Common Questions About Personal Loans

A personal loan is a fixed amount of money you borrow and repay in equal monthly installments over a set term. Most are unsecured, meaning no collateral is required.

Prequalifying usually uses a soft credit inquiry, which doesn't affect your score. A formal application typically triggers a hard inquiry, which may lower your score slightly for a short time.

Requirements vary by lender. Higher scores usually qualify for lower APRs. Some lenders work with fair or limited credit, but rates are generally higher.

It depends on the lender. Some online lenders fund within a few business days of approval; banks and credit unions may take longer.

Common fees include origination fees, late fees and returned payment fees. Some lenders charge prepayment penalties. All required fees should be disclosed before you sign.

Usually, yes. Many lenders allow early payoff without penalty, which saves interest. Check your loan agreement for any prepayment penalty.

On-time payments can help build your credit history, and consolidating card debt can lower your utilization. Missed payments will hurt your score.

The interest rate is the cost of borrowing the principal. The APR includes the interest rate plus certain fees, giving a fuller picture of the yearly cost.

Possibly, but costs are usually higher. Consider credit unions, secured loans or a co-borrower, and avoid predatory lenders. See our page on personal loans for bad credit.

No. SmartPath Finance is an education website. We do not make, arrange or broker loans.