What is a personal loan?
Personal loans are a type of unsecured installment debt. They don't require collateral (like secure debt), feature shorter repayment terms and fixed interest rates. Unlike other types of loans, personal loans can be used for any purpose. Common uses for personal loans are debt consolidation, home improvement projects, medical expenses and financing big purchases, events or vacations.
What factors do lenders consider for personal loans?
Most lenders look at traditional credit data - credit score, credit report, statements of assets, debt-to-income ratio and annual income. Other lenders consider alternative credit data, which includes your employment and education history, utility and rent payment history, and information available in public records.
Can you use a personal loan for anything?
Taking out a loan on behalf of someone else or using it for any form of gambling -- including investing -- is a complete no-go with any type of personal loan. Some lenders restrict loans a bit more than others and prohibit using funds for refinancing existing debt, paying for college or contributing to retirement plans, among others.
Should I apply for a personal loan or a balance transfer card to consolidate credit card debt?