Personal Loans

Last updated: November 10, 2026. Rates and figures are refreshed monthly from the Federal Reserve (FRED) and the CFPB.

What is a personal loan?

A personal loan is an installment loan. You borrow a set amount, get it as a lump sum, and pay it back in fixed monthly payments until the term ends. Most personal loans are unsecured, which means you don’t put up your car, your house or your savings as collateral. The lender decides based on your credit, your income and the debts you already carry.

That structure is the whole appeal. A credit card lets the balance roll from month to month with no end date. A personal loan has a finish line. You know the payment, you know the term, and you know the day it’s paid off.

People use personal loans for a car repair, a medical bill, a move, a home project, or to pay off higher-cost credit card balances. The money usually isn’t restricted, though some lenders ask what it’s for and a few limit uses such as tuition or business costs.

Secured personal loans exist too. They’re backed by something you own, often a savings account or a vehicle. Secured loans can be easier to qualify for, but you risk losing the collateral if you can’t repay.

What do personal loans cost right now?

Start with the market, not an ad. The Federal Reserve tracks what commercial banks charge, and those numbers give you a baseline before you look at any offer.

• 24-month personal loans at commercial banks: 11.90% average (Federal Reserve via FRED, TERMCBPER24NS, August 2026).
• Credit card plans, all accounts: 21.19% average (Federal Reserve via FRED, TERMCBCCALLNS, August 2026).
• Credit card accounts that were charged interest: 22.36% average (Federal Reserve via FRED, TERMCBCCINTNS, August 2026).
• Total consumer credit outstanding: $5.22 trillion (Federal Reserve via FRED, TOTALSL, September 2026).

Those are averages at banks. Your rate depends on your credit history, your income, the loan amount and the term. Online lenders and credit unions price differently, and borrowers with weaker credit usually pay more than the bank average.

The gap between card rates and personal loan rates is why so many people use a personal loan to pay off cards. It only works if the loan’s total cost, fees included, is lower than what you’d pay by keeping the balance on the card, and if you don’t run the card balance back up.

What is the difference between APR and the interest rate?

This is the number that matters most when you compare offers. According to the Consumer Financial Protection Bureau, a loan’s interest rate is “the cost you pay to the lender for borrowing money,” while the APR is “a measure of the interest rate plus the additional fees charged with the loan” (CFPB, last reviewed August 28, 2026).

Two loans can carry the same interest rate and very different APRs once fees are counted. Compare APR to APR. Never compare one lender’s APR with another lender’s interest rate.

Federal law backs you up here. The Truth in Lending Act requires lenders to disclose the APR and other key terms before you sign, so you can line offers up side by side.

What fees should you expect on a personal loan?

Interest isn’t the only cost. The CFPB says “fees and charges are often added to the total cost of your personal installment loan,” and lists common ones such as an origination fee, a documentation fee to process the paperwork, and late fees (CFPB, last reviewed August 30, 2024).

• Origination fee: charged for making the loan. Some lenders take it out of the money you receive, so you get less than you borrowed.
• Late fee: charged when a payment arrives after the due date.
• Prepayment penalty: some lenders charge you for paying the loan off early. Many don’t. Ask before you sign.
• Optional add-ons: credit insurance and similar products are optional. If an offer bundles them in, ask what the loan costs without them.

Every one of these shows up in the loan disclosure. Read it before you accept.

How does a personal loan compare with other ways to borrow?

The balance transfer and home equity points come from the CFPB’s guide to consolidating credit card debt (CFPB, last reviewed September 2, 2026).

Who is a personal loan a good fit for?

A personal loan tends to fit when these are true:

• You have a specific amount in mind. A repair estimate, a medical bill, a set of card balances you want gone.
• Your income can carry the fixed payment. The payment doesn’t flex down in a tight month the way a card minimum does.
• The total cost beats your current path. If you’re replacing card debt, the loan’s APR and fees together should come in below what the cards would cost you.
• You won’t refill the cards. Paying off cards with a loan and then charging them up again leaves you with both debts.

Who should skip a personal loan?

• Anyone covering everyday bills every month. If the loan pays for groceries and rent because income doesn’t cover them, it delays the problem and adds a payment.
• Anyone who can’t fit the payment. A missed payment brings late fees and damages your credit.
• Anyone whose only offers carry very high APRs. At some point the loan costs more than the problem it solves. A nonprofit credit counselor can be a better first call.
• Anyone already behind on several debts. New credit may not be available or affordable. Our debt consolidation guide walks through other options.

What are the warning signs of a personal loan scam?

The most common loan scam has a simple shape. Someone promises you a loan, then asks for money before you get it. The Federal Trade Commission puts it plainly: in an advance-fee loan scam, “there is no loan and there is no lender” (FTC, July 2022).

Watch for these signs, all drawn from the FTC’s guidance:

• A fee before the loan. The FTC says “any up-front fee that the lender wants to collect before granting the loan is a cue to walk away.” Scammers call it insurance, a deposit, or a processing charge.
• Approval promised without your credit history. “Legitimate lenders will not promise you a loan or other credit without knowing your credit history,” the FTC says. Ads that say “Bad credit? No problem” or “guaranteed” are a red flag.
• A fee that “guarantees” approval. Real lenders can charge an application or appraisal fee, but the FTC notes that “nobody legit will tell you that paying a fee guarantees that you’ll get a loan.”
• A lender that isn’t registered. The FTC says lenders must register where they do business. Check with your state’s attorney general or banking regulator.
• Pressure to decide on the spot. A real offer gives you time to read the disclosure. If someone rushes you, slow down.
• Payment by gift card, wire or cryptocurrency. No legitimate lender asks to be paid that way.

How do you choose a personal loan?

1. Know your number. Borrow what you need and can repay, not the maximum you’re offered.
2. Check your credit first. You’re entitled to free credit reports. Fix errors before you apply.
3. Compare APR to APR. Line up at least a few offers on the same basis.
4. Look at the total cost. Multiply the payment by the number of months and add any fee taken upfront. A lower payment over a longer term can cost more overall, as the CFPB warns in its guide to consolidating debt.
5. Read the fee terms. Origination, late payment and prepayment terms are all in the disclosure.
6. Confirm the lender is real. Check its registration and never pay a fee to get approved.

Frequently asked questions about personal loans

What credit score do you need for personal loans?

There’s no single cutoff. Each lender sets its own standards, and most look at your income, your job history and the debts you already carry as well as your score. Stronger credit generally earns lower rates and better terms, because the lender sees less risk. If your credit is weak, expect higher APRs, a smaller amount or a request for a cosigner. Before you apply, pull your free credit reports, dispute any errors, and pay down a card balance if you can. Then compare offers carefully before you accept one.

Does checking personal loan offers affect your credit?

It depends on the lender and the step. Ask each lender whether checking your rate uses a soft or a hard credit inquiry. A soft inquiry is visible only to you. A hard inquiry appears on your credit report, and submitting a full application usually involves one. If you’re shopping around, line up your applications within a short window and apply only once you’ve compared the offers you can see without one. Read the lender’s disclosure about how it checks your credit before you click submit.

Is a personal loan better than a credit card?

For a large balance you plan to pay down over time, a personal loan usually costs less and ends on a set date. Banks averaged 11.90% on 24-month personal loans versus 21.19% on credit card plans (Federal Reserve via FRED, August 2026). The fixed payment also forces progress: the balance goes down every month. For small purchases you pay off in full each month, a card can cost nothing in interest and may earn rewards. The right answer depends on how long you’ll carry the balance.

Can you use a personal loan to consolidate debt?

Yes. Paying several card balances with one loan leaves you a single fixed payment and a clear end date. It helps only if the loan’s total cost, fees included, is lower than what the cards would cost you, and only if you stop adding to the cards afterward. Run the numbers on both paths before you sign. If a loan doesn’t fit your credit or your budget, our debt consolidation guide compares it with balance transfers, debt management plans and the other ways to get out from under several balances.

How fast can you get a personal loan?

Timing varies by lender. It depends on how quickly you send proof of income, identification and bank details, and how long the lender takes to verify them. Have pay stubs, a recent bank statement and your ID ready before you apply, and answer any follow-up questions quickly. Ask each lender for its timeline up front. Speed matters when a bill is due, but it should never push you into an offer you haven’t read. A fast loan with high fees can cost more than waiting a few days for a better one.

What is an origination fee?

It’s a fee for making the loan. The CFPB lists it among the common personal loan fees, alongside documentation and late fees. Some lenders deduct it from the money you receive, so the amount that lands in your account is less than the amount you borrowed and repay. Check how the fee is charged, borrow enough to cover what you actually need, and make sure the APR you compare includes it. Two offers with the same interest rate can have very different costs once the origination fee is counted.

How can you tell if a loan offer is a scam?

Walk away if anyone asks for a fee before the loan is granted, promises approval without checking your credit, or wants payment by gift card, wire or cryptocurrency. Those are the FTC’s clearest warning signs. Real lenders tell you the APR and terms in writing before you sign, and they’re registered in the states where they do business. If an offer arrives out of the blue, look up the lender yourself instead of using the contact details in the message. When in doubt, report it to the FTC at ReportFraud.ftc.gov.

Related guides

• Best Personal Loans to Beat High Rates in 2026
• Personal Loan vs Credit Card Debt 2026: Which Wins?

By location

• Personal Loan With Cosigner: Is It Right for You?

Also see our Debt Consolidation guide.