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There are dollars on the table and a sticker with the inscription personal loans.

What is a personal loan?

By Peter Schaaf · June 19, 2021, · 7-minute read

A personal loan is a type of loan that is typically used for personal expenses. This could include things like taking a vacation, paying for school, or making home improvements. Personal loans can be used for a variety of purposes, and they come in a variety of different forms.

With Blue sky financial personal loans, you can get cash when and where it's needed. The approval process is often faster than a home equity line of credit which lets borrowers borrow funds as they need them rather than having all their requests wait in a queue until one clears before being processed.

In this blog post, we will discuss what personal loans are, how they work, and the different types that are available. We will also provide some tips on how to choose the right personal loan for your needs!

What are current personal loan interest rates?

Personal loan interest rates will vary depending on the lender, but they are typically lower than credit card interest rates. This makes personal loans a great option for borrowers who need to consolidate debt or make a large purchase.

Personal loan terms can range from 12 months to 60 months, and you can choose a repayment plan that fits your budget. Some personal loans even offer flexible repayment options, such as making interest-only payments for the first few years of the loan.

When shopping for a personal loan, it's important to compare offers from multiple lenders to ensure you're getting the best rate possible. Be sure to read the fine print and understand all the fees and charges associated with each loan before making a decision.

Average personal loan interest rates by credit rating

Average personal loan interest rates range from 10.3 percent to 12.5 percent for “excellent” credit scores of 720 to 850, 13.5 percent to 15.5 percent for "good" credit scores of 690 to 719, 17.8 percent to 19.9 percent for "average" credit scores of 630 to 689 and 28.5 percent to 32.0 percent for “poor” credit scores of 300 to 629.




Excellent Credit



Good Credit



Average Credit



Bad Credit



If you have good credit, then it's time to take advantage of that! Personal loan interest rates currently range from about 3% - 36%, depending on your score. As of January 31st, 2022 average personal loans come with 10-28%. Compare these offers to see what is best suited.

Before applying don't forget there could be reduced fees too if the lender has any promotions going right now.

Excellent-credit loans

These personal loan offers have the lowest interest rates currently available, from about 720 and 850. If you have excellent credit, you should definitely shop around for the best personal loan rates before applying.

Good-credit loans

Loans for good-credit borrowers typically have slightly higher interest rates than excellent-credit loans, but they're still much lower than average credit card rates. You can expect to see personal loan offers in the range of 690 and 719 if you have good credit.

Average-credit loans

If your credit is fair or poor, you'll likely pay higher interest rates for a personal loan. However, there are still plenty of options available, and you can find personal loan offers in the range of 630 and 689.

Bad-credit loans

If you have bad credit, there is still hope for a loan. You will not be able to get the best rates but if your score falls between 300-629 then it's likely around 28%. To see what else can happen with these types of loans we recommend comparing them against each other before making any final decisions as this could save money in interest payments down the road!

Compare personal loan rates in February 2023








6.99%–22.23% (with autopay)

2 to 7 years


Overall personal loan


5.73%–19.99% (with autopay)

2 to 12 years


Generous repayment terms



2 to 5 years


People with bad credit

Marcus by Goldman Sachs

6.99%–19.99% (with autopay)

3 to 6 years


Debt consolidation

Best Egg


3 to 5 years


Low APRs


6.55%–35.97% (with autopay)

3 to 5 years


Fast funding



2 to 5 years


Paying credit card debt



3 or 5 years


Little credit history



3 or 5 years


Using a co-borrower



1 to 5 years


Small loan amounts

TD Bank


3 to 5 years


Few fees

PNC Bank

Starting at 5.99% (with autopay)

6 months to 5 years


In-person banking

Pros and cons of personal loans


1. Personal loans can be a great way to get the money you need for any purpose

2. They often have lower interest rates than credit cards

3. You can usually get a personal loan without having to put up any collateral

4. However, personal loans can also be risky if you don't repay them on time

5. Make sure you research different lenders and compare interest rates before applying for a loan

6. And always read the terms and conditions carefully so you know exactly what you're getting into


1. Personal loans can be very costly in the long run

2. They can cause you to become financially unstable

3. It's easy to get trapped in a cycle of debt if you're not careful

4. You may not be able to get a personal loan if you have a poor credit score

5. It's important to read the fine print before signing any paperwork

What are the different types of personal loans?

Personal loans come in a few common categories. The most popular are traditional financing methods like mortgages and car credits, but there are also short-term solutions such as payday lenders that offer quick cash advances for small emergencies or expensive expenses!

Debt consolidation

If you have multiple debts, you may be able to consolidate them into one personal loan. This can help you save money on interest and make it easier to keep track of your payments. Just be sure to read the terms and conditions carefully before signing up for a consolidation loan.

  • If you have multiple high-interest debts, personal loans for debt consolidation can be your best option.
  • There are many things to consider when you are consolidating your debt. Make sure that the rate of interest will be cheaper in the future, and don't forget about any fees associated with this type of transaction!
  • If you have several high-interest debts and can qualify for a lower interest rate with personal loans, consider taking one out.
  • Consider consolidating your debts to get the best interest rates. You can save money by comparing top lenders and getting quotes for how much you could spend on the credit card or mortgage payments, then deciding which loan is right for you!

Emergency expenses

Personal loans can also be a good option for unexpected or emergency expenses. If you need to pay for a car repair, medical bill, or another unexpected expense, personal loans can give you the funds you need quickly. Just be sure to compare rates and terms from different lenders before you apply.

Home renovations

Personal loans can be a great way to finance home renovations. While most people think of using personal loans for large purchases like a car or a boat, they can also be used for smaller projects like home renovations. Personal loans can be used to finance anything from a new kitchen to a complete home makeover.

And because personal loans are unsecured, they typically have lower interest rates than credit cards, making them a more affordable option for financing home renovations. So if you're thinking about taking out a personal loan to finance your next home renovation, be sure to shop around for the best interest rate and repayment terms.

Pros of home renovations

1. Home renovations can increase the value of your home 

2. Personal loans are a great way to finance your renovation project 

3. There are many different types of personal loans available 

4. Make sure you shop around for the best interest rate and terms 

5. Renovate with caution - make sure you stay within your budget 

6. Enjoy your new, renovated home!

FAQs personal loans

What is APR?

The APR stands for the annual percentage rate. It refers to the extra amount borrowers pay on top of their loan, or principal - which can be different from your interest rates because it includes any fees that may come along with this type of financing option.

A secured loan and an unsecured loan what's the difference between them?

A secured loan is a loan that is backed by collateral, such as a house or a car. This means that if the borrower defaults on the loan, the lender can seize the collateral to recoup their losses. An unsecured loan, on the other hand, is not backed by any collateral.

This makes them riskier for lenders, and as a result, unsecured loans usually have higher interest rates than secured loans. However, they can be more difficult to obtain, especially for borrowers with bad credit. Because of this, it's important to understand the difference between a secured loan and an unsecured loan before applying for financing.

What documents are required for personal loans?

There are a few different types of personal loans, each with its own set of requirements. For example, secured personal loans require collateral, such as a car or house, while unsecured personal loans do not.

Generally speaking, the most common type of personal loan is an unsecured personal loan. Unsecured personal loans are available from banks, credit unions, and online lenders. To apply for an unsecured personal loan, you will likely need to provide the following documents:

  1. Your Social Security number
  2. Proof of income, such as pay stubs or tax returns
  3. Banking information, such as your account number and routing number
  4. An ID, such as a driver's license or passport
  5. List of debts and assets

How much will a personal loan cost?

How much will a personal loan cost? The answer to this question depends on a number of factors, including the size of the loan, the interest rate, and the repayment schedule. For instance, a small loan with a low-interest rate and a short repayment period may only cost a few hundred dollars. On the other hand, a large loan with a high-interest rate and a long repayment period could cost thousands of dollars.

Where can I get a personal loan?

You may be able to get a personal loan from a bank, credit union, or online lender. The best place to start your search is with a local bank or credit union, where you’re likely to get the lowest interest rate and best terms.

You can also check with online lenders, which often have more relaxed eligibility requirements. Keep in mind that you’ll likely need good credit to qualify for a personal loan, so it’s important to check your credit score before you apply. You can get a free copy of your credit report from each of the major credit bureaus once per year.

What can you use a personal loan for?

While personal loans can be used for a variety of purposes, they are typically used for two main reasons: to consolidate debt or to finance a large purchase. If you have high-interest credit card debt, a personal loan can be a great way to consolidate your debt into one monthly payment at a lower interest rate.

This can save you money over time and help you get out of debt more quickly. Personal loans can also be used to finance a major purchase, such as a car or home renovation.

How much can you borrow with a personal loan?

How much can you borrow with a personal loan? The answer to this question depends on a number of factors, including the lender you choose and your credit history. Generally speaking, most personal loans range from $1,000 to $50,000. However, some lenders may be willing to extend larger loans to qualified borrowers. If you have good credit, you may be able to qualify for a loan of up to $100,000. 

Final words about personal loans

A personal loan can be a great way to finance a large purchase or consolidate debt. However, it’s important to understand the terms of your loan before you apply. Be sure to shop around for the best interest rate and repayment schedule that fits your needs.

Now that you know the ins and outs of personal loans, you can decide if one is right for you. If you’re ready to start shopping for a personal loan, check out our personal loan calculator to compare offers from multiple lenders. When you’re ready to apply, we can help you find the best personal loan for your needs. Just tell us a little about yourself.


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