[{"data":1,"prerenderedAt":5387},["Reactive",2],{"/":3},{"data":4,"headers":5360,"perPage":5385,"total":5386},{"stories":5,"cv":5357,"rels":5358,"links":5359},[6,872,1995,2833,3445,4214,4692],{"name":7,"created_at":8,"published_at":9,"updated_at":10,"id":11,"uuid":12,"content":13,"slug":863,"full_slug":864,"sort_by_date":106,"position":865,"tag_list":866,"is_startpage":45,"parent_id":867,"meta_data":106,"group_id":868,"first_published_at":869,"release_id":106,"lang":870,"path":106,"alternates":871,"default_full_slug":106,"translated_slugs":106},"How to Open a High-Yield Savings Account","2025-04-07T18:31:32.550Z","2025-12-26T13:45:15.116Z","2025-12-26T13:45:15.150Z",651798206,"46456cc2-f3d5-4c99-acc3-4c3c82644c0a",{"seo":14,"_uid":20,"body":21,"author":48,"category":859,"featured":45,"component":860,"canonicalTag":861,"_editable":862},{"_uid":15,"title":16,"plugin":17,"og_image":18,"og_title":18,"description":19,"twitter_image":18,"twitter_title":18,"og_description":18,"twitter_description":18},"6e279110-4da0-48c0-8e96-3269c04f3ee5","How to Open a High-Yield Savings Account - Navient Marketplace","seo_metatags","","How to open a high-yield savings account in seven easy steps. Learn fees, terms, pros and cons & alternatives. Get the guide from start to finish.","24614723-3c23-4d4f-990b-c49a1b45edce",[22,52,834],{"id":23,"_uid":24,"image":25,"intro":26,"author":27,"classes":28,"category":18,"featured":45,"blogTitle":7,"component":46,"imageLink":47,"blendImage":45,"authorRoute":48,"publishedDate":49,"backgroundColor":50,"_editable":51},"blog-hero","79f5a035-fc41-41ad-92c1-be998deab658","//a.storyblok.com/f/110029/4096x2734/570c1496ba/how-to-open-a-high-yield-savings-account.svg","Here’s what you need to know, and how to open a high-yield savings account.","Curt Kirby",[29],{"_uid":30,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":34,"authorClasses":35,"subtitleColor":36,"titleMaxWidth":37,"subtitleClasses":38,"dateMobileClasses":39,"titleMobileClasses":40,"authorMobileClasses":41,"featuredMobileClasses":42,"subtitleMobileClasses":43,"_editable":44},"5d8a3dfe-c0c7-415b-8e3d-2676a4998763","BlogHeroStyle","#470A68","text-subtitle-2 mt-7 accent--text text--darken-2","text-h4 mt-6 font-weight-bold blog-info-section","text-size-sub-1 mt-7 accent--text text--darken-4","#75478E","600","text-h6 mt-n6 blog-post-subtitle","text-size-caption mt-4 accent--text text--darken-2","text-size-button-3 font-weight-bold","text-size-sub-1 mt-4 accent--text text--darken-4","text-size-sub-1 accent--text","text-size-sub-1 mt-n9 pt-5","\u003C!--#storyblok#{\"name\": \"BlogHeroStyle\", \"space\": \"157494\", \"uid\": \"5d8a3dfe-c0c7-415b-8e3d-2676a4998763\", \"id\": \"651798206\"}-->",false,"BlogHero","/images/how-to-open-a-high-yield-savings-account.png","curt-kirby","Updated: April 27, 2023 ","#F6F2F7","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"79f5a035-fc41-41ad-92c1-be998deab658\", \"id\": \"651798206\"}-->",{"_uid":53,"bloks":54,"classes":830,"component":831,"mobileClasses":18,"containerContent":832,"_editable":833},"a524f7f9-d117-4e66-ad66-48bdef990dc1",[55],{"_uid":56,"bloks":57,"classes":18,"justify":776,"component":828,"mobileClasses":18,"_editable":829},"17e2f2ba-9fb3-4bb6-a5c2-63670f0193ce",[58,779],{"lg":59,"md":59,"sm":60,"_uid":61,"cols":60,"bloks":62,"alignSelf":776,"component":777,"_editable":778},"7","12","fb1f586b-34d2-4553-84a6-1c536ab78608",[63],{"_uid":64,"color":65,"classes":66,"content":18,"richText":67,"component":769,"mobileClasses":770,"enableRichText":771,"richTextMobile":772,"_editable":775},"bbe4297a-be79-46dd-9df2-7033f885ffea","#444444","blog-post-text blog-post-headers",{"type":68,"content":69},"doc",[70,85,92,118,130,151,172,181,191,198,208,229,238,259,268,275,284,305,314,335,366,375,382,391,411,420,427,436,443,452,459,468,560,569,654,663,672,679,686,695,702,709,718,725,746,755],{"type":71,"content":72},"paragraph",[73],{"text":74,"type":75,"marks":76},"Navient may receive compensation when you click on links associated with this Navient Marketplace. Navient is not being compensated for any application, quotation, or the purchase of any financial products.","text",[77,81],{"type":78,"attrs":79},"styled",{"class":80},"footer-text",{"type":82,"attrs":83},"textStyle",{"color":84},"#000000",{"type":71,"content":86},[87],{"text":88,"type":75,"marks":89},"With economists muttering about a recession and the stock market fluctuating wildly, it can be tempting to stick your savings under a mattress and wait for all to be over. But putting your money in a traditional savings account won’t actually prevent losses: because interest rates on those accounts are so low, your money won’t grow nearly enough to keep up with inflation. That means your hard-earned cash will slowly lose its value. The better way to protect your money is to put it to work. That’s where a high-yield savings account can help. ",[90],{"type":82,"attrs":91},{"color":84},{"type":71,"content":93},[94,99,113],{"text":95,"type":75,"marks":96},"Over the past few years, ",[97],{"type":82,"attrs":98},{"color":84},{"text":100,"type":75,"marks":101},"annual percentage yield",[102,109,111],{"type":103,"attrs":104},"link",{"href":105,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.investopedia.com/terms/a/apy.asp",null,"_blank","url",{"type":82,"attrs":110},{"color":106},{"type":112},"underline",{"text":114,"type":75,"marks":115}," (APY) rates on high-yield savings accounts have consistently risen, making now a great time to take advantage. A high-yield savings account is a type of deposit account that gives you easy access to your funds — while still letting you grow your savings at rates well above the national average. Here’s what you need to know, and how to open a high-yield savings account.",[116],{"type":82,"attrs":117},{"color":106},{"type":119,"attrs":120,"content":122},"heading",{"level":121},2,[123],{"text":124,"type":75,"marks":125},"What is a high-yield savings account? ",[126,128],{"type":127},"bold",{"type":82,"attrs":129},{"color":84},{"type":71,"content":131},[132,137,146],{"text":133,"type":75,"marks":134},"A high-yield savings account is similar to a traditional savings account, except it pays more in interest on the money deposited. Where a traditional savings account might pay a fraction of a percentage point in interest, current interest rates for top high-yield savings accounts ",[135],{"type":82,"attrs":136},{"color":84},{"text":138,"type":75,"marks":139},"are over 4.0%",[140,143,145],{"type":103,"attrs":141},{"href":142,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.cnbc.com/select/best-high-yield-savings-accounts/",{"type":82,"attrs":144},{"color":106},{"type":112},{"text":147,"type":75,"marks":148},". ",[149],{"type":82,"attrs":150},{"color":106},{"type":71,"content":152},[153,158,167],{"text":154,"type":75,"marks":155},"This is ",[156],{"type":82,"attrs":157},{"color":84},{"text":159,"type":75,"marks":160},"compound interest",[161,164,166],{"type":103,"attrs":162},{"href":163,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://money.usnews.com/investing/term/compound-interest",{"type":82,"attrs":165},{"color":106},{"type":112},{"text":168,"type":75,"marks":169},", which means your interest is added to your account balance, and the next interest calculation is made on the full amount. Compound interest is among the best ways to grow your money fast. In addition to having higher interest rates, high-yield accounts are also flexible, accessible, and low-risk. ",[170],{"type":82,"attrs":171},{"color":106},{"type":119,"attrs":173,"content":174},{"level":121},[175],{"text":176,"type":75,"marks":177},"How to open a high-yield savings account",[178,179],{"type":127},{"type":82,"attrs":180},{"color":84},{"type":119,"attrs":182,"content":184},{"level":183},3,[185],{"text":186,"type":75,"marks":187},"1. Compare the APY and features of different accounts",[188,189],{"type":127},{"type":82,"attrs":190},{"color":84},{"type":71,"content":192},[193],{"text":194,"type":75,"marks":195},"Your first step is to shop around and get a feel for what your options are. Here are a few of the most important things to consider when choosing a high-yield savings account. ",[196],{"type":82,"attrs":197},{"color":84},{"type":119,"attrs":199,"content":201},{"level":200},4,[202],{"text":203,"type":75,"marks":204},"APY",[205,206],{"type":127},{"type":82,"attrs":207},{"color":84},{"type":71,"content":209},[210,215,224],{"text":211,"type":75,"marks":212},"APY, or annual percentage yield, is a measure of the money you’ll make in interest each year. The APY on a high-yield savings account typically ranges from 1.0 to 4.5%, and is currently ",[213],{"type":82,"attrs":214},{"color":84},{"text":216,"type":75,"marks":217},"capped at about 5.0%",[218,221,223],{"type":103,"attrs":219},{"href":220,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.fdic.gov/resources/bankers/national-rates/index.html#footnote",{"type":82,"attrs":222},{"color":106},{"type":112},{"text":225,"type":75,"marks":226},". (Note that the best rates can be up to 20 to 25 times higher than the national average for standard savings accounts.)",[227],{"type":82,"attrs":228},{"color":106},{"type":119,"attrs":230,"content":231},{"level":200},[232],{"text":233,"type":75,"marks":234},"Fees",[235,236],{"type":127},{"type":82,"attrs":237},{"color":84},{"type":71,"content":239},[240,245,254],{"text":241,"type":75,"marks":242},"You should also make note of each financial institution’s fee schedule, which you can often find on their FAQs page and in specific account disclosures. Many banks charge overdraft fees, ATM fees, and fees for closing your account within the first 180 days. You may also face penalties for making more than ",[243],{"type":82,"attrs":244},{"color":84},{"text":246,"type":75,"marks":247},"six withdrawals per month",[248,251,253],{"type":103,"attrs":249},{"href":250,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.investopedia.com/articles/pf/09/high-yield-savings-account.asp",{"type":82,"attrs":252},{"color":106},{"type":112},{"text":255,"type":75,"marks":256},". (This is the withdrawal limit on high-yield savings accounts as mandated by federal law.) Many accounts also charge a monthly service fee or monthly maintenance fee just to keep them open. ",[257],{"type":82,"attrs":258},{"color":106},{"type":119,"attrs":260,"content":261},{"level":200},[262],{"text":263,"type":75,"marks":264},"Minimum balance requirements",[265,266],{"type":127},{"type":82,"attrs":267},{"color":84},{"type":71,"content":269},[270],{"text":271,"type":75,"marks":272},"In addition to fees, some banks have minimum deposit requirements. You may need to make a minimum opening deposit to kick things off, and/or maintain a certain account balance to avoid penalties. Of course, not all banks have these kinds of requirements. If you don’t have a ton of extra cash on hand, you may want to look for a high-yield account without any minimums. ",[273],{"type":82,"attrs":274},{"color":84},{"type":119,"attrs":276,"content":277},{"level":200},[278],{"text":279,"type":75,"marks":280},"Access to funds",[281,282],{"type":127},{"type":82,"attrs":283},{"color":84},{"type":71,"content":285},[286,291,296,300],{"text":287,"type":75,"marks":288},"Finally, you should consider how you’d prefer to access your funds. While high-interest savings accounts rarely come with check-writing or debit card capabilities, some banks do provide an ATM card that you can use to withdraw cash. Others only allow ACH or wire transfers. ",[289],{"type":82,"attrs":290},{"color":84},{"type":292,"marks":293},"hard_break",[294],{"type":82,"attrs":295},{"color":106},{"type":292,"marks":297},[298],{"type":82,"attrs":299},{"color":106},{"text":301,"type":75,"marks":302},"Deposit options also vary by account. Many only allow check deposits to be made by mail, and permit only transfers or direct deposits. Other institutions, like Ally Bank and UFB Direct (a division of Axos Bank) permit mobile check deposits via an app. ",[303],{"type":82,"attrs":304},{"color":106},{"type":119,"attrs":306,"content":307},{"level":183},[308],{"text":309,"type":75,"marks":310},"2. Prepare your personal information ",[311,312],{"type":127},{"type":82,"attrs":313},{"color":84},{"type":71,"content":315},[316,321,330],{"text":317,"type":75,"marks":318},"When you’ve chosen the best high-yield savings account for your needs, the next step is to gather your ",[319],{"type":82,"attrs":320},{"color":84},{"text":322,"type":75,"marks":323},"personal information",[324,327,329],{"type":103,"attrs":325},{"href":326,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.businessinsider.com/personal-finance/how-to-open-high-yield-savings-account-online-save-money",{"type":82,"attrs":328},{"color":106},{"type":112},{"text":331,"type":75,"marks":332}," and begin the account opening process. You’ll likely need:",[333],{"type":82,"attrs":334},{"color":106},{"type":336,"content":337},"bullet_list",[338,348,357],{"type":339,"content":340},"list_item",[341],{"type":71,"content":342},[343],{"text":344,"type":75,"marks":345},"A form of identification, such as a driver's license.",[346],{"type":82,"attrs":347},{"color":84},{"type":339,"content":349},[350],{"type":71,"content":351},[352],{"text":353,"type":75,"marks":354},"Proof of your physical address. ",[355],{"type":82,"attrs":356},{"color":106},{"type":339,"content":358},[359],{"type":71,"content":360},[361],{"text":362,"type":75,"marks":363},"Your social security number or Individual Taxpayer Identification number (ITIN).",[364],{"type":82,"attrs":365},{"color":106},{"type":119,"attrs":367,"content":368},{"level":183},[369],{"text":370,"type":75,"marks":371},"3. Submit your application ",[372,373],{"type":127},{"type":82,"attrs":374},{"color":84},{"type":71,"content":376},[377],{"text":378,"type":75,"marks":379},"Most big national banks provide streamlined applications that take just 10 minutes to fill out. If you’re working with a brick-and-mortar bank, you may need to make an in-person appointment to complete your application. If you’re using an online lender, you can almost always complete the entire thing online. ",[380],{"type":82,"attrs":381},{"color":84},{"type":119,"attrs":383,"content":384},{"level":183},[385],{"text":386,"type":75,"marks":387},"4. Make your initial deposit ",[388,389],{"type":127},{"type":82,"attrs":390},{"color":84},{"type":71,"content":392},[393,398,402,406],{"text":394,"type":75,"marks":395},"Once your application is submitted and your identity is confirmed, you’ll be able to add money to your account. Usually, the easiest way to do this is to link your new account to an existing account and transfer funds. ",[396],{"type":82,"attrs":397},{"color":84},{"type":292,"marks":399},[400],{"type":82,"attrs":401},{"color":106},{"type":292,"marks":403},[404],{"type":82,"attrs":405},{"color":106},{"text":407,"type":75,"marks":408},"Some financial institutions will also let you mail a check or use a credit card to make this initial deposit (though using a credit card often comes with high fees). If your account requires a minimum opening deposit, make sure your first deposit amount meets that minimum.",[409],{"type":82,"attrs":410},{"color":106},{"type":119,"attrs":412,"content":413},{"level":183},[414],{"text":415,"type":75,"marks":416},"5. Set up online banking",[417,418],{"type":127},{"type":82,"attrs":419},{"color":84},{"type":71,"content":421},[422],{"text":423,"type":75,"marks":424},"The next step is to set up your online savings account, whether that’s via computer or your bank’s mobile app. From your online dashboard, you’ll be able to link additional accounts, enable mobile alerts, and initiate transfers. You’ll also be able to track your account balance and view your transaction history.",[425],{"type":82,"attrs":426},{"color":84},{"type":119,"attrs":428,"content":429},{"level":183},[430],{"text":431,"type":75,"marks":432},"6. Name beneficiaries ",[433,434],{"type":127},{"type":82,"attrs":435},{"color":84},{"type":71,"content":437},[438],{"text":439,"type":75,"marks":440},"If you weren’t asked to do so during the application process, now is the time to designate a beneficiary. If something were to happen to you, your named beneficiary will inherit the funds from your account. You’ll generally need their legal name, social security number, and other personal information.",[441],{"type":82,"attrs":442},{"color":84},{"type":119,"attrs":444,"content":445},{"level":183},[446],{"text":447,"type":75,"marks":448},"7. Make sure you understand your account limits and regulations  ",[449,450],{"type":127},{"type":82,"attrs":451},{"color":84},{"type":71,"content":453},[454],{"text":455,"type":75,"marks":456},"Lastly, it’s smart to review all the requirements associated with your account. As the primary depositor, you should know how to avoid fees and how many monthly withdrawals you can make without penalty. Also check to see how you can maintain the APY you were initially offered. Some institutions require you to set up recurring transfers or direct deposits before they can offer you their highest APY. ",[457],{"type":82,"attrs":458},{"color":84},{"type":119,"attrs":460,"content":461},{"level":121},[462],{"text":463,"type":75,"marks":464},"Pros of a high-yield savings account ",[465,466],{"type":127},{"type":82,"attrs":467},{"color":84},{"type":336,"content":469},[470,485,500,515,530,545],{"type":339,"content":471},[472],{"type":71,"content":473},[474,480],{"text":475,"type":75,"marks":476},"Higher interest rates than traditional savings accounts",[477,478],{"type":127},{"type":82,"attrs":479},{"color":84},{"text":481,"type":75,"marks":482},". In a traditional savings account, your money is safe, but it’s probably not growing. High-yield savings accounts, on the other hand, allow you to store your money safely while offering you higher rates. Generally, high-yield savings account rates are 15 to 25 times higher than what you’d get with a traditional savings account.",[483],{"type":82,"attrs":484},{"color":106},{"type":339,"content":486},[487],{"type":71,"content":488},[489,495],{"text":490,"type":75,"marks":491},"FDIC-insured for further protection. ",[492,493],{"type":127},{"type":82,"attrs":494},{"color":84},{"text":496,"type":75,"marks":497},"Unlike many stock-market investment vehicles, high-yield savings accounts are protected by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance — sometimes labeled on account disclosures as “member FDIC”— means that you cannot lose your savings due to a fault of your bank, even if the bank goes under.",[498],{"type":82,"attrs":499},{"color":106},{"type":339,"content":501},[502],{"type":71,"content":503},[504,510],{"text":505,"type":75,"marks":506},"More flexible than a CD account. ",[507,508],{"type":127},{"type":82,"attrs":509},{"color":84},{"text":511,"type":75,"marks":512},"A CD (certificate of deposit) account can offer high interest rates, but it will also require you to store those funds for a set term. While your money is in a CD account, you can’t withdraw it before the term is over without incurring penalties and fees. With a high-yield savings account, you’ll be able to make withdrawals and transfers up to a certain limit without penalty.",[513],{"type":82,"attrs":514},{"color":106},{"type":339,"content":516},[517],{"type":71,"content":518},[519,525],{"text":520,"type":75,"marks":521},"Lower-risk than the stock market. ",[522,523],{"type":127},{"type":82,"attrs":524},{"color":84},{"text":526,"type":75,"marks":527},"Long-term, you’re likely to see a higher return on investment from the stock market than with a high-yield savings account. But that ROI may not come before some significant short-term losses. High-yield savings accounts are insulated from those risks, making them better for reaching short-term savings goals.",[528],{"type":82,"attrs":529},{"color":106},{"type":339,"content":531},[532],{"type":71,"content":533},[534,540],{"text":535,"type":75,"marks":536},"Great for money you’re saving for a rainy day. ",[537,538],{"type":127},{"type":82,"attrs":539},{"color":84},{"text":541,"type":75,"marks":542},"High-yield savings accounts are great for storing money you don’t need right now, but may need in the near future. A great example is an emergency fund, or funds you’re saving for a house or car.",[543],{"type":82,"attrs":544},{"color":106},{"type":339,"content":546},[547],{"type":71,"content":548},[549,555],{"text":550,"type":75,"marks":551},"Perfect for storing a windfall. ",[552,553],{"type":127},{"type":82,"attrs":554},{"color":84},{"text":556,"type":75,"marks":557},"Whether it’s birthday money from a relative, a wedding gift, or a tax refund, high-yield savings accounts are a perfect place to store your money until you know what to do with it. By the time you’ve figured out how to use it, there’s a chance it may have already grown.",[558],{"type":82,"attrs":559},{"color":106},{"type":119,"attrs":561,"content":562},{"level":121},[563],{"text":564,"type":75,"marks":565},"Cons of a high-yield savings account",[566,567],{"type":127},{"type":82,"attrs":568},{"color":84},{"type":336,"content":570},[571,600,615,639],{"type":339,"content":572},[573],{"type":71,"content":574},[575,581,586,595],{"text":576,"type":75,"marks":577},"Not as accessible as checking accounts",[578,579],{"type":127},{"type":82,"attrs":580},{"color":84},{"text":582,"type":75,"marks":583},". Legally, you’re only allowed to withdraw money from your high-yield savings account ",[584],{"type":82,"attrs":585},{"color":106},{"text":587,"type":75,"marks":588},"up to 6 times per month",[589,592,594],{"type":103,"attrs":590},{"href":591,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.cnbc.com/select/when-to-open-high-yield-savings-account/",{"type":82,"attrs":593},{"color":106},{"type":112},{"text":596,"type":75,"marks":597}," without fees. For that reason, everyday spending money is better stored in a checking account, where you won’t be charged for consistent usage.",[598],{"type":82,"attrs":599},{"color":106},{"type":339,"content":601},[602],{"type":71,"content":603},[604,610],{"text":605,"type":75,"marks":606},"More requirements than a traditional savings account",[607,608],{"type":127},{"type":82,"attrs":609},{"color":84},{"text":611,"type":75,"marks":612},". Traditional bank accounts don’t always require you to maintain a minimum balance, but high-yield savings accounts often do. High-yield savings accounts also have withdrawal and transfer limits, which you’re less likely to find with a traditional bank account.",[613],{"type":82,"attrs":614},{"color":106},{"type":339,"content":616},[617],{"type":71,"content":618},[619,625,630],{"text":620,"type":75,"marks":621},"Won’t keep up with inflation.",[622,623],{"type":127},{"type":82,"attrs":624},{"color":84},{"text":626,"type":75,"marks":627}," The interest you earn on your high-yield savings accounts will be higher than what you’d get on traditional savings accounts, but it’s still lower than the rate of inflation. For long-term ROI, ",[628],{"type":82,"attrs":629},{"color":106},{"text":631,"type":75,"marks":632},"your money is better stored elsewhere.",[633,636,638],{"type":103,"attrs":634},{"href":635,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.nerdwallet.com/article/investing/the-best-investments-right-now#mutual",{"type":82,"attrs":637},{"color":106},{"type":112},{"type":339,"content":640},[641],{"type":71,"content":642},[643,649],{"text":644,"type":75,"marks":645},"You may earn less than advertised.",[646,647],{"type":127},{"type":82,"attrs":648},{"color":84},{"text":650,"type":75,"marks":651}," The interest rates on high-yield savings accounts aren’t locked in. So if you see an account offering a high rate, know that that rate is subject to change at the bank’s discretion. That means you may not earn as much as you thought you would going in. ",[652],{"type":82,"attrs":653},{"color":106},{"type":119,"attrs":655,"content":656},{"level":121},[657],{"text":658,"type":75,"marks":659},"Alternatives to a high-yield savings account ",[660,661],{"type":127},{"type":82,"attrs":662},{"color":84},{"type":119,"attrs":664,"content":665},{"level":183},[666],{"text":667,"type":75,"marks":668},"A money market account",[669,670],{"type":127},{"type":82,"attrs":671},{"color":84},{"type":71,"content":673},[674],{"text":675,"type":75,"marks":676},"A money market account is similar to high-yield savings in that it offers higher interest rates than a traditional bank account. Though money market interest rates tend to be a little lower than high-yield savings interest rates, the benefit to a money market account is that it’s more likely to offer check-writing and ATM access. ",[677],{"type":82,"attrs":678},{"color":84},{"type":71,"content":680},[681],{"text":682,"type":75,"marks":683},"Money market accounts are available from banks, credit unions, brokerages, and large financial institutions like Capital One or Goldman Sachs. They're also sometimes called money market deposit accounts (MMDA). The name \"money market\" comes from the fact that this type of account allows you to keep your funds liquid — meaning you can easily access them — while still earning a decent rate of return on your money.",[684],{"type":82,"attrs":685},{"color":84},{"type":119,"attrs":687,"content":688},{"level":183},[689],{"text":690,"type":75,"marks":691},"A CD account",[692,693],{"type":127},{"type":82,"attrs":694},{"color":84},{"type":71,"content":696},[697],{"text":698,"type":75,"marks":699},"CDs are a type of savings account insured by the FDIC that can help you earn higher interest rates. With a CD, you agree to keep your money in an account for a specific period of time, and in return the bank promises to grow that money at a fixed interest rate. If you withdraw money from your CD before it matures, you'll pay an early withdrawal penalty that could even wipe out the gains from the interest you earned.",[700],{"type":82,"attrs":701},{"color":84},{"type":71,"content":703},[704],{"text":705,"type":75,"marks":706},"CDs typically come in terms ranging from three months to five years, but longer terms give you better returns than shorter ones. Interest rates on CDs can vary widely depending on the term length and type of CD. You'll also see different types of CDs, including regular CDs, jumbo CDs, and IRA CDs. Each one will have different benefits and drawbacks, so be sure to do your research.",[707],{"type":82,"attrs":708},{"color":84},{"type":119,"attrs":710,"content":711},{"level":121},[712],{"text":713,"type":75,"marks":714},"Explore savings accounts on Navient Marketplace",[715,716],{"type":127},{"type":82,"attrs":717},{"color":84},{"type":71,"content":719},[720],{"text":721,"type":75,"marks":722},"High-yield savings accounts are a great way to get a high APY on funds that would otherwise remain stagnant. That makes them one of the best ways to reach your short-term savings goals. With this type of account, you get guaranteed interest earnings, and you won’t have to risk losing any of your hard-earned cash. ",[723],{"type":82,"attrs":724},{"color":84},{"type":71,"content":726},[727,732,741],{"text":728,"type":75,"marks":729},"If you’re ready to move your money out of your traditional bank account and start growing your savings for real, the Navient Marketplace is a great place to start. This robust online platform has everything you need to learn more about high-yield savings accounts and compare financial products in a convenient one-stop shop. Visit ",[730],{"type":82,"attrs":731},{"color":84},{"text":733,"type":75,"marks":734},"Navient Marketplace",[735,738,740],{"type":103,"attrs":736},{"href":737,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://marketplace.navient.com/",{"type":82,"attrs":739},{"color":106},{"type":112},{"text":742,"type":75,"marks":743}," today to get started.",[744],{"type":82,"attrs":745},{"color":106},{"type":71,"content":747},[748],{"text":749,"type":75,"marks":750},"Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.",[751,753],{"type":78,"attrs":752},{"class":80},{"type":82,"attrs":754},{"color":84},{"type":71,"content":756},[757,764],{"text":758,"type":75,"marks":759},"Information in this blog, including the rates advertised, are current as of 04/27/2023 and subject to change.",[760,762],{"type":78,"attrs":761},{"class":80},{"type":82,"attrs":763},{"color":84},{"text":765,"type":75,"marks":766}," ",[767],{"type":82,"attrs":768},{"color":106},"Typography","mx-7 blog-post-text blog-post-headers",true,{"type":68,"content":773},[774],{"type":71},"\u003C!--#storyblok#{\"name\": \"Typography\", \"space\": \"157494\", \"uid\": \"bbe4297a-be79-46dd-9df2-7033f885ffea\", \"id\": \"651798206\"}-->","start","Column","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"fb1f586b-34d2-4553-84a6-1c536ab78608\", \"id\": 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text-transform-none text-size-sub-1","Button","\u003C!--#storyblok#{\"name\": \"Button\", \"space\": \"157494\", \"uid\": \"60b7aad0-4fb5-4ec4-b557-61a0608af582\", \"id\": \"651798206\"}-->","\u003C!--#storyblok#{\"name\": \"BackToTop\", \"space\": \"157494\", \"uid\": \"64db4d07-4185-4db4-b8e4-7af1e0eed038\", \"id\": \"651798206\"}-->","1240px","Grid","pl-0","ml-7",{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},"\u003C!--#storyblok#{\"name\": \"Grid\", \"space\": \"157494\", \"uid\": \"4c330c4e-f5a7-41f6-8f59-8e9ddfcddf76\", \"id\": \"651798206\"}-->","Savings","BlogPost","https://www.marketplace.navient.com/blog/how-to-open-a-high-yield-savings-account/","\u003C!--#storyblok#{\"name\": \"BlogPost\", \"space\": \"157494\", \"uid\": \"24614723-3c23-4d4f-990b-c49a1b45edce\", \"id\": \"651798206\"}-->","how-to-open-a-high-yield-savings-account","navient_marketplace/blog/how-to-open-a-high-yield-savings-account",20,[],651751493,"20088926-a3c0-4812-aa8e-a6c1af508cfa","2023-05-10T19:26:42.913Z","default",[],{"name":873,"created_at":874,"published_at":875,"updated_at":876,"id":877,"uuid":878,"content":879,"slug":1988,"full_slug":1989,"sort_by_date":106,"position":1990,"tag_list":1991,"is_startpage":45,"parent_id":867,"meta_data":106,"group_id":1992,"first_published_at":1993,"release_id":106,"lang":870,"path":106,"alternates":1994,"default_full_slug":106,"translated_slugs":106},"Benefits and Disadvantages of Term Life Insurance","2025-04-07T18:31:36.056Z","2025-12-26T13:45:15.635Z","2025-12-26T13:45:15.676Z",651798208,"8e911b48-50ac-49a8-8b4e-6957c8d70513",{"seo":880,"_uid":20,"body":883,"author":48,"category":1985,"featured":45,"component":860,"canonicalTag":1986,"_editable":1987},{"_uid":15,"title":881,"plugin":17,"og_image":18,"og_title":18,"description":882,"twitter_image":18,"twitter_title":18,"og_description":18,"twitter_description":18},"Benefits and Disadvantages of Term Life Insurance - Navient Marketplace","What are the benefits of term life insurance? Affordable, flexible, and tax-free. Learn the rest here, along with disadvantages and alternatives.",[884,896,1970],{"id":23,"_uid":885,"image":886,"intro":887,"author":27,"classes":888,"category":18,"featured":45,"blogTitle":873,"component":46,"imageLink":893,"blendImage":45,"authorRoute":48,"publishedDate":894,"backgroundColor":50,"_editable":895},"02557530-adb9-49fb-9319-277497a70cb8","//a.storyblok.com/f/110029/800x471/227172a6b5/benefits-of-term-life-insurance.png","Term life insurance is both flexible and budget-friendly. Here’s how to determine whether or not it’s the right fit for you.",[889],{"_uid":890,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":891,"authorClasses":35,"subtitleColor":36,"titleMaxWidth":37,"subtitleClasses":38,"dateMobileClasses":39,"titleMobileClasses":40,"authorMobileClasses":41,"featuredMobileClasses":42,"subtitleMobileClasses":43,"_editable":892},"6bc0d925-925b-40e2-8cb5-ac30d0086187","text-h4 mt-6 font-weight-bold","\u003C!--#storyblok#{\"name\": \"BlogHeroStyle\", \"space\": \"157494\", \"uid\": \"6bc0d925-925b-40e2-8cb5-ac30d0086187\", \"id\": \"651798208\"}-->","/images/benefits-of-term-life-insurance.png","Updated: April 27, 2023","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"02557530-adb9-49fb-9319-277497a70cb8\", \"id\": \"651798208\"}-->",{"_uid":897,"bloks":898,"classes":830,"component":831,"mobileClasses":18,"containerContent":1968,"_editable":1969},"222843d6-4c0d-4ac3-aa5f-7f579c49c5fe",[899],{"_uid":900,"bloks":901,"classes":18,"justify":776,"component":828,"mobileClasses":18,"_editable":1967},"0737a92f-e416-438d-b8db-1c0e86499923",[902,1534,1563,1675],{"lg":59,"md":59,"sm":60,"_uid":903,"cols":60,"bloks":904,"alignSelf":776,"component":777,"_editable":1533},"c286affa-ee04-4348-8508-6e9f77932903",[905],{"_uid":906,"color":65,"classes":66,"content":18,"richText":907,"component":769,"mobileClasses":770,"enableRichText":771,"richTextMobile":1529,"_editable":1532},"a64c4df0-154e-4c12-b867-678d292709f4",{"type":68,"content":908},[909,917,924,933,949,956,963,972,993,1001,1008,1015,1023,1030,1038,1059,1066,1074,1081,1089,1110,1118,1125,1134,1141,1149,1156,1164,1185,1193,1200,1208,1221,1229,1236,1245,1266,1279,1292,1319,1332,1341,1362,1438,1447,1467],{"type":71,"content":910},[911],{"text":74,"type":75,"marks":912},[913,915],{"type":78,"attrs":914},{"class":80},{"type":82,"attrs":916},{"color":84},{"type":71,"content":918},[919],{"text":920,"type":75,"marks":921},"When you have loved ones depending on you for their livelihoods, life insurance can provide invaluable peace of mind. However, not everyone can afford the high premiums and committing contracts of traditional life insurance. Term life insurance, on the other hand, is both flexible and budget-friendly. If you’re looking for immediate, short-term coverage — either because you only need to cover your dependents for a certain number of years, or because you expect your financial situation to change — term life might be your solution. Here’s how to determine whether or not it’s the right fit for you. ",[922],{"type":82,"attrs":923},{"color":84},{"type":119,"attrs":925,"content":926},{"level":121},[927],{"text":928,"type":75,"marks":929},"What is term life insurance?",[930,931],{"type":127},{"type":82,"attrs":932},{"color":84},{"type":71,"content":934},[935,944],{"text":936,"type":75,"marks":937},"Term life insurance",[938,941,943],{"type":103,"attrs":939},{"href":940,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.nerdwallet.com/article/insurance/what-is-term-life-insurance",{"type":82,"attrs":942},{"color":84},{"type":112},{"text":945,"type":75,"marks":946}," is a type of coverage that helps protect against the financial hardship that can be caused by the sudden death of a breadwinner. In exchange for monthly payments, providers pay out a set amount in the event of your untimely passing.",[947],{"type":82,"attrs":948},{"color":106},{"type":71,"content":950},[951],{"text":952,"type":75,"marks":953},"What makes term life insurance unique is that it has an expiration date. With whole life insurance, you keep paying your premiums for your entire life, but with term life insurance, you only pay premiums up until a predetermined end date. At that point, your term coverage ends. ",[954],{"type":82,"attrs":955},{"color":84},{"type":71,"content":957},[958],{"text":959,"type":75,"marks":960},"Since most people only need life insurance coverage until they reach retirement age or their dependents are old enough to take care of themselves, they’ll stop paying premiums once they reach that milestone. After that, most people move on to other types of insurance, such as permanent or universal life insurance. ",[961],{"type":82,"attrs":962},{"color":106},{"type":119,"attrs":964,"content":965},{"level":121},[966],{"text":967,"type":75,"marks":968},"The benefits of term life insurance ",[969,970],{"type":127},{"type":82,"attrs":971},{"color":84},{"type":71,"content":973},[974,979,988],{"text":975,"type":75,"marks":976},"From flexible payment terms to lower premiums, term ",[977],{"type":82,"attrs":978},{"color":84},{"text":980,"type":75,"marks":981},"life insurance has plenty of perks",[982,985,987],{"type":103,"attrs":983},{"href":984,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.newyorklife.com/articles/six-reasons-to-buy-life-insurance",{"type":82,"attrs":986},{"color":106},{"type":112},{"text":989,"type":75,"marks":990},". Here are a few of the benefits to consider. ",[991],{"type":82,"attrs":992},{"color":106},{"type":119,"attrs":994,"content":995},{"level":183},[996],{"text":997,"type":75,"marks":998},"More coverage options available ",[999],{"type":82,"attrs":1000},{"color":84},{"type":71,"content":1002},[1003],{"text":1004,"type":75,"marks":1005},"Unlike a whole life policy, term coverage is temporary. This means you can take out a policy for almost any period of time you wish. Most insurance providers offer policy terms ranging from 5 to 30 years. So, a couple with young children, for example, may want to take out a policy with a 20- or 30-year term, which will cover the kids until they’re out of the house (and/or out of college). ",[1006],{"type":82,"attrs":1007},{"color":84},{"type":71,"content":1009},[1010],{"text":1011,"type":75,"marks":1012},"Conversely, a newly married person with student debt might want to take a shorter policy — maybe a 10-year term — to protect their partner in case they pass away before paying off their loans. With term life insurance, you can choose whichever term suits your needs. ",[1013],{"type":82,"attrs":1014},{"color":84},{"type":119,"attrs":1016,"content":1017},{"level":183},[1018],{"text":1019,"type":75,"marks":1020},"Flexible payment options",[1021],{"type":82,"attrs":1022},{"color":84},{"type":71,"content":1024},[1025],{"text":1026,"type":75,"marks":1027},"Some term life insurance providers offer multiple payment options. Policyholders can elect to make their premium payments monthly, quarterly, semi-annually, or even annually. This allows you to select a payment schedule that best suits your budgeting style. (Whole life insurance policies, on the other hand, typically follow a monthly schedule with set payment amounts.)",[1028],{"type":82,"attrs":1029},{"color":84},{"type":119,"attrs":1031,"content":1032},{"level":183},[1033],{"text":1034,"type":75,"marks":1035},"Generally cheaper",[1036],{"type":82,"attrs":1037},{"color":84},{"type":71,"content":1039},[1040,1045,1054],{"text":1041,"type":75,"marks":1042},"Because term life coverage is only issued for a specific length of time, ",[1043],{"type":82,"attrs":1044},{"color":84},{"text":1046,"type":75,"marks":1047},"it is less costly",[1048,1051,1053],{"type":103,"attrs":1049},{"href":1050,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.policygenius.com/life-insurance/term-vs-whole-life-insurance/",{"type":82,"attrs":1052},{"color":106},{"type":112},{"text":1055,"type":75,"marks":1056}," than whole life insurance. That makes it a great choice for younger families who aren’t interested in permanent life insurance. ",[1057],{"type":82,"attrs":1058},{"color":106},{"type":71,"content":1060},[1061],{"text":1062,"type":75,"marks":1063},"For example, a 35-year-old nonsmoker in good health, can get a 20-year term policy with $500,000 in coverage for around $30 per month. The same candidate would likely pay more than $500 per month for a whole life insurance policy with the same coverage.",[1064],{"type":82,"attrs":1065},{"color":84},{"type":119,"attrs":1067,"content":1068},{"level":183},[1069],{"text":1070,"type":75,"marks":1071},"Certain plans are renewable",[1072],{"type":82,"attrs":1073},{"color":84},{"type":71,"content":1075},[1076],{"text":1077,"type":75,"marks":1078},"Some companies allow policyholders to renew their term life policy at the end of the term. This gives you the flexibility to end the contract or continue as you wish — all without the fuss of reapplying. Renewal may come with a slight premium increase, especially if you’ve gone up an age bracket since you took out your last policy. However, because you have an existing relationship with your insurance company, you likely won’t need to take a new medical exam.",[1079],{"type":82,"attrs":1080},{"color":84},{"type":119,"attrs":1082,"content":1083},{"level":183},[1084],{"text":1085,"type":75,"marks":1086},"Tax-free death benefit",[1087],{"type":82,"attrs":1088},{"color":84},{"type":71,"content":1090},[1091,1096,1105],{"text":1092,"type":75,"marks":1093},"If you pass away before your term length is up, the insurance company will send your beneficiary a lump sum payout called a “death benefit” or “disbursement.” Term life insurance ",[1094],{"type":82,"attrs":1095},{"color":84},{"text":1097,"type":75,"marks":1098},"disbursements are tax-free",[1099,1102,1104],{"type":103,"attrs":1100},{"href":1101,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.irs.gov/help/ita/are-the-life-insurance-proceeds-i-received-taxable",{"type":82,"attrs":1103},{"color":106},{"type":112},{"text":1106,"type":75,"marks":1107},", so your beneficiary will receive the total amount without any withholdings. This is in contrast to certain whole life plans, which can accrue value over time. In this case, any interest you made on that value will be taxed before the disbursements reach the beneficiary.",[1108],{"type":82,"attrs":1109},{"color":106},{"type":119,"attrs":1111,"content":1112},{"level":183},[1113],{"text":1114,"type":75,"marks":1115},"Easy to cancel",[1116],{"type":82,"attrs":1117},{"color":84},{"type":71,"content":1119},[1120],{"text":1121,"type":75,"marks":1122},"Most term life insurance policies allow you to cancel at any time without having to pay cancellation fees or any other penalties. So, if your financial situation changes mid-way through your term, you can easily back out of your agreement or pivot to a new plan that better suits your needs.",[1123],{"type":82,"attrs":1124},{"color":84},{"type":119,"attrs":1126,"content":1127},{"level":121},[1128],{"text":1129,"type":75,"marks":1130},"The disadvantages of term life insurance ",[1131,1132],{"type":127},{"type":82,"attrs":1133},{"color":84},{"type":71,"content":1135},[1136],{"text":1137,"type":75,"marks":1138},"While it can have a ton of benefits, term life insurance may not be the best choice for everyone. Here are a few potential drawbacks to consider before you take out a policy. ",[1139],{"type":82,"attrs":1140},{"color":84},{"type":119,"attrs":1142,"content":1143},{"level":183},[1144],{"text":1145,"type":75,"marks":1146},"When you renew, your premiums are based on your current health.",[1147],{"type":82,"attrs":1148},{"color":84},{"type":71,"content":1150},[1151],{"text":1152,"type":75,"marks":1153},"Unlike whole life insurance — which locks you into a predetermined rate for your entire life — your term life policy will be based upon your health at the start of each term. So, even if you choose to renew your term life insurance, your new policy won’t necessarily be an exact continuation of your old policy. If you develop health issues during a term or between terms, you could see a significant rate hike if you take out a new one.",[1154],{"type":82,"attrs":1155},{"color":84},{"type":119,"attrs":1157,"content":1158},{"level":183},[1159],{"text":1160,"type":75,"marks":1161},"Term life insurance doesn’t have a cash value component, so there’s no investment aspect. You also can’t take out loans against it.",[1162],{"type":82,"attrs":1163},{"color":84},{"type":71,"content":1165},[1166,1171,1180],{"text":1167,"type":75,"marks":1168},"With many types of whole life insurance, your policy will build value as you pay into it. That means you can treat a whole life policy as an investment. You can make money on it via interest, and you can ",[1169],{"type":82,"attrs":1170},{"color":84},{"text":1172,"type":75,"marks":1173},"access those funds",[1174,1177,1179],{"type":103,"attrs":1175},{"href":1176,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.guardianlife.com/life-insurance/withdraw",{"type":82,"attrs":1178},{"color":106},{"type":112},{"text":1181,"type":75,"marks":1182}," while you’re still alive. In a term life agreement, however, your policy will not build cash value. You can’t make interest on the money you pay into it, and the amount of coverage won’t grow over time.   ",[1183],{"type":82,"attrs":1184},{"color":106},{"type":119,"attrs":1186,"content":1187},{"level":183},[1188],{"text":1189,"type":75,"marks":1190},"You can’t surrender your policy for cash value if you no longer want it.",[1191],{"type":82,"attrs":1192},{"color":84},{"type":71,"content":1194},[1195],{"text":1196,"type":75,"marks":1197},"If you cancel a whole life insurance plan prematurely, you may be able to receive a percentage of the funds that have accrued during the active policy period. However, term life insurance policies don’t have a cash value component to them. So, if you cancel your agreement, you won’t receive any cash back. ",[1198],{"type":82,"attrs":1199},{"color":84},{"type":119,"attrs":1201,"content":1202},{"level":183},[1203],{"text":1204,"type":75,"marks":1205},"Term life doesn’t cover pre-existing conditions.",[1206],{"type":82,"attrs":1207},{"color":84},{"type":71,"content":1209},[1210,1215],{"text":1211,"type":75,"marks":1212},"If you have pre-existing medical conditions, you may not qualify for term coverage. To find out, you can check the insurance provider’s list of exclusions before you apply. If you have a pre-existing condition, you may want to look for a “guaranteed-issue” policy, but be prepared to pay much higher premiums. ",[1213],{"type":82,"attrs":1214},{"color":84},{"text":1216,"type":75,"marks":1217},"  ",[1218,1219],{"type":127},{"type":82,"attrs":1220},{"color":106},{"type":119,"attrs":1222,"content":1223},{"level":183},[1224],{"text":1225,"type":75,"marks":1226},"If you die outside of the term, you won’t receive a death benefit.",[1227],{"type":82,"attrs":1228},{"color":84},{"type":71,"content":1230},[1231],{"text":1232,"type":75,"marks":1233},"Term life policies have specific, rigid term lengths. If your death occurs outside these parameters, you will not receive a death benefit. If you reach the end of the term, it is important to renew your policy quickly to avoid any lapse in coverage.",[1234],{"type":82,"attrs":1235},{"color":84},{"type":119,"attrs":1237,"content":1238},{"level":121},[1239],{"text":1240,"type":75,"marks":1241},"Types of term life insurance",[1242,1243],{"type":127},{"type":82,"attrs":1244},{"color":84},{"type":71,"content":1246},[1247,1252,1261],{"text":1248,"type":75,"marks":1249},"Before you shop around with different life insurance companies, first educate yourself on the ",[1250],{"type":82,"attrs":1251},{"color":84},{"text":1253,"type":75,"marks":1254},"different kinds of policies",[1255,1258,1260],{"type":103,"attrs":1256},{"href":1257,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.guardianlife.com/life-insurance/how-term-life-works",{"type":82,"attrs":1259},{"color":106},{"type":112},{"text":1262,"type":75,"marks":1263}," available. Different policies carry different term lengths and payment structures. Here’s how to figure out which life insurance option is best for you.",[1264],{"type":82,"attrs":1265},{"color":106},{"type":71,"content":1267},[1268,1274],{"text":1269,"type":75,"marks":1270},"Level premium",[1271,1272],{"type":127},{"type":82,"attrs":1273},{"color":84},{"text":1275,"type":75,"marks":1276},": Also referred to as “level term,” this is one of the more common types of term life insurance. With this kind of coverage, your premium will remain the same for the duration of the policy. That can make these types of policies easier to work into your regular budget, since your rate won’t change over time. ",[1277],{"type":82,"attrs":1278},{"color":106},{"type":71,"content":1280},[1281,1287],{"text":1282,"type":75,"marks":1283},"Yearly renewable term",[1284,1285],{"type":127},{"type":82,"attrs":1286},{"color":84},{"text":1288,"type":75,"marks":1289},": A yearly or annual renewable-term policy covers you for a year at a time. This type of life insurance coverage gives you the option to renew your policy every 12 months without a medical exam. However, each renewal comes with a premium increase. Yearly renewable term policies can look tempting because they start out with lower premiums than level term policies do. However, they often end up more expensive in the long run because of the annual premium increases. ",[1290],{"type":82,"attrs":1291},{"color":106},{"type":71,"content":1293},[1294,1300,1305,1314],{"text":1295,"type":75,"marks":1296},"Return of premium",[1297,1298],{"type":127},{"type":82,"attrs":1299},{"color":84},{"text":1301,"type":75,"marks":1302},": With this type of term policy, you will receive a payout of all or a portion of your premiums if you live to the end of the policy term. However, you can expect premiums to be much higher (two to four times higher) than they would be with a level term policy. Additionally, if you ",[1303],{"type":82,"attrs":1304},{"color":106},{"text":1306,"type":75,"marks":1307},"allow the policy to lapse",[1308,1311,1313],{"type":103,"attrs":1309},{"href":1310,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.policygenius.com/life-insurance/what-is-a-life-insurance-policy-lapse/",{"type":82,"attrs":1312},{"color":106},{"type":112},{"text":1315,"type":75,"marks":1316},", you may only receive back a portion of the premiums, if anything at all.",[1317],{"type":82,"attrs":1318},{"color":106},{"type":71,"content":1320},[1321,1327],{"text":1322,"type":75,"marks":1323},"Guaranteed issue",[1324,1325],{"type":127},{"type":82,"attrs":1326},{"color":84},{"text":1328,"type":75,"marks":1329},": As the name indicates, you cannot be turned down for this type of life insurance. You won’t have to take a medical exam, and the insurance provider typically asks very few — if any — health questions. Because this type of policy is available to riskier candidates, it typically comes with higher premiums and provides less coverage than other policy types. Additionally, most brokers won’t pay the full death benefit unless the insured lives for two or three years after the policy is created. So, if a policyholder passes away suddenly within those first years  — even from natural causes — their beneficiaries may not get the funds they need. ",[1330],{"type":82,"attrs":1331},{"color":106},{"type":119,"attrs":1333,"content":1334},{"level":121},[1335],{"text":1336,"type":75,"marks":1337},"How much does term life insurance cost?",[1338,1339],{"type":127},{"type":82,"attrs":1340},{"color":84},{"type":71,"content":1342},[1343,1348,1357],{"text":1344,"type":75,"marks":1345},"Term life insurance is usually less expensive than whole life insurance. Because term life insurance only lasts for a specific number of years, it isn’t uncommon to see term life premiums ",[1346],{"type":82,"attrs":1347},{"color":84},{"text":1349,"type":75,"marks":1350},"five to fifteen times lower",[1351,1354,1356],{"type":103,"attrs":1352},{"href":1353,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.investopedia.com/term-life-vs-whole-life-5075430",{"type":82,"attrs":1355},{"color":106},{"type":112},{"text":1358,"type":75,"marks":1359}," than whole life policies with the same coverage amount. However, there’s still some variability within term policies. To find a good price, you need to understand what factors determine the cost. These include:",[1360],{"type":82,"attrs":1361},{"color":106},{"type":336,"content":1363},[1364,1379,1394,1423],{"type":339,"content":1365},[1366],{"type":71,"content":1367},[1368,1374],{"text":1369,"type":75,"marks":1370},"Your health",[1371,1372],{"type":127},{"type":82,"attrs":1373},{"color":84},{"text":1375,"type":75,"marks":1376},": Your health is one of the biggest factors insurance providers use to determine your premiums. Because healthier people are at lower risk of dying, insurance providers tend to offer them lower premiums. To evaluate your health, insurance agents will ask you about your medical history and health habits and may request a medical exam. Family history — especially related to cancer, diabetes, alcohol dependence, or heart disease — may also impact the way issuers determine your personal health risk. ",[1377],{"type":82,"attrs":1378},{"color":106},{"type":339,"content":1380},[1381],{"type":71,"content":1382},[1383,1389],{"text":1384,"type":75,"marks":1385},"Your age",[1386,1387],{"type":127},{"type":82,"attrs":1388},{"color":106},{"text":1390,"type":75,"marks":1391},": Age also affects the underwriting for your loan policy. The older you are, the more likely it is that an insurer will have to pay out on your policy, so insurance providers almost always charge older policyholders higher premiums. This is why it can be advantageous to take out a policy when you’re still young. ",[1392],{"type":82,"attrs":1393},{"color":106},{"type":339,"content":1395},[1396],{"type":71,"content":1397},[1398,1404,1409,1418],{"text":1399,"type":75,"marks":1400},"Your coverage amount",[1401,1402],{"type":127},{"type":82,"attrs":1403},{"color":106},{"text":1405,"type":75,"marks":1406},": Your coverage amount — i.e., the payout you’ll receive in the event of death — will also determine how high your premiums are. ",[1407],{"type":82,"attrs":1408},{"color":106},{"text":1410,"type":75,"marks":1411},"Average coverage amounts",[1412,1415,1417],{"type":103,"attrs":1413},{"href":1414,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.guardianlife.com/life-insurance/rates",{"type":82,"attrs":1416},{"color":106},{"type":112},{"text":1419,"type":75,"marks":1420}," range from $250,000 to $1,000,000. The higher your coverage amount, the higher your premium payments will be.  ",[1421],{"type":82,"attrs":1422},{"color":106},{"type":339,"content":1424},[1425],{"type":71,"content":1426},[1427,1433],{"text":1428,"type":75,"marks":1429},"Your term length: ",[1430,1431],{"type":127},{"type":82,"attrs":1432},{"color":106},{"text":1434,"type":75,"marks":1435},"Typical term life insurance policies range from 10 to 30 years. If you select a policy with a longer term length, you’ll be paying into the plan for longer. Because of this, your individual premiums will be lower.",[1436],{"type":82,"attrs":1437},{"color":106},{"type":119,"attrs":1439,"content":1440},{"level":121},[1441],{"text":1442,"type":75,"marks":1443},"How much life insurance coverage do I need? ",[1444,1445],{"type":127},{"type":82,"attrs":1446},{"color":84},{"type":71,"content":1448},[1449,1454,1462],{"text":1450,"type":75,"marks":1451},"Determining ",[1452],{"type":82,"attrs":1453},{"color":84},{"text":1455,"type":75,"marks":1456},"how much life insurance",[1457,1459,1461],{"type":103,"attrs":1458},{"href":1257,"uuid":106,"anchor":106,"target":106,"linktype":108},{"type":82,"attrs":1460},{"color":106},{"type":112},{"text":1463,"type":75,"marks":1464}," you need depends on your personal situation and timeline. There are a few methods you can use to figure out what you need:",[1465],{"type":82,"attrs":1466},{"color":106},{"type":336,"content":1468},[1469,1484,1499,1514],{"type":339,"content":1470},[1471],{"type":71,"content":1472},[1473,1479],{"text":1474,"type":75,"marks":1475},"Multiply your salary by 10: ",[1476,1477],{"type":127},{"type":82,"attrs":1478},{"color":84},{"text":1480,"type":75,"marks":1481},"This is one of the simplest ways to determine a good life insurance threshold. However, if you have children, this method may not account for added expenses such as college tuition.",[1482],{"type":82,"attrs":1483},{"color":106},{"type":339,"content":1485},[1486],{"type":71,"content":1487},[1488,1494],{"text":1489,"type":75,"marks":1490},"Multiply your salary by 10, then add college costs: ",[1491,1492],{"type":127},{"type":82,"attrs":1493},{"color":106},{"text":1495,"type":75,"marks":1496},"Adding $100,000 to $150,000 per child for college expenses (on top of the salary multiplier) can give your kids some extra financial cushion and help them afford a college education.",[1497],{"type":82,"attrs":1498},{"color":106},{"type":339,"content":1500},[1501],{"type":71,"content":1502},[1503,1509],{"text":1504,"type":75,"marks":1505},"Use the DIME formula: ",[1506,1507],{"type":127},{"type":82,"attrs":1508},{"color":106},{"text":1510,"type":75,"marks":1511},"The debt, income, mortgage, and education (DIME) method accounts for additional financial obligations. With this method, you first determine the amount you expect to pay annually toward your mortgage, debt payments, and any tuition. Then, add these on top of your salary multiplier to calculate your total coverage. ",[1512],{"type":82,"attrs":1513},{"color":106},{"type":339,"content":1515},[1516],{"type":71,"content":1517},[1518,1524],{"text":1519,"type":75,"marks":1520},"Calculate your lifetime earning potential:",[1521,1522],{"type":127},{"type":82,"attrs":1523},{"color":106},{"text":1525,"type":75,"marks":1526}," This method considers what you’re making now, as well as what you expect to make down the road. This calculation changes based on age, but you can get a rough illustration in the table below:",[1527],{"type":82,"attrs":1528},{"color":106},{"type":68,"content":1530},[1531],{"type":71},"\u003C!--#storyblok#{\"name\": \"Typography\", \"space\": \"157494\", \"uid\": \"a64c4df0-154e-4c12-b867-678d292709f4\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"c286affa-ee04-4348-8508-6e9f77932903\", \"id\": \"651798208\"}-->",{"lg":780,"md":18,"sm":780,"_uid":1535,"cols":780,"bloks":1536,"alignSelf":776,"component":777,"_editable":1562},"5277645c-7102-4a2e-9059-77ece298cfd1",[1537],{"id":784,"_uid":1538,"fixed":771,"title":1539,"classes":792,"maxWidth":18,"subtitle":1545,"component":796,"titleClasses":797,"mobileClasses":798,"backgroundColor":799,"subtitleClasses":800,"checkYourRateBtn":1548,"_editable":1561},"56f93595-4560-4a1d-addd-e6b8575e2ad3",{"type":68,"content":1540},[1541],{"type":71,"content":1542},[1543],{"text":1544,"type":75},"Search and compare to get a low rate and save.",{"type":68,"content":1546},[1547],{"type":71},[1549],{"url":1550,"_uid":1552,"icon":1553,"text":1554,"color":810,"sizing":1555,"classes":821,"rounded":45,"outlined":45,"component":822,"textColor":799,"hoverBgColor":799,"mobileClasses":823,"hoverTextColor":810,"navigationType":1559,"_editable":1560},{"id":18,"url":1551,"linktype":108,"fieldtype":805,"cached_url":1551},"https://www.leaplife.com/partner/navientlifeinsurance/life-insurance/","b85a45b7-57da-4e6f-b680-ef9da79ce85d",{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":106,"copyright":106,"fieldtype":808},"Check It Out",[1556],{"_uid":1557,"width":814,"height":815,"fontSize":816,"component":817,"mobileWidth":818,"mobileHeight":815,"fontSizeMobile":819,"_editable":1558},"1431aed2-aef3-4868-8695-d3db1b068b18","\u003C!--#storyblok#{\"name\": \"buttonSizing\", \"space\": \"157494\", \"uid\": \"1431aed2-aef3-4868-8695-d3db1b068b18\", \"id\": \"651798208\"}-->",[],"\u003C!--#storyblok#{\"name\": \"CheckYourRateBtn\", \"space\": \"157494\", \"uid\": \"b85a45b7-57da-4e6f-b680-ef9da79ce85d\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"BlogCTA\", \"space\": \"157494\", \"uid\": \"56f93595-4560-4a1d-addd-e6b8575e2ad3\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"5277645c-7102-4a2e-9059-77ece298cfd1\", \"id\": \"651798208\"}-->",{"lg":59,"md":59,"sm":60,"_uid":1564,"cols":60,"bloks":1565,"classes":1673,"alignSelf":1657,"component":777,"_editable":1674},"e229c45d-68a1-4dee-8aad-9b0bc6074feb",[1566],{"_uid":1567,"table":1568,"component":1655,"tableWidth":1656,"rowCellAlign":1657,"footerContent":1658,"includeFooter":771,"footerRichText":1659,"headerCellAlign":1657,"_editable":1672},"a325b247-a33b-48e8-bd2f-9fea86e97f63",{"tbody":1569,"thead":1644,"fieldtype":1654},[1570,1584,1596,1608,1620,1632],{"_uid":1571,"body":1572,"component":1582,"_editable":1583},"e33c689f-1e2e-4a30-9570-2121fb0dbfc7",[1573,1578],{"_uid":1574,"value":1575,"component":1576,"_editable":1577},"4ff79c24-b433-425a-aaf7-3e624f8f52a2","18-40","_table_col","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"4ff79c24-b433-425a-aaf7-3e624f8f52a2\", \"id\": \"651798208\"}-->",{"_uid":1579,"value":1580,"component":1576,"_editable":1581},"7c1df32d-9954-4ce8-bb64-dcf17cf88eb4","30 times income","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"7c1df32d-9954-4ce8-bb64-dcf17cf88eb4\", \"id\": \"651798208\"}-->","_table_row","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"e33c689f-1e2e-4a30-9570-2121fb0dbfc7\", \"id\": \"651798208\"}-->",{"_uid":1585,"body":1586,"component":1582,"_editable":1595},"c4e3ad99-f201-4837-bd27-f5575bd95f42",[1587,1591],{"_uid":1588,"value":1589,"component":1576,"_editable":1590},"6b315c1e-1d5c-47d8-81a0-e0225c600eaa","41-50","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"6b315c1e-1d5c-47d8-81a0-e0225c600eaa\", \"id\": \"651798208\"}-->",{"_uid":1592,"value":1593,"component":1576,"_editable":1594},"aee77fdd-d97d-46f9-98ab-770dd6d791a7","20 times income","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"aee77fdd-d97d-46f9-98ab-770dd6d791a7\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"c4e3ad99-f201-4837-bd27-f5575bd95f42\", \"id\": \"651798208\"}-->",{"_uid":1597,"body":1598,"component":1582,"_editable":1607},"fe9ab8b8-f7e8-41f8-b8c0-f162263d86e3",[1599,1603],{"_uid":1600,"value":1601,"component":1576,"_editable":1602},"5fd1142f-3be2-4528-97aa-d3e5f7b2a8aa","51-60","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"5fd1142f-3be2-4528-97aa-d3e5f7b2a8aa\", \"id\": \"651798208\"}-->",{"_uid":1604,"value":1605,"component":1576,"_editable":1606},"eef4d04c-b14f-4da9-9761-d1b73d333847","15 times income","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"eef4d04c-b14f-4da9-9761-d1b73d333847\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"fe9ab8b8-f7e8-41f8-b8c0-f162263d86e3\", \"id\": \"651798208\"}-->",{"_uid":1609,"body":1610,"component":1582,"_editable":1619},"4dc8e557-36d7-4f79-b09b-cee72ff9ace5",[1611,1615],{"_uid":1612,"value":1613,"component":1576,"_editable":1614},"1ae8583e-7dc9-437f-bba2-991a4d995361","61-65","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"1ae8583e-7dc9-437f-bba2-991a4d995361\", \"id\": \"651798208\"}-->",{"_uid":1616,"value":1617,"component":1576,"_editable":1618},"f4ad43ea-4d42-4a87-9374-720dc461cf64","10 times income","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"f4ad43ea-4d42-4a87-9374-720dc461cf64\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"4dc8e557-36d7-4f79-b09b-cee72ff9ace5\", \"id\": \"651798208\"}-->",{"_uid":1621,"body":1622,"component":1582,"_editable":1631},"1f6555dd-c46d-41f6-9242-5f1b489b6b8d",[1623,1627],{"_uid":1624,"value":1625,"component":1576,"_editable":1626},"c6fd72cd-d891-4a1a-9626-527635a8b68e","66-70","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"c6fd72cd-d891-4a1a-9626-527635a8b68e\", \"id\": \"651798208\"}-->",{"_uid":1628,"value":1629,"component":1576,"_editable":1630},"18357d7e-e5f4-4ce8-920a-82b05f0f25f9","1 times net worth","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"18357d7e-e5f4-4ce8-920a-82b05f0f25f9\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"1f6555dd-c46d-41f6-9242-5f1b489b6b8d\", \"id\": \"651798208\"}-->",{"_uid":1633,"body":1634,"component":1582,"_editable":1643},"b73f70fa-529c-4572-bd36-aa7eaa81c02b",[1635,1639],{"_uid":1636,"value":1637,"component":1576,"_editable":1638},"3e30046c-9315-4cf7-95b8-5593b427b2ab","71-75","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"3e30046c-9315-4cf7-95b8-5593b427b2ab\", \"id\": \"651798208\"}-->",{"_uid":1640,"value":1641,"component":1576,"_editable":1642},"cfd17eef-16b9-4e34-bac2-d9159f5dce05","0.5 times net worth","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"cfd17eef-16b9-4e34-bac2-d9159f5dce05\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"b73f70fa-529c-4572-bd36-aa7eaa81c02b\", \"id\": \"651798208\"}-->",[1645,1650],{"_uid":1646,"value":1647,"component":1648,"_editable":1649},"47e96c34-437b-41cf-af5e-f15013974fdc","Age","_table_head","\u003C!--#storyblok#{\"name\": \"_table_head\", \"space\": \"157494\", \"uid\": \"47e96c34-437b-41cf-af5e-f15013974fdc\", \"id\": \"651798208\"}-->",{"_uid":1651,"value":1652,"component":1648,"_editable":1653},"77f6841e-e966-47e8-9a99-ed0d6226872f","Maximum Life Insurance","\u003C!--#storyblok#{\"name\": \"_table_head\", \"space\": \"157494\", \"uid\": \"77f6841e-e966-47e8-9a99-ed0d6226872f\", \"id\": \"651798208\"}-->","table","TableComponent","350px","center","Source: Guardian",{"type":68,"content":1660},[1661],{"type":71,"content":1662},[1663,1665],{"text":1664,"type":75},"Source: ",{"text":1666,"type":75,"marks":1667},"Guardian",[1668],{"type":103,"attrs":1669},{"href":1670,"uuid":106,"anchor":106,"custom":1671,"target":107,"linktype":108},"https://www.guardianlife.com/life-insurance/how-term-life-works#How%20much","[object Object]","\u003C!--#storyblok#{\"name\": \"TableComponent\", \"space\": \"157494\", \"uid\": \"a325b247-a33b-48e8-bd2f-9fea86e97f63\", \"id\": \"651798208\"}-->","center-content","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"e229c45d-68a1-4dee-8aad-9b0bc6074feb\", \"id\": \"651798208\"}-->",{"lg":59,"md":59,"sm":60,"_uid":1676,"cols":60,"bloks":1677,"alignSelf":776,"component":777,"_editable":1966},"2bd54e19-1519-4581-a3cd-36b567949c3a",[1678],{"_uid":1679,"color":65,"classes":66,"content":18,"richText":1680,"component":769,"mobileClasses":770,"enableRichText":771,"richTextMobile":1962,"_editable":1965},"1c7bce69-59db-42fa-bf55-3b2916c6425c",{"type":68,"content":1681},[1682,1691,1698,1779,1788,1795,1803,1837,1845,1866,1874,1895,1903,1910,1919,1926,1945,1953],{"type":119,"attrs":1683,"content":1684},{"level":121},[1685],{"text":1686,"type":75,"marks":1687},"How getting term life insurance works",[1688,1689],{"type":127},{"type":82,"attrs":1690},{"color":84},{"type":71,"content":1692},[1693],{"text":1694,"type":75,"marks":1695},"Essentially, a term life insurance policy is a contract between the policyholder and the insurance company. The specific term (typically 10 to 30 years) dictates how long that contract will last. Here’s how to go about finding a policy:",[1696],{"type":82,"attrs":1697},{"color":84},{"type":1699,"attrs":1700,"content":1703},"ordered_list",{"order":1701},{"order":1702},1,[1704,1719,1734,1749,1764],{"type":339,"content":1705},[1706],{"type":71,"content":1707},[1708,1714],{"text":1709,"type":75,"marks":1710},"Start shopping around:",[1711,1712],{"type":127},{"type":82,"attrs":1713},{"color":84},{"text":1715,"type":75,"marks":1716}," Shop around between multiple providers to see what kinds of life insurance rates they can offer you. Some may require you to fill out a form or questionnaire before they can give you a life insurance quote.",[1717],{"type":82,"attrs":1718},{"color":106},{"type":339,"content":1720},[1721],{"type":71,"content":1722},[1723,1729],{"text":1724,"type":75,"marks":1725},"Compare life insurance quotes: ",[1726,1727],{"type":127},{"type":82,"attrs":1728},{"color":106},{"text":1730,"type":75,"marks":1731},"When you’ve checked with a handful of providers, you can then compare quotes and choose the company that will give you the best deal.",[1732],{"type":82,"attrs":1733},{"color":106},{"type":339,"content":1735},[1736],{"type":71,"content":1737},[1738,1744],{"text":1739,"type":75,"marks":1740},"Fill out an application:",[1741,1742],{"type":127},{"type":82,"attrs":1743},{"color":106},{"text":1745,"type":75,"marks":1746}," When you’ve made your final choice, you’ll then fill out a formal application. During this process, the insurance company will find out more about you. Insurance agents may request medical records or schedule a medical exam to assess your health. They may also want to know more about your occupation and hobbies. Someone who works as a lumberjack will certainly carry more occupational risk than someone who works as an accountant, for example. Likewise, if your hobbies include dangerous sports like riding motorcycles or scuba diving, you may see higher rates.",[1747],{"type":82,"attrs":1748},{"color":106},{"type":339,"content":1750},[1751],{"type":71,"content":1752},[1753,1759],{"text":1754,"type":75,"marks":1755},"Choose your policy details: ",[1756,1757],{"type":127},{"type":82,"attrs":1758},{"color":106},{"text":1760,"type":75,"marks":1761},"Now you’ll choose your term length and amount of coverage. These numbers will depend on your age, income, and specific needs.",[1762],{"type":82,"attrs":1763},{"color":106},{"type":339,"content":1765},[1766],{"type":71,"content":1767},[1768,1774],{"text":1769,"type":75,"marks":1770},"Name your beneficiaries: ",[1771,1772],{"type":127},{"type":82,"attrs":1773},{"color":106},{"text":1775,"type":75,"marks":1776},"Beneficiaries are the individuals who will receive the payout if you pass away before the end of the term window. Usually these are the same people you list as dependents on your taxes, but they don’t have to be. You can either choose a single person — such as a spouse, sibling, or child — or you can choose to divide the death benefit between several beneficiaries. ",[1777],{"type":82,"attrs":1778},{"color":106},{"type":119,"attrs":1780,"content":1781},{"level":121},[1782],{"text":1783,"type":75,"marks":1784},"Other types of life insurance",[1785,1786],{"type":127},{"type":82,"attrs":1787},{"color":84},{"type":71,"content":1789},[1790],{"text":1791,"type":75,"marks":1792},"There are many different types of life insurance. Here are a few of the alternatives to term life insurance:",[1793],{"type":82,"attrs":1794},{"color":84},{"type":119,"attrs":1796,"content":1797},{"level":183},[1798],{"text":1799,"type":75,"marks":1800},"Whole life ",[1801],{"type":82,"attrs":1802},{"color":84},{"type":71,"content":1804},[1805,1810,1819,1824,1828,1832],{"text":1806,"type":75,"marks":1807},"A ",[1808],{"type":82,"attrs":1809},{"color":84},{"text":1811,"type":75,"marks":1812},"whole life insurance",[1813,1816,1818],{"type":103,"attrs":1814},{"href":1815,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.guardianlife.com/life-insurance/whole-life/how-it-works",{"type":82,"attrs":1817},{"color":106},{"type":112},{"text":1820,"type":75,"marks":1821}," policy carries lifetime coverage as long as you make your payments. Although the payment amounts remain the same for life, they are typically more expensive than term life insurance premiums — even on a policy that provides the same amount of coverage. ",[1822],{"type":82,"attrs":1823},{"color":106},{"type":292,"marks":1825},[1826],{"type":82,"attrs":1827},{"color":106},{"type":292,"marks":1829},[1830],{"type":82,"attrs":1831},{"color":106},{"text":1833,"type":75,"marks":1834},"Unlike term life, whole life policies can accumulate cash over time, and you can borrow the funds as needed. However, if those funds go unrepaid, the policy’s value and death benefit will decrease accordingly. ",[1835],{"type":82,"attrs":1836},{"color":106},{"type":119,"attrs":1838,"content":1839},{"level":183},[1840],{"text":1841,"type":75,"marks":1842},"Universal life",[1843],{"type":82,"attrs":1844},{"color":84},{"type":71,"content":1846},[1847,1852,1861],{"text":1848,"type":75,"marks":1849},"Universal life insurance is similar to whole life insurance in that they both provide lifetime protection while building cash value. However, a universal life policy ",[1850],{"type":82,"attrs":1851},{"color":84},{"text":1853,"type":75,"marks":1854},"is more flexible",[1855,1858,1860],{"type":103,"attrs":1856},{"href":1857,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.guardianlife.com/life-insurance/universal-life",{"type":82,"attrs":1859},{"color":106},{"type":112},{"text":1862,"type":75,"marks":1863}," in that you have the option to raise or lower your premium as needed. This can make it less expensive than whole life insurance. However, if you make lower payments for too long, this can negatively impact the policy’s death benefit and cash growth potential.  ",[1864],{"type":82,"attrs":1865},{"color":106},{"type":119,"attrs":1867,"content":1868},{"level":183},[1869],{"text":1870,"type":75,"marks":1871},"Variable life",[1872],{"type":82,"attrs":1873},{"color":84},{"type":71,"content":1875},[1876,1881,1890],{"text":1877,"type":75,"marks":1878},"Variable life insurance is another type of permanent life insurance: as long as you pay your premiums, you’re covered for your entire life. However, ",[1879],{"type":82,"attrs":1880},{"color":84},{"text":1882,"type":75,"marks":1883},"variable life policies",[1884,1887,1889],{"type":103,"attrs":1885},{"href":1886,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.valuepenguin.com/life-insurance/variable-life-insurance",{"type":82,"attrs":1888},{"color":106},{"type":112},{"text":1891,"type":75,"marks":1892}," are unique in that they give you the option to reinvest any accumulated cash value. You may choose to reinvest the money into stocks, bonds, or an index. Because the cash is invested, variable life policies can be riskier and may carry higher fees than other types of life insurance. ",[1893],{"type":82,"attrs":1894},{"color":106},{"type":119,"attrs":1896,"content":1897},{"level":183},[1898],{"text":1899,"type":75,"marks":1900},"Indexed universal life",[1901],{"type":82,"attrs":1902},{"color":84},{"type":71,"content":1904},[1905],{"text":1906,"type":75,"marks":1907},"Indexed universal life insurance is a permanent life insurance policy that pays interest based on the fluctuation of the stock market. Unlike variable life insurance, you can’t invest your cash value into stocks or bonds. Instead, you’re tied to a specific stock market index. That means your funds will be subject to the volatility of the stock market as a whole. (However, there is usually a floor or cap to minimize the impact of large swings.) ",[1908],{"type":82,"attrs":1909},{"color":84},{"type":119,"attrs":1911,"content":1912},{"level":121},[1913],{"text":1914,"type":75,"marks":1915},"Explore term life insurance on Navient Marketplace",[1916,1917],{"type":127},{"type":82,"attrs":1918},{"color":84},{"type":71,"content":1920},[1921],{"text":1922,"type":75,"marks":1923},"If you’re the sole or primary breadwinner in your family, term life insurance can be an affordable way to protect your dependents against financial destitution. With term coverage, you can elect to be covered for a specific period of time and cancel your policy any time you wish. This makes it one of the most flexible options for life insurance on the market.",[1924],{"type":82,"attrs":1925},{"color":84},{"type":71,"content":1927},[1928,1933,1940],{"text":1929,"type":75,"marks":1930},"If you’re ready to shop for term policies — or just get a feel for what life insurance products are available to you — head over to ",[1931],{"type":82,"attrs":1932},{"color":106},{"text":733,"type":75,"marks":1934},[1935,1937,1939],{"type":103,"attrs":1936},{"href":737,"uuid":106,"anchor":106,"target":107,"linktype":108},{"type":82,"attrs":1938},{"color":106},{"type":112},{"text":1941,"type":75,"marks":1942},". This comprehensive platform makes it easy to compare different providers. Click through, browse your options, and find the one that meets your life insurance needs. ",[1943],{"type":82,"attrs":1944},{"color":106},{"type":71,"content":1946},[1947],{"text":749,"type":75,"marks":1948},[1949,1951],{"type":78,"attrs":1950},{"class":80},{"type":82,"attrs":1952},{"color":84},{"type":71,"content":1954},[1955],{"text":1956,"type":75,"marks":1957},"Information in this blog, including the rates advertised, are current as of 04/27/2023 and subject to change. ",[1958,1960],{"type":78,"attrs":1959},{"class":80},{"type":82,"attrs":1961},{"color":84},{"type":68,"content":1963},[1964],{"type":71},"\u003C!--#storyblok#{\"name\": \"Typography\", \"space\": \"157494\", \"uid\": \"1c7bce69-59db-42fa-bf55-3b2916c6425c\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"2bd54e19-1519-4581-a3cd-36b567949c3a\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"Row\", \"space\": \"157494\", \"uid\": \"0737a92f-e416-438d-b8db-1c0e86499923\", \"id\": \"651798208\"}-->",[],"\u003C!--#storyblok#{\"name\": \"Container\", \"space\": \"157494\", \"uid\": \"222843d6-4c0d-4ac3-aa5f-7f579c49c5fe\", \"id\": \"651798208\"}-->",{"id":18,"lg":18,"md":18,"sm":18,"_uid":1971,"cols":18,"height":18,"classes":836,"columns":1972,"justify":18,"maxWidth":853,"component":854,"colClasses":855,"rowClasses":18,"mobileClasses":856,"backgroundColor":18,"backgroundImage":1983,"containerClasses":18,"useBackgroundImage":45,"_editable":1984},"33d3a06b-b58c-487e-92e7-fc588a9c1c78",[1973],{"_uid":1974,"component":840,"backToTopBtn":1975,"_editable":1982},"c390fb05-75db-44ae-af73-2bbd7c809b57",[1976],{"url":1977,"_uid":1978,"icon":1979,"text":847,"color":32,"event":18,"sizing":1980,"classes":849,"rounded":45,"outlined":45,"component":850,"textColor":799,"hoverBgColor":799,"mobileClasses":18,"hoverTextColor":810,"navigationType":18,"_editable":1981},{"id":18,"url":18,"linktype":844,"fieldtype":805,"cached_url":18},"d87937d9-6d46-4da0-813d-437561563b18",{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},[],"\u003C!--#storyblok#{\"name\": \"Button\", \"space\": \"157494\", \"uid\": \"d87937d9-6d46-4da0-813d-437561563b18\", \"id\": \"651798208\"}-->","\u003C!--#storyblok#{\"name\": \"BackToTop\", \"space\": \"157494\", \"uid\": \"c390fb05-75db-44ae-af73-2bbd7c809b57\", \"id\": \"651798208\"}-->",{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},"\u003C!--#storyblok#{\"name\": \"Grid\", \"space\": \"157494\", \"uid\": \"33d3a06b-b58c-487e-92e7-fc588a9c1c78\", \"id\": \"651798208\"}-->","Insurance","https://www.marketplace.navient.com/blog/benefits-of-term-life-insurance/","\u003C!--#storyblok#{\"name\": \"BlogPost\", \"space\": \"157494\", \"uid\": \"24614723-3c23-4d4f-990b-c49a1b45edce\", \"id\": \"651798208\"}-->","benefits-of-term-life-insurance","navient_marketplace/blog/benefits-of-term-life-insurance",40,[],"3be6acdb-2e95-491d-9b06-ec5d63099498","2023-05-10T18:29:46.407Z",[],{"name":1996,"created_at":1997,"published_at":1998,"updated_at":1999,"id":2000,"uuid":2001,"content":2002,"slug":2825,"full_slug":2826,"sort_by_date":106,"position":2827,"tag_list":2828,"is_startpage":45,"parent_id":867,"meta_data":106,"group_id":2829,"first_published_at":2830,"release_id":106,"lang":870,"path":2831,"alternates":2832,"default_full_slug":106,"translated_slugs":106},"What is a Personal Loan?","2025-04-07T18:31:41.681Z","2026-04-01T17:17:08.300Z","2026-04-01T17:17:08.323Z",651798212,"05da79f1-7a78-4daf-a4e0-91946ace1eb1",{"seo":2003,"_uid":20,"body":2006,"author":48,"category":2822,"featured":45,"component":860,"canonicalTag":2823,"_editable":2824},{"_uid":15,"title":2004,"plugin":17,"og_image":18,"og_title":18,"description":2005,"twitter_image":18,"twitter_title":18,"og_description":18,"twitter_description":18},"What is a Personal Loan? - Navient Marketplace","What is a personal loan? Get the complete guide here: Definitions, loan types, how personal loans work, plus fees, terms, APRs, alternatives, and more. ",[2007,2016,2810],{"id":23,"_uid":885,"image":2008,"intro":2009,"author":27,"classes":2010,"category":18,"featured":45,"blogTitle":1996,"component":46,"imageLink":2013,"blendImage":45,"authorRoute":48,"publishedDate":2014,"backgroundColor":50,"_editable":2015},"//a.storyblok.com/f/110029/800x533/1fb9f8db2b/what-is-a-personal-loan.png","If your short-term goals require immediate funds, a personal loan can be a reliable option. Here's what you need to know.",[2011],{"_uid":890,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":891,"authorClasses":35,"subtitleColor":36,"subtitleClasses":38,"dateMobileClasses":39,"titleMobileClasses":40,"authorMobileClasses":41,"featuredMobileClasses":42,"subtitleMobileClasses":43,"_editable":2012},"\u003C!--#storyblok#{\"name\": \"BlogHeroStyle\", \"space\": \"157494\", \"uid\": \"6bc0d925-925b-40e2-8cb5-ac30d0086187\", \"id\": \"651798212\"}-->","/images/what-is-a-personal-loan.png","Updated: February 16, 2023","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"02557530-adb9-49fb-9319-277497a70cb8\", \"id\": \"651798212\"}-->",{"_uid":897,"bloks":2017,"classes":830,"component":831,"mobileClasses":18,"containerContent":2808,"_editable":2809},[2018],{"_uid":900,"bloks":2019,"classes":18,"justify":776,"component":828,"mobileClasses":18,"_editable":2807},[2020,2778],{"lg":59,"md":59,"sm":60,"_uid":903,"cols":60,"bloks":2021,"alignSelf":776,"component":777,"_editable":2777},[2022],{"_uid":906,"color":65,"classes":66,"content":18,"richText":2023,"component":769,"mobileClasses":770,"enableRichText":771,"richTextMobile":2773,"_editable":2776},{"type":68,"content":2024},[2025,2029,2036,2048,2061,2065,2072,2085,2092,2096,2109,2116,2120,2127,2131,2193,2197,2204,2208,2212,2275,2282,2286,2292,2305,2366,2370,2377,2381,2385,2392,2396,2400,2413,2417,2421,2428,2432,2436,2443,2447,2451,2458,2462,2466,2470,2477,2481,2488,2492,2501,2527,2535,2561,2568,2572,2576,2584,2601,2608,2625,2632,2636,2643,2660,2667,2675,2682,2686,2693,2710,2717,2734,2741,2745,2756,2767],{"type":71,"content":2026},[2027],{"text":2028,"type":75},"Considering a personal loan? Whether it’s for a costly home improvement, a wedding, or even paying off an auto loan, it may help put your plans into action without requiring you to dip into your savings account. If your short-term goals require immediate funds, a personal loan can be a reliable and manageable option. Here’s what you need to know.",{"type":119,"attrs":2030,"content":2031},{"level":121},[2032],{"text":2033,"type":75,"marks":2034},"What is a personal loan?",[2035],{"type":127},{"type":71,"content":2037},[2038,2039,2046],{"text":1806,"type":75},{"text":2040,"type":75,"marks":2041},"personal loan",[2042],{"type":103,"attrs":2043},{"href":2044,"uuid":106,"anchor":106,"custom":2045,"target":107,"linktype":108},"https://www.forbes.com/advisor/personal-loans/what-is-a-personal-loan/",{},{"text":2047,"type":75}," is a sum of money offered by a financial institution that can be used for a variety of purposes. It works like this: The borrower is provided with a one-time lump sum of cash, and then the loan is paid back to the lender in monthly payments over a specific time period, also known as a loan term.",{"type":71,"content":2049},[2050,2052,2059],{"text":2051,"type":75},"The borrower's credit score and ",{"text":2053,"type":75,"marks":2054},"credit history",[2055],{"type":103,"attrs":2056},{"href":2057,"uuid":106,"anchor":106,"custom":2058,"target":107,"linktype":108},"https://www.bankrate.com/loans/personal-loans/what-is-a-personal-loan/",{},{"text":2060,"type":75}," determine the annual percentage rate on the loan. Annual percentage rate (APR) is the money that is owed on top of the principal amount of the loan being borrowed. Borrowers with high credit scores will typically have more favorable monthly payments because of lower interest rates. ",{"type":71,"content":2062},[2063],{"text":2064,"type":75},"A personal loan is different from other types of loans. Personal loans do not require a specific purpose to be utilized. For instance, a mortgage loan and auto loan must be used on a home and a car respectively.",{"type":119,"attrs":2066,"content":2067},{"level":121},[2068],{"text":2069,"type":75,"marks":2070},"Types of personal loans",[2071],{"type":127},{"type":71,"content":2073},[2074,2076,2083],{"text":2075,"type":75},"There are ",{"text":2077,"type":75,"marks":2078},"several types of personal loans",[2079],{"type":103,"attrs":2080},{"href":2081,"uuid":106,"anchor":106,"custom":2082,"target":107,"linktype":108},"https://wallethub.com/edu/pl/what-is-a-personal-loan/61076",{},{"text":2084,"type":75},". The two most common are unsecured personal loans and secured personal loans.",{"type":119,"attrs":2086,"content":2087},{"level":183},[2088],{"text":2089,"type":75,"marks":2090},"Unsecured personal loans",[2091],{"type":127},{"type":71,"content":2093},[2094],{"text":2095,"type":75},"A personal loan can be unsecured. This means that the borrower does not have to offer collateral, such as a house or car for loan approval.",{"type":71,"content":2097},[2098,2100,2107],{"text":2099,"type":75},"Unsecured personal loans typically benefit borrowers with ",{"text":2101,"type":75,"marks":2102},"excellent credit",[2103],{"type":103,"attrs":2104},{"href":2105,"uuid":106,"anchor":106,"custom":2106,"target":107,"linktype":108},"https://www.experian.com/blogs/ask-experian/personal-loans-what-to-know-before-you-apply/",{},{"text":2108,"type":75},". Since the creditworthiness of the borrower determines the interest rate on the loan, individuals with high credit scores will be rewarded with lower rates.",{"type":119,"attrs":2110,"content":2111},{"level":183},[2112],{"text":2113,"type":75,"marks":2114},"Secured personal loans",[2115],{"type":127},{"type":71,"content":2117},[2118],{"text":2119,"type":75},"Secured personal loans require an individual to offer an asset as collateral on the loan. This option may be beneficial to individuals with lower credit scores who, without collateral, would likely face higher interest rates. The borrower may offer their car (known as a title loan) as collateral for the loan. However, if the loan payments are not made by the borrower, the asset can be seized by the financial institution.",{"type":119,"attrs":2121,"content":2122},{"level":121},[2123],{"text":2124,"type":75,"marks":2125},"What can a personal loan be used for?",[2126],{"type":127},{"type":71,"content":2128},[2129],{"text":2130,"type":75},"Personal loans are unique because they can be used for almost any purpose. There are several reasons someone may want to take out a personal loan. Some examples include:",{"type":336,"content":2132},[2133,2143,2153,2163,2173,2183],{"type":339,"content":2134},[2135],{"type":71,"content":2136},[2137,2141],{"text":2138,"type":75,"marks":2139},"Debt Consolidation",[2140],{"type":127},{"text":2142,"type":75},": You may have lingering debt with high interest rates, such as old credit cards. A personal loan could help you pay these off faster while adopting a lower interest rate.",{"type":339,"content":2144},[2145],{"type":71,"content":2146},[2147,2151],{"text":2148,"type":75,"marks":2149},"Medical bills",[2150],{"type":127},{"text":2152,"type":75},": A personal loan may give you the lump sum of money needed to wipe out your debt from a medical procedure.",{"type":339,"content":2154},[2155],{"type":71,"content":2156},[2157,2161],{"text":2158,"type":75,"marks":2159},"Home Improvements:",[2160],{"type":127},{"text":2162,"type":75}," Remodeling your kitchen or replacing your roof can be very expensive. A personal loan can be a great alternative to depleting your savings. ",{"type":339,"content":2164},[2165],{"type":71,"content":2166},[2167,2171],{"text":2168,"type":75,"marks":2169},"Purchasing a car: ",[2170],{"type":127},{"text":2172,"type":75},"Most likely, an auto loan will give you a better rate than a personal loan. However, if the personal loan does not require a down payment, this may be more equitable for you.",{"type":339,"content":2174},[2175],{"type":71,"content":2176},[2177,2181],{"text":2178,"type":75,"marks":2179},"Moving Costs",[2180],{"type":127},{"text":2182,"type":75},": Moving fees can add up quickly, especially for long-distance relocation. A personal loan will get you money fast to cover these expenses during a stressful time. ",{"type":339,"content":2184},[2185],{"type":71,"content":2186},[2187,2191],{"text":2188,"type":75,"marks":2189},"Refinance existing debt",[2190],{"type":127},{"text":2192,"type":75},": If you can get a better interest rate from a personal loan, you can use the loan to pay down existing high-interest debt.",{"type":71,"content":2194},[2195],{"text":2196,"type":75},"There are some situations where a personal loan cannot be used. Several examples include student loans, business expenses, and making a down payment on a house. There are other loan options dedicated to these situations.",{"type":119,"attrs":2198,"content":2199},{"level":121},[2200],{"text":2201,"type":75,"marks":2202},"How do personal loans work?",[2203],{"type":127},{"type":71,"content":2205},[2206],{"text":2207,"type":75},"A personal loan is an agreed-upon lump sum from a financial institution or online lender distributed to a borrower. During the application process, lenders work with a credit union to check the credit report of the borrower. An annual percentage rate is applied to the principal amount depending on the bureau's credit score findings. The borrower then pays back this loan amount in monthly payments over the agreed-upon loan term.",{"type":71,"content":2209},[2210],{"text":2211,"type":75},"There are a few steps before the money goes straight into your bank account. Let’s outline them:",{"type":1699,"attrs":2213,"content":2215},{"order":2214},{"order":1702},[2216,2226,2236,2255,2265],{"type":339,"content":2217},[2218],{"type":71,"content":2219},[2220,2224],{"text":2221,"type":75,"marks":2222},"Individual submits loan application.",[2223],{"type":127},{"text":2225,"type":75}," At this point, the financial institution pulls a credit report to assess the financial well-being of the applicant.",{"type":339,"content":2227},[2228],{"type":71,"content":2229},[2230,2234],{"text":2231,"type":75,"marks":2232},"Bank approves loan.",[2233],{"type":127},{"text":2235,"type":75}," If the lender finds the creditworthiness of the applicant adequate, a loan agreement will be sent to the borrower. At this point the application process is complete.",{"type":339,"content":2237},[2238],{"type":71,"content":2239},[2240,2244,2246,2253],{"text":2241,"type":75,"marks":2242},"Interest rate is applied.",[2243],{"type":127},{"text":2245,"type":75}," Whether a ",{"text":2247,"type":75,"marks":2248},"fixed interest rate or a variable rate",[2249],{"type":103,"attrs":2250},{"href":2251,"uuid":106,"anchor":106,"custom":2252,"target":107,"linktype":108},"https://www.valuepenguin.com/loans/fixed-vs-variable-interest-rates",{},{"text":2254,"type":75},", a percentage will be applied to the principal amount borrowed. Funds should be disbursed to the borrower within a few business days.",{"type":339,"content":2256},[2257],{"type":71,"content":2258},[2259,2263],{"text":2260,"type":75,"marks":2261},"Monthly payments are made.",[2262],{"type":127},{"text":2264,"type":75}," Monthly payments consist of the principal plus interest amount. These are paid over a period of time known as the loan term.",{"type":339,"content":2266},[2267],{"type":71,"content":2268},[2269,2273],{"text":2270,"type":75,"marks":2271},"Credit score is impacted.",[2272],{"type":127},{"text":2274,"type":75}," Lenders will report to credit bureaus on the timeliness of a borrower's repayment. If monthly payments are met each month, a borrower’s credit score will improve. If they fall delinquent, their score will subsequently suffer. In the case of a secured personal loan, failure to repay the loan within its term can lead to forfeiture of the initial collateral that was leveraged. ",{"type":119,"attrs":2276,"content":2277},{"level":121},[2278],{"text":2279,"type":75,"marks":2280},"How to pick the best personal loan",[2281],{"type":127},{"type":71,"content":2283},[2284],{"text":2285,"type":75},"All loans are not created equal. There are a few things an applicant should consider when choosing a personal loan: fees, repayment terms, annual percentage rate (APR), borrowing limits, and collateral requirements. Let’s take a closer look at each of these.",{"type":119,"attrs":2287,"content":2288},{"level":183},[2289],{"text":233,"type":75,"marks":2290},[2291],{"type":127},{"type":71,"content":2293},[2294,2296,2303],{"text":2295,"type":75},"Personal loans may carry ",{"text":2297,"type":75,"marks":2298},"other fees",[2299],{"type":103,"attrs":2300},{"href":2301,"uuid":106,"anchor":106,"custom":2302,"target":107,"linktype":108},"https://www.mybanktracker.com/personal-loans/faq/personal-loan-fees-273285 ",{},{"text":2304,"type":75}," depending on the financial institution lending the funds. A few common fees include: ",{"type":336,"content":2306},[2307,2326,2336,2346,2356],{"type":339,"content":2308},[2309],{"type":71,"content":2310},[2311,2315,2317,2324],{"text":2312,"type":75,"marks":2313},"Application fee: ",[2314],{"type":127},{"text":2316,"type":75},"This is usually a ",{"text":2318,"type":75,"marks":2319},"small flat fee",[2320],{"type":103,"attrs":2321},{"href":2322,"uuid":106,"anchor":106,"custom":2323,"target":107,"linktype":108},"https://www.mybanktracker.com/personal-loans/faq/personal-loan-fees-273285",{},{"text":2325,"type":75}," ($25-50) due at the beginning of the loan process, when the application is submitted.",{"type":339,"content":2327},[2328],{"type":71,"content":2329},[2330,2334],{"text":2331,"type":75,"marks":2332},"Origination fee: ",[2333],{"type":127},{"text":2335,"type":75},"This fee is leveraged by a lender as a way to reduce risk. It’s usually based on the principal amount borrowed. Typically, these are about 1-6% of the loan amount.",{"type":339,"content":2337},[2338],{"type":71,"content":2339},[2340,2344],{"text":2341,"type":75,"marks":2342},"Prepayment penalty:",[2343],{"type":127},{"text":2345,"type":75}," These fees are paid by the borrower if they pay off their loan before the end of their loan term. Because the interest rate is based on the length of the loan term, some banks use this as a way to recoup lost funds. This fee is usually around 2% of the original loan amount.",{"type":339,"content":2347},[2348],{"type":71,"content":2349},[2350,2354],{"text":2351,"type":75,"marks":2352},"Insufficient Funds:",[2353],{"type":127},{"text":2355,"type":75}," Similar to overdrafting your checking account, if there are insufficient funds when collecting a monthly payment, you will incur a fee. This scenario typically carries a $25-50 flat fee.",{"type":339,"content":2357},[2358],{"type":71,"content":2359},[2360,2364],{"text":2361,"type":75,"marks":2362},"Late payment:",[2363],{"type":127},{"text":2365,"type":75}," Of course, if payments are late or missed you can expect to pay a penalty. These can be a set fee or a percentage of your monthly payment. ",{"type":71,"content":2367},[2368],{"text":2369,"type":75},"Not all lenders charge fees, however. It is important to understand what fees are associated with each lender prior to applying for your personal loan. Many financial institutions offer “no-fee” lending and help you avoid some of the fees mentioned above. Most, however, still include some fees related to insufficient funds or late payments.",{"type":119,"attrs":2371,"content":2372},{"level":183},[2373],{"text":2374,"type":75,"marks":2375},"Repayment terms",[2376],{"type":127},{"type":71,"content":2378},[2379],{"text":2380,"type":75},"Repayment terms refer to the amount of time between when money is borrowed and when it is expected to be paid back in full. Repayment terms range from lender to lender. Loans that carry shorter terms typically carry a higher monthly payment. But in the end, with a shorter term, you’ll pay less in interest than if the loan is spread over a longer term.",{"type":71,"content":2382},[2383],{"text":2384,"type":75},"On the other hand, though longer repayment terms translate to more paid in interest over the life of the loan, they also translate to lower monthly payments. Borrowers must determine what is right for them: a long term and a lower monthly payment vs a short term and less interest paid over the life of the loan.",{"type":119,"attrs":2386,"content":2387},{"level":183},[2388],{"text":2389,"type":75,"marks":2390},"APR",[2391],{"type":127},{"type":71,"content":2393},[2394],{"text":2395,"type":75},"Annual percentage rate (APR) is the yearly expense which a borrower pays on the loan amount borrowed. APR is calculated by determining how much the loan will cost you every year based on the interest rate and finance charges.",{"type":71,"content":2397},[2398],{"text":2399,"type":75},"Interest rate and APR are different. Interest rates represent the cost you’ll pay each year to borrow money. APR measures the cost to borrow money, but also takes into account additional fees that may be associated. Since APR includes your interest rate and other fees connected to your loan, your APR will reflect a higher number than your interest rate, and it’s a more accurate reflection of what you’ll pay on top of principal. ",{"type":71,"content":2401},[2402,2404,2411],{"text":2403,"type":75},"The average personal loan interest rate is ",{"text":2405,"type":75,"marks":2406},"around 11%",[2407],{"type":103,"attrs":2408},{"href":2409,"uuid":106,"anchor":106,"custom":2410,"target":107,"linktype":108},"https://www.bankrate.com/loans/personal-loans/average-personal-loan-rates/",{},{"text":2412,"type":75},". Individuals with good credit scores will receive lower rates, while those with bad credit can see rates much higher. ",{"type":71,"content":2414},[2415],{"text":2416,"type":75},"A borrower's APR will differ between financial institutions and online lenders. Factors such as credit score, amount of money borrowed, and length of term also impact APR.",{"type":71,"content":2418},[2419],{"text":2420,"type":75},"There are ways to lower your APR, such as improving your credit score, choosing a shorter term length, or negotiating with your lender.",{"type":119,"attrs":2422,"content":2423},{"level":183},[2424],{"text":2425,"type":75,"marks":2426},"Borrowing limits",[2427],{"type":127},{"type":71,"content":2429},[2430],{"text":2431,"type":75},"There is typically a maximum amount of money that someone can borrow from a lender. This is known as the borrowing limit. Several factors can determine an individual’s borrowing limit. A few include credit history, debt-to-income ratio, and loan type.",{"type":71,"content":2433},[2434],{"text":2435,"type":75},"In order to decide the best borrowing limit for you, you must determine what amount is feasible to pay back within the life of the loan. One thing to consider is your existing debt-to-income ratio. If you already have significant credit card debt or medical bills, can you afford another monthly payment?",{"type":119,"attrs":2437,"content":2438},{"level":183},[2439],{"text":2440,"type":75,"marks":2441},"Collateral requirements",[2442],{"type":127},{"type":71,"content":2444},[2445],{"text":2446,"type":75},"Typically, personal loans are unsecured. This means that they don't require collateral on the loan being borrowed. Instead, the borrower's credit score, income level, and overall financial well-being are analyzed.",{"type":71,"content":2448},[2449],{"text":2450,"type":75},"When you’re taking out a secured personal loan, collateral will be required. In this case, a lender will require an asset to offset the risk of the loan, such as savings account funds or a car. Before the borrower accepts the terms of the loan, they must determine if the collateral amount is a reasonable requirement for the loan amount, and if they can stand to lose it should they not be able to repay it in full.",{"type":119,"attrs":2452,"content":2453},{"level":121},[2454],{"text":2455,"type":75,"marks":2456},"Applying for a personal loan",[2457],{"type":127},{"type":71,"content":2459},[2460],{"text":2461,"type":75},"There are many ways to apply for a personal loan. In recent years, the internet has become the most efficient way to start the research process. You can quickly view terms and conditions from an array of lenders to determine who will work best for you. This is also an easy way to compare multiple loan offers.",{"type":71,"content":2463},[2464],{"text":2465,"type":75},"There are a few things you can do to prepare yourself for taking out a personal loan. To start, you should have an idea of your credit score. Obviously, the better your credit, the more likely you are to get a good annual percentage rate. You can also use a personal loan calculator to see what your monthly payment will look like based on the loan amount and loan term.",{"type":71,"content":2467},[2468],{"text":2469,"type":75},"Credit score and debt-to-income ratio are a few ways to know if you are in a good place financially to take on a personal loan.",{"type":119,"attrs":2471,"content":2472},{"level":121},[2473],{"text":2474,"type":75,"marks":2475},"Personal loan alternatives",[2476],{"type":127},{"type":71,"content":2478},[2479],{"text":2480,"type":75},"There are several alternatives to a personal loan. Depending on your situation, there may be a better option to suit your needs. Let’s take a look at a few.",{"type":119,"attrs":2482,"content":2483},{"level":183},[2484],{"text":2485,"type":75,"marks":2486},"Credit card",[2487],{"type":127},{"type":71,"content":2489},[2490],{"text":2491,"type":75},"A credit card is a line of credit that is offered by a financial institution to make purchases and is for everyday use. They typically carry a max spend limit based on the creditworthiness of the holder. Repayment for purchases on the credit card are made monthly.",{"type":71,"content":2493},[2494],{"text":2495,"type":75,"marks":2496},"Benefits of a credit card include:",[2497,2498],{"type":127},{"type":78,"attrs":2499},{"class":2500},"no-margin-bottom",{"type":336,"content":2502},[2503,2512,2521],{"type":339,"content":2504},[2505],{"type":71,"content":2506},[2507],{"text":2508,"type":75,"marks":2509},"immediate access to funds",[2510],{"type":78,"attrs":2511},{"class":2500},{"type":339,"content":2513},[2514],{"type":71,"content":2515},[2516],{"text":2517,"type":75,"marks":2518},"convenience",[2519],{"type":78,"attrs":2520},{"class":2500},{"type":339,"content":2522},[2523],{"type":71,"content":2524},[2525],{"text":2526,"type":75},"potential to earn rewards",{"type":71,"content":2528},[2529],{"text":2530,"type":75,"marks":2531},"Cons include:",[2532,2533],{"type":127},{"type":78,"attrs":2534},{"class":2500},{"type":336,"content":2536},[2537,2546,2555],{"type":339,"content":2538},[2539],{"type":71,"content":2540},[2541],{"text":2542,"type":75,"marks":2543},"high interest rates",[2544],{"type":78,"attrs":2545},{"class":2500},{"type":339,"content":2547},[2548],{"type":71,"content":2549},[2550],{"text":2551,"type":75,"marks":2552},"complex terms",[2553],{"type":78,"attrs":2554},{"class":2500},{"type":339,"content":2556},[2557],{"type":71,"content":2558},[2559],{"text":2560,"type":75},"annual fees",{"type":119,"attrs":2562,"content":2563},{"level":183},[2564],{"text":2565,"type":75,"marks":2566},"Personal line of credit",[2567],{"type":127},{"type":71,"content":2569},[2570],{"text":2571,"type":75},"A personal line of credit (PLOC) is similar to a credit card in that an individual receives a spend limit. Payments are then made monthly on what is spent. Unlike a credit card, however, funds can be withdrawn from the PLOC.",{"type":71,"content":2573},[2574],{"text":2575,"type":75},"A PLOC is also a term loan, meaning it has an expiration date. For instance, a lender may offer you access to funds for a period of two years.",{"type":71,"content":2577},[2578],{"text":2579,"type":75,"marks":2580},"Pros include:",[2581,2582],{"type":127},{"type":78,"attrs":2583},{"class":2500},{"type":336,"content":2585},[2586,2595],{"type":339,"content":2587},[2588],{"type":71,"content":2589},[2590],{"text":2591,"type":75,"marks":2592},"quick access to funds",[2593],{"type":78,"attrs":2594},{"class":2500},{"type":339,"content":2596},[2597],{"type":71,"content":2598},[2599],{"text":2600,"type":75},"no collateral required",{"type":71,"content":2602},[2603],{"text":2530,"type":75,"marks":2604},[2605,2606],{"type":127},{"type":78,"attrs":2607},{"class":2500},{"type":336,"content":2609},[2610,2619],{"type":339,"content":2611},[2612],{"type":71,"content":2613},[2614],{"text":2615,"type":75,"marks":2616},"variable interest rates",[2617],{"type":78,"attrs":2618},{"class":2500},{"type":339,"content":2620},[2621],{"type":71,"content":2622},[2623],{"text":2624,"type":75},"the risk of over-borrowing past your means, leading to further debt",{"type":119,"attrs":2626,"content":2627},{"level":183},[2628],{"text":2629,"type":75,"marks":2630},"Home equity loan",[2631],{"type":127},{"type":71,"content":2633},[2634],{"text":2635,"type":75},"A home equity loan is another financial option for homeowners. This allows someone to borrow money based on the equity they have in their home. Equity is determined by the home’s current market value and the balance of the remaining mortgage loan.",{"type":71,"content":2637},[2638],{"text":2579,"type":75,"marks":2639},[2640,2641],{"type":127},{"type":78,"attrs":2642},{"class":2500},{"type":336,"content":2644},[2645,2654],{"type":339,"content":2646},[2647],{"type":71,"content":2648},[2649],{"text":2650,"type":75,"marks":2651},"fixed payments with fixed interest rates",[2652],{"type":78,"attrs":2653},{"class":2500},{"type":339,"content":2655},[2656],{"type":71,"content":2657},[2658],{"text":2659,"type":75},"access to a lump sum of money",{"type":71,"content":2661},[2662],{"text":2530,"type":75,"marks":2663},[2664,2665],{"type":127},{"type":78,"attrs":2666},{"class":2500},{"type":336,"content":2668},[2669],{"type":339,"content":2670},[2671],{"type":71,"content":2672},[2673],{"text":2674,"type":75},"leveraging debt against your home, which can lead to foreclosure if loan payments are not met.",{"type":119,"attrs":2676,"content":2677},{"level":183},[2678],{"text":2679,"type":75,"marks":2680},"Home equity line of credit (HELOC)",[2681],{"type":127},{"type":71,"content":2683},[2684],{"text":2685,"type":75},"A home equity line of credit (HELOC) is similar to a home equity loan. The major difference is that a HELOC is a revolving line of credit instead of a lump sum of money. Borrowers pay based on what they use. ",{"type":71,"content":2687},[2688],{"text":2579,"type":75,"marks":2689},[2690,2691],{"type":127},{"type":78,"attrs":2692},{"class":2500},{"type":336,"content":2694},[2695,2704],{"type":339,"content":2696},[2697],{"type":71,"content":2698},[2699],{"text":2700,"type":75,"marks":2701},"borrowing & paying back only what you need",[2702],{"type":78,"attrs":2703},{"class":2500},{"type":339,"content":2705},[2706],{"type":71,"content":2707},[2708],{"text":2709,"type":75},"access to a large sum",{"type":71,"content":2711},[2712],{"text":2530,"type":75,"marks":2713},[2714,2715],{"type":127},{"type":78,"attrs":2716},{"class":2500},{"type":336,"content":2718},[2719,2728],{"type":339,"content":2720},[2721],{"type":71,"content":2722},[2723],{"text":2724,"type":75,"marks":2725},"Variable interest rates",[2726],{"type":78,"attrs":2727},{"class":2500},{"type":339,"content":2729},[2730],{"type":71,"content":2731},[2732],{"text":2733,"type":75},"Using your home as collateral.",{"type":119,"attrs":2735,"content":2736},{"level":121},[2737],{"text":2738,"type":75,"marks":2739},"How Navient Marketplace can help",[2740],{"type":127},{"type":71,"content":2742},[2743],{"text":2744,"type":75},"A personal loan may be a great option for someone that needs access to funds quickly. They can be used for almost anything, including home renovations, travel, a wedding, or even as a debt consolidation loan. They are a type of installment loan which means they can be paid down monthly based on the loan term.",{"type":71,"content":2746},[2747,2749,2754],{"text":2748,"type":75},"If you think a personal loan is right for you, Navient is worth considering. We’re an industry leader in loan originations and loan servicing, and we’ve recently partnered with top-tiered financial institutions to build a one-stop shop called ",{"text":733,"type":75,"marks":2750},[2751],{"type":103,"attrs":2752},{"href":737,"uuid":106,"anchor":106,"custom":2753,"target":107,"linktype":108},{},{"text":2755,"type":75}," that can help you choose the option that fits you best.",{"type":71,"content":2757},[2758,2760,2765],{"text":2759,"type":75},"If you are ready to take the next step in receiving a personal loan, visit ",{"text":733,"type":75,"marks":2761},[2762],{"type":103,"attrs":2763},{"href":737,"uuid":106,"anchor":106,"custom":2764,"target":107,"linktype":108},{},{"text":2766,"type":75}," and start the process today.",{"type":71,"content":2768},[2769],{"text":749,"type":75,"marks":2770},[2771],{"type":78,"attrs":2772},{"class":80},{"type":68,"content":2774},[2775],{"type":71},"\u003C!--#storyblok#{\"name\": \"Typography\", \"space\": \"157494\", \"uid\": 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\"BackToTop\", \"space\": \"157494\", \"uid\": \"c390fb05-75db-44ae-af73-2bbd7c809b57\", \"id\": \"651798212\"}-->",{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},"\u003C!--#storyblok#{\"name\": \"Grid\", \"space\": \"157494\", \"uid\": \"33d3a06b-b58c-487e-92e7-fc588a9c1c78\", \"id\": \"651798212\"}-->","Personal Loans","https://www.marketplace.navient.com/blog/what-is-a-personal-loan/","\u003C!--#storyblok#{\"name\": \"BlogPost\", \"space\": \"157494\", \"uid\": \"24614723-3c23-4d4f-990b-c49a1b45edce\", \"id\": \"651798212\"}-->","what-is-a-personal-loan","navient_marketplace/blog/what-is-a-personal-loan",80,[],"724f1f5c-5b59-4468-a144-04b70d9fc3de","2023-02-28T18:40:14.095Z","blog/what-is-a-personal-loan/",[],{"name":2834,"created_at":2835,"published_at":2836,"updated_at":2837,"id":2838,"uuid":2839,"content":2840,"slug":3437,"full_slug":3438,"sort_by_date":106,"position":3439,"tag_list":3440,"is_startpage":45,"parent_id":867,"meta_data":106,"group_id":3441,"first_published_at":3442,"release_id":106,"lang":870,"path":3443,"alternates":3444,"default_full_slug":106,"translated_slugs":106},"Pros and Cons of Personal Loans","2025-04-07T18:31:43.540Z","2026-04-01T17:17:36.551Z","2026-04-01T17:17:36.571Z",651798213,"8a8dc044-267b-40fe-81b7-210d95a5024b",{"seo":2841,"_uid":20,"body":2844,"author":48,"category":2822,"featured":45,"component":860,"canonicalTag":3435,"_editable":3436},{"_uid":15,"title":2842,"plugin":17,"og_image":18,"og_title":18,"description":2843,"twitter_image":18,"twitter_title":18,"og_description":18,"twitter_description":18},"Pros and Cons of Personal Loans - Navient Marketplace","Personal loans are ideal for debt consolidation, but they can be hard on borrowers with poor credit. Get the other pros and cons of personal loans here.",[2845,2853,3423],{"id":23,"_uid":885,"image":2846,"intro":2847,"author":27,"classes":2848,"category":18,"featured":45,"blogTitle":2834,"component":46,"imageLink":2851,"blendImage":45,"authorRoute":48,"publishedDate":2014,"backgroundColor":50,"_editable":2852},"//a.storyblok.com/f/110029/800x533/20e434964b/pros-and-cons-of-personal-loans.png","To decide whether or not a personal loan works for you, you first have to understand the pros and cons of personal loans.",[2849],{"_uid":890,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":891,"authorClasses":35,"subtitleColor":36,"subtitleClasses":38,"dateMobileClasses":39,"titleMobileClasses":40,"authorMobileClasses":41,"featuredMobileClasses":42,"subtitleMobileClasses":43,"_editable":2850},"\u003C!--#storyblok#{\"name\": \"BlogHeroStyle\", \"space\": \"157494\", \"uid\": \"6bc0d925-925b-40e2-8cb5-ac30d0086187\", \"id\": \"651798213\"}-->","/images/pros-and-cons-of-personal-loans.png","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"02557530-adb9-49fb-9319-277497a70cb8\", \"id\": \"651798213\"}-->",{"_uid":897,"bloks":2854,"classes":830,"component":831,"mobileClasses":18,"containerContent":3421,"_editable":3422},[2855],{"_uid":900,"bloks":2856,"classes":18,"justify":776,"component":828,"mobileClasses":18,"_editable":3420},[2857,3394],{"lg":59,"md":59,"sm":60,"_uid":903,"cols":60,"bloks":2858,"alignSelf":776,"component":777,"_editable":3393},[2859],{"_uid":906,"color":65,"classes":66,"content":18,"richText":2860,"component":769,"mobileClasses":770,"enableRichText":771,"richTextMobile":3389,"_editable":3392},{"type":68,"content":2861},[2862,2866,2872,2891,2904,2911,2915,2919,2926,2939,2946,2959,3020,3024,3031,3044,3051,3062,3069,3073,3080,3084,3091,3095,3102,3106,3113,3117,3124,3136,3143,3156,3163,3176,3218,3225,3229,3273,3279,3283,3289,3293,3297,3303,3307,3311,3318,3322,3326,3332,3336,3340,3346,3350,3354,3361,3365,3376,3382],{"type":71,"content":2863},[2864],{"text":2865,"type":75},"Do you have a wedding on the horizon? Are you finally starting those home renovations you’ve been planning for years? If so, you might be considering taking out a personal loan. Personal loans are a great way to get money when you need it fast. However, as with any type of loan, there’s also some risk involved. To decide whether or not it’s the best option for you, you first have to understand the pros and cons of personal loans.",{"type":119,"attrs":2867,"content":2868},{"level":121},[2869],{"text":2033,"type":75,"marks":2870},[2871],{"type":127},{"type":71,"content":2873},[2874,2876,2883,2889],{"text":2875,"type":75},"A personal loan is a type of installment loan, which means the borrower receives a lump sum of money that is repaid via monthly payments over an agreed-upon term length. Unlike auto loans and home loans, which have very narrow usage requirements, personal loans can be used for almost anything. Some popular uses include medical bills, home improvements or repairs, and other large purchases. Personal loans can also be used as a pathway for ",{"text":2877,"type":75,"marks":2878},"debt consolidation",[2879],{"type":103,"attrs":2880},{"href":2881,"uuid":106,"anchor":106,"custom":2882,"target":107,"linktype":108},"https://www.earnest.com/blog/what-is-debt-consolidation/",{},{"text":2884,"type":75,"marks":2885},"1",[2886],{"type":78,"attrs":2887},{"class":2888},"superscript",{"text":2890,"type":75},".",{"type":71,"content":2892},[2893,2895,2902],{"text":2894,"type":75},"Personal loans are distributed by online lenders, banks, credit unions, and other financial institutions. Interest rates on personal loans can vary widely, but they often ",{"text":2896,"type":75,"marks":2897},"hover around 9% and 10%",[2898],{"type":103,"attrs":2899},{"href":2900,"uuid":106,"anchor":106,"custom":2901,"target":107,"linktype":108},"https://www.bankrate.com/loans/personal-loans/pros-cons-of-personal-loans/#pros",{},{"text":2903,"type":75},". Most lenders will make you an interest rate offer depending on your credit score, loan term, and requested loan amount.",{"type":119,"attrs":2905,"content":2906},{"level":183},[2907],{"text":2908,"type":75,"marks":2909},"Secured versus unsecured personal loans",[2910],{"type":127},{"type":71,"content":2912},[2913],{"text":2914,"type":75},"There are two types of personal loans: secured and unsecured. With secured personal loans, you’ll need to exchange some type of collateral with the lender in return for the requested loan amount. This could be, for example, a home, car, stock market holdings, etc. This offers the lender some assurance that they’ll recoup the value of the borrowed funds, and they’ll hold onto your collateral until the loan is paid in full.",{"type":71,"content":2916},[2917],{"text":2918,"type":75},"An unsecured personal loan does not require collateral to back the loan. Instead, these are approved based on the creditworthiness of the borrower. Because unsecured loans are riskier for the lender, they typically carry higher interest rates than secured loans.",{"type":119,"attrs":2920,"content":2921},{"level":121},[2922],{"text":2923,"type":75,"marks":2924},"The advantages of a personal loan",[2925],{"type":127},{"type":71,"content":2927},[2928,2930,2937],{"text":2929,"type":75},"Personal loans can have ",{"text":2931,"type":75,"marks":2932},"many advantages",[2933],{"type":103,"attrs":2934},{"href":2935,"uuid":106,"anchor":106,"custom":2936,"target":107,"linktype":108},"https://www.forbes.com/advisor/personal-loans/pros-and-cons-of-personal-loans/",{},{"text":2938,"type":75}," for borrowers under the right circumstances. Let’s take a look at a few.",{"type":119,"attrs":2940,"content":2941},{"level":183},[2942],{"text":2943,"type":75,"marks":2944},"Flexibility",[2945],{"type":127},{"type":71,"content":2947},[2948,2950,2957],{"text":2949,"type":75},"Personal loans can be ",{"text":2951,"type":75,"marks":2952},"used for almost anything",[2953],{"type":103,"attrs":2954},{"href":2955,"uuid":106,"anchor":106,"custom":2956,"target":107,"linktype":108},"https://lanterncredit.com/personal-loans/pros-and-cons-of-personal-loans",{},{"text":2958,"type":75},", from organizing your personal finances via debt consolidation to covering an emergency expense. Here are a few of the most common uses.",{"type":336,"content":2960},[2961,2971,2981,2991,3000,3010],{"type":339,"content":2962},[2963],{"type":71,"content":2964},[2965,2969],{"text":2966,"type":75,"marks":2967},"Home Renovations",[2968],{"type":127},{"text":2970,"type":75},": Thanks to materials and labor shortages, the cost of home improvements has been soaring. Remodeling a bathroom or kitchen can cost thousands of dollars. If you need to make a critical repair or add value to your home ahead of a property revaluation, and using a credit card or payment plan is not an option, a personal loan offers one solution.",{"type":339,"content":2972},[2973],{"type":71,"content":2974},[2975,2979],{"text":2976,"type":75,"marks":2977},"Moving costs",[2978],{"type":127},{"text":2980,"type":75},": Moving expenses can add up quickly. A personal loan can help you cover the cost of shipping your belongings, transporting your vehicle, or even purchasing new furniture.",{"type":339,"content":2982},[2983],{"type":71,"content":2984},[2985,2989],{"text":2986,"type":75,"marks":2987},"Weddings",[2988],{"type":127},{"text":2990,"type":75},": Your dream wedding doesn’t come cheap. In fact, the average wedding cost in 2021 was around $28,000. A personal loan can help you cover the venue, photographer, catering, and other fees. ",{"type":339,"content":2992},[2993],{"type":71,"content":2994},[2995,2998],{"text":2138,"type":75,"marks":2996},[2997],{"type":127},{"text":2999,"type":75},": If you’re juggling multiple high-interest-rate credit card balances, you can use a personal loan to consolidate and therefore simplify your credit card debt. This can be a smart financial decision for someone with credit cards that carry a high interest rate, since you can often get a lower rate on a personal loan. In some cases, that could help you save thousands of dollars over the life of the loan. ",{"type":339,"content":3001},[3002],{"type":71,"content":3003},[3004,3008],{"text":3005,"type":75,"marks":3006},"Buying a Vehicle",[3007],{"type":127},{"text":3009,"type":75},": Typically, when purchasing a car from a dealership, an auto loan will give you more favorable rates and terms than a personal loan. However, if you’re purchasing a vehicle from a private party and auto financing is not an option, a personal loan can be a good alternative. ",{"type":339,"content":3011},[3012],{"type":71,"content":3013},[3014,3018],{"text":3015,"type":75,"marks":3016},"Other Large Purchases",[3017],{"type":127},{"text":3019,"type":75},": Sometimes, unavoidable circumstances arise that require an immediate remedy. If your transmission blows out on your only car, or your home’s HVAC unit stops working in the middle of winter, you need a solution fast. Personal loans can get you back up and running quickly.",{"type":71,"content":3021},[3022],{"text":3023,"type":75},"Of course, there are also some cases where you would not want to use a personal loan. For instance, making a down payment on a house or purchasing a car from a dealership are both situations where you can obtain lower interest rate loans from other sources.",{"type":119,"attrs":3025,"content":3026},{"level":183},[3027],{"text":3028,"type":75,"marks":3029},"Lower interest rates on average",[3030],{"type":127},{"type":71,"content":3032},[3033,3035,3042],{"text":3034,"type":75},"Personal loans tend to have competitive interest rates when compared with other lines of credit. For instance, credit cards carried an average interest rate of 16.5% in 2021 according to ",{"text":3036,"type":75,"marks":3037},"data collected",[3038],{"type":103,"attrs":3039},{"href":3040,"uuid":106,"anchor":106,"custom":3041,"target":107,"linktype":108},"https://www.federalreserve.gov/releases/g19/current/",{},{"text":3043,"type":75}," by the Federal Reserve. Data from this same time period showed a 24-month personal loan rate average of about 9.5%. The interest rate you’re offered will be dictated by your loan principal, loan term, and other aspects of your financial situation, including your credit score as reported by the major credit bureaus. Borrowers with poor credit may receive interest rates well higher than the average.",{"type":119,"attrs":3045,"content":3046},{"level":183},[3047],{"text":3048,"type":75,"marks":3049},"One lump sum",[3050],{"type":127},{"type":71,"content":3052},[3053,3060],{"text":3054,"type":75,"marks":3055},"Another benefit",[3056],{"type":103,"attrs":3057},{"href":3058,"uuid":106,"anchor":106,"custom":3059,"target":107,"linktype":108},"https://www.moneygeek.com/personal-loans/pros-and-cons/",{},{"text":3061,"type":75}," of a personal loan is that the money is provided in one lump sum. This gives you ultimate flexibility to make large purchases or cover other expenses. That’s in contrast to something like a credit card, which doles out credit over time and may have lower limits than you need. With a personal loan, you get the money upfront and can use it immediately.",{"type":119,"attrs":3063,"content":3064},{"level":183},[3065],{"text":3066,"type":75,"marks":3067},"Quick approval process",[3068],{"type":127},{"type":71,"content":3070},[3071],{"text":3072,"type":75},"The approval process for a personal loan is pretty fast — usually only about 24 hours. As with other types of loans, you’ll have to submit some personal information, and the lender will likely check your credit report, which may affect your credit score. They’ll also verify your employment and home address and analyze any other outstanding debts you may have to assess your creditworthiness.",{"type":119,"attrs":3074,"content":3075},{"level":183},[3076],{"text":3077,"type":75,"marks":3078},"May not require collateral",[3079],{"type":127},{"type":71,"content":3081},[3082],{"text":3083,"type":75},"Unsecured personal loans do not require collateral. As such, they typically carry higher interest charges than secured personal loans because they pose more risk for the lender. However, if your personal finances are in good standing, you could still receive a competitive rate without having to leverage any of your assets to receive the loan.",{"type":119,"attrs":3085,"content":3086},{"level":183},[3087],{"text":3088,"type":75,"marks":3089},"Reasonable monthly payments",[3090],{"type":127},{"type":71,"content":3092},[3093],{"text":3094,"type":75},"Personal loans often have longer loan terms than other financing options. This makes monthly payments more reasonable for the borrower. The longer the term, the lower the monthly payment. At the same time, it’s important to remember that with a longer term, you’ll ultimately pay more in interest over the life of the loan.",{"type":119,"attrs":3096,"content":3097},{"level":183},[3098],{"text":3099,"type":75,"marks":3100},"Useful for refinancing",[3101],{"type":127},{"type":71,"content":3103},[3104],{"text":3105,"type":75},"If you have credit card debt or other existing types of debt, a personal loan can provide a way to refinance or consolidate it. This can simplify your monthly payments and even save you money by helping you secure a lower interest rate, switch from a fixed to a variable interest rate, or select a new loan term.",{"type":119,"attrs":3107,"content":3108},{"level":121},[3109],{"text":3110,"type":75,"marks":3111},"The disadvantages of a personal loan",[3112],{"type":127},{"type":71,"content":3114},[3115],{"text":3116,"type":75},"Personal loans can offer immediate financial relief for all kinds of borrowers, but they’re not right for everyone. Here are a few cons of personal loans to consider before you move forward.",{"type":119,"attrs":3118,"content":3119},{"level":183},[3120],{"text":3121,"type":75,"marks":3122},"Hard on borrowers with bad credit",[3123],{"type":127},{"type":71,"content":3125},[3126,3128,3135],{"text":3127,"type":75},"Personal loans tend to have higher interest rates for borrowers with poor credit. If you have a low credit score, (possible if your credit history includes bankruptcies, spotty payment history, or other high balances) personal loans might not be your best option. If you’re not sure what your credit score is, you can check your credit report by requesting it from the major credit bureaus (Transunion, Equifax, and Experian). You can do this once per year for free via ",{"text":3129,"type":75,"marks":3130},"annualcreditreport.com",[3131],{"type":103,"attrs":3132},{"href":3133,"uuid":106,"anchor":106,"custom":3134,"target":107,"linktype":108},"https://www.annualcreditreport.com/index.action",{},{"text":2890,"type":75},{"type":119,"attrs":3137,"content":3138},{"level":183},[3139],{"text":3140,"type":75,"marks":3141},"Strict eligibility requirements",[3142],{"type":127},{"type":71,"content":3144},[3145,3147,3154],{"text":3146,"type":75},"Personal loans can require more from potential borrowers than other types of loans. Some lenders require an individual to have a minimum credit score of 600 and a ",{"text":3148,"type":75,"marks":3149},"debt-to-income ratio",[3150],{"type":103,"attrs":3151},{"href":3152,"uuid":106,"anchor":106,"custom":3153,"target":107,"linktype":108},"https://www.lendingtree.com/personal/personal-loan-are-you-a-good-candidate/#:~:text=Personal%20loan%20eligibility%3A%20FAQ,-Am%20I%20eligible&text=Many%20lenders%20typically%20require%20that,in%20to%20understand%20the%20specifics.",{},{"text":3155,"type":75}," no more than 35%. Each lender is different, but some have fairly stringent requirements that may make them harder to qualify for.",{"type":119,"attrs":3157,"content":3158},{"level":183},[3159],{"text":3160,"type":75,"marks":3161},"Potentially high fees",[3162],{"type":127},{"type":71,"content":3164},[3165,3167,3174],{"text":3166,"type":75},"Some personal loans also carry ",{"text":3168,"type":75,"marks":3169},"fees",[3170],{"type":103,"attrs":3171},{"href":3172,"uuid":106,"anchor":106,"custom":3173,"target":107,"linktype":108},"https://www.experian.com/blogs/ask-experian/personal-loan-fees-you-should-watch-out-for/",{},{"text":3175,"type":75},", which can add up and inflate the cost, making monthly payments untenable for some borrowers. A few common fees include",{"type":336,"content":3177},[3178,3188,3198,3208],{"type":339,"content":3179},[3180],{"type":71,"content":3181},[3182,3186],{"text":3183,"type":75,"marks":3184},"Origination fees: ",[3185],{"type":127},{"text":3187,"type":75},"Some banks, credit unions, or other lenders will charge a loan origination fee to cover costs associated with processing the loan. These fees will often be added to the total loan amount. Origination fees are usually a percentage (1 to 6%) of the total amount borrowed.",{"type":339,"content":3189},[3190],{"type":71,"content":3191},[3192,3196],{"text":3193,"type":75,"marks":3194},"Application fees",[3195],{"type":127},{"text":3197,"type":75},": These cover the initial expense of processing and reviewing your loan application. Application fees are typically an upfront cost, and won’t be refunded even if the applicant does not qualify for the loan. While these fees are uncommon for personal loans, it’s still a good idea to ask before you apply.",{"type":339,"content":3199},[3200],{"type":71,"content":3201},[3202,3206],{"text":3203,"type":75,"marks":3204},"Prepayment penalties: ",[3205],{"type":127},{"text":3207,"type":75},"Some lenders charge a penalty if the borrower pays off their loan before the end of their loan term. This helps the lender recoup the cost of the interest you would have paid over the full term. Prepayment penalties are usually a small percentage of the original loan amount.",{"type":339,"content":3209},[3210],{"type":71,"content":3211},[3212,3216],{"text":3213,"type":75,"marks":3214},"Late fees: ",[3215],{"type":127},{"text":3217,"type":75},"These are common across many types of loans, including personal loans. You could incur these by missing a monthly payment or failing to pay off the loan in full by the end of the term. Late fees are usually a flat fee but can also be a percentage of the monthly payment amount, depending on the conditions of the financial institution.",{"type":119,"attrs":3219,"content":3220},{"level":121},[3221],{"text":3222,"type":75,"marks":3223},"Is a personal loan right for me?",[3224],{"type":127},{"type":71,"content":3226},[3227],{"text":3228,"type":75},"A personal loan can be helpful for borrowers who fit the right criteria. You likely are a good candidate for a personal loan if:",{"type":336,"content":3230},[3231,3240,3249,3258,3267],{"type":339,"content":3232},[3233],{"type":71,"content":3234},[3235],{"text":3236,"type":75,"marks":3237},"You have high-interest debt that would benefit from consolidation.",[3238],{"type":78,"attrs":3239},{"class":2500},{"type":339,"content":3241},[3242],{"type":71,"content":3243},[3244],{"text":3245,"type":75,"marks":3246},"You have a good credit score or have collateral to leverage.",[3247],{"type":78,"attrs":3248},{"class":2500},{"type":339,"content":3250},[3251],{"type":71,"content":3252},[3253],{"text":3254,"type":75,"marks":3255},"You have a reliable source of income and can meet your monthly payments.",[3256],{"type":78,"attrs":3257},{"class":2500},{"type":339,"content":3259},[3260],{"type":71,"content":3261},[3262],{"text":3263,"type":75,"marks":3264},"Your debt-to-income ratio is lower than 35%.",[3265],{"type":78,"attrs":3266},{"class":2500},{"type":339,"content":3268},[3269],{"type":71,"content":3270},[3271],{"text":3272,"type":75},"You have a reliable track record of making on-time payments.",{"type":119,"attrs":3274,"content":3275},{"level":121},[3276],{"text":2474,"type":75,"marks":3277},[3278],{"type":127},{"type":71,"content":3280},[3281],{"text":3282,"type":75},"There are many alternatives to personal loans. Depending on your financial situation, some of these could be better options. Here are a few of the most common.",{"type":119,"attrs":3284,"content":3285},{"level":183},[3286],{"text":2485,"type":75,"marks":3287},[3288],{"type":127},{"type":71,"content":3290},[3291],{"text":3292,"type":75},"A credit card is a revolving line of credit offered by a financial institution. Credit cards can be used to make everyday purchases. They carry a max spending limit based on the creditworthiness of the cardholder. If you make your monthly payments on time, you won’t usually incur any fees. If you just make the minimum monthly payment, your remaining balance will be carried into the next month. Your interest then compounds and can add to the balance due.",{"type":71,"content":3294},[3295],{"text":3296,"type":75},"Credit cards sometimes carry great perks, such as cash-back and travel rewards. They can offer low introductory rates such as 0% APR for the first 12 months. However, many start to charge high interest rates after that introductory period. Credit cards are great for everyday use as long as you can keep up with the payments. Otherwise, compounding interest and late payments can quickly inflate your overall debt.",{"type":119,"attrs":3298,"content":3299},{"level":183},[3300],{"text":2565,"type":75,"marks":3301},[3302],{"type":127},{"type":71,"content":3304},[3305],{"text":3306,"type":75},"A personal line of credit (PLOC) is similar to a credit card. In this agreement, an individual receives a spending limit and repays their total monthly expenses at the end of each month. However, unlike a credit card, a borrower may withdraw funds from their PLOC.",{"type":71,"content":3308},[3309],{"text":3310,"type":75},"A PLOC is a type of term loan. This means that the loan has an expiration date. If your loan term is two years, for example, the PLOC balance must be paid back in full at the end of those two years. A PLOC might be a good choice for you if you’re expecting a large expenditure and happen to qualify for a lower interest rate. To find out, you can contact your bank, credit union, or another financial institution.",{"type":119,"attrs":3312,"content":3313},{"level":183},[3314],{"text":3315,"type":75,"marks":3316},"Payday loan",[3317],{"type":127},{"type":71,"content":3319},[3320],{"text":3321,"type":75},"A payday loan is a short-term loan, typically around $500 or less, that’s due within a week or two of the borrowing date. The loan is usually repaid in a single payment once the borrower receives their next paycheck. This type of loan generally carries high fees. Lenders may charge $10 to $30 for every $100 you borrow, which is an extremely high percentage given the small loan amounts.",{"type":71,"content":3323},[3324],{"text":3325,"type":75},"This type of loan is typically used as an advance on a paycheck that is guaranteed to come in. If you have bills that need to be paid prior to payday, this option can help avoid penalties for falling delinquent on those services.",{"type":119,"attrs":3327,"content":3328},{"level":183},[3329],{"text":2629,"type":75,"marks":3330},[3331],{"type":127},{"type":71,"content":3333},[3334],{"text":3335,"type":75},"If you are a homeowner, a home equity loan is another financial option. This type of financing allows someone to borrow money based on the equity they have in their home. Equity is calculated by the home’s current market value and the remaining mortgage loan balance on the home.",{"type":71,"content":3337},[3338],{"text":3339,"type":75},"This option is obviously only useful for homeowners. The downside to a home equity loan is that you’re leveraging your home as collateral — which means it could be partially or fully repossessed if you fail to pay the loan.",{"type":119,"attrs":3341,"content":3342},{"level":183},[3343],{"text":2679,"type":75,"marks":3344},[3345],{"type":127},{"type":71,"content":3347},[3348],{"text":3349,"type":75},"With a home equity line of credit (HELOC), a borrower receives a revolving line of credit that is awarded based on the equity value in their home. Instead of a lump sum of money, borrowers pay based on what they use, similar to a credit card or PLOC.",{"type":71,"content":3351},[3352],{"text":3353,"type":75},"The ideal borrower is a homeowner who has built substantial equity in their home, and who can also afford to make payments on the money being drawn.",{"type":119,"attrs":3355,"content":3356},{"level":121},[3357],{"text":3358,"type":75,"marks":3359},"Find the best personal loan with Navient Marketplace",[3360],{"type":127},{"type":71,"content":3362},[3363],{"text":3364,"type":75},"Personal loans are a great option for someone who needs quick access to funds. They can be used for almost anything, including home renovations, travel, weddings, and even debt consolidation.",{"type":71,"content":3366},[3367,3369,3374],{"text":3368,"type":75},"Whether you’ve already decided that a personal loan is right for you, or you're still doing your research, the ",{"text":733,"type":75,"marks":3370},[3371],{"type":103,"attrs":3372},{"href":737,"uuid":106,"anchor":106,"custom":3373,"target":107,"linktype":108},{},{"text":3375,"type":75}," is a great place to get started. Navient is an industry leader in loan originations and loan servicing, and has recently partnered with top-tiered financial institutions to build a comprehensive online platform that can help you choose the option that fits you best. Stop by today and see if a personal loan is right for you.",{"type":71,"content":3377},[3378],{"text":749,"type":75,"marks":3379},[3380],{"type":78,"attrs":3381},{"class":80},{"type":71,"content":3383},[3384],{"text":3385,"type":75,"marks":3386},"1 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for total cost of your refinanced loan.",[3387],{"type":78,"attrs":3388},{"class":80},{"type":68,"content":3390},[3391],{"type":71},"\u003C!--#storyblok#{\"name\": \"Typography\", \"space\": \"157494\", \"uid\": \"a64c4df0-154e-4c12-b867-678d292709f4\", \"id\": \"651798213\"}-->","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"c286affa-ee04-4348-8508-6e9f77932903\", \"id\": 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\"BackToTop\", \"space\": \"157494\", \"uid\": \"c390fb05-75db-44ae-af73-2bbd7c809b57\", \"id\": \"651798213\"}-->",{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},"\u003C!--#storyblok#{\"name\": \"Grid\", \"space\": \"157494\", \"uid\": \"33d3a06b-b58c-487e-92e7-fc588a9c1c78\", \"id\": \"651798213\"}-->","https://www.marketplace.navient.com/blog/pros-and-cons-of-personal-loans/","\u003C!--#storyblok#{\"name\": \"BlogPost\", \"space\": \"157494\", \"uid\": \"24614723-3c23-4d4f-990b-c49a1b45edce\", \"id\": \"651798213\"}-->","pros-and-cons-of-personal-loans","navient_marketplace/blog/pros-and-cons-of-personal-loans",90,[],"ea120acc-f962-4ffe-8690-a373e95d6afa","2023-02-28T18:40:14.426Z","blog/pros-and-cons-of-personal-loans/",[],{"name":3446,"created_at":3447,"published_at":3448,"updated_at":3449,"id":3450,"uuid":3451,"content":3452,"slug":4207,"full_slug":4208,"sort_by_date":106,"position":4209,"tag_list":4210,"is_startpage":45,"parent_id":867,"meta_data":106,"group_id":4211,"first_published_at":4212,"release_id":106,"lang":870,"path":106,"alternates":4213,"default_full_slug":106,"translated_slugs":106},"How Do Personal Loans Work?","2025-04-07T18:31:48.710Z","2026-04-01T17:18:30.737Z","2026-04-01T17:18:30.760Z",651798216,"339bfa65-e4a7-40cf-a529-7246385eda3b",{"seo":3453,"_uid":20,"body":3456,"author":48,"category":2822,"featured":45,"component":860,"canonicalTag":4205,"_editable":4206},{"_uid":15,"title":3454,"plugin":17,"og_image":18,"og_title":18,"description":3455,"twitter_image":18,"twitter_title":18,"og_description":18,"twitter_description":18},"How Do Personal Loans Work? - Navient Marketplace","How do personal loans work? Learn the 6 steps, plus pros and cons, alternatives, and where to find personal loans.",[3457,3465,4193],{"id":23,"_uid":885,"image":3458,"intro":3459,"author":27,"classes":3460,"category":18,"featured":45,"blogTitle":3446,"component":46,"imageLink":3463,"blendImage":45,"authorRoute":48,"publishedDate":2014,"backgroundColor":50,"_editable":3464},"//a.storyblok.com/f/110029/800x545/86ee1be857/how-do-personal-loans-work.png","Before you apply for a personal loan, it's important to understand how they work. This guide explains all you need to know.",[3461],{"_uid":890,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":891,"authorClasses":35,"subtitleColor":36,"titleMaxWidth":37,"subtitleClasses":38,"dateMobileClasses":39,"titleMobileClasses":40,"authorMobileClasses":41,"featuredMobileClasses":42,"subtitleMobileClasses":43,"_editable":3462},"\u003C!--#storyblok#{\"name\": \"BlogHeroStyle\", \"space\": \"157494\", \"uid\": \"6bc0d925-925b-40e2-8cb5-ac30d0086187\", \"id\": \"651798216\"}-->","/images/how-do-personal-loans-work.png","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"02557530-adb9-49fb-9319-277497a70cb8\", \"id\": \"651798216\"}-->",{"_uid":897,"bloks":3466,"classes":830,"component":831,"mobileClasses":18,"containerContent":4191,"_editable":4192},[3467],{"_uid":900,"bloks":3468,"classes":18,"justify":776,"component":828,"mobileClasses":18,"_editable":4190},[3469,4164],{"lg":59,"md":59,"sm":60,"_uid":903,"cols":60,"bloks":3470,"alignSelf":776,"component":777,"_editable":4163},[3471],{"_uid":906,"color":65,"classes":66,"content":18,"richText":3472,"component":769,"mobileClasses":770,"enableRichText":771,"richTextMobile":4159,"_editable":4162},{"type":68,"content":3473},[3474,3478,3482,3489,3533,3539,3543,3547,3551,3557,3561,3573,3585,3589,3596,3600,3612,3624,3628,3635,3647,3654,3673,3680,3692,3699,3703,3710,3722,3726,3738,3745,3749,3756,3760,3767,3779,3786,3796,3803,3815,3822,3826,3833,3845,3849,3856,3868,3875,3879,3891,3898,3902,3906,3957,3961,4011,4018,4022,4062,4068,4072,4124,4131,4135,4146,4152],{"type":71,"content":3475},[3476],{"text":3477,"type":75},"Personal loans are one of the most popular types of loans, and there's a good reason why. They can be used for a variety of purposes, from consolidating debt to financing home-improvement projects. And because there are so many lenders out there, it's easy to find one that fits your needs.",{"type":71,"content":3479},[3480],{"text":3481,"type":75},"But before you apply for a personal loan, it's important to understand how they work. In this blog post, we'll break down everything you need to know about personal loans including how they're different from other types of loans, the factors that determine your interest rate, and how to choose the right lender. ",{"type":119,"attrs":3483,"content":3484},{"level":121},[3485],{"text":3486,"type":75,"marks":3487},"How does a personal loan work? Key takeaways:",[3488],{"type":127},{"type":336,"content":3490},[3491,3500,3509,3518,3527],{"type":339,"content":3492},[3493],{"type":71,"content":3494},[3495],{"text":3496,"type":75,"marks":3497},"A personal loan is a lump sum of cash that can be used to finance almost any large expense.",[3498],{"type":78,"attrs":3499},{"class":2500},{"type":339,"content":3501},[3502],{"type":71,"content":3503},[3504],{"text":3505,"type":75,"marks":3506},"Lower interest rates are usually offered to borrowers with low debt and high credit scores.",[3507],{"type":78,"attrs":3508},{"class":2500},{"type":339,"content":3510},[3511],{"type":71,"content":3512},[3513],{"text":3514,"type":75,"marks":3515},"You can use a personal loan to consolidate your existing high-interest debt into a single new loan with a single monthly payment.",[3516],{"type":78,"attrs":3517},{"class":2500},{"type":339,"content":3519},[3520],{"type":71,"content":3521},[3522],{"text":3523,"type":75,"marks":3524},"Home improvements that add value to your house are a great way to utilize personal loans.",[3525],{"type":78,"attrs":3526},{"class":2500},{"type":339,"content":3528},[3529],{"type":71,"content":3530},[3531],{"text":3532,"type":75},"Personal loans are not likely the smartest option when it comes to daily purchases. ",{"type":119,"attrs":3534,"content":3535},{"level":121},[3536],{"text":2033,"type":75,"marks":3537},[3538],{"type":127},{"type":71,"content":3540},[3541],{"text":3542,"type":75},"So, what exactly is a personal loan? In short, it's a type of loan that can be used for just about anything — from paying off credit cards to covering unexpected medical bills. Unlike car loans or mortgages, there aren't many restrictions on how you can use a personal loan. However, loan proceeds may not be used for postsecondary educational expenses, including refinancing federal or private student loans.",{"type":71,"content":3544},[3545],{"text":3546,"type":75},"There are two types of personal loans: secured and unsecured. Most personal loans are unsecured, meaning the lender doesn’t require you to offer collateral like a home or car to back them up. These are considered less risky than secured loans, which do require collateral. However, interest rates on unsecured personal loans may be higher than rates on secured loans.",{"type":71,"content":3548},[3549],{"text":3550,"type":75},"When taking out a personal loan, it's important to consider the terms, rates, and payment schedule carefully to make sure you can comfortably afford the monthly payments. In the long run, a personal loan can be a useful tool for achieving your financial goals — as long as you’re not taking on more debt than you can handle.",{"type":119,"attrs":3552,"content":3553},{"level":121},[3554],{"text":2201,"type":75,"marks":3555},[3556],{"type":127},{"type":71,"content":3558},[3559],{"text":3560,"type":75},"Once you decide to move forward with a personal loan, you’ll complete a loan application from a financial institution. The lender will then pull your credit report to determine your creditworthiness.",{"type":71,"content":3562},[3563,3565,3571],{"text":3564,"type":75},"If you have good credit history, the lender will offer you a low ",{"text":3566,"type":75,"marks":3567},"annual percentage rate (APR)",[3568],{"type":103,"attrs":3569},{"href":3570,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.experian.com/blogs/ask-experian/what-is-apr/",{"text":3572,"type":75},". If you have bad credit, you may still receive a loan approval but for a higher interest rate. Other factors, such as the amount of money you borrow and the loan term (the time it will take you to pay off the loan) will impact your APR, as well.",{"type":71,"content":3574},[3575,3577,3583],{"text":3576,"type":75},"If you like the offer you receive, you’ll sign the loan agreement, and the lender will disburse the lump sum of cash, usually straight to your bank account. You’ll then pay it back in monthly installments until the loan term is up. (For this reason, personal loans are considered a type of “",{"text":3578,"type":75,"marks":3579},"installment loan",[3580],{"type":103,"attrs":3581},{"href":3582,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.bankrate.com/loans/personal-loans/what-is-an-installment-loan/",{"text":3584,"type":75},".”) If you miss a payment or make a late payment, you’ll have to pay a penalty. If you fail to pay back the loan, it could go to collections.",{"type":71,"content":3586},[3587],{"text":3588,"type":75},"That’s the brief overview of how personal loans work. Here’s how the whole process works in detail:",{"type":119,"attrs":3590,"content":3591},{"level":183},[3592],{"text":3593,"type":75,"marks":3594},"Step 1: Determine whether or not you need the loan",[3595],{"type":127},{"type":71,"content":3597},[3598],{"text":3599,"type":75},"While you can use a personal loan for just about anything, that doesn’t mean you should. For example, a lavish vacation adds little value to your long-term financial situation, and a personal loan will only compound that risk. It’s also not recommended to use a personal loan for weddings, parties, or large purchases. These are all hard to justify going into debt for.",{"type":71,"content":3601},[3602,3604,3610],{"text":3603,"type":75},"Of course, big unexpected expenses like home repairs can sometimes leave you with limited options. You can either put off the renovation until you’ve saved up enough cash, or use a financing option such as a personal loan to cover it. A personal loan is easier to justify if the home repair or renovation absolutely cannot wait, will definitely ",{"text":3605,"type":75,"marks":3606},"add value to your home",[3607],{"type":103,"attrs":3608},{"href":3609,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.bankrate.com/loans/personal-loans/get-personal-loan-for-home-improvements/",{"text":3611,"type":75},", and can’t be covered by insurance. In this case, a personal loan can give you the cash you need right away.",{"type":71,"content":3613},[3614,3616,3622],{"text":3615,"type":75},"Debt consolidation is another popular reason to take out a personal loan. If you have high credit card debt or multiple lines of credit, you can use a personal loan to ",{"text":3617,"type":75,"marks":3618},"consolidate your payments",[3619],{"type":103,"attrs":3620},{"href":3621,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.bankrate.com/loans/personal-loans/using-a-personal-loan-for-debt-consolidation/",{"text":3623,"type":75}," into a single new loan with a new interest rate. The benefit here is that you can work with one institution to pay off your overall debt rather than having to juggle multiple lenders and bills. You may also be able to save money in interest charges by converting your high-interest-rate debt into a lower-interest-rate personal loan.",{"type":71,"content":3625},[3626],{"text":3627,"type":75},"A good general guideline is that if the expense is not urgent or necessary to your wellbeing, it may be wise to wait until you have the cash in your savings account to fund that expenditure. If it is urgent and necessary, a personal loan could be a great solution.",{"type":119,"attrs":3629,"content":3630},{"level":183},[3631],{"text":3632,"type":75,"marks":3633},"Step 2: Assess your financial situation",[3634],{"type":127},{"type":71,"content":3636},[3637,3639,3645],{"text":3638,"type":75},"When considering a personal loan, make sure that taking on additional debt will not put you in a worse position than you’re currently in. You can do this by ",{"text":3640,"type":75,"marks":3641},"looking at your monthly budget",[3642],{"type":103,"attrs":3643},{"href":3644,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.nerdwallet.com/article/finance/how-to-budget",{"text":3646,"type":75}," and making sure you have enough extra income to cover the monthly payment on your personal loan. You should also pull your credit report to get an idea of what kind of rates you’ll qualify for.",{"type":119,"attrs":3648,"content":3649},{"level":200},[3650],{"text":3651,"type":75,"marks":3652},"Find your credit score",[3653],{"type":127},{"type":71,"content":3655},[3656,3658,3664,3666,3671],{"text":3657,"type":75},"Lenders typically require a ",{"text":3659,"type":75,"marks":3660},"minimum credit score",[3661],{"type":103,"attrs":3662},{"href":3663,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.nerdwallet.com/article/loans/personal-loans/credit-score-need-get-personal-loan",{"text":3665,"type":75}," of 560 to 660 before they’ll agree to lend to you. If you have a ",{"text":3667,"type":75,"marks":3668},"credit score above 700",[3669],{"type":103,"attrs":3670},{"href":2057,"uuid":106,"anchor":106,"target":107,"linktype":108},{"text":3672,"type":75},", you’ll qualify for even lower interest rates, which will allow you to save a considerable amount of money over the life of the loan.",{"type":119,"attrs":3674,"content":3675},{"level":200},[3676],{"text":3677,"type":75,"marks":3678},"Determine your DTI",[3679],{"type":127},{"type":71,"content":3681},[3682,3684,3690],{"text":3683,"type":75},"Lenders also consider other factors, like your ",{"text":3685,"type":75,"marks":3686},"debt-to-income (DTI)",[3687],{"type":103,"attrs":3688},{"href":3689,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.investopedia.com/terms/d/dti.asp",{"text":3691,"type":75}," ratio. Your DTI is your total monthly debt divided by your gross monthly income. Because individuals with higher DTI ratios tend to have more trouble making payments, lenders view those borrowers as riskier. For that reason, they offer those borrowers higher interest rates.",{"type":119,"attrs":3693,"content":3694},{"level":200},[3695],{"text":3696,"type":75,"marks":3697},"Look at your credit history",[3698],{"type":127},{"type":71,"content":3700},[3701],{"text":3702,"type":75},"The length of your credit history is important, as well. If a lender can see that you are consistently making on-time payments on your other forms of debt, they may be more likely to offer you a lower rate. Lenders also favor borrowers with high income and/or few other debt obligations. If your current financial situation is less than ideal, it may be wise to wait until it improves before applying for a personal loan.",{"type":119,"attrs":3704,"content":3705},{"level":183},[3706],{"text":3707,"type":75,"marks":3708},"Step 3: Shop lenders",[3709],{"type":127},{"type":71,"content":3711},[3712,3714,3720],{"text":3713,"type":75},"If you’ve determined that a personal loan is right for you, it’s time to research your options. Every lender offers different rates, terms, fees, and perks, so it’s worth shopping around. If possible, try to only get rate estimates from lenders who advertise “free rate checks,” or “",{"text":3715,"type":75,"marks":3716},"soft credit pulls",[3717],{"type":103,"attrs":3718},{"href":3719,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.earnest.com/blog/soft-vs-hard-credit-inquiries/",{"text":3721,"type":75},",” especially if you’re early in the research process. These kinds of credit checks won’t show up on your credit report. ",{"type":71,"content":3723},[3724],{"text":3725,"type":75},"“Hard credit checks,” however, will show up on your report. These types of credit pulls are unavoidable in the final application phase, but are worth keeping track of. If a lender sees multiple hard credit pulls on your report, they might view you as a riskier borrower. Credit bureaus typically react the same way, dropping your credit score by several points per hard credit check.",{"type":71,"content":3727},[3728,3730,3736],{"text":3729,"type":75},"There is one exception to this rule. If you make multiple hard credit pulls within a certain time period, ",{"text":3731,"type":75,"marks":3732},"typically 45 days",[3733],{"type":103,"attrs":3734},{"href":3735,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.forbes.com/advisor/credit-score/soft-credit-check-vs-hard-credit-check/",{"text":3737,"type":75},", those pulls will all get lumped together and will show up on your credit report as a single inquiry. This is called the “rate shopping exception” and is designed to protect borrowers who are just trying to do their due diligence. So it’s best to try and complete all your rate shopping within this 45-day window.",{"type":119,"attrs":3739,"content":3740},{"level":183},[3741],{"text":3742,"type":75,"marks":3743},"Step 4: Evaluate your offers",[3744],{"type":127},{"type":71,"content":3746},[3747],{"text":3748,"type":75},"Once you find a lender you like, you’ll fill out a personal loan application, which usually includes things like your social security number, pay stubs, and other financial documents. Once you submit your applications, each lender will make you an offer. Here are a few things to consider when reviewing your loan offers:",{"type":119,"attrs":3750,"content":3751},{"level":200},[3752],{"text":3753,"type":75,"marks":3754},"Interest rate",[3755],{"type":127},{"type":71,"content":3757},[3758],{"text":3759,"type":75},"Your personal loan interest rate, or APR, will determine how much money you’ll pay in addition to the principal (the total amount of money you borrowed). The higher the loan APR, the more you’ll pay over the life of the loan.",{"type":119,"attrs":3761,"content":3762},{"level":200},[3763],{"text":3764,"type":75,"marks":3765},"Type of interest rate",[3766],{"type":127},{"type":71,"content":3768},[3769,3771,3777],{"text":3770,"type":75},"There are two types of interest rates: ",{"text":3772,"type":75,"marks":3773},"fixed rates and variable rates",[3774],{"type":103,"attrs":3775},{"href":3776,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.earnest.com/blog/student-loan-variable-or-fixed/",{"text":3778,"type":75},". Fixed interest rates lock you into a single rate for the entire life of the loan. Variable interest rates, however, fluctuate according to a national benchmark called a “rate index.” When national interest rates go up, so will the rate index—and therefore so will the monthly payment on your variable-rate loan. Variable rates can be beneficial if interest rates are high now but might fall in the future.",{"type":119,"attrs":3780,"content":3781},{"level":200},[3782],{"text":3783,"type":75,"marks":3784},"Repayment term",[3785],{"type":127},{"type":71,"content":3787},[3788,3790,3794],{"text":3789,"type":75},"Your loan term, or repayment period, will also impact your monthly payment amount. Personal loan terms are typically 12 to 60 months",{"text":2884,"type":75,"marks":3791},[3792],{"type":78,"attrs":3793},{"class":2888},{"text":3795,"type":75},". The longer your loan term, the lower and more affordable your monthly payments will be. However, paying interest for a longer period of time means your loan will cost you more in the long run.",{"type":119,"attrs":3797,"content":3798},{"level":200},[3799],{"text":3800,"type":75,"marks":3801},"Origination fees",[3802],{"type":127},{"type":71,"content":3804},[3805,3807,3813],{"text":3806,"type":75},"Most lenders charge upfront costs during the application process to cover administrative expenses. Sometimes the ",{"text":3808,"type":75,"marks":3809},"origination fee",[3810],{"type":103,"attrs":3811},{"href":3812,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.bankrate.com/loans/personal-loans/personal-loan-origination-fees/",{"text":3814,"type":75}," is a small flat rate. Other times, it’s a percentage based on the amount of money borrowed. If you’re borrowing a large sum, your fees could be substantial. Before you take out a loan, make sure you understand how the lender plans to charge for origination.",{"type":119,"attrs":3816,"content":3817},{"level":200},[3818],{"text":3819,"type":75,"marks":3820},"Other fees",[3821],{"type":127},{"type":71,"content":3823},[3824],{"text":3825,"type":75},"Some banks, credit unions, or other financial institutions may charge additional fees. Late fees, prepayment penalties, and other processing fees could ultimately affect the loan’s affordability.",{"type":119,"attrs":3827,"content":3828},{"level":200},[3829],{"text":3830,"type":75,"marks":3831},"Monthly payments",[3832],{"type":127},{"type":71,"content":3834},[3835,3837,3843],{"text":3836,"type":75},"Once you know your ",{"text":3838,"type":75,"marks":3839},"principal, interest rate, repayment term, and fees,",[3840],{"type":103,"attrs":3841},{"href":3842,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.gdrc.org/icm/loan-glossary.html",{"text":3844,"type":75}," you will be able to calculate your monthly payment. (Most loan agreements will state this amount, but you can calculate it ahead of time using a personal loan calculator.) Your monthly payment is the cost that the lender will expect you to pay each month for the duration of the loan term. Before you sign the loan contract, make sure the monthly payment is an amount you can easily afford.   ",{"type":71,"content":3846},[3847],{"text":3848,"type":75},"Payment structure isn’t the only factor that can affect your choice of loan provider. Take time to read only reviews and do some research. Make sure the lender is trustworthy and reputable and has a track record of good customer service.",{"type":119,"attrs":3850,"content":3851},{"level":183},[3852],{"text":3853,"type":75,"marks":3854},"Step 5: Sign on the dotted line and receive your lump sum",[3855],{"type":127},{"type":71,"content":3857},[3858,3860,3866],{"text":3859,"type":75},"Once you select a lender, it's time to sign the agreement and receive your funds in as little as a day. Some lenders will give you a ",{"text":3861,"type":75,"marks":3862},"grace period",[3863],{"type":103,"attrs":3864},{"href":3865,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.investopedia.com/terms/g/grace_period.asp",{"text":3867,"type":75}," during which you can change your mind. This is usually the space of time after you’ve signed the agreement and before you’ve received your funds. For some lenders, this period is less than a day. For others, it’s up to a week. Once you receive your loan amount, you are committed to the loan.",{"type":119,"attrs":3869,"content":3870},{"level":183},[3871],{"text":3872,"type":75,"marks":3873},"Step 6: Make on-time payments",[3874],{"type":127},{"type":71,"content":3876},[3877],{"text":3878,"type":75},"The final step is to pay back the loan. If you planned properly, your loan payments should fit into your monthly budget, and you should have no problem making them on time.",{"type":71,"content":3880},[3881,3883,3889],{"text":3882,"type":75},"Keep in mind that missing a payment will result in a penalty, but isn’t the end of the world. Missing multiple payments, however, can have ",{"text":3884,"type":75,"marks":3885},"serious negative consequences",[3886],{"type":103,"attrs":3887},{"href":3888,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.experian.com/blogs/ask-experian/what-happens-if-you-dont-pay-back-personal-loan/",{"text":3890,"type":75},". If you fail to repay a secured personal loan, the lender could seize the asset you offered up as collateral. If you fail to pay back an unsecured personal loan, you’ll face other repercussions, like damage to your credit score, fees, collections calls, and even lawsuits from your creditors.",{"type":119,"attrs":3892,"content":3893},{"level":121},[3894],{"text":3895,"type":75,"marks":3896},"Pros and cons of personal loans",[3897],{"type":127},{"type":71,"content":3899},[3900],{"text":3901,"type":75},"There are positives and negatives associated with most financial decisions. It is important to understand both to determine if a personal loan is right for you. ",{"type":71,"content":3903},[3904],{"text":3905,"type":75},"Here are some of the pros of taking out a personal loan:",{"type":336,"content":3907},[3908,3917,3927,3937,3947],{"type":339,"content":3909},[3910],{"type":71,"content":3911},[3912,3915],{"text":3048,"type":75,"marks":3913},[3914],{"type":127},{"text":3916,"type":75},": The funds are delivered all at once and can be used immediately. This makes personal loans convenient for large purchases",{"type":339,"content":3918},[3919],{"type":71,"content":3920},[3921,3925],{"text":3922,"type":75,"marks":3923},"Quick approval process:",[3924],{"type":127},{"text":3926,"type":75}," You can get approved for a personal loan in as little as a day.",{"type":339,"content":3928},[3929],{"type":71,"content":3930},[3931,3935],{"text":3932,"type":75,"marks":3933},"Lower interest rates than credit cards",[3934],{"type":127},{"text":3936,"type":75},": Personal loans generally carry low interest rates relative to most credit cards. While credit cards may offer generous introductory terms, their rates can become very high once those introductory periods expire.",{"type":339,"content":3938},[3939],{"type":71,"content":3940},[3941,3945],{"text":3942,"type":75,"marks":3943},"Simpler payments",[3944],{"type":127},{"text":3946,"type":75},": You can use a personal loan as a debt consolidation loan to pay off credit cards and other short-term loans. This is essentially a DIY refinance of your high-interest debt. After you refinance, you’ll be left with a single loan with a simple monthly payment.",{"type":339,"content":3948},[3949],{"type":71,"content":3950},[3951,3955],{"text":3952,"type":75,"marks":3953},"Lower monthly payments",[3954],{"type":127},{"text":3956,"type":75},": Compared to other short-term loans, personal loans tend to have the best rates, longest loan terms, and lowest monthly payments.",{"type":71,"content":3958},[3959],{"text":3960,"type":75},"Some of the cons of personal loans include:",{"type":336,"content":3962},[3963,3973,3982,3991,4001],{"type":339,"content":3964},[3965],{"type":71,"content":3966},[3967,3971],{"text":3968,"type":75,"marks":3969},"Additional debt",[3970],{"type":127},{"text":3972,"type":75},": If you’re not financially stable, taking on more debt could leave you in a worse situation.",{"type":339,"content":3974},[3975],{"type":71,"content":3976},[3977,3980],{"text":3121,"type":75,"marks":3978},[3979],{"type":127},{"text":3981,"type":75},": If your credit is not up to par, you could receive unfavorable rates — or fail to qualify for a personal loan at all.",{"type":339,"content":3983},[3984],{"type":71,"content":3985},[3986,3989],{"text":3160,"type":75,"marks":3987},[3988],{"type":127},{"text":3990,"type":75},": Origination and processing fees can add up. Make sure your monthly payments are affordable.",{"type":339,"content":3992},[3993],{"type":71,"content":3994},[3995,3999],{"text":3996,"type":75,"marks":3997},"You could need collateral",[3998],{"type":127},{"text":4000,"type":75},": Depending on your creditworthiness, you may be obligated to offer collateral, such as a car or savings account, to secure the loan. This puts some of your biggest personal investments at risk.",{"type":339,"content":4002},[4003],{"type":71,"content":4004},[4005,4009],{"text":4006,"type":75,"marks":4007},"Not for every scenario",[4008],{"type":127},{"text":4010,"type":75},": If taking out a personal loan won’t help you gain equity, it’s usually better to put off the expense until you’ve saved up more cash.",{"type":119,"attrs":4012,"content":4013},{"level":121},[4014],{"text":4015,"type":75,"marks":4016},"Where can I get a personal loan?",[4017],{"type":127},{"type":71,"content":4019},[4020],{"text":4021,"type":75},"Many different financial institutions offer personal loans. Here are a few of the most popular:",{"type":336,"content":4023},[4024,4036,4049],{"type":339,"content":4025},[4026],{"type":71,"content":4027},[4028,4034],{"text":4029,"type":75,"marks":4030},"Online lenders",[4031,4033],{"type":103,"attrs":4032},{"href":737,"uuid":106,"anchor":106,"target":107,"linktype":108},{"type":127},{"text":4035,"type":75},": These allow you to shop and compare interest rates without having to leave your home. A potential downside is that you’re less likely to have a pre-existing relationship with an online lender, so they might offer higher rates than banks or credit unions, depending on your credit history.",{"type":339,"content":4037},[4038],{"type":71,"content":4039},[4040,4047],{"text":4041,"type":75,"marks":4042},"Credit unions",[4043,4046],{"type":103,"attrs":4044},{"href":4045,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.experian.com/blogs/ask-experian/can-i-get-personal-loan-from-credit-union/",{"type":127},{"text":4048,"type":75},": Credit unions are a better option for borrowers with poor credit because they tend to have softer eligibility requirements and lower rates. You must be a member of the credit union, which can require a small fee. They also generally require in-person appointments to take out a loan.",{"type":339,"content":4050},[4051],{"type":71,"content":4052},[4053,4060],{"text":4054,"type":75,"marks":4055},"Banks",[4056,4059],{"type":103,"attrs":4057},{"href":4058,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.nerdwallet.com/article/loans/personal-loans/personal-loan-bank-credit-union",{"type":127},{"text":4061,"type":75},": If you already have a relationship with a bank, they might be the easiest lender for you to work with, and your financial history together could help you secure a lower rate than you would get with an online lender. Sometimes banks will require you to apply for the loan in person, which can be inconvenient. Banks often charge higher interest rates than credit unions do.",{"type":119,"attrs":4063,"content":4064},{"level":121},[4065],{"text":2474,"type":75,"marks":4066},[4067],{"type":127},{"type":71,"content":4069},[4070],{"text":4071,"type":75},"if you’ve determined that a personal loan isn’t right for your situation, consider one of these alternatives:",{"type":336,"content":4073},[4074,4087,4100,4112],{"type":339,"content":4075},[4076],{"type":71,"content":4077},[4078,4085],{"text":4079,"type":75,"marks":4080},"Credit cards",[4081,4084],{"type":103,"attrs":4082},{"href":4083,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.bankrate.com/finance/credit-cards/what-is-a-credit-card/",{"type":127},{"text":4086,"type":75},": A credit card is a line of funds issued to a user for purchasing everyday goods and services. Credit cards tend to have high interest rates if you don’t make the monthly payments on time.",{"type":339,"content":4088},[4089],{"type":71,"content":4090},[4091,4098],{"text":4092,"type":75,"marks":4093},"Cash-out refinance",[4094,4097],{"type":103,"attrs":4095},{"href":4096,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.bankrate.com/mortgages/cash-out-refinancing/",{"type":127},{"text":4099,"type":75},": If you take out a new mortgage loan that’s more than what you currently owe, you can receive the difference in cash. ",{"type":339,"content":4101},[4102],{"type":71,"content":4103},[4104,4110],{"text":2629,"type":75,"marks":4105},[4106,4109],{"type":103,"attrs":4107},{"href":4108,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-loan-en-106/",{"type":127},{"text":4111,"type":75},": A home equity loan or home equity line of credit (HELOC) is a type of secured loan that’s backed by the equity in your home. Home equity loans sometimes have lower interest rates than personal loans. However, they can result in the foreclosure of your home if you don’t pay them back according to the terms.",{"type":339,"content":4113},[4114],{"type":71,"content":4115},[4116,4122],{"text":3315,"type":75,"marks":4117},[4118,4121],{"type":103,"attrs":4119},{"href":4120,"uuid":106,"anchor":106,"target":107,"linktype":108},"https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/",{"type":127},{"text":4123,"type":75},": Payday loans are small, short-term loans given as an advance on an individual's income. You’re supposed to pay them back as soon as your next paycheck comes in. If you don’t you could be subject to extremely high interest rates — anywhere from 20% to 400% of the principal.",{"type":119,"attrs":4125,"content":4126},{"level":121},[4127],{"text":4128,"type":75,"marks":4129},"Find the best personal loans with Navient Marketplace",[4130],{"type":127},{"type":71,"content":4132},[4133],{"text":4134,"type":75},"Personal loans are one of the most versatile types of loans out there. Unlike student loans or auto loans, they are relatively easy to obtain and can be used for almost anything. If you have a solid credit history and can afford to take on the monthly payments, you could be a perfect candidate for a personal loan.",{"type":71,"content":4136},[4137,4139,4144],{"text":4138,"type":75},"When considering lenders and your loan options, check out the ",{"text":4140,"type":75,"marks":4141},"Marketplace by Navient",[4142],{"type":103,"attrs":4143},{"href":737,"uuid":106,"anchor":106,"target":107,"linktype":108},{"text":4145,"type":75},". They have partnered with top financial institutions and bundled numerous options for you to review, all in one place.",{"type":71,"content":4147},[4148],{"text":749,"type":75,"marks":4149},[4150],{"type":78,"attrs":4151},{"class":80},{"type":71,"content":4153},[4154],{"text":4155,"type":75,"marks":4156},"1 Representative Example: If you borrow $5,000 on a 36 month repayment term and at a 10% APR, the monthly repayment will be $161.34. Total repayment will be $5,808.24. Total interest paid will be $808.24",[4157],{"type":78,"attrs":4158},{"class":80},{"type":68,"content":4160},[4161],{"type":71},"\u003C!--#storyblok#{\"name\": \"Typography\", \"space\": \"157494\", \"uid\": \"a64c4df0-154e-4c12-b867-678d292709f4\", \"id\": \"651798216\"}-->","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"c286affa-ee04-4348-8508-6e9f77932903\", \"id\": 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\"651798216\"}-->",{"id":18,"lg":18,"md":18,"sm":18,"_uid":1971,"cols":18,"height":18,"classes":836,"columns":4194,"justify":18,"maxWidth":853,"component":854,"colClasses":855,"rowClasses":18,"mobileClasses":856,"backgroundColor":18,"backgroundImage":4203,"containerClasses":18,"useBackgroundImage":45,"_editable":4204},[4195],{"_uid":1974,"component":840,"backToTopBtn":4196,"_editable":4202},[4197],{"url":4198,"_uid":1978,"icon":4199,"text":847,"color":32,"event":18,"sizing":4200,"classes":849,"rounded":45,"outlined":45,"component":850,"textColor":799,"hoverBgColor":799,"mobileClasses":18,"hoverTextColor":810,"navigationType":18,"_editable":4201},{"id":18,"url":18,"linktype":844,"fieldtype":805,"cached_url":18},{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},[],"\u003C!--#storyblok#{\"name\": \"Button\", \"space\": \"157494\", \"uid\": \"d87937d9-6d46-4da0-813d-437561563b18\", \"id\": \"651798216\"}-->","\u003C!--#storyblok#{\"name\": \"BackToTop\", \"space\": \"157494\", \"uid\": \"c390fb05-75db-44ae-af73-2bbd7c809b57\", \"id\": \"651798216\"}-->",{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},"\u003C!--#storyblok#{\"name\": \"Grid\", \"space\": \"157494\", \"uid\": \"33d3a06b-b58c-487e-92e7-fc588a9c1c78\", \"id\": \"651798216\"}-->","https://www.marketplace.navient.com/blog/how-do-personal-loans-work/","\u003C!--#storyblok#{\"name\": \"BlogPost\", \"space\": \"157494\", \"uid\": \"24614723-3c23-4d4f-990b-c49a1b45edce\", \"id\": \"651798216\"}-->","how-do-personal-loans-work","navient_marketplace/blog/how-do-personal-loans-work",120,[],"3d47204c-5533-41fd-b153-9b5bf3966ffc","2023-02-28T18:40:15.447Z",[],{"name":4215,"created_at":4216,"published_at":4217,"updated_at":4218,"id":4219,"uuid":4220,"content":4221,"slug":4685,"full_slug":4686,"sort_by_date":106,"position":4687,"tag_list":4688,"is_startpage":45,"parent_id":867,"meta_data":106,"group_id":4689,"first_published_at":4690,"release_id":106,"lang":870,"path":106,"alternates":4691,"default_full_slug":106,"translated_slugs":106},"Using a Personal Loan to Pay Off Credit Cards","2025-04-07T18:31:55.389Z","2026-04-01T17:18:52.331Z","2026-04-01T17:18:52.356Z",651798220,"aa5cae1d-c101-4e74-adf6-f8ae01857718",{"seo":4222,"_uid":20,"body":4225,"author":48,"category":2822,"featured":45,"component":860,"canonicalTag":4683,"_editable":4684},{"_uid":15,"title":4223,"plugin":17,"og_image":18,"og_title":18,"description":4224,"twitter_image":18,"twitter_title":18,"og_description":18,"twitter_description":18},"Using a Personal Loan to Pay Off Credit Cards - Navient Marketplace","Using a personal loan to pay off credit card debt could save you a significant sum in interest. Learn pros, cons, alternatives, and lenders. ",[4226,4234,4671],{"id":23,"_uid":885,"image":4227,"intro":4228,"author":27,"classes":4229,"category":18,"featured":45,"blogTitle":4215,"component":46,"imageLink":4232,"blendImage":45,"authorRoute":48,"publishedDate":2014,"backgroundColor":50,"_editable":4233},"//a.storyblok.com/f/110029/800x533/3bc798174c/personal-loan-to-pay-off-credit-card.png","One available option to pay off credit card debt it is to get a personal loan. Here, we'll explain this concept in detail.",[4230],{"_uid":890,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":891,"authorClasses":35,"subtitleColor":36,"subtitleClasses":38,"dateMobileClasses":39,"titleMobileClasses":40,"authorMobileClasses":41,"featuredMobileClasses":42,"subtitleMobileClasses":43,"_editable":4231},"\u003C!--#storyblok#{\"name\": \"BlogHeroStyle\", \"space\": \"157494\", \"uid\": \"6bc0d925-925b-40e2-8cb5-ac30d0086187\", \"id\": \"651798220\"}-->","/images/personal-loan-to-pay-off-credit-card.png","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"02557530-adb9-49fb-9319-277497a70cb8\", \"id\": \"651798220\"}-->",{"_uid":897,"bloks":4235,"classes":830,"component":831,"mobileClasses":18,"containerContent":4669,"_editable":4670},[4236],{"_uid":900,"bloks":4237,"classes":18,"justify":776,"component":828,"mobileClasses":18,"_editable":4668},[4238,4642],{"lg":59,"md":59,"sm":60,"_uid":903,"cols":60,"bloks":4239,"alignSelf":776,"component":777,"_editable":4641},[4240],{"_uid":906,"color":65,"classes":66,"content":18,"richText":4241,"component":769,"mobileClasses":770,"enableRichText":771,"richTextMobile":4637,"_editable":4640},{"type":68,"content":4242},[4243,4256,4260,4266,4270,4283,4287,4294,4306,4313,4317,4324,4328,4350,4357,4361,4368,4381,4388,4392,4398,4402,4409,4413,4420,4428,4435,4439,4446,4459,4466,4470,4477,4481,4485,4489,4496,4500,4513,4520,4533,4537,4544,4557,4561,4565,4572,4576,4582,4586,4592,4596,4602,4606,4610,4616,4620,4631],{"type":71,"content":4244},[4245,4247,4254],{"text":4246,"type":75},"It can be easy to let credit card debt sneak up on you, especially if you have multiple cards. In fact, about ",{"text":4248,"type":75,"marks":4249},"60% of Americans",[4250],{"type":103,"attrs":4251},{"href":4252,"uuid":106,"anchor":106,"custom":4253,"target":107,"linktype":108},"https://www.bloomberg.com/news/articles/2022-09-19/more-americans-are-stuck-with-long-term-credit-card-debt?leadSource=uverify%20wall",{},{"text":4255,"type":75}," struggle with long-term credit card debt. Once you’re in debt, soaring interest rates can make it nearly impossible to get out of it. Fortunately, there are other options that could help you consolidate your debt, simplify your monthly payments, and even get a lower interest rate on the amount you owe.",{"type":71,"content":4257},[4258],{"text":4259,"type":75},"One of the easiest options is to get a personal loan to pay off credit card debt. Taking out a personal loan moves your debt from the credit card company to a loan servicer of your choice, which may offer better repayment terms and more flexibility than your current creditors. That could help you get out of debt faster and get back to pursuing your other financial goals.",{"type":119,"attrs":4261,"content":4262},{"level":121},[4263],{"text":2033,"type":75,"marks":4264},[4265],{"type":127},{"type":71,"content":4267},[4268],{"text":4269,"type":75},"A personal loan is a loan from a financial institution that can be used for a wide variety of purposes. First, the lender issues the borrower a one-time, lump-sum cash disbursement. Then the borrower repays the loan in a series of monthly payments over a specific period of time. That period, also known as the loan term, is usually two to ten years.",{"type":71,"content":4271},[4272,4274,4281],{"text":4273,"type":75},"You can use personal loans for almost any reason, including ",{"text":4275,"type":75,"marks":4276},"home renovations",[4277],{"type":103,"attrs":4278},{"href":4279,"uuid":106,"anchor":106,"custom":4280,"target":107,"linktype":108},"https://www.earnest.com/blog/home-improvement-loan-vs-home-equity-loan/",{},{"text":4282,"type":75},", medical expenses, or moving expenses. Another option is to use your lump sum of cash as a debt consolidation loan, as in, to pay off other debts from multiple sources. However, personal loan proceeds may not be used for secondary educational expenses, including refinancing federal or private student loans.",{"type":71,"content":4284},[4285],{"text":4286,"type":75},"The issue with credit cards is that they usually carry high interest rates. That can make your debt snowball faster than you can keep up with it. To take control of your debt, you can take out a personal loan, use that loan to pay off all your existing credit card debts, and then pay off the personal loan over time. This often puts you in a better financial situation since personal loans tend to have lower interest rates than credit cards do. Personal loans often have simpler monthly payment requirements and longer terms, as well.",{"type":119,"attrs":4288,"content":4289},{"level":121},[4290],{"text":4291,"type":75,"marks":4292},"Pros and cons of using a personal loan to pay off credit card debt",[4293],{"type":127},{"type":71,"content":4295},[4296,4298,4305],{"text":4297,"type":75},"Like any type of loan or debt, there are benefits and drawbacks associated with personal loans. Here are some of the pros and cons of ",{"text":4299,"type":75,"marks":4300},"using a personal loan to pay off a credit card",[4301],{"type":103,"attrs":4302},{"href":4303,"uuid":106,"anchor":106,"custom":4304,"target":107,"linktype":108},"https://www.bankrate.com/finance/credit-cards/take-out-personal-loan-to-pay-credit-card-bill/",{},{"text":2890,"type":75},{"type":119,"attrs":4307,"content":4308},{"level":183},[4309],{"text":4310,"type":75,"marks":4311},"1. Lump sum is ideal for debt consolidation",[4312],{"type":127},{"type":71,"content":4314},[4315],{"text":4316,"type":75},"One of the biggest advantages of a personal loan is that the funds are available quickly. You can use a personal loan to pay off almost any kind of existing debt. That makes personal loans ideal for debt consolidation. You can use the lump to pay off your credit card debt, then make payments to your personal loan servicer instead. That takes your debt out of your creditors’ hands and moves it to a new lender of your choice.",{"type":119,"attrs":4318,"content":4319},{"level":183},[4320],{"text":4321,"type":75,"marks":4322},"2. Lower interest rates on average ",[4323],{"type":127},{"type":71,"content":4325},[4326],{"text":4327,"type":75},"Personal loans generally carry low interest rates relative to most credit cards. While credit cards may offer generous introductory terms, rates can become very high once those introductory periods expire.",{"type":71,"content":4329},[4330,4332,4339,4341,4348],{"text":4331,"type":75},"As of July 2022, ",{"text":4333,"type":75,"marks":4334},"the average personal loan rate was 10.28%",[4335],{"type":103,"attrs":4336},{"href":4337,"uuid":106,"anchor":106,"custom":4338,"target":107,"linktype":108},"https://www.bankrate.com/loans/personal-loans/pros-cons-of-personal-loans/",{},{"text":4340,"type":75},", while the average ",{"text":4342,"type":75,"marks":4343},"credit card rate",[4344],{"type":103,"attrs":4345},{"href":4346,"uuid":106,"anchor":106,"custom":4347,"target":107,"linktype":108},"https://www.bankrate.com/finance/credit-cards/current-interest-rates/",{},{"text":4349,"type":75}," was 16.80%. With a personal loan, you can effectively transform your credit card debt into a different type of debt with a much lower interest rate. That can help you save money and put you on the road to becoming debt-free faster.",{"type":119,"attrs":4351,"content":4352},{"level":183},[4353],{"text":4354,"type":75,"marks":4355},"3. Simpler payments",[4356],{"type":127},{"type":71,"content":4358},[4359],{"text":4360,"type":75},"Using a personal loan to pay off credit card debt is one way to simplify your monthly payments. If you have three credit cards with three different lenders, it can be tough to keep track of all those due dates, minimums, and interest rates. Consolidating all your credit card debt via personal loan will leave you with just one fixed rate, one fixed monthly payment, and one loan servicer to worry about.",{"type":119,"attrs":4362,"content":4363},{"level":183},[4364],{"text":4365,"type":75,"marks":4366},"4. Lower monthly payments",[4367],{"type":127},{"type":71,"content":4369},[4370,4372,4379],{"text":4371,"type":75},"Unlike ",{"text":4373,"type":75,"marks":4374},"other short-term loans",[4375],{"type":103,"attrs":4376},{"href":4377,"uuid":106,"anchor":106,"custom":4378,"target":107,"linktype":108},"https://www.earnest.com/blog/payday-loans-vs-personal-loans/",{},{"text":4380,"type":75},", personal loans tend to have lower interest rates and longer terms, which ensure more manageable monthly payments. Terms for personal loans range from two to ten years, depending on the lender.",{"type":119,"attrs":4382,"content":4383},{"level":183},[4384],{"text":4385,"type":75,"marks":4386},"5. Better alternative to a balance-transfer card",[4387],{"type":127},{"type":71,"content":4389},[4390],{"text":4391,"type":75},"Some people use balance-transfer cards to restructure their debt. A balance transfer is the process of taking out a new credit card and moving your existing credit-card balances to that new card. It’s effectively a type of loan consolidation, but it’s often more expensive in the long run than a personal loan. That’s because credit card issuers typically charge a fee based on the balance carried over. Plus, once the new card’s introductory period expires, you may be left with a higher interest rate than you had in the first place.",{"type":119,"attrs":4393,"content":4394},{"level":121},[4395],{"text":3110,"type":75,"marks":4396},[4397],{"type":127},{"type":71,"content":4399},[4400],{"text":4401,"type":75},"Personal loans do have some disadvantages, and they may not always make sense for your financial situation. Here are some things to consider before you apply for a personal loan.",{"type":119,"attrs":4403,"content":4404},{"level":183},[4405],{"text":4406,"type":75,"marks":4407},"1. You’ll take on additional debt",[4408],{"type":127},{"type":71,"content":4410},[4411],{"text":4412,"type":75},"Taking on more debt is only a good idea if you can be proactive about getting out of that debt. The old adage, “robbing Peter to pay Paul,” rings true with any sort of debt-consolidation tactic. If you take out a personal loan and pay off your credit card debt, then misuse credit cards again, you could find yourself in even more debt than you started with. If you can afford it, it’s often better to increase your monthly payment and aggressively pay down your debt than it is to take out a new loan.",{"type":119,"attrs":4414,"content":4415},{"level":183},[4416],{"text":4417,"type":75,"marks":4418},"2. It’s hard on borrowers with bad credit scores",[4419],{"type":127},{"type":71,"content":4421},[4422,4424,4425,4426],{"text":4423,"type":75},"When you apply for a personal loan, the lending institution will pull a credit report to determine your creditworthiness. They’ll then offer you an interest rate based on your financial situation and credit history. If you are already in trouble with delinquent credit card payments, or have bad credit for other reasons, you may not like your interest-rate offer. Lenders consider borrowers with poor credit a payback risk, which means they can’t afford to offer those borrowers a low interest rate. ",{"type":292},{"type":292},{"text":4427,"type":75},"High interest rates aren’t the only reason to avoid taking out a personal loan if you have bad credit. If you already struggle to pay off your credit cards on time, you may not have the tools you need to manage paying off a new loan. (Instead, check out the alternatives to personal loans listed below.)",{"type":119,"attrs":4429,"content":4430},{"level":183},[4431],{"text":4432,"type":75,"marks":4433},"3. There could be high fees",[4434],{"type":127},{"type":71,"content":4436},[4437],{"text":4438,"type":75},"Like many other loans, personal loans have fees associated with them. As a borrower, you can expect an origination fee to be added to your initial principal amount. (Origination fees typically cover the cost of processing the loan.) You will also incur late fees if you do not make payments on time. Late fees are usually a percentage of the loan amount, which can be very large depending on how much you borrow. Some servicers will also add prepayment penalties if you pay off the loan early.",{"type":119,"attrs":4440,"content":4441},{"level":183},[4442],{"text":4443,"type":75,"marks":4444},"4. You may have to offer collateral",[4445],{"type":127},{"type":71,"content":4447},[4448,4450,4457],{"text":4449,"type":75},"Some personal loans are ",{"text":4451,"type":75,"marks":4452},"secured loans",[4453],{"type":103,"attrs":4454},{"href":4455,"uuid":106,"anchor":106,"custom":4456,"target":107,"linktype":108},"https://www.earnest.com/blog/unsecured-vs-secured-personal-loans-101/",{},{"text":4458,"type":75},". This means they require collateral upfront. Secured loans tend to have lower interest rates than unsecured loans and better terms because the borrower is leveraging something of value in exchange for the loan. Collateral may also be required of borrowers with poor credit history to offset the risk to the lender. Types of collateral can include assets such as a car or a house. However, failure to repay the loan upon the agreed terms can result in forfeit of the leveraged asset.",{"type":119,"attrs":4460,"content":4461},{"level":121},[4462],{"text":4463,"type":75,"marks":4464},"Alternatives to using a personal loan to pay off credit cards",[4465],{"type":127},{"type":71,"content":4467},[4468],{"text":4469,"type":75},"If using a personal loan to pay off credit card debt sounds like it might not be right for you, consider the following alternatives:",{"type":119,"attrs":4471,"content":4472},{"level":183},[4473],{"text":4474,"type":75,"marks":4475},"Balance transfer card",[4476],{"type":127},{"type":71,"content":4478},[4479],{"text":4480,"type":75},"When someone applies for a new credit card and transfers all their existing credit-card balances to that new card, it’s called a “balance transfer.” This can be beneficial if the new credit card has a lower rate than your existing credit cards do. For instance, some introductory offers carry a 0% interest rate, which effectively eliminates the interest on your credit card debt — at least while the introductory period remains in effect.",{"type":71,"content":4482},[4483],{"text":4484,"type":75},"This may all sound good at first glance, but balance-transfer credit cards do have their downsides. Your new credit card issuer may charge a balance-transfer fee, for example. This is typically a percentage of the balance being transferred.",{"type":71,"content":4486},[4487],{"text":4488,"type":75},"As mentioned, introductory offers can be helpful, but they don’t last forever. The interest rate on the new card could end up higher than the rate of the old card after the introductory offer expires. If this is the case, then you could find yourself worse off than you were before. It’s also important to note that many of the better introductory offers are only available to those with excellent credit.",{"type":119,"attrs":4490,"content":4491},{"level":183},[4492],{"text":4493,"type":75,"marks":4494},"Home equity loan or HELOC",[4495],{"type":127},{"type":71,"content":4497},[4498],{"text":4499,"type":75},"A home equity line of credit (HELOC), is a revolving line of credit awarded to a homeowner based on the equity they have in their home. Home equity is a measure of how much of your home you own, and what the value of that ownership is. A revolving line of credit allows you to borrow money when needed, then pay interest on the money you borrow.",{"type":71,"content":4501},[4502,4504,4511],{"text":4503,"type":75},"Since HELOCs typically have better interest rates than credit cards do, you can use a HELOC as a consolidation loan. The tricky thing is that, when you apply for a line of credit in this way, you’re putting up your home as collateral. Failure to repay the loan within the terms could mean foreclosure on the home. For this reason, HELOCs are generally ",{"text":4505,"type":75,"marks":4506},"considered too risky",[4507],{"type":103,"attrs":4508},{"href":4509,"uuid":106,"anchor":106,"custom":4510,"target":107,"linktype":108},"https://www.bankrate.com/home-equity/should-i-use-heloc-to-pay-credit-card-debt/ ",{},{"text":4512,"type":75}," to be used to pay off credit card debt. Instead, they’re usually recommended for home improvements that will add greater value to your home.",{"type":119,"attrs":4514,"content":4515},{"level":183},[4516],{"text":4517,"type":75,"marks":4518},"Debt settlement",[4519],{"type":127},{"type":71,"content":4521},[4522,4524,4531],{"text":4523,"type":75},"There may be some scenarios in which you cannot pay down your credit card debt and do not qualify for an option such as a personal loan. Sometimes, you can negotiate with a lender to let you pay back only a portion of the debt you owe. This process is called ",{"text":4525,"type":75,"marks":4526},"debt settlement",[4527],{"type":103,"attrs":4528},{"href":4529,"uuid":106,"anchor":106,"custom":4530,"target":107,"linktype":108},"https://www.consumerfinance.gov/ask-cfpb/what-are-debt-settlementdebt-relief-services-and-should-i-use-them-en-1457/",{},{"text":4532,"type":75},". During this process, a third party negotiates the amount you’ll pay, then guarantees your creditor that you will pay that settled amount in full.",{"type":71,"content":4534},[4535],{"text":4536,"type":75},"Debt settlement might sound appealing, but it can sometimes cause more harm than good. If a financial institution does agree to settle, you could end up with hefty fees from the third-party negotiator. Debt settlement can also negatively impact your credit score, which can take years to rebuild.",{"type":119,"attrs":4538,"content":4539},{"level":183},[4540],{"text":4541,"type":75,"marks":4542},"Debt avalanche or snowball method",[4543],{"type":127},{"type":71,"content":4545},[4546,4548,4555],{"text":4547,"type":75},"If you don’t qualify for a personal loan, you can pay off your credit cards the old-fashioned way with one of these two classic ",{"text":4549,"type":75,"marks":4550},"debt repayment strategies",[4551],{"type":103,"attrs":4552},{"href":4553,"uuid":106,"anchor":106,"custom":4554,"target":107,"linktype":108},"https://www.wellsfargo.com/goals-credit/smarter-credit/manage-your-debt/snowball-vs-avalanche-paydown/",{},{"text":4556,"type":75},": “Debt avalanche” or “debt snowball.”",{"type":71,"content":4558},[4559],{"text":4560,"type":75},"With the debt avalanche method, you continue to make minimum payments on all your outstanding debts while prioritizing paying off your highest interest-rate balances first. The debt avalanche method is the best way to pay off your debt while saving the most money on interest fees.",{"type":71,"content":4562},[4563],{"text":4564,"type":75},"With the debt snowball method, you continue to make the minimum payments on all your debts, but you prioritize paying off your smaller balances first. The debt snowball method will help settle your overall debt amount faster. By paying off loans when you can, you will ultimately reduce the debt you owe in total.",{"type":119,"attrs":4566,"content":4567},{"level":121},[4568],{"text":4569,"type":75,"marks":4570},"Where to get a personal loan to pay off credit card debt",[4571],{"type":127},{"type":71,"content":4573},[4574],{"text":4575,"type":75},"Many different financial institutions offer personal loans.  Each has benefits and drawbacks, so be sure to analyze your options before you move forward.",{"type":119,"attrs":4577,"content":4578},{"level":183},[4579],{"text":4054,"type":75,"marks":4580},[4581],{"type":127},{"type":71,"content":4583},[4584],{"text":4585,"type":75},"Obtaining a personal loan from a bank is one of the more traditional options. If you already hold a savings or checking account with the bank, this may be a good choice for you. That’s because bank members may receive more favorable rates, higher loan amounts, and faster application options than non-members. Banks typically require good credit to issue a personal loan, especially if you are not a member already. You’ll likely need to visit the bank in person to complete this process.",{"type":119,"attrs":4587,"content":4588},{"level":183},[4589],{"text":4041,"type":75,"marks":4590},[4591],{"type":127},{"type":71,"content":4593},[4594],{"text":4595,"type":75},"You can also take out a personal loan through a credit union. Because credit unions are member-owned, they often carry lower loan rates and fees, which could save you money over the life of the loan. Credit unions also tend to be more generous toward individuals with fair to bad credit. To apply for a loan, you’ll need to become a member, which is often easy and inexpensive to do.",{"type":119,"attrs":4597,"content":4598},{"level":183},[4599],{"text":4029,"type":75,"marks":4600},[4601],{"type":127},{"type":71,"content":4603},[4604],{"text":4605,"type":75},"One of the fastest ways to obtain a personal loan is through an online lender. Online lenders have the ability to approve and disburse your loan within a day or two. You can complete the entire loan application process online, and the funds go directly to your bank account.",{"type":71,"content":4607},[4608],{"text":4609,"type":75},"The downside to online lending is that borrowers rarely have an existing relationship with the institution. That means those with poor credit could receive higher rates than they might get from a bank or credit union where they’re already a member.",{"type":119,"attrs":4611,"content":4612},{"level":121},[4613],{"text":3358,"type":75,"marks":4614},[4615],{"type":127},{"type":71,"content":4617},[4618],{"text":4619,"type":75},"Personal loans are a fast, simple way to consolidate credit card debt. They typically come with longer terms and lower interest rates than credit cards. That makes them a great way to lower your monthly payment, simplify your debt obligations, and get out of debt faster.",{"type":71,"content":4621},[4622,4624,4629],{"text":4623,"type":75},"If you’ve decided a personal loan is right for you, it’s time to find a lender. Start your search at ",{"text":733,"type":75,"marks":4625},[4626],{"type":103,"attrs":4627},{"href":737,"uuid":106,"anchor":106,"custom":4628,"target":107,"linktype":108},{},{"text":4630,"type":75},", an online platform designed to take the overwhelm out of the loan application process by organizing all your options in one place. Shop the marketplace today to find the best option for your personal finance needs.",{"type":71,"content":4632},[4633],{"text":749,"type":75,"marks":4634},[4635],{"type":78,"attrs":4636},{"class":80},{"type":68,"content":4638},[4639],{"type":71},"\u003C!--#storyblok#{\"name\": \"Typography\", \"space\": \"157494\", \"uid\": \"a64c4df0-154e-4c12-b867-678d292709f4\", \"id\": \"651798220\"}-->","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"c286affa-ee04-4348-8508-6e9f77932903\", \"id\": 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\"651798220\"}-->",{"id":18,"lg":18,"md":18,"sm":18,"_uid":1971,"cols":18,"height":18,"classes":836,"columns":4672,"justify":18,"maxWidth":853,"component":854,"colClasses":855,"rowClasses":18,"mobileClasses":856,"backgroundColor":18,"backgroundImage":4681,"containerClasses":18,"useBackgroundImage":45,"_editable":4682},[4673],{"_uid":1974,"component":840,"backToTopBtn":4674,"_editable":4680},[4675],{"url":4676,"_uid":1978,"icon":4677,"text":847,"color":32,"event":18,"sizing":4678,"classes":849,"rounded":45,"outlined":45,"component":850,"textColor":799,"hoverBgColor":799,"mobileClasses":18,"hoverTextColor":810,"navigationType":18,"_editable":4679},{"id":18,"url":18,"linktype":844,"fieldtype":805,"cached_url":18},{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},[],"\u003C!--#storyblok#{\"name\": \"Button\", \"space\": \"157494\", \"uid\": \"d87937d9-6d46-4da0-813d-437561563b18\", \"id\": \"651798220\"}-->","\u003C!--#storyblok#{\"name\": \"BackToTop\", \"space\": \"157494\", \"uid\": \"c390fb05-75db-44ae-af73-2bbd7c809b57\", \"id\": \"651798220\"}-->",{"id":106,"alt":106,"name":18,"focus":106,"title":106,"filename":18,"copyright":106,"fieldtype":808},"\u003C!--#storyblok#{\"name\": \"Grid\", \"space\": \"157494\", \"uid\": \"33d3a06b-b58c-487e-92e7-fc588a9c1c78\", \"id\": \"651798220\"}-->","https://www.marketplace.navient.com/blog/personal-loan-to-pay-off-credit-card/","\u003C!--#storyblok#{\"name\": \"BlogPost\", \"space\": \"157494\", \"uid\": \"24614723-3c23-4d4f-990b-c49a1b45edce\", \"id\": \"651798220\"}-->","personal-loan-to-pay-off-credit-card","navient_marketplace/blog/personal-loan-to-pay-off-credit-card",160,[],"67346c84-3ad3-45f6-8207-e8a3740db1e0","2023-02-28T18:40:15.684Z",[],{"name":4693,"created_at":4694,"published_at":4695,"updated_at":4696,"id":4697,"uuid":4698,"content":4699,"slug":5350,"full_slug":5351,"sort_by_date":106,"position":5352,"tag_list":5353,"is_startpage":45,"parent_id":867,"meta_data":106,"group_id":5354,"first_published_at":5355,"release_id":106,"lang":870,"path":106,"alternates":5356,"default_full_slug":106,"translated_slugs":106},"What to Know About Personal Loans","2025-04-07T18:31:56.911Z","2026-04-01T17:19:24.240Z","2026-04-01T17:19:24.263Z",651798221,"df4f1cf3-de57-4fb7-9e14-323f52f8cdb7",{"seo":4700,"_uid":20,"body":4703,"author":48,"category":2822,"featured":45,"component":860,"canonicalTag":5348,"_editable":5349},{"_uid":15,"title":4701,"plugin":17,"og_image":18,"og_title":18,"description":4702,"twitter_image":18,"twitter_title":18,"og_description":18,"twitter_description":18},"What to Know About Personal Loans - Navient Marketplace","What to know about personal loans: They're flexible, lump-sum, and good for debt consolidation. But they may not be right for you. Get the details here. ",[4704,4712,5336],{"id":23,"_uid":885,"image":4705,"intro":4706,"author":27,"classes":4707,"category":18,"featured":45,"blogTitle":4693,"component":46,"imageLink":4710,"blendImage":45,"authorRoute":48,"publishedDate":2014,"backgroundColor":50,"_editable":4711},"//a.storyblok.com/f/110029/800x532/2e35990a35/what-to-know-about-personal-loans.png","In this guide, we’ll discuss everything you need to know about personal loans, including where to get one and alternatives.",[4708],{"_uid":890,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":891,"authorClasses":35,"subtitleColor":36,"subtitleClasses":38,"dateMobileClasses":39,"titleMobileClasses":40,"authorMobileClasses":41,"featuredMobileClasses":42,"subtitleMobileClasses":43,"_editable":4709},"\u003C!--#storyblok#{\"name\": \"BlogHeroStyle\", \"space\": \"157494\", \"uid\": \"6bc0d925-925b-40e2-8cb5-ac30d0086187\", \"id\": \"651798221\"}-->","/images/what-to-know-about-personal-loans.png","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"02557530-adb9-49fb-9319-277497a70cb8\", \"id\": \"651798221\"}-->",{"_uid":897,"bloks":4713,"classes":830,"component":831,"mobileClasses":18,"containerContent":5334,"_editable":5335},[4714],{"_uid":900,"bloks":4715,"classes":18,"justify":776,"component":828,"mobileClasses":18,"_editable":5333},[4716,5307],{"lg":59,"md":59,"sm":60,"_uid":903,"cols":60,"bloks":4717,"alignSelf":776,"component":777,"_editable":5306},[4718],{"_uid":906,"color":65,"classes":66,"content":18,"richText":4719,"component":769,"mobileClasses":770,"enableRichText":771,"richTextMobile":5302,"_editable":5305},{"type":68,"content":4720},[4721,4725,4729,4736,4780,4787,4791,4795,4799,4811,4818,4822,4868,4875,4879,4886,4890,4897,4901,4908,4921,4928,4948,4955,4959,4966,4970,4977,4989,4996,5000,5007,5011,5015,5022,5026,5039,5059,5066,5070,5077,5090,5097,5110,5117,5121,5128,5132,5139,5143,5150,5154,5161,5165,5169,5176,5184,5188,5195,5199,5205,5209,5213,5219,5223,5227,5231,5235,5241,5245,5249,5256,5260,5273,5279,5283,5295],{"type":71,"content":4722},[4723],{"text":4724,"type":75},"Personal loans are a versatile source of funding that can be used for almost anything. They’re a popular solution for everything from funding big home improvement projects to covering unexpected expenses. They’re also popular to use as a debt consolidation loan, which can help you lower your interest rates and get out of debt faster.",{"type":71,"content":4726},[4727],{"text":4728,"type":75},"Any time you take out a loan, it’s important to research your options and determine whether or not it’s the right fit for your financial situation. In this article, we’ll discuss everything you need to know about personal loans, including how personal loans work, where you can get one, and what alternatives to consider.",{"type":119,"attrs":4730,"content":4731},{"level":121},[4732],{"text":4733,"type":75,"marks":4734},"What to know about personal loans: key takeaways",[4735],{"type":127},{"type":336,"content":4737},[4738,4747,4756,4765,4774],{"type":339,"content":4739},[4740],{"type":71,"content":4741},[4742],{"text":4743,"type":75,"marks":4744},"A personal loan is a lump sum of money that can be used for almost any purpose.",[4745],{"type":78,"attrs":4746},{"class":2500},{"type":339,"content":4748},[4749],{"type":71,"content":4750},[4751],{"text":4752,"type":75,"marks":4753},"Individuals with high credit scores and low existing debt will likely get the best rates.",[4754],{"type":78,"attrs":4755},{"class":2500},{"type":339,"content":4757},[4758],{"type":71,"content":4759},[4760],{"text":4761,"type":75,"marks":4762},"Borrowers can use personal loans to consolidate their existing credit card debt into one monthly loan payment.",[4763],{"type":78,"attrs":4764},{"class":2500},{"type":339,"content":4766},[4767],{"type":71,"content":4768},[4769],{"text":4770,"type":75,"marks":4771},"Banks, credit unions, and online lenders are a few of the most popular sources of personal loans.",[4772],{"type":78,"attrs":4773},{"class":2500},{"type":339,"content":4775},[4776],{"type":71,"content":4777},[4778],{"text":4779,"type":75},"Personal loans are suited for debt consolidation, critical expenses, and purchases that will help you build equity. They’re not recommended for everyday or non-essential expenditures.",{"type":119,"attrs":4781,"content":4782},{"level":121},[4783],{"text":4784,"type":75,"marks":4785},"What are personal loans and how do they work?",[4786],{"type":127},{"type":71,"content":4788},[4789],{"text":4790,"type":75},"A personal loan is a type of installment loan that can be used for a wide variety of purposes. The money is handed over in a lump sum, leaving the borrower to do almost anything they want with it. Some of the most popular uses for personal loans include debt consolidation, home repairs, and medical expenses. However, loan proceeds may not be used for postsecondary educational expenses, including refinancing federal or private student loans.",{"type":71,"content":4792},[4793],{"text":4794,"type":75},"So, how exactly do personal loans work?",{"type":71,"content":4796},[4797],{"text":4798,"type":75},"First, the borrower submits a loan application to a lender, like a bank or credit union. The lender then checks the borrower’s credit score, debt history, and other markers of creditworthiness. If the borrower passes the credit check, the lender will then hand over a set amount of money, which must be paid back over a fixed period of time with interest.",{"type":71,"content":4800},[4801,4803,4809],{"text":4802,"type":75},"The interest rates on personal loans are often lower than you’d find on other types of short-term debt, like credit cards or ",{"text":4804,"type":75,"marks":4805},"payday loans",[4806],{"type":103,"attrs":4807},{"href":4377,"uuid":106,"anchor":106,"custom":4808,"target":107,"linktype":108},{},{"text":4810,"type":75},". That said, personal loan interest rates do vary depending on the type of loan and the creditworthiness of the borrower. ",{"type":119,"attrs":4812,"content":4813},{"level":121},[4814],{"text":4815,"type":75,"marks":4816},"The different types of personal loans available",[4817],{"type":127},{"type":71,"content":4819},[4820],{"text":4821,"type":75},"There are a few different types of personal loans available, each with its own benefits and drawbacks. Let’s take a look at the three most common types of personal loans: secured, unsecured, and peer-to-peer.",{"type":336,"content":4823},[4824,4835,4855],{"type":339,"content":4825},[4826],{"type":71,"content":4827},[4828,4833],{"text":2113,"type":75,"marks":4829},[4830],{"type":103,"attrs":4831},{"href":4455,"uuid":106,"anchor":106,"custom":4832,"target":107,"linktype":108},{},{"text":4834,"type":75}," are backed by collateral, such as a home or car. If the borrower defaults on the loan, the lender can seize the collateral to recover their money. This gives the lender an extra level of reassurance that they’ll be able to recoup their investment. For that reason, secured personal loans tend to have lower interest rates than unsecured personal loans.",{"type":339,"content":4836},[4837],{"type":71,"content":4838},[4839,4845,4847,4854],{"text":2089,"type":75,"marks":4840},[4841],{"type":103,"attrs":4842},{"href":4843,"uuid":106,"anchor":106,"custom":4844,"target":107,"linktype":108},"https://www.cnbc.com/select/secured-loans-vs-unsecured-loans/",{},{"text":4846,"type":75}," do not require any collateral. So, if the borrower defaults, the lender has no way to recoup their money except through legal action. For that reason,  lenders face more risk with unsecured loans, which is why these types of loans usually come with higher interest rates. They are typically given to borrowers with ",{"text":4848,"type":75,"marks":4849},"good credit scores",[4850],{"type":103,"attrs":4851},{"href":4852,"uuid":106,"anchor":106,"custom":4853,"target":107,"linktype":108},"https://www.earnest.com/blog/personal-financial-health/",{},{"text":2890,"type":75},{"type":339,"content":4856},[4857],{"type":71,"content":4858},[4859,4866],{"text":4860,"type":75,"marks":4861},"Peer-to-peer (P2P)",[4862],{"type":103,"attrs":4863},{"href":4864,"uuid":106,"anchor":106,"custom":4865,"target":107,"linktype":108},"https://www.investopedia.com/terms/p/peer-to-peer-lending.asp",{},{"text":4867,"type":75}," lending describes a newer type of loan setup that connects borrowers and lenders directly without using a bank or credit union as an intermediary. This type of loan typically comes with lower interest rates than other types of personal loans since there’s no middleman.",{"type":119,"attrs":4869,"content":4870},{"level":121},[4871],{"text":4872,"type":75,"marks":4873},"The benefits of personal loans",[4874],{"type":127},{"type":71,"content":4876},[4877],{"text":4878,"type":75},"There are a number of benefits to taking out a personal loan. Here are a few of their best qualities:",{"type":119,"attrs":4880,"content":4881},{"level":183},[4882],{"text":4883,"type":75,"marks":4884},"Flexible",[4885],{"type":127},{"type":71,"content":4887},[4888],{"text":4889,"type":75},"Personal loans offer borrowers more flexibility than other types of loans. This is because personal loans can be used for almost any purpose, whereas other types of loans are typically tied to something specific, such as purchasing a car or a home. Need to use part of the loan to pay off some debt, and the rest to finance a home repair? With a personal loan, that’s no problem",{"type":119,"attrs":4891,"content":4892},{"level":183},[4893],{"text":4894,"type":75,"marks":4895},"Disbursed in one lump sum",[4896],{"type":127},{"type":71,"content":4898},[4899],{"text":4900,"type":75},"Most personal loans are disbursed in a lump sum. This means you receive the entire amount of the loan at once, rather than receiving it in installments. When you have the money all at once, you’re free to use the whole loan immediately (to pay off a high-interest credit card in its entirety, for example), and it’s easier to stay organized since everyone involved knows exactly how much money needs to be paid back and when. ",{"type":119,"attrs":4902,"content":4903},{"level":183},[4904],{"text":4905,"type":75,"marks":4906},"Good for refinancing high-interest debt",[4907],{"type":127},{"type":71,"content":4909},[4910,4912,4919],{"text":4911,"type":75},"Personal loans are a good option for ",{"text":4913,"type":75,"marks":4914},"refinancing high-interest debt",[4915],{"type":103,"attrs":4916},{"href":4917,"uuid":106,"anchor":106,"custom":4918,"target":107,"linktype":108},"https://www.earnest.com/blog/refinance-credit-card-debt/",{},{"text":4920,"type":75},". When you have multiple debts with different interest rates, it can be difficult to keep track of what you’re paying and how much interest you’re accumulating. A personal loan lets you effectively transfer all those debts to a single new loan. You’re left with a single bill and a single fixed interest rate to keep track of. In addition, personal loans usually have lower interest rates than credit cards. Refinancing your debt in this way can therefore save you money over the life of the loan by drastically reducing your total interest charges.",{"type":119,"attrs":4922,"content":4923},{"level":183},[4924],{"text":4925,"type":75,"marks":4926},"Lower Risk",[4927],{"type":127},{"type":71,"content":4929},[4930,4932,4938,4940,4946],{"text":4931,"type":75},"Unsecured personal loans are less risky for borrowers than many other types of loans. Take secured ",{"text":4933,"type":75,"marks":4934},"home equity loans",[4935],{"type":103,"attrs":4936},{"href":4279,"uuid":106,"anchor":106,"custom":4937,"target":107,"linktype":108},{},{"text":4939,"type":75},", for example. If you want to take out a loan to ",{"text":4941,"type":75,"marks":4942},"consolidate your high-interest debt",[4943],{"type":103,"attrs":4944},{"href":2881,"uuid":106,"anchor":106,"custom":4945,"target":107,"linktype":108},{},{"text":4947,"type":75}," but don’t have much equity in your home yet, you could take out a personal loan instead. This would give you the funds you need without putting your home at risk.",{"type":119,"attrs":4949,"content":4950},{"level":121},[4951],{"text":4952,"type":75,"marks":4953},"How to get a personal loan",[4954],{"type":127},{"type":71,"content":4956},[4957],{"text":4958,"type":75},"There are a number of ways to get a personal loan, but the most common way is through a bank, online lender, or a credit union (a non-profit, community-based financial institution). Here’s what the process looks like:",{"type":119,"attrs":4960,"content":4961},{"level":183},[4962],{"text":4963,"type":75,"marks":4964},"1. Look for banks or credit unions that offer personal loans",[4965],{"type":127},{"type":71,"content":4967},[4968],{"text":4969,"type":75},"If you’ve decided a personal loan is for you, there are a few different places you can start your search. Which is best for you will depend on your situation.",{"type":119,"attrs":4971,"content":4972},{"level":200},[4973],{"text":4974,"type":75,"marks":4975},"A bank where you already have an account",[4976],{"type":127},{"type":71,"content":4978},[4979,4981,4988],{"text":4980,"type":75},"A great place to look for a personal loan is at an institution where you already have a bank account. This existing relationship may help you down the line when lenders want to know more about your financial history. Big banks tend to offer lower annual percentage rates (APRs) and higher loan amounts to individuals in good standing with them, but are less likely to offer a loan to someone ",{"text":4982,"type":75,"marks":4983},"with bad credit",[4984],{"type":103,"attrs":4985},{"href":4986,"uuid":106,"anchor":106,"custom":4987,"target":107,"linktype":108},"https://www.earnest.com/blog/build-credit-in-6-easy-smart-steps/",{},{"text":2890,"type":75},{"type":119,"attrs":4990,"content":4991},{"level":200},[4992],{"text":4993,"type":75,"marks":4994},"A credit union if your credit score isn’t exceptional",[4995],{"type":127},{"type":71,"content":4997},[4998],{"text":4999,"type":75},"Credit unions tend to be more favorable for those with low to average credit. Credit union loan officers may be willing to consider other factors beyond your credit score to help you get a loan. Because credit unions are usually local or regional, you can expect more personal service throughout the process as well. The only catch is that to apply for a loan through a credit union, you must be a member, which usually requires a small fee.",{"type":119,"attrs":5001,"content":5002},{"level":200},[5003],{"text":5004,"type":75,"marks":5005},"An online lender if you’re looking for speed and convenience",[5006],{"type":127},{"type":71,"content":5008},[5009],{"text":5010,"type":75},"Another option is using an online lender. Online lenders allow you to quickly shop around and review multiple loan offers from the comfort of your home. Because you can compare so many options at once, it’s easier to figure out if you are getting a good rate.",{"type":71,"content":5012},[5013],{"text":5014,"type":75},"A potential downside to having an online lender is that you will need to use email, phone, or online chat to resolve any issues. With a bank or credit union, you can address questions by walking in and getting more personal service, which some borrowers prefer.",{"type":119,"attrs":5016,"content":5017},{"level":183},[5018],{"text":5019,"type":75,"marks":5020},"2. Compare interest rates between different financial institutions",[5021],{"type":127},{"type":71,"content":5023},[5024],{"text":5025,"type":75},"Each financial institution will likely offer you a different interest rate. Make sure to compare rates before you decide which one to go with.",{"type":71,"content":5027},[5028,5030,5037],{"text":5029,"type":75},"Each offer will be based on factors like your credit score, debt-to-income ratio, and credit history. Lenders will review this information by pulling your credit report. ",{"text":5031,"type":75,"marks":5032},"According to Experian",[5033],{"type":103,"attrs":5034},{"href":5035,"uuid":106,"anchor":106,"custom":5036,"target":107,"linktype":108},"https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-is-a-good-credit-score/",{},{"text":5038,"type":75},", one of the “Big Three” credit bureaus, a “good” credit score is anything above 700, and an “excellent” score is 800 or more. The amount and term length of the loan will also affect the rates your lender can offer you. If you are in good financial standing and can commit to a shorter loan term, you will likely receive the best rates a lender can offer.",{"type":71,"content":5040},[5041,5043,5050,5052,5058],{"text":5042,"type":75},"While different borrowers will qualify for different interest rates, a “",{"text":5044,"type":75,"marks":5045},"good interest rate",[5046],{"type":103,"attrs":5047},{"href":5048,"uuid":106,"anchor":106,"custom":5049,"target":107,"linktype":108},"https://www.forbes.com/advisor/personal-loans/personal-loan-rates/#what_are_current_personal_loan_rates_section",{},{"text":5051,"type":75},"” is typically defined as one that falls below the national average. In August 2022, the national average interest rate for a personal loan was ",{"text":5053,"type":75,"marks":5054},"about 10%",[5055],{"type":103,"attrs":5056},{"href":3040,"uuid":106,"anchor":106,"custom":5057,"target":107,"linktype":108},{},{"text":2890,"type":75},{"type":119,"attrs":5060,"content":5061},{"level":183},[5062],{"text":5063,"type":75,"marks":5064},"3. Apply for a personal loan with the lender of your choice",[5065],{"type":127},{"type":71,"content":5067},[5068],{"text":5069,"type":75},"When you’ve decided on a lender, your next step is to fill out a loan application. During the application process, you will need to provide proof of identity, such as a driver’s license or passport, as well as your social security number. The lender will also want to verify your employer and income, so they may request a pay stub or W2 form, as well. Rental agreements or mortgage statements may be required to provide proof of address.",{"type":119,"attrs":5071,"content":5072},{"level":183},[5073],{"text":5074,"type":75,"marks":5075},"4. Wait for approval from your financial institution",[5076],{"type":127},{"type":71,"content":5078},[5079,5081,5088],{"text":5080,"type":75},"Once you submit your application, your lender will review it and let you know if you’ve been approved for a loan. ",{"text":5082,"type":75,"marks":5083},"Approval for a personal loan",[5084],{"type":103,"attrs":5085},{"href":5086,"uuid":106,"anchor":106,"custom":5087,"target":107,"linktype":108},"https://www.cusocal.org/how-long-does-it-take-to-get-a-personal-loan",{},{"text":5089,"type":75}," can take one to seven days. This can sometimes take longer if there’s a delay with your credit check or a backup at your bank or credit union. Applications tend to be approved more quickly with online lenders than with brick-and-mortar institutions.",{"type":119,"attrs":5091,"content":5092},{"level":183},[5093],{"text":5094,"type":75,"marks":5095},"5. Sign the agreement and receive your funds",[5096],{"type":127},{"type":71,"content":5098},[5099,5101,5108],{"text":5100,"type":75},"If you’re approved for a loan, the lender will send you a document outlining the terms of the loan agreement. Be sure to carefully read the fine print, as this document will include everything you’re about to commit to, including the total amount of the loan, the repayment terms, the loan APR, and the monthly installment amounts and deadlines. ",{"text":5102,"type":75,"marks":5103},"After you sign this agreement",[5104],{"type":103,"attrs":5105},{"href":5106,"uuid":106,"anchor":106,"custom":5107,"target":107,"linktype":108},"https://www.experian.com/blogs/ask-experian/how-long-does-it-take-to-get-a-personal-loan/",{},{"text":5109,"type":75},", the funds will be disbursed to you. At that point, you cannot change your mind and go back on the agreement.",{"type":119,"attrs":5111,"content":5112},{"level":183},[5113],{"text":5114,"type":75,"marks":5115},"6. Continue repaying the loan until your debts are paid off",[5116],{"type":127},{"type":71,"content":5118},[5119],{"text":5120,"type":75},"It’s important to make your loan payments on time. Lapses in payment will likely result in late fees. Failure to repay the loan will also carry serious penalties. You could be subject to more fees, damage to your credit score, collections calls, or even legal ramifications.",{"type":119,"attrs":5122,"content":5123},{"level":121},[5124],{"text":5125,"type":75,"marks":5126},"Things to consider before taking out a personal loan",[5127],{"type":127},{"type":71,"content":5129},[5130],{"text":5131,"type":75},"There are a number of things you need to consider before taking out a personal loan. Here are a few of the most important.",{"type":119,"attrs":5133,"content":5134},{"level":183},[5135],{"text":5136,"type":75,"marks":5137},"How much do you need?",[5138],{"type":127},{"type":71,"content":5140},[5141],{"text":5142,"type":75},"Personal loans typically range from $1,000 to $50,000. That’s a big range, which means you’ll need to decide how much money you need before you apply. Do some calculations to figure out how much you’ll need to cover your expected home repair, pay off your credit card debt, or achieve another financial goal. Then, take out only what you need. This will ensure you won’t incur unnecessary interest charges, and it will keep your monthly payments within reason.",{"type":119,"attrs":5144,"content":5145},{"level":183},[5146],{"text":5147,"type":75,"marks":5148},"What is the repayment schedule?",[5149],{"type":127},{"type":71,"content":5151},[5152],{"text":5153,"type":75},"Most personal loans have a repayment schedule, or loan term, of either three or five years1. Because personal loans are a type of installment loan, you will make monthly payments based on the amount you borrowed plus interest. These payments will continue until the loan is paid back in full. Before you sign off on a loan, make sure you can afford the monthly payments and that the repayment schedule aligns with your other financial goals.",{"type":119,"attrs":5155,"content":5156},{"level":183},[5157],{"text":5158,"type":75,"marks":5159},"What are the fees?",[5160],{"type":127},{"type":71,"content":5162},[5163],{"text":5164,"type":75},"Many personal loan servicers charge origination fees, late-payment fees, or prepayment penalties. Origination fees are associated with the administration and processing costs of the loan and are typically a small percentage of the overall loan amount. Late fees are incurred if you fall behind on payments. A late fee can be a set amount or a percentage of your monthly payments, depending on your loan servicer.",{"type":71,"content":5166},[5167],{"text":5168,"type":75},"Not all loan servicers charge prepayment penalties. However, some do charge a fee if you pay off the loan prior to the end of the term. Because lenders make money on interest charges, this is their way of locking you into the total cost of the loan. If you expect to pay off your loan quickly, either select a servicer that doesn’t charge prepayment penalties, or choose a loan with a shorter term.",{"type":119,"attrs":5170,"content":5171},{"level":183},[5172],{"text":5173,"type":75,"marks":5174},"Are there better payment options for your situation?",[5175],{"type":127},{"type":71,"content":5177},[5178,5180,5181,5182],{"text":5179,"type":75},"Personal loans might not be the best choice if low-interest, purpose-made loans exist for your situation. Medical bills can often be resolved with your healthcare provider at a low cost to you. Auto loans and mortgage loans are often better options for car and home purchases, and student loans give borrowers much more flexibility and protection, making them a better option than personal loans for paying college tuition and fees. ",{"type":292},{"type":292},{"text":5183,"type":75},"A home equity line of credit (HELOC) could suit your needs if you are looking to do home renovations. (That said, a HELOC is a type of secured loan, which means it could put your home at risk if you fail to pay it off on time.)",{"type":71,"content":5185},[5186],{"text":5187,"type":75},"If your credit history is weak and you are looking to build credit, a credit card may be a better option for you. You can read more about alternatives to personal loans below.",{"type":119,"attrs":5189,"content":5190},{"level":121},[5191],{"text":5192,"type":75,"marks":5193},"Alternatives to personal loans",[5194],{"type":127},{"type":71,"content":5196},[5197],{"text":5198,"type":75},"Personal loans aren’t the best option for every situation. Here are some alternatives to consider.",{"type":119,"attrs":5200,"content":5201},{"level":183},[5202],{"text":4092,"type":75,"marks":5203},[5204],{"type":127},{"type":71,"content":5206},[5207],{"text":5208,"type":75},"A cash-out refinance is when you replace your current home loan with a new (higher) mortgage for the existing value of the home, and receive the difference in funds for the equity you’ve built. You can use the extra cash to pay off high-interest debt, make home improvements, or cover unexpected expenses.",{"type":71,"content":5210},[5211],{"text":5212,"type":75},"A cash-out refinance can be a great way to get a lower interest rate on your mortgage and free up some extra cash at the same time. It's important to remember, however, that you will be paying off the new loan over a longer period of time. So make sure you're comfortable with the monthly payments (and total interest charges) before you apply.",{"type":119,"attrs":5214,"content":5215},{"level":183},[5216],{"text":2629,"type":75,"marks":5217},[5218],{"type":127},{"type":71,"content":5220},[5221],{"text":5222,"type":75},"A home equity loan is a type of secured loan in which the borrower uses their home as collateral. It is a lump sum of cash that you receive all at once. You must repay the entire loan amount plus interest over a fixed period of time, usually 5 to 10 years.",{"type":71,"content":5224},[5225],{"text":5226,"type":75},"This type of loan is usually used to finance major expenses such as tuition, medical bills, or home improvements. Home equity loans are available in both fixed-rate and variable-rate formats, and typically have lower interest rates than unsecured loans, including most personal loans.",{"type":71,"content":5228},[5229],{"text":5230,"type":75},"The amount you can borrow with a home equity loan depends on the value of the property you plan to use as collateral. (It will also depend on your credit score.) In most cases, homeowners can borrow up to 80% of the property's value.",{"type":71,"content":5232},[5233],{"text":5234,"type":75},"The biggest downside to home equity loans is that they put your house at risk. If you default on a home equity loan, you could lose your home.",{"type":119,"attrs":5236,"content":5237},{"level":183},[5238],{"text":2679,"type":75,"marks":5239},[5240],{"type":127},{"type":71,"content":5242},[5243],{"text":5244,"type":75},"Unlike a home equity loan, which is a lump-sum loan, a home equity line of credit (HELOC), is a pool of funds that you can take out and pay back on a revolving basis. With a HELOC, you can borrow as much or as little as you need up to your approved limit, and you only pay interest on the amount you actually borrow.",{"type":71,"content":5246},[5247],{"text":5248,"type":75},"HELOCs are popular because they offer more flexibility than traditional term loans. You can borrow what you need when you need it, and there are no prepayment penalties if you want to pay off the debt early. However, since interest rates for HELOCs are always variable, they can go up over time according to national trends. If rates go up, you could be stuck paying more money than you originally expected. ",{"type":119,"attrs":5250,"content":5251},{"level":183},[5252],{"text":5253,"type":75,"marks":5254},"Payday loans",[5255],{"type":127},{"type":71,"content":5257},[5258],{"text":5259,"type":75},"A payday loan is a short-term, high-interest loan, typically due around the time you receive your next paycheck. These loans are also sometimes referred to as cash advances.",{"type":71,"content":5261},[5262,5264,5271],{"text":5263,"type":75},"Payday loans are often characterized by very high interest rates — sometimes ",{"text":5265,"type":75,"marks":5266},"up to 400%",[5267],{"type":103,"attrs":5268},{"href":5269,"uuid":106,"anchor":106,"custom":5270,"target":107,"linktype":108},"https://www.consumerfinance.gov/ask-cfpb/my-payday-lender-said-my-loan-would-cost-15-percent-but-my-loan-documents-say-the-annual-percentage-rate-apr-is-almost-400-percent-what-is-an-apr-on-a-payday-loan-and-how-should-i-use-it-en-1625/",{},{"text":5272,"type":75}," — and they are particularly harmful to borrowers who cannot afford to repay them on time. Payday loans are generally only useful to people who need a small amount of cash quickly and cannot qualify for other, more forgiving loan options because of poor credit history. For that reason, they’re typically considered a last resort.",{"type":119,"attrs":5274,"content":5275},{"level":121},[5276],{"text":4128,"type":75,"marks":5277},[5278],{"type":127},{"type":71,"content":5280},[5281],{"text":5282,"type":75},"Personal loans are a versatile line of funding that can be used for almost anything. While they are not right for everyone, they can be great for borrowers that have good credit and are looking to fund a large purchase or consolidate debt.",{"type":71,"content":5284},[5285,5287,5293],{"text":5286,"type":75},"If you've decided a personal loan is right for you, your next step is to start shopping for competitive loan offers to make sure you get the best rates. One of the best ways to do this is through the Navient Marketplace. This is a unique, comprehensive database of available lenders and loan options. It’s a great tool to find out what’s out there, compare loan offers, and find the solution that best fits your financial goals. ",{"text":5288,"type":75,"marks":5289},"Check out the Marketplace today",[5290],{"type":103,"attrs":5291},{"href":737,"uuid":106,"anchor":106,"custom":5292,"target":107,"linktype":108},{},{"text":5294,"type":75}," to compare rates and find a personal loan that suits your needs.",{"type":71,"content":5296},[5297],{"text":5298,"type":75,"marks":5299},"1 Representative Example: If you borrow $5,000 on a 36 month repayment term and at a 10% APR, the monthly repayment will be $161.34. Total repayment will be $5,808.24. 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