Personal loan questions, answered plainly

A personal loan is money you borrow once and repay in fixed payments over a set term. Most are unsecured, meaning no collateral. People use them for debt consolidation, repairs, medical bills and other one-time costs.

A lender approves an amount, you receive the money, often as a lump sum, and you repay it with interest in equal monthly payments until the term ends. Fees may be deducted from the proceeds.

The interest rate is the cost of borrowing the principal. APR adds certain fees, such as origination fees, into a yearly cost so you can compare offers. Compare APR to APR, as the CFPB advises.

There is no single cutoff. Each lender sets its own range, and a higher score generally gives you more lenders and lower costs. Read our credit guides for what to expect by range.

Prequalification that uses a soft pull does not. A formal application usually triggers a hard inquiry. Ask a lender which one it uses before you proceed.

Be careful. Lenders that advertise no credit check often charge very high costs or are scams. Legitimate lenders evaluate your ability to repay.

Limits vary by lender, often from a few thousand dollars to tens of thousands, and depend on income, debt and credit. Borrow only what you need.

It varies from the same day to several business days, depending on the lender and verification. Never pay a fee for speed.

A fee some lenders charge for processing a loan, often deducted from the proceeds. It raises your APR, so a lender that charges one must reflect it in the disclosure.

It is your total monthly debt payments divided by your gross monthly income, as the CFPB defines it. Lenders use it to judge whether a new payment fits your budget.

For debt that will take more than a year to repay, a fixed-term loan often limits interest by setting an end date. For short-term spending you can repay quickly, a card can cost less.

A personal loan is a fixed lump sum with no collateral. A HELOC is secured by your home and usually has a variable rate. Choose based on cost certainty and how much risk you accept.

Often yes, but check for prepayment penalties in the agreement before you sign.

You may owe a late fee and your credit can be harmed. Contact the lender before you miss one and ask about hardship options.

Many lenders allow most personal uses, but some restrict business use or education. Check the agreement.

On-time payments can help your history. Paying off card balances may lower utilization. A new account and inquiry can cause a small short-term dip.

A person who agrees to repay the loan if you do not. They are fully liable, so it is a serious commitment for both of you.

Not for an unsecured personal loan. A secured loan is backed by an asset the lender can take if you default.

Verify its license with your state regulator, search for complaints and confirm the APR in writing. Never pay a fee before you receive the money.

Common reasons are high debt-to-income, recent late payments, thin credit history or income that could not be verified. The lender must tell you the reasons or how to get them.

Lending partners may pay us when you are matched or take a loan. Borrowers pay nothing. This can affect which partners we show, and we explain it on our disclosures page.

No. We compare options and match requests to lending partners. Only a lender can approve a loan.

No. If anyone asking for money claims to be us, it is not us.

The same questions lenders use to screen applications. They help prevent requests that cannot be approved and protect your credit from unnecessary inquiries.

We use it to check fit and, once matching begins, to match you with lending partners. If you do not fit, we do not store your name, email or phone. See the privacy policy.

No one can. Be cautious of anyone who does.

Availability of lending partners varies by state, and we are still finishing partner agreements. Guides are free to read from anywhere.

You will see free options, including nonprofit credit counseling and credit union programs.

Reply STOP to a text or email us. Consent is never required to submit a request.

With the CFPB, your state regulator or the FTC for scams. Our contact page lists direct options.