Primer · Personal Loans
Personal Loans: The Tool That Quietly Replaced the Credit Card
Fixed-rate, fixed-term, unsecured installment loans now finance everything from medical bills to weddings. The economics are clearer than revolving credit — if you read the terms.
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 |
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.
- Online prime lenders (SoFi, LightStream, Marcus) for excellent credit.
- Fintech marketplaces (LendingTree, Upgrade, Prosper) for soft-pull rate comparison.
Fine print that traps borrowers
- Origination fees of 1–10% are deducted from 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 cost. Decline it.
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Sources & Further Reading
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