Something else loans

Personal loans are deliberately flexible. Most lenders ask for a stated purpose but allow the funds to be used for almost any legitimate personal expense.

The test is the same whatever the reason: a fixed payment you can cover for the whole term, at an APR you have compared against the alternatives.

Before you borrow for something else, run through the points below. They are where most of the avoidable cost sits.

• Some lenders exclude specific uses such as business costs, education, gambling or investing
• Borrowing to cover an ongoing shortfall rather than a one-off cost usually makes things worse
• The purpose you state can affect which lenders will consider you

A personal loan is not always the cheapest route. It is worth ruling these out before you commit.

• An emergency fund or savings, where you have them
• A credit union loan, which can undercut market rates for members
• Negotiating directly with whoever you owe

A personal loan for something else can make sense if the fixed rate is lower than your existing financing and the monthly payment fits your budget.

Remember to compare APRs across lenders, watch for origination fees, and only borrow what you can comfortably repay.

Most personal loans from our lending partners are unsecured and fixed rate. With no collateral involved, the lender prices the loan almost entirely on how likely it believes you are to repay. That judgment is built from your credit history, your income relative to your existing debt, how long you have been employed, and the amount and term you ask for.

Personal loans can also be secured by collateral, such as a motor vehicle. Pledging collateral can support a larger amount or a lower rate, but it puts the vehicle at risk if the loan is not repaid. Secured options vary by lender and may not be available through the lenders currently listed here.

The number that matters is the APR, not the interest rate. APR folds in the interest rate plus any origination fee, so it is the only figure that lets you line two offers up fairly. A loan quoted at a lower interest rate can easily cost more once a 6% origination fee is deducted from the money you actually receive.

• Credit history and score band: the single biggest driver of the rate you are offered
• Debt-to-income ratio: monthly debt payments measured against gross monthly income
• Loan amount and term: longer terms usually carry higher rates
• Income stability: length of employment and whether income is verifiable
• Whether the loan is secured: collateral can lower the rate a lender is willing to offer
• State of residence: not every lender lends in every state