Personal Loans

A personal loan is money you borrow from a bank, online lender or credit union. The money you borrow is repaid in fixed monthly payments over the term of the loan, usually between one to seven years. A personal loan can be used for almost any purpose including debt consolidation, large purchases, home improvements or urgent expenses.

Personal loans come in several types, each designed to meet different financial needs. Here’s a breakdown of the main types:

• Unsecured Personal Loans don’t require collateral and are based on your creditworthiness. They tend to have higher interest rates because they pose more risk to lenders.

• Secured Personal Loans require collateral, often a vehicle, to secure the loan. They usually have lower interest rates since they’re less risky for personal loan lenders.

• Debt Consolidation Loans are designed to combine multiple debts into a single loan. They often come with lower interest rates than credit cards, helping reduce monthly payments and simplify finances.

• Personal Lines of Credit are like credit cards but with a lower interest rate. You borrow only what you need, and you pay interest on the amount you use, not the total limit.

• Credit-Builder Loans are intended to help you build or improve your credit score. Personal loan lenders hold the funds in a savings account until you repay in full.

Each type of personal loan has different requirements, interest rates, and repayment terms, so it’s important to assess your financial needs and eligibility when choosing the right personal loan.

Personal loans come with a fixed or variable annual percentage rate (APR) which usually ranges from 6% to 36%. Calculated on a yearly basis, the APR for personal loans includes the interest rate plus any other lender fees, such as an origination fee. The origination fee is between 1% to 10% of the loan amount and is typically deducted from the loan money sent to you.

As you compare personal loan lenders, recognize that the APR you are charged depends on your credit score and debt-to-income ratio. Those with excellent credit scores of 690 or above who have a steady income and low debt-to-income ratio usually get the lowest interest rates and will have more loan options. Use our Personal Loan Calculator to see how the APR and repayment terms affect your monthly repayments.

We recommend that you carefully follow the steps below to ensure that you pick the right loan option for you:

• Check your credit score: This will give you an indication of the personal loan options available to you. You can get a free annual credit report at AnnualCreditReport.com. 

• Search for Loan Offers: Search loan offers from our lenders using your credit score as one of the criteria. Identify personal loan lenders who offer you the lowest APRs available.

• Pre-qualification: Before making a final decision on a loan offer, you can pre-qualify with most online lenders without impacting your credit score. Get yourself prequalified by several lenders so that you can compare interest and fees on various types of personal loans. 

• Calculate your total monthly payments. Use our Personal Loan Calculator to work out your monthly payments for the loan options that you receive, based on features such as their APRs, loan amounts and repayment terms.

• Read loan offer reviews: When you compare personal loan lenders, read online reviews from other borrowers to understand pros and cons of each offer before committing yourself. 

• Apply for loan: This is when you officially apply for the loan offer of your choice. A hard credit check will be performed which can temporarily lower your credit score.  At a minimum, you will need to provide proof of income and a government issued ID.  

Some lenders fund the loan as quickly as one day after approval, but others can take up to a week or more. Look for fast personal loans to find same day or next day funding offers. 

Personal loans can be a lifeline for borrowers with lower credit scores (those between 350 to 579) as the loan money can be used to pay off credit cards and other debts and help to rebuild credit.  LendMeMoney.com collaborates with some personal loan lenders who specialize in offering types of personal loans for customers with low credit scores. Typically, they offer smaller loan amounts, shorter repayment terms, and higher interest rates.  You may also consider finding a co-applicant with good credit to get a better rate. The co-applicant would be responsible for making the loan payments if you fail to do so. 

Personal loan refinancing is the process of replacing your current loan with a new one, ideally with lower personal loan interest rates and better terms. The potential benefits of personal loan refinancing include saving money with low-interest personal loans, securing the best loan rates, and reducing your monthly payments.  You can use the Personal Loan Calculator to understand how refinancing could impact your monthly payments and overall savings. A good credit score can help you qualify for more favorable terms from personal loan lenders, including lower interest rates and more flexible options for types of personal loans.

A decrease in interest rates can significantly impact loan refinancing by allowing you to secure a new loan with a lower interest rate than your current one. This can result in lower monthly payments and long-term savings, making it an attractive option for borrowers seeking good APR for personal loans.

Yes, personal loans can be refinanced multiple times. As your financial situation changes, you can explore loan refinancing with personal loan lenders to better align with your needs and goals.

Lenders typically have specific criteria for approving refinancing, considering factors such as your credit score, income, employment history, and debt-to-income ratio.