What can you use a personal loan for?

Not sure how you can use your loan funds? Here are your top options.

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When you need to borrow money, there are plenty of choices to choose from. If you’ve started looking at personal loans, you may be wondering what sort of situations you can use one for and what you can do to find the best lender for your situation. By breaking down your options, you can make your decision easier and know that your loan will be useful for whatever purpose you need to pay for.

Our top pick: LendingClub Personal Loan

  • Min. Credit Score Required: 640
  • Min. Loan Amount: $1,000
  • Max. Loan Amount: $40,000
  • APR: 6.95% to 35.89%
  • Requirements: US citizen or permanent resident, verifiable bank account, steady source of income, ages 18+.
  • No prepayment penalties
  • Flexible loan terms
  • Fast and easy application

Our top pick: LendingClub Personal Loan

A peer-to-peer lender offering fair rates based on your credit score.

  • Min. Credit Score Required: 640
  • Min. Loan Amount: $1,000
  • Max. Loan Amount: $40,000
  • APR: 6.95% to 35.89%
  • Requirements: US citizen or permanent resident, verifiable bank account, steady source of income, ages 18+.
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How can I use a personal loan?

Lenders rarely place restrictions on how you can use the funds from your personal loan. This is by no means an exhaustive list, but it can get you started when you have large expenses you need covered.

Purpose Can you use a personal loan? What to consider
Debt consolidation Yes Many people take out personal loans for debt consolidation. It’s a top option because you can potentially lower your monthly payments or score a lower interest rate. However, it’s not guaranteed to be a better deal. You’ll still have to compare your options to find the best debt consolidation loan.
Medical bills Yes While your doctor or hospital might offer its own financing, you might be able to find a better deal by comparing your medical loan options or by looking for a general-use personal loan.
Home improvement Yes Not only can you use a personal loan for home improvement, you can also consider using your home’s equity to pay for renovations.
Buying a car Yes Although you can use a personal loan to cover the cost of a vehicle — especially if it’s a vintage model — you may be able to score a lower rate by opting for a car loan that uses your vehicle as collateral.
Pay off taxes Yes You can take out a loan to pay your tax bill in one lump sum to avoid fees charged by the IRS for installment plans or late payments.
Business It depends Lenders have different criteria for approving loans for business purposes, but you may still be able to get a personal loan for business use.
Vacation Yes There are lenders that offer personal loans for vacations. However, it’s best to know your budget and only borrow as much as you need before jetsetting around the globe.
Wedding Yes You can certainly use a personal loan to finance your wedding. But like with vacations, it should be in combination with your savings to keep the cost of interest low.
Pet care Yes A personal loan can help you pay for unexpected costs that come with being a pet owner, such as large veterinary bills or even the deductible on your pet insurance.
Boat or jet ski Yes While you can use a personal loan to finance a boat or jet ski, you may not be able to cover the full cost. If you can’t borrow the maximum amount with an unsecured loan, consider borrowing a secured loan for your boat or jet ski.
Going green Yes Many lenders are willing to help you foot the cost of becoming energy efficient by offering loans you can use to buy solar panels and other equipment.

Compare top personal loan options

Updated October 21st, 2019
Name Product Filter Values APR Min. Credit Score Max. Loan Amount
3.84% to 35.99%
Good to excellent credit
$100,000
Get loan offers from multiple lenders at once without affecting your credit score.
Varies by lender
Available for all credit scores
$100,000
Get connected with a lender — or get debt advice.
6.49% to 17.99%
650
$25,000
With over 80 years of lending experience, this credit union offers personal loans for a variety of expenses.
6.98% to 35.89%
620
$50,000
Affordable loans with two simple repayment terms and no prepayment penalties.
3.99% to 35.99%
500
$100,000
Quickly compare multiple online lenders with competitive rates depending on your credit.
34% to 155% (Varies by state)
550
$10,000
Check eligibility in minutes and get a personalized quote without affecting your credit score.
6.95% to 35.89%
640
$40,000
A peer-to-peer lender offering fair rates based on your credit score.
4.99% to 35.99%
Good to excellent credit
$100,000
Get personalized rates in minutes and then choose a loan offer from several top online lenders.
3.84% to 35.99%
550
$100,000
Get connected to competitive loan offers instantly from top online consumer lenders.
5.99% to 17.66%
680
$100,000
No fees. Multiple member perks such as community events and career coaching.

Compare up to 4 providers

Will my loan purpose affect my application?

It may. Certain loan purposes may be seen as more risky than others. For example, if you’re applying for debt consolidation, you may already appear to be higher risk than someone who’s buying an asset like a car.

However, being approved for a loan will depend more on how the lender assesses your risk than what you plan on using your loan for. Ultimately, your eligibility will come down to whether you meet the lender’s eligibility criteria and if you can afford the amount you’re looking to borrow.

How top lenders let borrowers use their personal loan

Provider Auto financing & refinancing Business expansion Debt consolidation Home improvement Special occasions & wedding Vacation
Citibank No No Yes Yes No No
Discover Yes No Yes Yes Yes Yes
LendingClub Yes Yes Yes Yes No No
NetCredit Yes No Yes Yes Yes Yes
OneMain Financial Yes No Yes Yes Yes Yes
Prosper Yes Yes Yes Yes Yes Yes
SoFi No No Yes Yes Yes No
Upstart Yes Yes Yes Yes Yes Yes
USAA Yes No Yes Yes Yes Yes
Wells Fargo Yes No Yes Yes Yes Yes

Our top pick: Credible Personal Loans

  • Min. Credit Score Required: Good to excellent credit
  • Min. Loan Amount: $1,000
  • Max. Loan Amount: $100,000
  • APR: 4.99% to 35.99%
  • Requirements: Have good to excellent credit, ages 18+ and be a US citizen or permanent resident.
  • Free loan connection service
  • Personalized rates in minutes
  • Secure online application

Our top pick: Credible Personal Loans

Get personalized rates in minutes and then choose a loan offer from several top online lenders.

  • Min. Credit Score Required: Good to excellent credit
  • Min. Loan Amount: $1,000
  • Max. Loan Amount: $100,000
  • APR: 4.99% to 35.99%
  • Requirements: Have good to excellent credit, ages 18+ and be a US citizen or permanent resident.
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What other credit options do I have?

While a personal loan can be used a number of ways, you also have other financing options to consider.

  • Home equity loans. If you’re undertaking home renovations, using the equity from your home may be an option. Since you’re using your home’s equity as collateral, you may be eligible for a lower interest rate.
  • Business loans. If you need a large loan for business purposes, you can compare business lenders offering financing up to $5 million.
  • Credit cards. These can be a good source of ongoing credit and can come with high limits – between $1,000 and $100,000 – that you can use when you don’t have the savings to make a purchase. However, many tend to have higher interest rates than personal loans.
  • Balance transfer credit card. If you have debt across a few credit cards or even a few personal loans, you may want to consider a balance transfer credit card. These let you pay 0% interest on the debt for an extended period of time.

What would you like to finance?

Bottom line

Because lenders don’t place many restrictions on the way borrowers can use a personal loan, you can use your funds for just about anything. However, not everything should be financed. You may be better off saving for that big purchase or vacation that taking out a loan. If possible, speak with a personal accountant to help guide your decision.

When you’re ready to borrow, compare your personal loan options to find the best deal for your budget.

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