A personal loan is a loan for a fixed amount, usually distributed as a single lump sum. Most personal loans are used for large purchases or to pay off, or consolidate, debt. Consolidating your debt with a personal loan can make it easier to manage your finances by allowing you to pay down your debt and leave you with one, ongoing payment, with a single interest rate.
Many loans are "secured"—guaranteed with collateral, like a vehicle or a home. But personal loans are unsecured, which provides you with far more flexibility when it comes to spending or using these funds.
Today, it's relatively simple to apply for a personal loan online. Many lenders offer an online application, which allows you to submit an application at any time of day, or night, from the comfort of your home. This application will request information like:
After you provide this information, the lender can decide whether it's willing to extend a personal loan to you. It's important to thoroughly understand all fees and interest charges before you sign a loan contract.
Many online personal loans offer quick approval. If your online lender extends a personal loan to you, it will often deposit the funds directly to your bank account. You will then be able to spend these funds as you would with any other type of deposit.
Soon, you will be required to make your first payment. The lender may offer autopay, allowing you to have the payment withdrawn directly from your bank account to ensure it's not late. Autopay can be convenient, but make sure you will have adequate funds in your bank account before you agree to have a payment automatically withdrawn.
When it comes to choosing a personal loan lender, there are a few factors to consider:
If you need a loan quickly, your lender's speed may be one of the most important factors. In other cases, you may prioritize the affordability of the loan or the lender's reputation.