A personal loan is an amount of money borrowed from a financial institution that is repaid in equal, monthly payments over a set period of time, typically two to seven years. 

Personal loans are typically unsecured, which means they don’t require collateral. Lenders instead consider your credit profile, income, and debts during the loan approval process. If you fail to repay the loan, you could face fees and penalties and your credit will be negatively impacted.

A personal loan can be used for almost any purpose, which makes them the most flexible category of loans (compared with mortgages, auto loans, and student loans). 

Some lenders are more restrictive than others, but personal loans have been taken out for: 

1. Consolidating higher-interest debt (such as credit cards) 
2. Home improvement projects 
3. Weddings 
4. Travel 
5. Moving costs 
6. Adoption 
7. Fertility and other medical expenses

Interest rates vary widely based on your credit score, your debt-to-income ratio, your income, and other factors like the economy. That’s why it’s advisable to check with multiple lenders to do your due diligence to make sure you’re getting the best loan offer possible. 

In general, shorter loan terms tend to have lower interest rates. Furthermore, the better your credit score and credit report, the lower the interest rate you can qualify for. Therefore, securing low-interest rates helps you save money over the duration of the loan. 

Many lenders offer a discount if you authorize your monthly loan payments to be directly withdrawn from your bank account.

As is the case with most things involving loans, the higher your credit score, the better. However, there are loan marketplaces (like AmOne) that will help improve your credit score so you can qualify for a personal loan. 

Do your research! Make sure you’re comparing not only the interest rates offered, but also the terms and conditions for each lender. Check things like origination fees, whether there are penalties for paying the loan back early, and other fees. The goal is to get a loan with low fees and low interest rates.

Personal loans offer many advantages, including: 

1. Fixed interest rates: Personal loans usually have fixed interest rates, which means you’ll pay it back, at the same rate, over the life of the loan. 
2. Lower interest rates: If you’re looking to pay your credit card debt faster, consider getting a personal loan since the interest rates on personal loans tend to be lower than credit cards. 
3. Faster path to debt payoff: Depending on your credit score, you could get a lower interest rate on a personal loan, then use it to consolidate other types of debt, and pay it all off faster than you would otherwise. 
4. Cover large expenses: A personal loan can help you get what you need to pay for bigger expenses (both expected and unexpected). 
5. Typically unsecured: You don’t usually have to worry about collateral when it comes to a personal loan, which means you don’t need many assets to help you secure the cash you need. 

Both credit cards and personal loans offer the borrower flexibility, so it really comes down to what you need. 

A personal loan gives you money right away that you’ll pay off at the same rate for a fixed amount of time, whereas a credit card gives you access to a line of credit that you can borrow from and pay off as you need to.