[{"data":1,"prerenderedAt":2851},["Reactive",2],{"/":3},{"data":4,"headers":2823,"perPage":2849,"total":2850},{"stories":5,"cv":2820,"rels":2821,"links":2822},[6,893,1672,2153],{"name":7,"created_at":8,"published_at":9,"updated_at":10,"id":11,"uuid":12,"content":13,"slug":884,"full_slug":885,"sort_by_date":83,"position":886,"tag_list":887,"is_startpage":44,"parent_id":888,"meta_data":83,"group_id":889,"first_published_at":890,"release_id":83,"lang":891,"path":83,"alternates":892,"default_full_slug":83,"translated_slugs":83},"Should I Get a Personal Loan? When it is (and isn't) a Good Idea","2025-04-07T18:31:45.224Z","2026-04-01T17:18:06.692Z","2026-04-01T17:18:06.715Z",651798214,"b486e7e0-9f13-4998-bc13-df9edbd92e8e",{"seo":14,"_uid":20,"body":21,"author":48,"category":880,"featured":44,"component":881,"canonicalTag":882,"_editable":883},{"_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","Should I Get a Personal Loan? When it is (and isn’t) a Good Idea - Navient Marketplace","seo_metatags","","Are you wondering, \"Should I get a personal loan?\" Here are some situations when it makes sense, and when it doesn't make sense, to get a personal loan.","24614723-3c23-4d4f-990b-c49a1b45edce",[22,52,855],{"id":23,"_uid":24,"image":25,"intro":26,"author":27,"classes":28,"category":18,"featured":44,"blogTitle":45,"component":46,"imageLink":47,"blendImage":44,"authorRoute":48,"publishedDate":49,"backgroundColor":50,"_editable":51},"blog-hero","02557530-adb9-49fb-9319-277497a70cb8","//a.storyblok.com/f/110029/800x534/820b664c8e/should-i-get-a-personal-loan.png","Used wisely, a personal loan can help cover gaps in your budget without putting your home or other assets at risk.","Monica Milone",[29],{"_uid":30,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":34,"authorClasses":35,"subtitleColor":36,"subtitleClasses":37,"dateMobileClasses":38,"titleMobileClasses":39,"authorMobileClasses":40,"featuredMobileClasses":41,"subtitleMobileClasses":42,"_editable":43},"6bc0d925-925b-40e2-8cb5-ac30d0086187","BlogHeroStyle","#470A68","text-subtitle-2 mt-7 accent--text text--darken-2","text-h4 mt-6 font-weight-bold","text-size-sub-1 mt-7 accent--text text--darken-4","#75478E","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\": \"6bc0d925-925b-40e2-8cb5-ac30d0086187\", \"id\": \"651798214\"}-->",false,"Should I Get a Personal Loan? When it is (and isn’t) a Good Idea","BlogHero","/images/should-i-get-a-personal-loan.png","monica-milone","Updated: February 16, 2023","#F6F2F7","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"02557530-adb9-49fb-9319-277497a70cb8\", \"id\": \"651798214\"}-->",{"_uid":53,"bloks":54,"classes":851,"component":852,"mobileClasses":18,"containerContent":853,"_editable":854},"222843d6-4c0d-4ac3-aa5f-7f579c49c5fe",[55],{"_uid":56,"bloks":57,"classes":18,"justify":662,"component":849,"mobileClasses":18,"_editable":850},"0737a92f-e416-438d-b8db-1c0e86499923",[58,665,714,805],{"lg":59,"md":59,"sm":60,"_uid":61,"cols":60,"bloks":62,"alignSelf":662,"component":663,"_editable":664},"7","12","c286affa-ee04-4348-8508-6e9f77932903",[63],{"_uid":64,"color":65,"classes":66,"content":18,"richText":67,"component":655,"mobileClasses":656,"enableRichText":657,"richTextMobile":658,"_editable":661},"a64c4df0-154e-4c12-b867-678d292709f4","#444444","blog-post-text blog-post-headers",{"type":68,"content":69},"doc",[70,98,102,112,151,158,162,175,179,201,208,212,250,254,262,266,279,283,287,294,298,305,318,322,329,333,341,345,352,356,363,374,381,385,392,396,403,407,414,418,425,429,436,440,447,451,492,499,512,519,523,530,534,541,563,576,580,587,600,622,629,633,640,644,651],{"type":71,"content":72},"paragraph",[73,76,87,89,96],{"text":74,"type":75},"If you need extra cash to cover a large purchase, pay for ","text",{"text":77,"type":75,"marks":78},"home improvements",[79],{"type":80,"attrs":81},"link",{"href":82,"uuid":83,"anchor":83,"custom":84,"target":85,"linktype":86},"https://www.bankrate.com/loans/home-improvement/rates/",null,{},"_blank","url",{"text":88,"type":75},", finance a wedding, or ",{"text":90,"type":75,"marks":91},"consolidate high-interest debt",[92],{"type":80,"attrs":93},{"href":94,"uuid":83,"anchor":83,"custom":95,"target":85,"linktype":86},"https://www.bankrate.com/personal-finance/debt/what-is-debt-consolidation/ ",{},{"text":97,"type":75},", you might want to consider a personal loan. Used wisely, a personal loan can help cover gaps in your budget without putting your home or other assets at risk.",{"type":71,"content":99},[100],{"text":101,"type":75},"As with other loans, interest rates for personal loans hinge on various aspects of your financial portfolio, including your credit score, payment history, and debt-to-income ratio. That means they’re not the right choice for everyone. But if you have some savings and decent money habits, a personal loan could be a valuable tool for getting your debts under control and reaching your other financial goals.",{"type":103,"attrs":104,"content":106},"heading",{"level":105},2,[107],{"text":108,"type":75,"marks":109},"Should I get a personal loan? Key takeaways:",[110],{"type":111},"bold",{"type":113,"content":114},"bullet_list",[115,127,136,145],{"type":116,"content":117},"list_item",[118],{"type":71,"content":119},[120],{"text":121,"type":75,"marks":122},"You can use a personal loan for almost any purpose, including debt consolidation, home improvements, and emergency expenses.",[123],{"type":124,"attrs":125},"styled",{"class":126},"no-margin-bottom",{"type":116,"content":128},[129],{"type":71,"content":130},[131],{"text":132,"type":75,"marks":133},"Personal loans typically have lower interest rates than most credit cards.",[134],{"type":124,"attrs":135},{"class":126},{"type":116,"content":137},[138],{"type":71,"content":139},[140],{"text":141,"type":75,"marks":142},"Applicants with high credit scores and low debt often get the lowest rates.",[143],{"type":124,"attrs":144},{"class":126},{"type":116,"content":146},[147],{"type":71,"content":148},[149],{"text":150,"type":75},"It’s important to have a clear repayment strategy any time you take out a personal loan.",{"type":103,"attrs":152,"content":153},{"level":105},[154],{"text":155,"type":75,"marks":156},"How do personal loans work?",[157],{"type":111},{"type":71,"content":159},[160],{"text":161,"type":75},"Personal loans are a type of credit issued by a bank, credit union, online lender, or other financial institution. Unlike mortgage loans or car loans, personal loans can be used for a wide variety of purposes. They’re considered installment loans, which means that if you’re approved, you’ll receive the loan in a single lump sum. You’ll then pay that money back (with interest) in monthly payments, or “installments,” over the life of the loan.",{"type":71,"content":163},[164,166,173],{"text":165,"type":75},"Once you pay off your personal loan in full, your account will be closed. This makes personal loans different from credit cards, which are a ",{"text":167,"type":75,"marks":168},"type of revolving credit",[169],{"type":80,"attrs":170},{"href":171,"uuid":83,"anchor":83,"custom":172,"target":85,"linktype":86},"https://www.forbes.com/advisor/personal-finance/what-is-a-line-of-credit/",{},{"text":174,"type":75},". If you pay off a credit card but need to make another purchase, you can just use the card again. If you pay off a personal loan but need more money, you’ll have to apply for a brand-new personal loan.",{"type":71,"content":176},[177],{"text":178,"type":75},"There are two types of personal loans: secured and unsecured.",{"type":113,"content":180},[181,191],{"type":116,"content":182},[183],{"type":71,"content":184},[185,189],{"text":186,"type":75,"marks":187},"Unsecured personal loans",[188],{"type":111},{"text":190,"type":75}," don’t require collateral. Rather, the lender decides whether or not you qualify based on your financial history and credit score. If you don’t qualify for an unsecured loan or want a lower interest rate, some lenders also offer secured loans.",{"type":116,"content":192},[193],{"type":71,"content":194},[195,199],{"text":196,"type":75,"marks":197},"Secured personal loans",[198],{"type":111},{"text":200,"type":75}," are backed by collateral, like a savings account or certificate of deposit (CD). If you don’t repay your secured loan on time, the lender could seize your asset as payment. This makes secured loans riskier for the borrower but less risky for the lender. For that reason, lenders typically offer lower interest rates for secured loans than they do for unsecured loans.",{"type":103,"attrs":202,"content":203},{"level":105},[204],{"text":205,"type":75,"marks":206},"When a personal loan makes sense",[207],{"type":111},{"type":71,"content":209},[210],{"text":211,"type":75},"A personal loan makes sense when all four of the following are true: ",{"type":213,"attrs":214,"content":216},"ordered_list",{"order":215},1,[217,226,235,244],{"type":116,"content":218},[219],{"type":71,"content":220},[221],{"text":222,"type":75,"marks":223},"You need cash for a specific, necessary expense — like remodeling a house or paying off high-interest credit cards.",[224],{"type":124,"attrs":225},{"class":126},{"type":116,"content":227},[228],{"type":71,"content":229},[230],{"text":231,"type":75,"marks":232},"You need the cash now.",[233],{"type":124,"attrs":234},{"class":126},{"type":116,"content":236},[237],{"type":71,"content":238},[239],{"text":240,"type":75,"marks":241},"Some debt is unavoidable.",[242],{"type":124,"attrs":243},{"class":126},{"type":116,"content":245},[246],{"type":71,"content":247},[248],{"text":249,"type":75},"It’s less expensive than other forms of credit.",{"type":71,"content":251},[252],{"text":253,"type":75},"Here’s a breakdown of some common situations that necessitate personal loans. Take a look through each example to help you further evaluate whether or not a personal loan makes sense for you.",{"type":103,"attrs":255,"content":257},{"level":256},3,[258],{"text":259,"type":75,"marks":260},"High-interest debt refinancing",[261],{"type":111},{"type":71,"content":263},[264],{"text":265,"type":75},"You can use a personal loan to do a DIY refinance of high-interest debts. Here’s how it works: you take a personal loan at a low or moderate interest rate, then use that cash to pay off your credit cards or other debts. When that’s done, you only have to worry about paying off your lower-interest-rate personal loan.",{"type":71,"content":267},[268,270,277],{"text":269,"type":75},"Personal loans are a good choice for refinancing because they typically have lower interest rates than short-term loans like title loans or payday loans. They’re also much less expensive to pay off than most credit card debt. As of Aug 2022, the ",{"text":271,"type":75,"marks":272},"average personal loan interest rate",[273],{"type":80,"attrs":274},{"href":275,"uuid":83,"anchor":83,"custom":276,"target":85,"linktype":86},"https://www.federalreserve.gov/releases/g19/current/",{},{"text":278,"type":75}," was 10.16%, while the average credit card rate was 18.43%. With that kind of difference, a personal loan could help you save a ton of money in interest charges.",{"type":71,"content":280},[281],{"text":282,"type":75},"For example, say you’re a borrower with good credit. You have two credit cards with a total balance of $30,000 and a combined interest rate of 18%. Right now, you pay $500 toward each card every month. However, if you refinance these debts by taking out a single personal loan with a 10% interest rate and a three-year term, you could save almost $4,000 over that time frame. You’ll also have a lower monthly payment and get out of debt faster.",{"type":71,"content":284},[285],{"text":286,"type":75},"Personal loans are also a better choice for debt refinancing than balance transfer cards. They’re typically processed more quickly than balance transfers, and they usually offer lower interest rates than you’ll find on most balance transfer cards. (Some balance transfer cards offer enticing, low-interest-rate introductory offers, but these usually end after a year, which could leave you with higher interest charges than you started with.) ",{"type":103,"attrs":288,"content":289},{"level":256},[290],{"text":291,"type":75,"marks":292},"Debt consolidation",[293],{"type":111},{"type":71,"content":295},[296],{"text":297,"type":75},"If you’re in a situation where you owe lots of different lenders, a personal loan can help you consolidate that debt, i.e., combine all your outstanding balances into one single bill. You can take out a personal loan, pay off your outstanding credit cards, and then make a single, simple payment to your new personal loan servicer each month. That makes your debt easier to manage, which could help you avoid accidental late fees and unnecessary interest charges.",{"type":103,"attrs":299,"content":300},{"level":256},[301],{"text":302,"type":75,"marks":303},"Emergency expenses",[304],{"type":111},{"type":71,"content":306},[307,309,316],{"text":308,"type":75},"If you need money right away and you don’t have an emergency fund available, personal loans could be a good option. They have a faster approval process than other types of loans, and they’re safer than title loans or payday loans, which are issued quickly but can have interest rates approaching 400%, ",{"text":310,"type":75,"marks":311},"per the Consumer Financial Protection Bureau",[312],{"type":80,"attrs":313},{"href":314,"uuid":83,"anchor":83,"custom":315,"target":85,"linktype":86},"https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/ ",{},{"text":317,"type":75},".",{"type":71,"content":319},[320],{"text":321,"type":75},"Many personal loan lenders offer same-day or next-day funding. Others will deposit the loan amount in your bank account within a few business days. Often, it’s better to wait the extra day or two to receive the funds than risk an expensive title or payday loan.",{"type":103,"attrs":323,"content":324},{"level":256},[325],{"text":326,"type":75,"marks":327},"When other types of loans won’t cover your expense  ",[328],{"type":111},{"type":71,"content":330},[331],{"text":332,"type":75},"Some loans are created for specific purposes, like student loans, mortgage loans, and auto loans. Personal loans, however, are very flexible. When another type of loan won’t cover your costs at a better rate, a personal loan is a viable option. Some common uses include:",{"type":103,"attrs":334,"content":336},{"level":335},4,[337],{"text":338,"type":75,"marks":339},"Home improvement or home repairs",[340],{"type":111},{"type":71,"content":342},[343],{"text":344,"type":75},"Whether it’s a renovation or repair, home improvement is a common reason to take out a personal loan, particularly if the project adds value to your home. However, you may want to look into Home Equity Lines of Credit (HELOC) first to see if you can get a better deal. ",{"type":103,"attrs":346,"content":347},{"level":335},[348],{"text":349,"type":75,"marks":350},"Weddings and funerals",[351],{"type":111},{"type":71,"content":353},[354],{"text":355,"type":75},"Some people take out personal loans to cover unexpected expenses like weddings or funerals. If you have a stable income and a watertight plan to pay the loan back, this can be a good way to cover big upfront costs.",{"type":103,"attrs":357,"content":358},{"level":335},[359],{"text":360,"type":75,"marks":361},"Vehicle financing",[362],{"type":111},{"type":71,"content":364},[365,372],{"text":366,"type":75,"marks":367},"Auto loans",[368],{"type":80,"attrs":369},{"href":370,"uuid":83,"anchor":83,"custom":371,"target":85,"linktype":86},"https://www.forbes.com/advisor/auto-loans/auto-loan-calculator/",{},{"text":373,"type":75}," are available if you’re looking to buy or lease a car, but personal loans could help you cover any gaps. Auto loans tend to have lower interest rates compared to personal loans, but they are secured loans that use your vehicle as collateral. If you’re worried about missing payments and your car getting repossessed, a personal loan might be a better option for you.",{"type":103,"attrs":375,"content":376},{"level":335},[377],{"text":378,"type":75,"marks":379},"Moving costs",[380],{"type":111},{"type":71,"content":382},[383],{"text":384,"type":75},"If you’re moving out of state, you may need extra cash to cover moving expenses. These can include the costs of packing, hiring movers, and transporting your belongings.",{"type":103,"attrs":386,"content":387},{"level":335},[388],{"text":389,"type":75,"marks":390},"Large purchases",[391],{"type":111},{"type":71,"content":393},[394],{"text":395,"type":75},"If your refrigerator breaks or you need to replace the engine in your car, a personal loan can provide relief. But before you use a personal loan for a big expense, do a little math to make sure taking out the loan will actually save you money in the long run. If an emergency car repair will help you save on rental car and ride-share costs, for example, it might be worth taking out a personal loan to cover it, even despite the loan’s interest charges and fees.",{"type":103,"attrs":397,"content":398},{"level":105},[399],{"text":400,"type":75,"marks":401},"When a personal loan doesn’t make sense",[402],{"type":111},{"type":71,"content":404},[405],{"text":406,"type":75},"While personal loans can be a saving grace in times of need, they might not always fit your personal finance goals. Avoid a personal loan when:",{"type":103,"attrs":408,"content":409},{"level":256},[410],{"text":411,"type":75,"marks":412},"You can’t afford it",[413],{"type":111},{"type":71,"content":415},[416],{"text":417,"type":75},"Remember, you’ll still need to pay this loan back. If you can’t afford the monthly payments for a new personal loan, try to avoid borrowing money if at all possible.",{"type":103,"attrs":419,"content":420},{"level":256},[421],{"text":422,"type":75,"marks":423},"You don’t really need it",[424],{"type":111},{"type":71,"content":426},[427],{"text":428,"type":75},"If you’re trying to cover a discretionary or “nice to have” expense like an extravagant vacation, expensive home remodel, or over-the-top wedding, reconsider. Try scaling your budget back or putting off these expenses until you have more cash on hand.",{"type":103,"attrs":430,"content":431},{"level":256},[432],{"text":433,"type":75,"marks":434},"You have bad credit",[435],{"type":111},{"type":71,"content":437},[438],{"text":439,"type":75},"When you apply for a personal loan, the lender will check your credit history to assess your creditworthiness. If you have poor credit, the lender might only be able to offer you a high interest rate. You may still qualify for a secured personal loan, but you’ll have to offer up collateral that the lender can claim if you don’t repay your loan on time. This collateral can include your car, home, or savings account. In these cases, it’s best to avoid taking out a personal loan.",{"type":103,"attrs":441,"content":442},{"level":256},[443],{"text":444,"type":75,"marks":445},"You’re paying off medical bills",[446],{"type":111},{"type":71,"content":448},[449],{"text":450,"type":75},"Personal loans are rarely the best option for paying off medical bills. Instead, try one of these low- or no-interest methods.",{"type":113,"content":452},[453,463,482],{"type":116,"content":454},[455],{"type":71,"content":456},[457,461],{"text":458,"type":75,"marks":459},"Payment plans:",[460],{"type":111},{"text":462,"type":75}," Ask your doctor’s office if you can set up a payment plan that splits a large bill into smaller monthly payments.",{"type":116,"content":464},[465],{"type":71,"content":466},[467,471,473,480],{"text":468,"type":75,"marks":469},"Medical bill advocates:",[470],{"type":111},{"text":472,"type":75}," ",{"text":474,"type":75,"marks":475},"Medical bill advocates",[476],{"type":80,"attrs":477},{"href":478,"uuid":83,"anchor":83,"custom":479,"target":85,"linktype":86},"https://www.patientadvocate.org/",{},{"text":481,"type":75}," negotiate down bills after an expensive procedure or hospital stay. They can also identify and dispute costly errors.",{"type":116,"content":483},[484],{"type":71,"content":485},[486,490],{"text":487,"type":75,"marks":488},"Medical credit card:",[489],{"type":111},{"text":491,"type":75}," Some doctor’s offices offer medical credit cards that have interest-free promotional periods. If you’re confident you can pay off the expense within that promotional period, these may be worth considering.",{"type":103,"attrs":493,"content":494},{"level":256},[495],{"text":496,"type":75,"marks":497},"There is a loan type dedicated to your expense",[498],{"type":111},{"type":71,"content":500},[501,503,510],{"text":502,"type":75},"Student loans, mortgages, home equity lines of credit (HELOC), and auto loans all offer better repayment terms than personal loans if you’re using them for their intended purposes. For example, if you’re hoping to pay for a home remodel, a HELOC might be the way to go (though this is a type of secured loan and therefore comes with some risk). If you’re hoping to refinance your student loans, you should first consider the many ",{"text":504,"type":75,"marks":505},"purpose-made loans",[506],{"type":80,"attrs":507},{"href":508,"uuid":83,"anchor":83,"custom":509,"target":85,"linktype":86},"https://navirefi.com",{},{"text":511,"type":75}," to reduce your student loan payments, and consider a personal loan a last resort.",{"type":103,"attrs":513,"content":514},{"level":256},[515],{"text":516,"type":75,"marks":517},"You intend to continue adding to your debt",[518],{"type":111},{"type":71,"content":520},[521],{"text":522,"type":75},"Some borrowers use a personal loan to pay off their credit card debt — only to continue spending recklessly afterward. It’s important to understand you will not be debt-free after using a personal loan to refinance; your debt will only be more manageable. Any time you take out a loan, make sure you have a clear, detailed plan for paying it off. If you don’t, it may be best to avoid taking out a personal loan at this time.",{"type":103,"attrs":524,"content":525},{"level":105},[526],{"text":527,"type":75,"marks":528},"Personal loan FAQs",[529],{"type":111},{"type":71,"content":531},[532],{"text":533,"type":75},"Ask yourself these questions to ensure you’re prepared for your new personal loan. ",{"type":103,"attrs":535,"content":536},{"level":256},[537],{"text":538,"type":75,"marks":539},"How will a personal loan affect my credit score?",[540],{"type":111},{"type":71,"content":542},[543,545,552,554,561],{"text":544,"type":75},"When you apply for a loan, the lender will pull your credit report as part of the application process. This is known as a “",{"text":546,"type":75,"marks":547},"hard inquiry",[548],{"type":80,"attrs":549},{"href":550,"uuid":83,"anchor":83,"custom":551,"target":85,"linktype":86},"https://www.creditkarma.com/advice/i/hard-credit-inquiries-and-soft-credit-inquiries",{},{"text":553,"type":75},",” and most credit bureaus will see it as a potential sign that you’re low on funds. As such, hard credit inquiries will usually lower your ",{"text":555,"type":75,"marks":556},"credit score",[557],{"type":80,"attrs":558},{"href":559,"uuid":83,"anchor":83,"custom":560,"target":85,"linktype":86},"https://www.creditkarma.com/credit-scores",{},{"text":562,"type":75}," by a few points.",{"type":71,"content":564},[565,567,574],{"text":566,"type":75},"Hard inquiries stay on your credit reports for about two years. Consider ",{"text":568,"type":75,"marks":569},"checking your rates",[570],{"type":80,"attrs":571},{"href":572,"uuid":83,"anchor":83,"custom":573,"target":85,"linktype":86},"https://fiona.com/partner/navientloans/loans",{},{"text":575,"type":75}," with lenders that conduct “soft inquiries,” which won’t impact your scores.",{"type":71,"content":577},[578],{"text":579,"type":75},"The good news is that if you decide to take out a personal loan and then make a series of on-time payments, this demonstrates responsible financial behavior. Over time, it can actually boost your credit score and improve your credit. ",{"type":103,"attrs":581,"content":582},{"level":256},[583],{"text":584,"type":75,"marks":585},"What credit score do I need to get a personal loan?",[586],{"type":111},{"type":71,"content":588},[589,591,598],{"text":590,"type":75},"Credit score requirements for personal loans vary by lender. Many give preference to borrowers with good or excellent credit scores (690 and above). With a ",{"text":592,"type":75,"marks":593},"FICO score above 760",[594],{"type":80,"attrs":595},{"href":596,"uuid":83,"anchor":83,"custom":597,"target":85,"linktype":86},"https://www.nerdwallet.com/article/loans/personal-loans/credit-score-need-get-personal-loan",{},{"text":599,"type":75},", you may qualify for annual percentage rates (APR) as low as 3.99%.",{"type":71,"content":601},[602,604,611,613,620],{"text":603,"type":75},"That said, you can get decent rates with a much lower score. The minimum credit score to qualify for a personal loan is ",{"text":605,"type":75,"marks":606},"usually 560 to 660",[607],{"type":80,"attrs":608},{"href":609,"uuid":83,"anchor":83,"custom":610,"target":85,"linktype":86},"https://www.consumer.equifax.ca/personal/education/credit-score/credit-score-personal-loan/",{},{"text":612,"type":75},". If your score is below this range, you may be able to apply with a cosigner to increase your likelihood of approval. 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Most lenders will have all their fees clearly listed either online or in the contract so you can review them before you sign.",{"type":103,"attrs":634,"content":635},{"level":256},[636],{"text":637,"type":75,"marks":638},"How soon will I get funds from a personal loan?",[639],{"type":111},{"type":71,"content":641},[642],{"text":643,"type":75},"Personal loan disbursal times vary by lender. Some online lenders provide funds as quickly as the next day. 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May offer higher credit limits than a credit card.","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"2774e5f8-39b2-4659-9b3f-45a4c8a18d0e\", \"id\": \"651798214\"}-->",{"_uid":734,"value":735,"component":727,"_editable":736},"19a7092b-cea1-431b-8642-6277d1ebef19","Useful if you need a higher credit limit or a low-cost cash advance.","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"19a7092b-cea1-431b-8642-6277d1ebef19\", \"id\": \"651798214\"}-->","_table_row","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"6221711a-3651-4d15-b400-f4c25a595e75\", \"id\": \"651798214\"}-->",{"_uid":740,"body":741,"component":737,"_editable":754},"0e60b468-8a98-487f-941a-e07cb9e76e26",[742,746,750],{"_uid":743,"value":744,"component":727,"_editable":745},"289bb1d6-43e2-4a95-ac7a-0760e241cf66","Credit card","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"289bb1d6-43e2-4a95-ac7a-0760e241cf66\", \"id\": \"651798214\"}-->",{"_uid":747,"value":748,"component":727,"_editable":749},"d44ff956-3579-41d3-ab90-535bb5dee3e5","A line of credit that lets you borrow up to a certain limit on a rolling basis. Those with strong credit may receive low promotional rates, cash-back rewards, and other perks.","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"d44ff956-3579-41d3-ab90-535bb5dee3e5\", \"id\": \"651798214\"}-->",{"_uid":751,"value":752,"component":727,"_editable":753},"13448381-32f8-41dd-8aa8-88a67ab11480","A good option if you prefer to borrow as needed and can afford to pay off your balance every month.","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"13448381-32f8-41dd-8aa8-88a67ab11480\", \"id\": \"651798214\"}-->","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"0e60b468-8a98-487f-941a-e07cb9e76e26\", \"id\": \"651798214\"}-->",{"_uid":756,"body":757,"component":737,"_editable":770},"d6794f6b-bbd4-41c4-9e18-f0444300204a",[758,762,766],{"_uid":759,"value":760,"component":727,"_editable":761},"79d66a18-409b-4c6c-a978-3816233c96b6","Home equity loan or home equity line of credit (HELOC)","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"79d66a18-409b-4c6c-a978-3816233c96b6\", \"id\": \"651798214\"}-->",{"_uid":763,"value":764,"component":727,"_editable":765},"30e6580c-7ff6-4900-bd49-01b11a54d71c","A loan or line of credit that lets you borrow against the value of your home.","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"30e6580c-7ff6-4900-bd49-01b11a54d71c\", \"id\": \"651798214\"}-->",{"_uid":767,"value":768,"component":727,"_editable":769},"c24d685f-b701-41b3-85f6-87dee00a5b14","Ideal if you have a lot of equity in your home and know you can avoid the risk of foreclosure. Best for funding projects that will increase home equity.","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"c24d685f-b701-41b3-85f6-87dee00a5b14\", \"id\": \"651798214\"}-->","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"d6794f6b-bbd4-41c4-9e18-f0444300204a\", \"id\": \"651798214\"}-->",{"_uid":772,"body":773,"component":737,"_editable":786},"4cdae78e-3ace-449f-ae6f-358ee50c89cc",[774,778,782],{"_uid":775,"value":776,"component":727,"_editable":777},"651bd6e2-799c-442e-ba97-ade584880305","Payday loan","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"651bd6e2-799c-442e-ba97-ade584880305\", \"id\": \"651798214\"}-->",{"_uid":779,"value":780,"component":727,"_editable":781},"5724f02a-87f7-41b1-a143-47a75c525a85","A short-term, high cost loan, generally for $500 or less, that’s typically due on your next payday.","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"5724f02a-87f7-41b1-a143-47a75c525a85\", \"id\": \"651798214\"}-->",{"_uid":783,"value":784,"component":727,"_editable":785},"f496d619-55ea-473f-a1a2-901af9469209","Only recommended if you know you can repay it right away, don’t have a bank account, or can’t provide collateral to take out another type of loan.","\u003C!--#storyblok#{\"name\": \"_table_col\", \"space\": \"157494\", \"uid\": \"f496d619-55ea-473f-a1a2-901af9469209\", \"id\": \"651798214\"}-->","\u003C!--#storyblok#{\"name\": \"_table_row\", \"space\": \"157494\", \"uid\": \"4cdae78e-3ace-449f-ae6f-358ee50c89cc\", \"id\": \"651798214\"}-->",[788,792,796],{"_uid":789,"value":18,"component":790,"_editable":791},"fcb52dab-6aac-4238-933a-6fefcffbc000","_table_head","\u003C!--#storyblok#{\"name\": \"_table_head\", \"space\": \"157494\", \"uid\": \"fcb52dab-6aac-4238-933a-6fefcffbc000\", \"id\": \"651798214\"}-->",{"_uid":793,"value":794,"component":790,"_editable":795},"a5377f9f-2c44-4766-87e6-b3c5806aafad","What it is","\u003C!--#storyblok#{\"name\": \"_table_head\", \"space\": \"157494\", \"uid\": \"a5377f9f-2c44-4766-87e6-b3c5806aafad\", \"id\": \"651798214\"}-->",{"_uid":797,"value":798,"component":790,"_editable":799},"c87039d8-73de-4c09-9e8a-701c39cf5d9b","What it's best for","\u003C!--#storyblok#{\"name\": \"_table_head\", \"space\": \"157494\", \"uid\": \"c87039d8-73de-4c09-9e8a-701c39cf5d9b\", \"id\": \"651798214\"}-->","table","TableComponent","100%","\u003C!--#storyblok#{\"name\": \"TableComponent\", \"space\": \"157494\", \"uid\": \"1859c494-2ecf-42bf-834b-ef47a0ef7db4\", \"id\": \"651798214\"}-->","\u003C!--#storyblok#{\"name\": \"Column\", \"space\": \"157494\", \"uid\": \"a230801e-c237-44f1-b604-7c6d3d2c57c3\", \"id\": \"651798214\"}-->",{"lg":59,"md":59,"sm":60,"_uid":806,"cols":60,"bloks":807,"alignSelf":662,"component":663,"_editable":848},"f020de37-15f6-4fa7-b569-84670b8d6dfb",[808],{"_uid":809,"color":65,"classes":66,"content":18,"richText":810,"component":655,"mobileClasses":656,"enableRichText":657,"richTextMobile":844,"_editable":847},"cd77267d-fb35-439c-ac18-351a5ec17a25",{"type":68,"content":811},[812,819,823,836],{"type":103,"attrs":813,"content":814},{"level":105},[815],{"text":816,"type":75,"marks":817},"Find the best personal loans with Navient Marketplace",[818],{"type":111},{"type":71,"content":820},[821],{"text":822,"type":75},"In many cases, personal loans can help you better manage your debt, consolidate your credit card balances, and pay for life’s unexpected events. 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Learn the 6 steps, plus pros and cons, alternatives, and where to find personal loans.",[905,916,1651],{"id":23,"_uid":24,"image":906,"intro":907,"author":908,"classes":909,"category":18,"featured":44,"blogTitle":894,"component":46,"imageLink":913,"blendImage":44,"authorRoute":914,"publishedDate":49,"backgroundColor":50,"_editable":915},"//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.","Curt Kirby",[910],{"_uid":30,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":34,"authorClasses":35,"subtitleColor":36,"titleMaxWidth":911,"subtitleClasses":37,"dateMobileClasses":38,"titleMobileClasses":39,"authorMobileClasses":40,"featuredMobileClasses":41,"subtitleMobileClasses":42,"_editable":912},"600","\u003C!--#storyblok#{\"name\": \"BlogHeroStyle\", \"space\": \"157494\", \"uid\": \"6bc0d925-925b-40e2-8cb5-ac30d0086187\", \"id\": \"651798216\"}-->","/images/how-do-personal-loans-work.png","curt-kirby","\u003C!--#storyblok#{\"name\": \"BlogHero\", \"space\": \"157494\", \"uid\": \"02557530-adb9-49fb-9319-277497a70cb8\", \"id\": \"651798216\"}-->",{"_uid":53,"bloks":917,"classes":851,"component":852,"mobileClasses":18,"containerContent":1649,"_editable":1650},[918],{"_uid":56,"bloks":919,"classes":18,"justify":662,"component":849,"mobileClasses":18,"_editable":1648},[920,1622],{"lg":59,"md":59,"sm":60,"_uid":61,"cols":60,"bloks":921,"alignSelf":662,"component":663,"_editable":1621},[922],{"_uid":64,"color":65,"classes":66,"content":18,"richText":923,"component":655,"mobileClasses":656,"enableRichText":657,"richTextMobile":1617,"_editable":1620},{"type":68,"content":924},[925,929,933,940,984,991,995,999,1003,1009,1013,1025,1037,1041,1048,1052,1064,1076,1080,1087,1099,1106,1125,1132,1144,1151,1155,1162,1174,1178,1190,1197,1201,1208,1212,1219,1231,1238,1250,1257,1269,1276,1280,1287,1299,1303,1310,1322,1329,1333,1345,1352,1356,1360,1412,1416,1468,1475,1479,1519,1526,1530,1583,1589,1593,1604,1610],{"type":71,"content":926},[927],{"text":928,"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":930},[931],{"text":932,"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":103,"attrs":934,"content":935},{"level":105},[936],{"text":937,"type":75,"marks":938},"How does a personal loan work? Key takeaways:",[939],{"type":111},{"type":113,"content":941},[942,951,960,969,978],{"type":116,"content":943},[944],{"type":71,"content":945},[946],{"text":947,"type":75,"marks":948},"A personal loan is a lump sum of cash that can be used to finance almost any large expense.",[949],{"type":124,"attrs":950},{"class":126},{"type":116,"content":952},[953],{"type":71,"content":954},[955],{"text":956,"type":75,"marks":957},"Lower interest rates are usually offered to borrowers with low debt and high credit scores.",[958],{"type":124,"attrs":959},{"class":126},{"type":116,"content":961},[962],{"type":71,"content":963},[964],{"text":965,"type":75,"marks":966},"You can use a personal loan to consolidate your existing high-interest debt into a single new loan with a single monthly payment.",[967],{"type":124,"attrs":968},{"class":126},{"type":116,"content":970},[971],{"type":71,"content":972},[973],{"text":974,"type":75,"marks":975},"Home improvements that add value to your house are a great way to utilize personal loans.",[976],{"type":124,"attrs":977},{"class":126},{"type":116,"content":979},[980],{"type":71,"content":981},[982],{"text":983,"type":75},"Personal loans are not likely the smartest option when it comes to daily purchases. ",{"type":103,"attrs":985,"content":986},{"level":105},[987],{"text":988,"type":75,"marks":989},"What is a personal loan?",[990],{"type":111},{"type":71,"content":992},[993],{"text":994,"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":996},[997],{"text":998,"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":1000},[1001],{"text":1002,"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":103,"attrs":1004,"content":1005},{"level":105},[1006],{"text":155,"type":75,"marks":1007},[1008],{"type":111},{"type":71,"content":1010},[1011],{"text":1012,"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":1014},[1015,1017,1023],{"text":1016,"type":75},"If you have good credit history, the lender will offer you a low ",{"text":1018,"type":75,"marks":1019},"annual percentage rate (APR)",[1020],{"type":80,"attrs":1021},{"href":1022,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.experian.com/blogs/ask-experian/what-is-apr/",{"text":1024,"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":1026},[1027,1029,1035],{"text":1028,"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":1030,"type":75,"marks":1031},"installment loan",[1032],{"type":80,"attrs":1033},{"href":1034,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.bankrate.com/loans/personal-loans/what-is-an-installment-loan/",{"text":1036,"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":1038},[1039],{"text":1040,"type":75},"That’s the brief overview of how personal loans work. Here’s how the whole process works in detail:",{"type":103,"attrs":1042,"content":1043},{"level":256},[1044],{"text":1045,"type":75,"marks":1046},"Step 1: Determine whether or not you need the loan",[1047],{"type":111},{"type":71,"content":1049},[1050],{"text":1051,"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":1053},[1054,1056,1062],{"text":1055,"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":1057,"type":75,"marks":1058},"add value to your home",[1059],{"type":80,"attrs":1060},{"href":1061,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.bankrate.com/loans/personal-loans/get-personal-loan-for-home-improvements/",{"text":1063,"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":1065},[1066,1068,1074],{"text":1067,"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":1069,"type":75,"marks":1070},"consolidate your payments",[1071],{"type":80,"attrs":1072},{"href":1073,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.bankrate.com/loans/personal-loans/using-a-personal-loan-for-debt-consolidation/",{"text":1075,"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":1077},[1078],{"text":1079,"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":103,"attrs":1081,"content":1082},{"level":256},[1083],{"text":1084,"type":75,"marks":1085},"Step 2: Assess your financial situation",[1086],{"type":111},{"type":71,"content":1088},[1089,1091,1097],{"text":1090,"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":1092,"type":75,"marks":1093},"looking at your monthly budget",[1094],{"type":80,"attrs":1095},{"href":1096,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.nerdwallet.com/article/finance/how-to-budget",{"text":1098,"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":103,"attrs":1100,"content":1101},{"level":335},[1102],{"text":1103,"type":75,"marks":1104},"Find your credit score",[1105],{"type":111},{"type":71,"content":1107},[1108,1110,1115,1117,1123],{"text":1109,"type":75},"Lenders typically require a ",{"text":1111,"type":75,"marks":1112},"minimum credit score",[1113],{"type":80,"attrs":1114},{"href":596,"uuid":83,"anchor":83,"target":85,"linktype":86},{"text":1116,"type":75}," of 560 to 660 before they’ll agree to lend to you. If you have a ",{"text":1118,"type":75,"marks":1119},"credit score above 700",[1120],{"type":80,"attrs":1121},{"href":1122,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.bankrate.com/loans/personal-loans/what-is-a-personal-loan/",{"text":1124,"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":103,"attrs":1126,"content":1127},{"level":335},[1128],{"text":1129,"type":75,"marks":1130},"Determine your DTI",[1131],{"type":111},{"type":71,"content":1133},[1134,1136,1142],{"text":1135,"type":75},"Lenders also consider other factors, like your ",{"text":1137,"type":75,"marks":1138},"debt-to-income (DTI)",[1139],{"type":80,"attrs":1140},{"href":1141,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.investopedia.com/terms/d/dti.asp",{"text":1143,"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":103,"attrs":1145,"content":1146},{"level":335},[1147],{"text":1148,"type":75,"marks":1149},"Look at your credit history",[1150],{"type":111},{"type":71,"content":1152},[1153],{"text":1154,"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":103,"attrs":1156,"content":1157},{"level":256},[1158],{"text":1159,"type":75,"marks":1160},"Step 3: Shop lenders",[1161],{"type":111},{"type":71,"content":1163},[1164,1166,1172],{"text":1165,"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":1167,"type":75,"marks":1168},"soft credit pulls",[1169],{"type":80,"attrs":1170},{"href":1171,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.earnest.com/blog/soft-vs-hard-credit-inquiries/",{"text":1173,"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":1175},[1176],{"text":1177,"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":1179},[1180,1182,1188],{"text":1181,"type":75},"There is one exception to this rule. If you make multiple hard credit pulls within a certain time period, ",{"text":1183,"type":75,"marks":1184},"typically 45 days",[1185],{"type":80,"attrs":1186},{"href":1187,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.forbes.com/advisor/credit-score/soft-credit-check-vs-hard-credit-check/",{"text":1189,"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":103,"attrs":1191,"content":1192},{"level":256},[1193],{"text":1194,"type":75,"marks":1195},"Step 4: Evaluate your offers",[1196],{"type":111},{"type":71,"content":1198},[1199],{"text":1200,"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":103,"attrs":1202,"content":1203},{"level":335},[1204],{"text":1205,"type":75,"marks":1206},"Interest rate",[1207],{"type":111},{"type":71,"content":1209},[1210],{"text":1211,"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":103,"attrs":1213,"content":1214},{"level":335},[1215],{"text":1216,"type":75,"marks":1217},"Type of interest rate",[1218],{"type":111},{"type":71,"content":1220},[1221,1223,1229],{"text":1222,"type":75},"There are two types of interest rates: ",{"text":1224,"type":75,"marks":1225},"fixed rates and variable rates",[1226],{"type":80,"attrs":1227},{"href":1228,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.earnest.com/blog/student-loan-variable-or-fixed/",{"text":1230,"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":103,"attrs":1232,"content":1233},{"level":335},[1234],{"text":1235,"type":75,"marks":1236},"Repayment term",[1237],{"type":111},{"type":71,"content":1239},[1240,1242,1248],{"text":1241,"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":1243,"type":75,"marks":1244},"1",[1245],{"type":124,"attrs":1246},{"class":1247},"superscript",{"text":1249,"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":103,"attrs":1251,"content":1252},{"level":335},[1253],{"text":1254,"type":75,"marks":1255},"Origination fees",[1256],{"type":111},{"type":71,"content":1258},[1259,1261,1267],{"text":1260,"type":75},"Most lenders charge upfront costs during the application process to cover administrative expenses. Sometimes the ",{"text":1262,"type":75,"marks":1263},"origination fee",[1264],{"type":80,"attrs":1265},{"href":1266,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.bankrate.com/loans/personal-loans/personal-loan-origination-fees/",{"text":1268,"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":103,"attrs":1270,"content":1271},{"level":335},[1272],{"text":1273,"type":75,"marks":1274},"Other fees",[1275],{"type":111},{"type":71,"content":1277},[1278],{"text":1279,"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":103,"attrs":1281,"content":1282},{"level":335},[1283],{"text":1284,"type":75,"marks":1285},"Monthly payments",[1286],{"type":111},{"type":71,"content":1288},[1289,1291,1297],{"text":1290,"type":75},"Once you know your ",{"text":1292,"type":75,"marks":1293},"principal, interest rate, repayment term, and fees,",[1294],{"type":80,"attrs":1295},{"href":1296,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.gdrc.org/icm/loan-glossary.html",{"text":1298,"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":1300},[1301],{"text":1302,"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":103,"attrs":1304,"content":1305},{"level":256},[1306],{"text":1307,"type":75,"marks":1308},"Step 5: Sign on the dotted line and receive your lump sum",[1309],{"type":111},{"type":71,"content":1311},[1312,1314,1320],{"text":1313,"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":1315,"type":75,"marks":1316},"grace period",[1317],{"type":80,"attrs":1318},{"href":1319,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.investopedia.com/terms/g/grace_period.asp",{"text":1321,"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":103,"attrs":1323,"content":1324},{"level":256},[1325],{"text":1326,"type":75,"marks":1327},"Step 6: Make on-time payments",[1328],{"type":111},{"type":71,"content":1330},[1331],{"text":1332,"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":1334},[1335,1337,1343],{"text":1336,"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":1338,"type":75,"marks":1339},"serious negative consequences",[1340],{"type":80,"attrs":1341},{"href":1342,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.experian.com/blogs/ask-experian/what-happens-if-you-dont-pay-back-personal-loan/",{"text":1344,"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":103,"attrs":1346,"content":1347},{"level":105},[1348],{"text":1349,"type":75,"marks":1350},"Pros and cons of personal loans",[1351],{"type":111},{"type":71,"content":1353},[1354],{"text":1355,"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":1357},[1358],{"text":1359,"type":75},"Here are some of the pros of taking out a personal loan:",{"type":113,"content":1361},[1362,1372,1382,1392,1402],{"type":116,"content":1363},[1364],{"type":71,"content":1365},[1366,1370],{"text":1367,"type":75,"marks":1368},"One lump sum",[1369],{"type":111},{"text":1371,"type":75},": The funds are delivered all at once and can be used immediately. This makes personal loans convenient for large purchases",{"type":116,"content":1373},[1374],{"type":71,"content":1375},[1376,1380],{"text":1377,"type":75,"marks":1378},"Quick approval process:",[1379],{"type":111},{"text":1381,"type":75}," You can get approved for a personal loan in as little as a day.",{"type":116,"content":1383},[1384],{"type":71,"content":1385},[1386,1390],{"text":1387,"type":75,"marks":1388},"Lower interest rates than credit cards",[1389],{"type":111},{"text":1391,"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":116,"content":1393},[1394],{"type":71,"content":1395},[1396,1400],{"text":1397,"type":75,"marks":1398},"Simpler payments",[1399],{"type":111},{"text":1401,"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":116,"content":1403},[1404],{"type":71,"content":1405},[1406,1410],{"text":1407,"type":75,"marks":1408},"Lower monthly payments",[1409],{"type":111},{"text":1411,"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":1413},[1414],{"text":1415,"type":75},"Some of the cons of personal loans include:",{"type":113,"content":1417},[1418,1428,1438,1448,1458],{"type":116,"content":1419},[1420],{"type":71,"content":1421},[1422,1426],{"text":1423,"type":75,"marks":1424},"Additional debt",[1425],{"type":111},{"text":1427,"type":75},": If you’re not financially stable, taking on more debt could leave you in a worse situation.",{"type":116,"content":1429},[1430],{"type":71,"content":1431},[1432,1436],{"text":1433,"type":75,"marks":1434},"Hard on borrowers with bad credit",[1435],{"type":111},{"text":1437,"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":116,"content":1439},[1440],{"type":71,"content":1441},[1442,1446],{"text":1443,"type":75,"marks":1444},"Potentially high fees",[1445],{"type":111},{"text":1447,"type":75},": Origination and processing fees can add up. Make sure your monthly payments are affordable.",{"type":116,"content":1449},[1450],{"type":71,"content":1451},[1452,1456],{"text":1453,"type":75,"marks":1454},"You could need collateral",[1455],{"type":111},{"text":1457,"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":116,"content":1459},[1460],{"type":71,"content":1461},[1462,1466],{"text":1463,"type":75,"marks":1464},"Not for every scenario",[1465],{"type":111},{"text":1467,"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":103,"attrs":1469,"content":1470},{"level":105},[1471],{"text":1472,"type":75,"marks":1473},"Where can I get a personal loan?",[1474],{"type":111},{"type":71,"content":1476},[1477],{"text":1478,"type":75},"Many different financial institutions offer personal loans. Here are a few of the most popular:",{"type":113,"content":1480},[1481,1493,1506],{"type":116,"content":1482},[1483],{"type":71,"content":1484},[1485,1491],{"text":1486,"type":75,"marks":1487},"Online lenders",[1488,1490],{"type":80,"attrs":1489},{"href":832,"uuid":83,"anchor":83,"target":85,"linktype":86},{"type":111},{"text":1492,"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":116,"content":1494},[1495],{"type":71,"content":1496},[1497,1504],{"text":1498,"type":75,"marks":1499},"Credit unions",[1500,1503],{"type":80,"attrs":1501},{"href":1502,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.experian.com/blogs/ask-experian/can-i-get-personal-loan-from-credit-union/",{"type":111},{"text":1505,"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":116,"content":1507},[1508],{"type":71,"content":1509},[1510,1517],{"text":1511,"type":75,"marks":1512},"Banks",[1513,1516],{"type":80,"attrs":1514},{"href":1515,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.nerdwallet.com/article/loans/personal-loans/personal-loan-bank-credit-union",{"type":111},{"text":1518,"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":103,"attrs":1520,"content":1521},{"level":105},[1522],{"text":1523,"type":75,"marks":1524},"Personal loan alternatives",[1525],{"type":111},{"type":71,"content":1527},[1528],{"text":1529,"type":75},"if you’ve determined that a personal loan isn’t right for your situation, consider one of these alternatives:",{"type":113,"content":1531},[1532,1545,1558,1571],{"type":116,"content":1533},[1534],{"type":71,"content":1535},[1536,1543],{"text":1537,"type":75,"marks":1538},"Credit cards",[1539,1542],{"type":80,"attrs":1540},{"href":1541,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.bankrate.com/finance/credit-cards/what-is-a-credit-card/",{"type":111},{"text":1544,"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":116,"content":1546},[1547],{"type":71,"content":1548},[1549,1556],{"text":1550,"type":75,"marks":1551},"Cash-out refinance",[1552,1555],{"type":80,"attrs":1553},{"href":1554,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.bankrate.com/mortgages/cash-out-refinancing/",{"type":111},{"text":1557,"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":116,"content":1559},[1560],{"type":71,"content":1561},[1562,1569],{"text":1563,"type":75,"marks":1564},"Home equity loan",[1565,1568],{"type":80,"attrs":1566},{"href":1567,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-loan-en-106/",{"type":111},{"text":1570,"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":116,"content":1572},[1573],{"type":71,"content":1574},[1575,1581],{"text":776,"type":75,"marks":1576},[1577,1580],{"type":80,"attrs":1578},{"href":1579,"uuid":83,"anchor":83,"target":85,"linktype":86},"https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/",{"type":111},{"text":1582,"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":103,"attrs":1584,"content":1585},{"level":105},[1586],{"text":816,"type":75,"marks":1587},[1588],{"type":111},{"type":71,"content":1590},[1591],{"text":1592,"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":1594},[1595,1597,1602],{"text":1596,"type":75},"When considering lenders and your loan options, check out the ",{"text":1598,"type":75,"marks":1599},"Marketplace by Navient",[1600],{"type":80,"attrs":1601},{"href":832,"uuid":83,"anchor":83,"target":85,"linktype":86},{"text":1603,"type":75},". They have partnered with top financial institutions and bundled numerous options for you to review, all in one place.",{"type":71,"content":1605},[1606],{"text":839,"type":75,"marks":1607},[1608],{"type":124,"attrs":1609},{"class":843},{"type":71,"content":1611},[1612],{"text":1613,"type":75,"marks":1614},"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",[1615],{"type":124,"attrs":1616},{"class":843},{"type":68,"content":1618},[1619],{"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":856,"cols":18,"height":18,"classes":857,"columns":1652,"justify":18,"maxWidth":874,"component":875,"colClasses":876,"rowClasses":18,"mobileClasses":877,"backgroundColor":18,"backgroundImage":1661,"containerClasses":18,"useBackgroundImage":44,"_editable":1662},[1653],{"_uid":860,"component":861,"backToTopBtn":1654,"_editable":1660},[1655],{"url":1656,"_uid":866,"icon":1657,"text":868,"color":32,"event":18,"sizing":1658,"classes":870,"rounded":44,"outlined":44,"component":871,"textColor":685,"hoverBgColor":685,"mobileClasses":18,"hoverTextColor":696,"navigationType":18,"_editable":1659},{"id":18,"url":18,"linktype":865,"fieldtype":691,"cached_url":18},{"id":83,"alt":83,"name":18,"focus":83,"title":83,"filename":18,"copyright":83,"fieldtype":694},[],"\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":83,"alt":83,"name":18,"focus":83,"title":83,"filename":18,"copyright":83,"fieldtype":694},"\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":1673,"created_at":1674,"published_at":1675,"updated_at":1676,"id":1677,"uuid":1678,"content":1679,"slug":2146,"full_slug":2147,"sort_by_date":83,"position":2148,"tag_list":2149,"is_startpage":44,"parent_id":888,"meta_data":83,"group_id":2150,"first_published_at":2151,"release_id":83,"lang":891,"path":83,"alternates":2152,"default_full_slug":83,"translated_slugs":83},"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":1680,"_uid":20,"body":1683,"author":914,"category":880,"featured":44,"component":881,"canonicalTag":2144,"_editable":2145},{"_uid":15,"title":1681,"plugin":17,"og_image":18,"og_title":18,"description":1682,"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. ",[1684,1692,2132],{"id":23,"_uid":24,"image":1685,"intro":1686,"author":908,"classes":1687,"category":18,"featured":44,"blogTitle":1673,"component":46,"imageLink":1690,"blendImage":44,"authorRoute":914,"publishedDate":49,"backgroundColor":50,"_editable":1691},"//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.",[1688],{"_uid":30,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":34,"authorClasses":35,"subtitleColor":36,"subtitleClasses":37,"dateMobileClasses":38,"titleMobileClasses":39,"authorMobileClasses":40,"featuredMobileClasses":41,"subtitleMobileClasses":42,"_editable":1689},"\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":53,"bloks":1693,"classes":851,"component":852,"mobileClasses":18,"containerContent":2130,"_editable":2131},[1694],{"_uid":56,"bloks":1695,"classes":18,"justify":662,"component":849,"mobileClasses":18,"_editable":2129},[1696,2103],{"lg":59,"md":59,"sm":60,"_uid":61,"cols":60,"bloks":1697,"alignSelf":662,"component":663,"_editable":2102},[1698],{"_uid":64,"color":65,"classes":66,"content":18,"richText":1699,"component":655,"mobileClasses":656,"enableRichText":657,"richTextMobile":2098,"_editable":2101},{"type":68,"content":1700},[1701,1714,1718,1724,1728,1741,1745,1752,1764,1771,1775,1782,1786,1808,1815,1819,1826,1839,1846,1850,1857,1861,1868,1872,1879,1888,1895,1899,1906,1919,1926,1930,1937,1941,1945,1949,1956,1960,1973,1980,1993,1997,2004,2017,2021,2025,2032,2036,2042,2046,2052,2056,2062,2066,2070,2077,2081,2092],{"type":71,"content":1702},[1703,1705,1712],{"text":1704,"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":1706,"type":75,"marks":1707},"60% of Americans",[1708],{"type":80,"attrs":1709},{"href":1710,"uuid":83,"anchor":83,"custom":1711,"target":85,"linktype":86},"https://www.bloomberg.com/news/articles/2022-09-19/more-americans-are-stuck-with-long-term-credit-card-debt?leadSource=uverify%20wall",{},{"text":1713,"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":1715},[1716],{"text":1717,"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":103,"attrs":1719,"content":1720},{"level":105},[1721],{"text":988,"type":75,"marks":1722},[1723],{"type":111},{"type":71,"content":1725},[1726],{"text":1727,"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":1729},[1730,1732,1739],{"text":1731,"type":75},"You can use personal loans for almost any reason, including ",{"text":1733,"type":75,"marks":1734},"home renovations",[1735],{"type":80,"attrs":1736},{"href":1737,"uuid":83,"anchor":83,"custom":1738,"target":85,"linktype":86},"https://www.earnest.com/blog/home-improvement-loan-vs-home-equity-loan/",{},{"text":1740,"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":1742},[1743],{"text":1744,"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":103,"attrs":1746,"content":1747},{"level":105},[1748],{"text":1749,"type":75,"marks":1750},"Pros and cons of using a personal loan to pay off credit card debt",[1751],{"type":111},{"type":71,"content":1753},[1754,1756,1763],{"text":1755,"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":1757,"type":75,"marks":1758},"using a personal loan to pay off a credit card",[1759],{"type":80,"attrs":1760},{"href":1761,"uuid":83,"anchor":83,"custom":1762,"target":85,"linktype":86},"https://www.bankrate.com/finance/credit-cards/take-out-personal-loan-to-pay-credit-card-bill/",{},{"text":317,"type":75},{"type":103,"attrs":1765,"content":1766},{"level":256},[1767],{"text":1768,"type":75,"marks":1769},"1. Lump sum is ideal for debt consolidation",[1770],{"type":111},{"type":71,"content":1772},[1773],{"text":1774,"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":103,"attrs":1776,"content":1777},{"level":256},[1778],{"text":1779,"type":75,"marks":1780},"2. Lower interest rates on average ",[1781],{"type":111},{"type":71,"content":1783},[1784],{"text":1785,"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":1787},[1788,1790,1797,1799,1806],{"text":1789,"type":75},"As of July 2022, ",{"text":1791,"type":75,"marks":1792},"the average personal loan rate was 10.28%",[1793],{"type":80,"attrs":1794},{"href":1795,"uuid":83,"anchor":83,"custom":1796,"target":85,"linktype":86},"https://www.bankrate.com/loans/personal-loans/pros-cons-of-personal-loans/",{},{"text":1798,"type":75},", while the average ",{"text":1800,"type":75,"marks":1801},"credit card rate",[1802],{"type":80,"attrs":1803},{"href":1804,"uuid":83,"anchor":83,"custom":1805,"target":85,"linktype":86},"https://www.bankrate.com/finance/credit-cards/current-interest-rates/",{},{"text":1807,"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":103,"attrs":1809,"content":1810},{"level":256},[1811],{"text":1812,"type":75,"marks":1813},"3. Simpler payments",[1814],{"type":111},{"type":71,"content":1816},[1817],{"text":1818,"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":103,"attrs":1820,"content":1821},{"level":256},[1822],{"text":1823,"type":75,"marks":1824},"4. Lower monthly payments",[1825],{"type":111},{"type":71,"content":1827},[1828,1830,1837],{"text":1829,"type":75},"Unlike ",{"text":1831,"type":75,"marks":1832},"other short-term loans",[1833],{"type":80,"attrs":1834},{"href":1835,"uuid":83,"anchor":83,"custom":1836,"target":85,"linktype":86},"https://www.earnest.com/blog/payday-loans-vs-personal-loans/",{},{"text":1838,"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":103,"attrs":1840,"content":1841},{"level":256},[1842],{"text":1843,"type":75,"marks":1844},"5. Better alternative to a balance-transfer card",[1845],{"type":111},{"type":71,"content":1847},[1848],{"text":1849,"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":103,"attrs":1851,"content":1852},{"level":105},[1853],{"text":1854,"type":75,"marks":1855},"The disadvantages of a personal loan",[1856],{"type":111},{"type":71,"content":1858},[1859],{"text":1860,"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":103,"attrs":1862,"content":1863},{"level":256},[1864],{"text":1865,"type":75,"marks":1866},"1. You’ll take on additional debt",[1867],{"type":111},{"type":71,"content":1869},[1870],{"text":1871,"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":103,"attrs":1873,"content":1874},{"level":256},[1875],{"text":1876,"type":75,"marks":1877},"2. It’s hard on borrowers with bad credit scores",[1878],{"type":111},{"type":71,"content":1880},[1881,1883,1885,1886],{"text":1882,"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":1884},"hard_break",{"type":1884},{"text":1887,"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":103,"attrs":1889,"content":1890},{"level":256},[1891],{"text":1892,"type":75,"marks":1893},"3. There could be high fees",[1894],{"type":111},{"type":71,"content":1896},[1897],{"text":1898,"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":103,"attrs":1900,"content":1901},{"level":256},[1902],{"text":1903,"type":75,"marks":1904},"4. You may have to offer collateral",[1905],{"type":111},{"type":71,"content":1907},[1908,1910,1917],{"text":1909,"type":75},"Some personal loans are ",{"text":1911,"type":75,"marks":1912},"secured loans",[1913],{"type":80,"attrs":1914},{"href":1915,"uuid":83,"anchor":83,"custom":1916,"target":85,"linktype":86},"https://www.earnest.com/blog/unsecured-vs-secured-personal-loans-101/",{},{"text":1918,"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":103,"attrs":1920,"content":1921},{"level":105},[1922],{"text":1923,"type":75,"marks":1924},"Alternatives to using a personal loan to pay off credit cards",[1925],{"type":111},{"type":71,"content":1927},[1928],{"text":1929,"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":103,"attrs":1931,"content":1932},{"level":256},[1933],{"text":1934,"type":75,"marks":1935},"Balance transfer card",[1936],{"type":111},{"type":71,"content":1938},[1939],{"text":1940,"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":1942},[1943],{"text":1944,"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":1946},[1947],{"text":1948,"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":103,"attrs":1950,"content":1951},{"level":256},[1952],{"text":1953,"type":75,"marks":1954},"Home equity loan or HELOC",[1955],{"type":111},{"type":71,"content":1957},[1958],{"text":1959,"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":1961},[1962,1964,1971],{"text":1963,"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":1965,"type":75,"marks":1966},"considered too risky",[1967],{"type":80,"attrs":1968},{"href":1969,"uuid":83,"anchor":83,"custom":1970,"target":85,"linktype":86},"https://www.bankrate.com/home-equity/should-i-use-heloc-to-pay-credit-card-debt/ ",{},{"text":1972,"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":103,"attrs":1974,"content":1975},{"level":256},[1976],{"text":1977,"type":75,"marks":1978},"Debt settlement",[1979],{"type":111},{"type":71,"content":1981},[1982,1984,1991],{"text":1983,"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":1985,"type":75,"marks":1986},"debt settlement",[1987],{"type":80,"attrs":1988},{"href":1989,"uuid":83,"anchor":83,"custom":1990,"target":85,"linktype":86},"https://www.consumerfinance.gov/ask-cfpb/what-are-debt-settlementdebt-relief-services-and-should-i-use-them-en-1457/",{},{"text":1992,"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":1994},[1995],{"text":1996,"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":103,"attrs":1998,"content":1999},{"level":256},[2000],{"text":2001,"type":75,"marks":2002},"Debt avalanche or snowball method",[2003],{"type":111},{"type":71,"content":2005},[2006,2008,2015],{"text":2007,"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":2009,"type":75,"marks":2010},"debt repayment strategies",[2011],{"type":80,"attrs":2012},{"href":2013,"uuid":83,"anchor":83,"custom":2014,"target":85,"linktype":86},"https://www.wellsfargo.com/goals-credit/smarter-credit/manage-your-debt/snowball-vs-avalanche-paydown/",{},{"text":2016,"type":75},": “Debt avalanche” or “debt snowball.”",{"type":71,"content":2018},[2019],{"text":2020,"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":2022},[2023],{"text":2024,"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":103,"attrs":2026,"content":2027},{"level":105},[2028],{"text":2029,"type":75,"marks":2030},"Where to get a personal loan to pay off credit card debt",[2031],{"type":111},{"type":71,"content":2033},[2034],{"text":2035,"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":103,"attrs":2037,"content":2038},{"level":256},[2039],{"text":1511,"type":75,"marks":2040},[2041],{"type":111},{"type":71,"content":2043},[2044],{"text":2045,"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":103,"attrs":2047,"content":2048},{"level":256},[2049],{"text":1498,"type":75,"marks":2050},[2051],{"type":111},{"type":71,"content":2053},[2054],{"text":2055,"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":103,"attrs":2057,"content":2058},{"level":256},[2059],{"text":1486,"type":75,"marks":2060},[2061],{"type":111},{"type":71,"content":2063},[2064],{"text":2065,"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":2067},[2068],{"text":2069,"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":103,"attrs":2071,"content":2072},{"level":105},[2073],{"text":2074,"type":75,"marks":2075},"Find the best personal loan with Navient Marketplace",[2076],{"type":111},{"type":71,"content":2078},[2079],{"text":2080,"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":2082},[2083,2085,2090],{"text":2084,"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":614,"type":75,"marks":2086},[2087],{"type":80,"attrs":2088},{"href":832,"uuid":83,"anchor":83,"custom":2089,"target":85,"linktype":86},{},{"text":2091,"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":2093},[2094],{"text":839,"type":75,"marks":2095},[2096],{"type":124,"attrs":2097},{"class":843},{"type":68,"content":2099},[2100],{"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":856,"cols":18,"height":18,"classes":857,"columns":2133,"justify":18,"maxWidth":874,"component":875,"colClasses":876,"rowClasses":18,"mobileClasses":877,"backgroundColor":18,"backgroundImage":2142,"containerClasses":18,"useBackgroundImage":44,"_editable":2143},[2134],{"_uid":860,"component":861,"backToTopBtn":2135,"_editable":2141},[2136],{"url":2137,"_uid":866,"icon":2138,"text":868,"color":32,"event":18,"sizing":2139,"classes":870,"rounded":44,"outlined":44,"component":871,"textColor":685,"hoverBgColor":685,"mobileClasses":18,"hoverTextColor":696,"navigationType":18,"_editable":2140},{"id":18,"url":18,"linktype":865,"fieldtype":691,"cached_url":18},{"id":83,"alt":83,"name":18,"focus":83,"title":83,"filename":18,"copyright":83,"fieldtype":694},[],"\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":83,"alt":83,"name":18,"focus":83,"title":83,"filename":18,"copyright":83,"fieldtype":694},"\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":2154,"created_at":2155,"published_at":2156,"updated_at":2157,"id":2158,"uuid":2159,"content":2160,"slug":2813,"full_slug":2814,"sort_by_date":83,"position":2815,"tag_list":2816,"is_startpage":44,"parent_id":888,"meta_data":83,"group_id":2817,"first_published_at":2818,"release_id":83,"lang":891,"path":83,"alternates":2819,"default_full_slug":83,"translated_slugs":83},"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":2161,"_uid":20,"body":2164,"author":914,"category":880,"featured":44,"component":881,"canonicalTag":2811,"_editable":2812},{"_uid":15,"title":2162,"plugin":17,"og_image":18,"og_title":18,"description":2163,"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. ",[2165,2173,2799],{"id":23,"_uid":24,"image":2166,"intro":2167,"author":908,"classes":2168,"category":18,"featured":44,"blogTitle":2154,"component":46,"imageLink":2171,"blendImage":44,"authorRoute":914,"publishedDate":49,"backgroundColor":50,"_editable":2172},"//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.",[2169],{"_uid":30,"component":31,"titleColor":32,"dateClasses":33,"titleClasses":34,"authorClasses":35,"subtitleColor":36,"subtitleClasses":37,"dateMobileClasses":38,"titleMobileClasses":39,"authorMobileClasses":40,"featuredMobileClasses":41,"subtitleMobileClasses":42,"_editable":2170},"\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":53,"bloks":2174,"classes":851,"component":852,"mobileClasses":18,"containerContent":2797,"_editable":2798},[2175],{"_uid":56,"bloks":2176,"classes":18,"justify":662,"component":849,"mobileClasses":18,"_editable":2796},[2177,2770],{"lg":59,"md":59,"sm":60,"_uid":61,"cols":60,"bloks":2178,"alignSelf":662,"component":663,"_editable":2769},[2179],{"_uid":64,"color":65,"classes":66,"content":18,"richText":2180,"component":655,"mobileClasses":656,"enableRichText":657,"richTextMobile":2765,"_editable":2768},{"type":68,"content":2181},[2182,2186,2190,2197,2241,2248,2252,2256,2260,2272,2279,2283,2329,2336,2340,2347,2351,2358,2362,2369,2382,2389,2410,2417,2421,2428,2432,2439,2451,2458,2462,2469,2473,2477,2484,2488,2501,2521,2528,2532,2539,2552,2559,2572,2579,2583,2590,2594,2601,2605,2612,2616,2623,2627,2631,2638,2646,2650,2657,2661,2667,2671,2675,2681,2685,2689,2693,2697,2704,2708,2712,2719,2723,2736,2742,2746,2758],{"type":71,"content":2183},[2184],{"text":2185,"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":2187},[2188],{"text":2189,"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":103,"attrs":2191,"content":2192},{"level":105},[2193],{"text":2194,"type":75,"marks":2195},"What to know about personal loans: key takeaways",[2196],{"type":111},{"type":113,"content":2198},[2199,2208,2217,2226,2235],{"type":116,"content":2200},[2201],{"type":71,"content":2202},[2203],{"text":2204,"type":75,"marks":2205},"A personal loan is a lump sum of money that can be used for almost any purpose.",[2206],{"type":124,"attrs":2207},{"class":126},{"type":116,"content":2209},[2210],{"type":71,"content":2211},[2212],{"text":2213,"type":75,"marks":2214},"Individuals with high credit scores and low existing debt will likely get the best rates.",[2215],{"type":124,"attrs":2216},{"class":126},{"type":116,"content":2218},[2219],{"type":71,"content":2220},[2221],{"text":2222,"type":75,"marks":2223},"Borrowers can use personal loans to consolidate their existing credit card debt into one monthly loan payment.",[2224],{"type":124,"attrs":2225},{"class":126},{"type":116,"content":2227},[2228],{"type":71,"content":2229},[2230],{"text":2231,"type":75,"marks":2232},"Banks, credit unions, and online lenders are a few of the most popular sources of personal loans.",[2233],{"type":124,"attrs":2234},{"class":126},{"type":116,"content":2236},[2237],{"type":71,"content":2238},[2239],{"text":2240,"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":103,"attrs":2242,"content":2243},{"level":105},[2244],{"text":2245,"type":75,"marks":2246},"What are personal loans and how do they work?",[2247],{"type":111},{"type":71,"content":2249},[2250],{"text":2251,"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":2253},[2254],{"text":2255,"type":75},"So, how exactly do personal loans work?",{"type":71,"content":2257},[2258],{"text":2259,"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":2261},[2262,2264,2270],{"text":2263,"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":2265,"type":75,"marks":2266},"payday loans",[2267],{"type":80,"attrs":2268},{"href":1835,"uuid":83,"anchor":83,"custom":2269,"target":85,"linktype":86},{},{"text":2271,"type":75},". That said, personal loan interest rates do vary depending on the type of loan and the creditworthiness of the borrower. ",{"type":103,"attrs":2273,"content":2274},{"level":105},[2275],{"text":2276,"type":75,"marks":2277},"The different types of personal loans available",[2278],{"type":111},{"type":71,"content":2280},[2281],{"text":2282,"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":113,"content":2284},[2285,2296,2316],{"type":116,"content":2286},[2287],{"type":71,"content":2288},[2289,2294],{"text":196,"type":75,"marks":2290},[2291],{"type":80,"attrs":2292},{"href":1915,"uuid":83,"anchor":83,"custom":2293,"target":85,"linktype":86},{},{"text":2295,"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":116,"content":2297},[2298],{"type":71,"content":2299},[2300,2306,2308,2315],{"text":186,"type":75,"marks":2301},[2302],{"type":80,"attrs":2303},{"href":2304,"uuid":83,"anchor":83,"custom":2305,"target":85,"linktype":86},"https://www.cnbc.com/select/secured-loans-vs-unsecured-loans/",{},{"text":2307,"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":2309,"type":75,"marks":2310},"good credit scores",[2311],{"type":80,"attrs":2312},{"href":2313,"uuid":83,"anchor":83,"custom":2314,"target":85,"linktype":86},"https://www.earnest.com/blog/personal-financial-health/",{},{"text":317,"type":75},{"type":116,"content":2317},[2318],{"type":71,"content":2319},[2320,2327],{"text":2321,"type":75,"marks":2322},"Peer-to-peer (P2P)",[2323],{"type":80,"attrs":2324},{"href":2325,"uuid":83,"anchor":83,"custom":2326,"target":85,"linktype":86},"https://www.investopedia.com/terms/p/peer-to-peer-lending.asp",{},{"text":2328,"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":103,"attrs":2330,"content":2331},{"level":105},[2332],{"text":2333,"type":75,"marks":2334},"The benefits of personal loans",[2335],{"type":111},{"type":71,"content":2337},[2338],{"text":2339,"type":75},"There are a number of benefits to taking out a personal loan. Here are a few of their best qualities:",{"type":103,"attrs":2341,"content":2342},{"level":256},[2343],{"text":2344,"type":75,"marks":2345},"Flexible",[2346],{"type":111},{"type":71,"content":2348},[2349],{"text":2350,"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":103,"attrs":2352,"content":2353},{"level":256},[2354],{"text":2355,"type":75,"marks":2356},"Disbursed in one lump sum",[2357],{"type":111},{"type":71,"content":2359},[2360],{"text":2361,"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":103,"attrs":2363,"content":2364},{"level":256},[2365],{"text":2366,"type":75,"marks":2367},"Good for refinancing high-interest debt",[2368],{"type":111},{"type":71,"content":2370},[2371,2373,2380],{"text":2372,"type":75},"Personal loans are a good option for ",{"text":2374,"type":75,"marks":2375},"refinancing high-interest debt",[2376],{"type":80,"attrs":2377},{"href":2378,"uuid":83,"anchor":83,"custom":2379,"target":85,"linktype":86},"https://www.earnest.com/blog/refinance-credit-card-debt/",{},{"text":2381,"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":103,"attrs":2383,"content":2384},{"level":256},[2385],{"text":2386,"type":75,"marks":2387},"Lower Risk",[2388],{"type":111},{"type":71,"content":2390},[2391,2393,2399,2401,2408],{"text":2392,"type":75},"Unsecured personal loans are less risky for borrowers than many other types of loans. Take secured ",{"text":2394,"type":75,"marks":2395},"home equity loans",[2396],{"type":80,"attrs":2397},{"href":1737,"uuid":83,"anchor":83,"custom":2398,"target":85,"linktype":86},{},{"text":2400,"type":75},", for example. If you want to take out a loan to ",{"text":2402,"type":75,"marks":2403},"consolidate your high-interest debt",[2404],{"type":80,"attrs":2405},{"href":2406,"uuid":83,"anchor":83,"custom":2407,"target":85,"linktype":86},"https://www.earnest.com/blog/what-is-debt-consolidation/",{},{"text":2409,"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":103,"attrs":2411,"content":2412},{"level":105},[2413],{"text":2414,"type":75,"marks":2415},"How to get a personal loan",[2416],{"type":111},{"type":71,"content":2418},[2419],{"text":2420,"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":103,"attrs":2422,"content":2423},{"level":256},[2424],{"text":2425,"type":75,"marks":2426},"1. Look for banks or credit unions that offer personal loans",[2427],{"type":111},{"type":71,"content":2429},[2430],{"text":2431,"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":103,"attrs":2433,"content":2434},{"level":335},[2435],{"text":2436,"type":75,"marks":2437},"A bank where you already have an account",[2438],{"type":111},{"type":71,"content":2440},[2441,2443,2450],{"text":2442,"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":2444,"type":75,"marks":2445},"with bad credit",[2446],{"type":80,"attrs":2447},{"href":2448,"uuid":83,"anchor":83,"custom":2449,"target":85,"linktype":86},"https://www.earnest.com/blog/build-credit-in-6-easy-smart-steps/",{},{"text":317,"type":75},{"type":103,"attrs":2452,"content":2453},{"level":335},[2454],{"text":2455,"type":75,"marks":2456},"A credit union if your credit score isn’t exceptional",[2457],{"type":111},{"type":71,"content":2459},[2460],{"text":2461,"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":103,"attrs":2463,"content":2464},{"level":335},[2465],{"text":2466,"type":75,"marks":2467},"An online lender if you’re looking for speed and convenience",[2468],{"type":111},{"type":71,"content":2470},[2471],{"text":2472,"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":2474},[2475],{"text":2476,"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":103,"attrs":2478,"content":2479},{"level":256},[2480],{"text":2481,"type":75,"marks":2482},"2. Compare interest rates between different financial institutions",[2483],{"type":111},{"type":71,"content":2485},[2486],{"text":2487,"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":2489},[2490,2492,2499],{"text":2491,"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":2493,"type":75,"marks":2494},"According to Experian",[2495],{"type":80,"attrs":2496},{"href":2497,"uuid":83,"anchor":83,"custom":2498,"target":85,"linktype":86},"https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-is-a-good-credit-score/",{},{"text":2500,"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":2502},[2503,2505,2512,2514,2520],{"text":2504,"type":75},"While different borrowers will qualify for different interest rates, a “",{"text":2506,"type":75,"marks":2507},"good interest rate",[2508],{"type":80,"attrs":2509},{"href":2510,"uuid":83,"anchor":83,"custom":2511,"target":85,"linktype":86},"https://www.forbes.com/advisor/personal-loans/personal-loan-rates/#what_are_current_personal_loan_rates_section",{},{"text":2513,"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":2515,"type":75,"marks":2516},"about 10%",[2517],{"type":80,"attrs":2518},{"href":275,"uuid":83,"anchor":83,"custom":2519,"target":85,"linktype":86},{},{"text":317,"type":75},{"type":103,"attrs":2522,"content":2523},{"level":256},[2524],{"text":2525,"type":75,"marks":2526},"3. Apply for a personal loan with the lender of your choice",[2527],{"type":111},{"type":71,"content":2529},[2530],{"text":2531,"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":103,"attrs":2533,"content":2534},{"level":256},[2535],{"text":2536,"type":75,"marks":2537},"4. Wait for approval from your financial institution",[2538],{"type":111},{"type":71,"content":2540},[2541,2543,2550],{"text":2542,"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":2544,"type":75,"marks":2545},"Approval for a personal loan",[2546],{"type":80,"attrs":2547},{"href":2548,"uuid":83,"anchor":83,"custom":2549,"target":85,"linktype":86},"https://www.cusocal.org/how-long-does-it-take-to-get-a-personal-loan",{},{"text":2551,"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":103,"attrs":2553,"content":2554},{"level":256},[2555],{"text":2556,"type":75,"marks":2557},"5. Sign the agreement and receive your funds",[2558],{"type":111},{"type":71,"content":2560},[2561,2563,2570],{"text":2562,"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":2564,"type":75,"marks":2565},"After you sign this agreement",[2566],{"type":80,"attrs":2567},{"href":2568,"uuid":83,"anchor":83,"custom":2569,"target":85,"linktype":86},"https://www.experian.com/blogs/ask-experian/how-long-does-it-take-to-get-a-personal-loan/",{},{"text":2571,"type":75},", the funds will be disbursed to you. At that point, you cannot change your mind and go back on the agreement.",{"type":103,"attrs":2573,"content":2574},{"level":256},[2575],{"text":2576,"type":75,"marks":2577},"6. Continue repaying the loan until your debts are paid off",[2578],{"type":111},{"type":71,"content":2580},[2581],{"text":2582,"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":103,"attrs":2584,"content":2585},{"level":105},[2586],{"text":2587,"type":75,"marks":2588},"Things to consider before taking out a personal loan",[2589],{"type":111},{"type":71,"content":2591},[2592],{"text":2593,"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":103,"attrs":2595,"content":2596},{"level":256},[2597],{"text":2598,"type":75,"marks":2599},"How much do you need?",[2600],{"type":111},{"type":71,"content":2602},[2603],{"text":2604,"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":103,"attrs":2606,"content":2607},{"level":256},[2608],{"text":2609,"type":75,"marks":2610},"What is the repayment schedule?",[2611],{"type":111},{"type":71,"content":2613},[2614],{"text":2615,"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":103,"attrs":2617,"content":2618},{"level":256},[2619],{"text":2620,"type":75,"marks":2621},"What are the fees?",[2622],{"type":111},{"type":71,"content":2624},[2625],{"text":2626,"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":2628},[2629],{"text":2630,"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":103,"attrs":2632,"content":2633},{"level":256},[2634],{"text":2635,"type":75,"marks":2636},"Are there better payment options for your situation?",[2637],{"type":111},{"type":71,"content":2639},[2640,2642,2643,2644],{"text":2641,"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":1884},{"type":1884},{"text":2645,"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":2647},[2648],{"text":2649,"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":103,"attrs":2651,"content":2652},{"level":105},[2653],{"text":2654,"type":75,"marks":2655},"Alternatives to personal loans",[2656],{"type":111},{"type":71,"content":2658},[2659],{"text":2660,"type":75},"Personal loans aren’t the best option for every situation. Here are some alternatives to consider.",{"type":103,"attrs":2662,"content":2663},{"level":256},[2664],{"text":1550,"type":75,"marks":2665},[2666],{"type":111},{"type":71,"content":2668},[2669],{"text":2670,"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":2672},[2673],{"text":2674,"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":103,"attrs":2676,"content":2677},{"level":256},[2678],{"text":1563,"type":75,"marks":2679},[2680],{"type":111},{"type":71,"content":2682},[2683],{"text":2684,"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":2686},[2687],{"text":2688,"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":2690},[2691],{"text":2692,"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":2694},[2695],{"text":2696,"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":103,"attrs":2698,"content":2699},{"level":256},[2700],{"text":2701,"type":75,"marks":2702},"Home equity line of credit (HELOC)",[2703],{"type":111},{"type":71,"content":2705},[2706],{"text":2707,"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":2709},[2710],{"text":2711,"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":103,"attrs":2713,"content":2714},{"level":256},[2715],{"text":2716,"type":75,"marks":2717},"Payday loans",[2718],{"type":111},{"type":71,"content":2720},[2721],{"text":2722,"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":2724},[2725,2727,2734],{"text":2726,"type":75},"Payday loans are often characterized by very high interest rates — sometimes ",{"text":2728,"type":75,"marks":2729},"up to 400%",[2730],{"type":80,"attrs":2731},{"href":2732,"uuid":83,"anchor":83,"custom":2733,"target":85,"linktype":86},"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":2735,"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":103,"attrs":2737,"content":2738},{"level":105},[2739],{"text":816,"type":75,"marks":2740},[2741],{"type":111},{"type":71,"content":2743},[2744],{"text":2745,"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":2747},[2748,2750,2756],{"text":2749,"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":2751,"type":75,"marks":2752},"Check out the Marketplace today",[2753],{"type":80,"attrs":2754},{"href":832,"uuid":83,"anchor":83,"custom":2755,"target":85,"linktype":86},{},{"text":2757,"type":75}," to compare rates and find a personal loan that suits your needs.",{"type":71,"content":2759},[2760],{"text":2761,"type":75,"marks":2762},"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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