A personal loan is a type of installment loan that you can use to cover almost any personal expense. Personal loans are available from a variety of financial institutions, including banks, credit unions, and online lenders.

Most personal loans are unsecured, which means you don’t have to worry about providing collateral (like your home or car). If you’re approved for an unsecured loan, you’ll make monthly payments to pay it back in full, plus interest. The loan terms and interest rate can vary based on the lender and your credit.

Some lenders offer secured personal loans that require collateral. Because there’s less risk to the lender, you might get a lower interest rate on a secured loan compared to an unsecured loan. But if you can’t keep up with your payments, you risk losing your collateral.

You can use personal loans for almost any expense — though some lenders restrict the use of their loans for certain purposes. Their varied uses make personal loans much more flexible than an auto loan, home loan, or student loan, which can only be used for one specific purpose.

Here are some of the expenses that you might be able to get a personal loan for:

Debt consolidation

Home improvement projects

Major purchases

Weddings or travel

Adoption

Fertility treatments

Medical treatments

Every lender has its own methods of evaluating borrowers and determining rates, so it’s a good idea to compare prequalified rates from more than one lender. Generally, the shorter the loan term, the lower the interest rate offered by most lenders; and the better your credit score and credit report, the better the interest rate you can qualify for. Securing low interest rates helps you save over the life of a loan.

Many lenders even offer an autopay discount if you authorize your monthly loan payments to be directly withdrawn from your bank account.

Qualifying for the lowest rates offered by a lender is dependent on your online application, credit approval and score, loan terms, and other factors. Through Credible, you can easily compare loan offers, loan terms, origination fees, monthly payment amounts, and repayment terms.

While minimum credit score requirements vary by lender, you’ll generally need a good to excellent credit score to qualify for the best interest rates on a personal loan. In general, the better your credit score, the more competitive interest rates you’ll likely get.

Here are the credit score ranges you can typically expect to see, as well as how they can affect the interest rates you’re offered:

Poor (639 or lower): A score in this range could make it much harder to get approved for a personal loan on your own. You might need to consider applying with a cosigner to qualify. If you’re approved, you’ll likely receive a high interest rate.
Fair (640 to 699): While several lenders offer fair credit personal loans, you can generally expect to pay a higher interest rate. Having a cosigner might get you a better rate, even if you don’t need one to qualify.
Good (700 to 749): A good score increases your chances of qualifying with several personal loan lenders. You’re also more likely to receive more favorable rates. While you likely won’t need a cosigner to get approved for a loan, having one might help you get the best interest rates.
Excellent (750 and above): Scores above 750 will qualify you for the vast majority of personal loans, as well as help you get the lowest interest rates advertised by lenders.

While eligibility criteria can vary by lender, here are a few personal loan requirements you’ll likely need to meet:

Good credit: Most lenders prefer to work with borrowers who have good to excellent credit. While several lenders also offer personal loans for poor or fair credit, remember that these loans will generally come with higher interest rates compared to good credit loans.
Verifiable income: When lenders review your loan application, they want to see that you can afford to repay your loan. Some lenders have a minimum required income, while others don’t — but in either case, you’ll likely have to provide proof of income.
Low debt-to-income ratio: Your debt-to-income (DTI) ratio is the amount you owe in monthly debt payments compared to your income. To qualify for a personal loan, you’ll typically need a DTI ratio of 40% or less — though some lenders might require a lower ratio than this.