Personal Loan Meaning

an illustration of loans and their uses

Simply put, a personal loan is an installment loan that can be used for any purpose. The money you're loaned is based on your personal accountability and financial history.

When you investigate loan options to help you make ends meet, you can encounter many different terms. Lightning Money Loans understands this can lead to further stress in a difficult situation. We'll help you break it down and understand the critical points to remember on your loan hunt. Read on to take a closer look at the meaning of personal loans.

What is a Personal Loan?

Personal loans are usually funded by a bank or other financial lender. The loan can be for any amount, from a few hundred dollars to thousands, depending on your need and ability to repay.

  • The loan isn't tied to property or other accounts you may have (collateral), such as a car or home, that could be used to repay the loan if you fail to do so.
  • Lenders examine your financial, employment, and credit history to determine whether you qualify for a personal loan and what your terms will be.
  • Money awarded with a personal loan can be used for any purpose; the lender can't control how or where it's spent.
  • The loan is repaid over a specific period, varying from a few weeks to several years.
  • The lender determines the loan terms—interest rate, fees, repayment interval, and length—and defines them in your loan contract.

What are the Benefits of a Personal Loan?

A personal loan can be a good option for:

  • Fast funding
  • Emergency expenses
  • Flexible uses
  • Reasonable interest rates
  • May offer lower fees
  • Building credit history
  • Debt consolidation
  • Larger borrowing limits
  • Predictable payments
  • Online loan availability
man putting money into a jar

The most significant advantage of a personal loan is its flexibility. This loan type has the fewest restrictions on the amount that can be borrowed and the most options for comparing interest rates and repayment terms. The interest rates are generally lower than those of credit cards, payday, and cash advance loans. It's an installment loan that allows you a better chance to get ahead financially while addressing immediate needs and paying down your loan.

Using Lightning Money Loans, consumers can submit one fast and easy form online and have the option to borrow the amount they need as quickly as they need it.

Just note that Lightning Money Loans is not a lender, but a lender connecting service. So when you submit your loan request online instead of it being shown to just one lender, we show your request to 50+ lenders and financial partners to get you a loan fast without having you fill out 50+ different forms. Pretty cool, right?

What is a Good Personal Loan Credit Score?

In general, you should have a credit score higher than 600. You may see some qualifying scores lower and some much higher. Most personal loan lenders that offer higher dollar loan amounts prefer credit scores above 690 when extending the higher loan amounts with the better terms.

That doesn't mean you'll be unable to get a loan with a lower credit score. Lenders may require a more thorough review of your credit history and additional information before making a decision. Lenders may consider your income, job stability, credit score, and more. Some lenders may not ask for your credit history. If they do, each company sets its own threshold.

This is why your life will be much easier if you submit one loan request with a company like Lightning Money Loans that works with many lenders instead of submitting your information over and over at several different companies. Your chances of finding a lender that can work with you will be that much higher.

two women watching their funds go up from a personal loan

Will a Personal Loan Build My Credit Score?

Depending on your unique situation, debt from a personal loan or any other source can help or hurt your credit score. If you already carry a large debt, adding more can be detrimental.

If you apply with many loan companies that do hard inquiries on your credit, that may negatively affect your credit score. If you fall behind on your repayments that may also negatively affect your score.

If you carefully weigh your loan options and know you'll likely be able to pay the loan back on time, the timely loan repayment may help improve your credit score. The more examples you provide to the credit score agencies that you are a responsible adult and pay back your loans on time the more likely they are to reward you with a credit score that keeps on climbing.

Get a Personal Loan via Lightning Money Loans

Do you need a loan right now? Fill out a simple online loan request form at Lightning Money Loans to get started.

Get a Personal Loan via Lightning Money Loans

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