A personal loan can be taken from a bank, credit union or online lender, although experts recommend checking with your bank or credit union first to see if they offer discounts to existing customers.

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Personal loan rates fell slightly: for those with excellent credit, average interest rates on 60-month personal loans reached 13.81% (compared to 15.51% the previous week) and for personal loans at 36 months, 12.49% (against 14.07%). a week before). But if your credit score isn’t in the upper echelon, expect to pay more. For 36-month personal loans, average interest rates were 21.85%, while 60-month or 5-year personal loans were 22.06%, according to Bankrate’s latest data for the week ending. May 22. You can see the lowest personal loan rates you can qualify for here.

The basics of the personal loan

A personal loan can be taken from a bank, credit union or online lender, although experts recommend checking with your bank or credit union first to see if they offer discounts to existing customers. Personal loans provide borrowers with a lump sum of money, usually between $1,000 and $100,000, and can be secured (meaning the lender requires collateral) or unsecured (meaning the lender does not does not), but unsecured loans are more common. Most personal loans have repayment periods that last between one and seven years, and interest and principal are repaid as soon as the loan is funded. Personal loans are commonly used to cover major purchases, to pay off high interest debt, to pay for home improvement projects or unexpected repairs and expenses.

Is the personal loan for you?

Some personal loans are funded in as little as a day, but to make sure you’re ready to apply ahead of time, experts say it’s wise to review your credit report, compare lenders and pre-qualify to get an idea of ​​the loan amount and terms. ‘ll qualify for. One thing to consider when applying for a personal loan is that since they are often unsecured, they tend to have higher interest rates than other types of loans. That said, if you don’t have any assets to put up as collateral and need cash fast, it might be worth paying a higher interest rate.

When applying for a personal loan, it may seem obvious to ask for a little extra money. But be warned: just because these loans can be easy to get, experts recommend only taking out the amount you actually need. If you become unable to repay the balance, your credit score will likely suffer, as will your ability to take out loans in the future.

Before taking out a personal loan, make sure you understand the lender’s terms and any fees associated with the application process. Personal loans often come with origination fees, which typically range from 1% to 8% of the total loan amount. So you should make sure to ask for some extra money to cover the cost of the initial fee. . If you need a $100,000 loan but your origination fee is 5%, you’ll actually want to apply for a $105,000 loan to cover the fee.

How to get the best rate on a personal loan

Borrowers from all credit backgrounds have options for personal loans, but the higher your credit score, the lower your interest rate will be. Engaging in a soft credit check will not affect your score and will give you an idea of ​​the rate you will pay. This MarketwatchPicks guide can also help you navigate the personal loan application process.