Full disclosure: I had never heard of a personal loan until I started coaching women around money. I knew what student loans, parent loans, car loans, and home loans were. But I didn’t know what a personal loan was and why you would need one. Ever since I became a financial coach, the topic of personal loans has come up a lot. That’s because many of the women who come to be are struggling with credit card debt and don’t always see a way out of it. A personal loan can be a lifesaver for some people, but it’s not always the solution. And it’s definitely not a miracle cure for overspending and debt. If you’re interested in learning more, and seeing if a personal loan might be right for you, keep reading!

A personal loan can be a lifesaver for some people, but it’s not always the solution.

What is a Personal Loan?

A personal loan is money borrowed from a bank, credit union, or online lender. This type of loan has a set monthly payment that you pay over the course of a determined number of years. The interest rates can range anywhere from 5 to 35 percent. You can usually use personal loan money for anything you want it for. Another important point about personal loans is that they are unsecured. This means that there is no collateral put up in order to get the loan, unlike something like a home equity loan.

Many people use personal loans in order to consolidate credit card debt and make lower, fixed monthly payments within a specific time frame. This can help provide a light at the end of the tunnel for those with large amounts of credit card debt, because they aren’t constantly accruing more interest and feeling like they will never pay off their debt.

(See what I’ve written about loan consolidation in the past.)

When You Might Want to Get a Personal Loan

When You Probably Don’t Want to Get a Personal Loan

What May Stop You from Getting a Personal Loan

Questions You Want to Ask Personal Loan Companies

Online Companies That Offer Personal Loans

Make sure to also talk to your bank to see if they have better offers. And never make a decision unless you feel comfortable and confident that it will put you in a better place than where you are now.

It’s also important to remember that getting a personal loan will not solve all of your problems! If you use a personal loan to consolidate your credit cards, you have to make sure to stop using your credit cards. Otherwise, you’ll end up with a personal loan to pay back and then accrue more debt later. It’s a dangerous cycle to get into, so your priority should be to change your habits to prevent overspending. If you do successfully pay off your debt, make sure you take the right steps afterwards.

Do you think you could benefit from financial coaching, so you can make lasting, positive changes in your life? Let’s talk!