What is a personal loan?
A personal loan is a fixed amount of money, from a few hundred dollars up to $50,000 or more (this site focuses on loans of $200 to $5,000), that you borrow from a bank, credit union or online lender and repay in equal monthly installments over a set term, usually two to seven years. Most personal loans are unsecured, meaning no collateral such as a car or home backs the debt; the lender relies on your credit history, income and existing obligations to price the risk.
Because the rate is almost always fixed, your payment never changes, which is the feature that distinguishes a personal loan from a credit card. The trade-off is flexibility: you receive the money once, as a lump sum, and you cannot re-borrow as you pay it down.
Secured vs. unsecured personal loans
A minority of personal loans are secured by a savings account, certificate of deposit or vehicle title. Secured loans carry lower APRs because the lender can claim the collateral if you default, and they are one of the few routes to a sub-10% rate with fair credit. Experian's 2025 data put total US personal loan balances at $597.6 billion, of which $390.4 billion was secured and $207.1 billion unsecured, so secured products are a larger share of the market than most borrowers assume.
Plain-English rule: if you could not comfortably make the payment if your income dropped for three months, the loan is too large or the term is too short, whatever the APR.
What a personal loan is not
- Not a payday loan. Payday and some storefront "installment" products carry APRs of 200% to 400%+ and two-to-four-week terms. The Military Lending Act caps rates for active-duty service members at 36% MAPR; many consumer advocates treat 36% as the ceiling for affordable credit generally.
- Not a line of credit. A personal line of credit or HELOC lets you draw repeatedly up to a limit, usually at a variable rate.
- Not a buy-now-pay-later plan. BNPL splits a single purchase into a few payments and is tied to that merchant.
Full guide: personal loans from application to final payment →





