Most of us take out loans when purchasing a car or a home, but sometimes you need extra cash for other life events such as home improvements, weddings, funding a small business, or consolidating debt. Personal loans can be attained without collateral and, unlike credit cards, are designed to be paid off with fixed monthly payments over a fixed time period.
How does a personal loan work?
A personal loan is money issued to an individual from a bank, credit union, or private lender for a specific purpose. You can often choose the exact amount you need, and the loan will be paid back in fixed monthly amounts with interest over a set number of years. Most personal loans aren’t re-accessible—the account is usually closed once the balance is paid in full. If you need to borrow additional funds, you may need to apply for a new loan.
The majority of personal loans are unsecured. That means you won’t need to present collateral up front to qualify for a loan. The amount you qualify for and the interest rate are generally determined by your credit score and income.
What are the benefits of a personal loan?
Personal loans offer many advantages, including:
- Flexibility: You can usually choose the term of your loan and many lenders won’t assess a prepayment penalty.
- Fixed term and rate: While credit card balances are revolving and built to keep you in debt with minimum payments and potentially adjustable APRs, personal loans will be paid off in a set time frame with a fixed rate and payment.
- Fast funding: Depending on your lender, you can often have the funds in your bank account within days of approval.
- Approvals for average and below average credit scores: A high credit score isn’t always necessary to qualify for a personal loan.
What is the annual percentage rate (APR) on a personal loan?
Your loan’s APR is based on your credit score. If you have a high credit score (over 750), you may qualify for the lowest rate offered by your lender. Borrowers with average to poor credit (670 or below) typically see higher rates.
How can I get a personal loan?
You can apply for a personal loan through Upstart, a trusted name in personal lending, without ever leaving home. Just fill out an online form and answer a few questions about how much you want to borrow, and a bit of personal information such as employment and education.* You can see your expected APR, choose a loan term, and get funded as fast as one business day. Δ
* Although educational information is collected as part of Upstart’s rate check process, neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.
Δ If you accept your loan by 5pm EST (not including weekends or holidays), you will receive your funds the next business day. Loans used to fund education related expenses are subject to a 3 business day wait period between loan acceptance and funding in accordance with federal law.