A personal loan is a lump sum of cash borrowed at a fixed rate, repaid in equal monthly installments over a fixed term. Unlike credit cards, the payment doesn't shrink as you pay down the balance, and there is no revolving line to draw against again.
What you can expect by credit tier
| FICO range | Tier | Typical APR | Typical max |
|---|---|---|---|
| 760+ | Excellent | 7.5% – 11% | $100,000 |
| 720–759 | Very good | 9% – 14% | $75,000 |
| 680–719 | Good | 13% – 19% | $50,000 |
| 640–679 | Fair | 18% – 27% | $35,000 |
| 580–639 | Below average | 25% – 36% | $20,000 |
| Below 580 | Subprime | 30% – 36% (or denied) | $10,000 |
Where to shop, in order
- Your existing credit union. Member rates frequently undercut the broader market by 200–400 basis points.
- Local community banks. Slower but more flexible underwriting for borderline credit files.
- Online prime lenders (e.g. SoFi, LightStream, Marcus) for excellent and very good credit.
- Fintech marketplaces (e.g. LendingTree, Upgrade, Prosper) for soft-pull rate comparison.
Fine print that traps borrowers
- Origination fees of 1%–10% are deducted from the disbursed amount but you still owe the full face. Compare APR, not nominal rate.
- Prepayment penalties exist at some subprime lenders. Reputable lenders charge none.
- Optional credit insurance bundled into the payment quietly inflates the cost; decline it.
- Autopay discounts of 0.25–0.50% are standard at prime lenders; enable them.
When a personal loan is the right move
- Consolidating high-APR revolving balances at a meaningfully lower rate.
- One-time large expense (medical, home repair) with a clear repayment runway.
- Replacing payday or title loans, where APRs frequently exceed 200%.