Loans
Understanding personal loans and other borrowing: how they work, what they really cost, how to compare offers and when borrowing makes sense.
Personal loans
Personal Loans: How They Work and When to Use One
A personal loan gives you a lump sum to repay in fixed monthly payments. It can be a cheaper way to consolidate high-interest debt or pay for a big expense, but it isn't always the right tool. Here's how personal loans work, what they cost, how to compare offers and when to avoid one.
| Provider | APR range | Details |
|---|---|---|
| Upstart Personal loans, opens in a new tab | 6.30%–35.99% | Visit site Upstart Personal loans, opens in a new tab |
| SoFi Personal loans, opens in a new tab | 6.49%–34.99% | Visit site SoFi Personal loans, opens in a new tab |
| Patelco Credit Union Personal Loan, opens in a new tab | 6.99%–17.90% | Visit site Patelco Credit Union Personal Loan, opens in a new tab |
See all 5 lenders and how we chose them
For information only, not a recommendation. Rates and terms change often and may depend on where you live; check the details with the provider before you apply. Pond.com isn't paid by any provider listed here.
Borrowing wisely
A loan can be a sensible way to spread out a big cost, consolidate expensive debt or handle an emergency. But borrowing always costs money, so it pays to compare offers, borrow only what you need and know exactly how you'll pay it back.
Personal loans explained covers how personal loans work, typical uses, what affects your rate, how to compare APRs and fees, and when a loan is better or worse than alternatives like a credit card or savings.
Your credit score has the biggest effect on the rate you're offered. Check it before you apply; see how credit scores work and how to check your credit report for free.
For specific types of borrowing, see how car loans work and renting vs buying a home. If you're already struggling with debt, a loan isn't always the answer; start with debt snowball vs avalanche.
Common questions
The interest rate is the cost of borrowing the money itself. APR (annual percentage rate) includes the interest rate plus certain fees, such as origination fees, so it gives a better picture of the total cost. Compare loans by APR.
Prequalifying usually uses a soft credit check, which doesn't affect your score. When you formally apply, the lender does a hard inquiry, which can lower your score slightly for a short time.
Car loans have their own guide in our Cars section, which covers rates, terms and getting preapproved before you visit a dealer. For homes, start with our renting vs buying guide in the Home section.