Best Personal Loans for 2024

What is a Personal Loan?

A personal loan refers to money borrowed from a bank, credit union, or online lender. Personal loans can be secured (tied to collateral) or unsecured. They usually have a fixed interest rate and term, allowing borrowers to make predictable monthly payments over a set period of time to repay the debt.

Reasons to Get a Personal Loan

Personal loans can help individuals and families when they need faster access to funds. People sometimes take out personal loans to pay for expenses like medical bills, car repairs, moving, or to cover an unexpected financial hardship like job loss. If you are already paying back multiple personal loans, you may want to consider using a loan to consolidate existing debts.

• Medical emergencies
• Funeral costs
• Job loss
• Divorce
• Moving expenses
• Home or car repairs
• Auto financing
• Financing a down payment
• Vacation expenses
• Other large purchases or bills
• Consolidate existing debts

How Personal Loans Work

Personal loans usually have a fixed interest rate and term. This means you'll make a predictable monthly minimum payment, with part going toward the principal balance and part covering the accrued interest. If your interest rate is high and your monthly mimimum is low, a significant portion of your payment may be allocated to interest rather than reducing the principal.

How to Apply for a Personal Loan

1. Determine your loan needs: Figure out how much money you need and what you'll use it for. Consider factors like loan amount, interest rate, repayment term, and a monthly payment that suits your financial situation and goals.
2. Check your credit score: Before applying, check your credit score. A higher score can increase your chances of approval and help you secure a lower interest rate.
3. Research lenders: Compare lenders, looking for competitive interest rates, flexible repayment terms, and good customer reviews. Check their reputation to make an informed decision.
4. Gather required documents: Get the necessary documents ready, such as proof of identity, income, and financial records, to streamline the application process.
5. Fill out and submit the application: Accurately complete the application form, and double-check for errors. Submit it to the chosen lender for review. Keep a copy for your records.

Personal Loan Interest Rates and Fees

When applying for a personal loan, it's important to understand the interest rates and fees associated with the loan. The interest rate is the percentage charged by the lender for borrowing the money. It is typically expressed as an annual percentage rate (APR). The APR takes into account not only the interest charged, but also any additional fees or charges. A lower interest rate means you will likely pay less in interest over the life of the loan, making it more affordable.

In addition to interest rates, personal loans can come with various fees. Common fees include:

• Origination fee: A fee charged by the lender for processing the loan application
• Prepayment fee: A fee imposed if you pay off the loan before the agreed-upon term
• Late fee: A fee charged by the lender if you miss or are late with a payment

We recommend carefully reviewing the terms and conditions to ensure you understand your interest rate and all the fees associated with your loan. By comparing interest rates and fees from different lenders, you can find the most cost-effective options that suits your financial needs.

Pros and Cons of Personal Loans

• Fast and convenient funding
• Flexible options for people with immediate financial needs
• Fixed rates and terms make repayment predictable

• Terms are dependent on the borrower's credit health
• Origination and other fees can be costly
• Interest can cost the borrower more long term