Personal loans can be helpful for meeting a variety of financial needs when using a credit card or paying cash isn’t an option. A personal loan is a type of installment loan, which means as you make payments the balance goes down until it reaches zero. If you’re considering a personal loan for any reason, here’s what you can expect.

Types of personal loans

A personal loan can be secured or unsecured. A secured loan requires collateral, while an unsecured loan would not. For example, some banks and credit unions offer savings secured personal loans, where a savings account or certificate of deposit serves as collateral.

SHOULD YOU GET A PERSONAL LOAN TO PAY OFF CREDIT CARD DEBT?

In terms of what a personal loan might be good for, here are some of the most common uses:

Debt consolidation

Home improvements

While you might be able to get a personal loan for student loan debt consolidation, that’s usually not the best option. If you have federal student loans, for example, rolling them into a personal loan would mean losing the option to defer payments or take a forbearance, if necessary.

[Read More]