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An unsecured personal loan can help you cover a large expense, pay for an emergency car or home repair or consolidate your debt. You can use funds from a personal loan for almost any purpose.
Each lender offers unique features and benefits, and some work better for certain borrowers and expenses than others. NerdWallet's personal loan guide will help you compare different lenders and find a loan that fits your budget and financial goals.
NerdWallet has rated and reviewed personal loans from more than 35 financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender's pre-qualification flow and follow up with company representatives. We do not receive compensation for our ratings. Read more about our personal loan star ratings methodology and our editorial guidelines.
A personal loan is money you borrow from a bank, credit union or online lender. Loan amounts are from $1,000 to $100,000, and they’re typically repaid over a term of two to seven years. To qualify, lenders look at factors including your credit score, credit history and debt-to-income ratio.
» MORE: How to get a personal loan
You can use personal loan funds for nearly any reason. Ideally, getting one positively impacts your overall financial health by helping you pay off debt faster, for example, or adding to the value of your home. Here are some top ways consumers use personal loans:
Debt consolidation: Use a debt consolidation loan to roll your debts into one monthly payment, potentially reducing the interest you pay and helping you pay it off faster.
Home improvement: Need to repair your roof, add a home office or install a swimming pool? Use a personal loan to finance home improvements.
Large expenses: You can use a personal loan to buy a boat, RV or other items with large price tags.
Life events: It can be expensive to finance your wedding or a vacation with a personal loan, but having one lump sum of money can help you stick to a budget.
Emergencies: Because personal loans are funded quickly, they can help cover an urgent home or car repair. Compare a loan with other low- or no-interest options.
Medical bills: A personal loan can help pay for medical or dental procedures, covering costs associated with out-of-network charges, high deductibles or specialty care.
Online lenders offer a convenient way to find and compare personal loans. Some online lenders offer low rates to good- and excellent-credit borrowers, while others can approve borrowers with poor or limited credit.
» MORE: Best online loans
Some national banks, including Wells Fargo, U.S. Bank and Discover, offer personal loans with competitive rates and in-person support. Banks may offer rate discounts if you’re already a customer, but they typically have tougher eligibility requirements than online lenders.
» MORE: Best banks for personal loans
Credit union loans may carry lower rates than banks and online lenders, especially for those with fair or bad credit, and loan officers may be more willing to consider your total financial picture.
Personal loan annual percentage rates typically range from about 6% to 36%. Currently — as a result of macroeconomic changes like high inflation and Federal Funds rate increases — rates on personal loans are higher than typical.
To determine your rate, lenders primarily assess your financial and credit information, but they may also consider factors like whether you own your home, your education level and your work history. Consumer advocates say 36% is the highest annual percentage rate a loan can have and still be considered affordable.
Borrowers with good to excellent credit scores (690 and higher) typically get the lowest interest rates and can borrow larger amounts. They also have the most options when shopping for a loan.
Those with fair to bad credit (scores below 690) may have to look a little harder and pay a higher rate for a personal loan. Having steady income, low debt, a long credit history and a record of on-time payments will improve your chances of approval.
Here’s what average personal loan APRs currently look like:
Borrower credit rating | Score range |