenders also charge an origination fee, often taken out of the amount you receive. A $15,000 loan at 10.5% APR over 48 months costs about $384 a month and roughly $3,430 in interest.
Common uses
People use personal loans to consolidate debt, cover medical bills, fund home repairs or manage a large one-off cost. They are less suitable for everyday spending.
How to compare offers
Look at APR, term, fees, and whether the rate is fixed. Check if there is a penalty for repaying early and how quickly funds arrive. Prequalification with a soft credit check can show estimated rates without affecting your score at many lenders.
Risks to know
Missed payments can damage your credit and add fees. Borrowing more than you need increases interest. Be wary of lenders who charge large upfront fees or guarantee approval.
Try it yourself
Use the personal loan calculator to see how amount, rate and term change your payment.
General information only, not financial, credit or legal advice. We do not offer or arrange loans. Rules and rates differ by country and lender.