What is a Personal Loan and How Does It Work?

Ever found yourself in need of a quick financial boost? That's where personal loans come into play, offering a helping hand when your wallet feels a bit light. Picture this: you're faced with unexpected expenses or trying to gather the funds to achieve a long-awaited goal. It's moments like these when a personal loan steps in, ready to provide support without the fuss. But what exactly is a personal loan, and how does it work? Let's take a closer look at this financial tool and see how it fits into your life.

What is a Personal Loan?

Think of a personal loan as your trusty sidekick when your wallet is running low, but you need cash pronto. It’s like borrowing money from a friend (except the friend is a bank or a credit union). Unlike “secured” loans which are backed by collateral like a car or a house, personal loans are “unsecured.” This means they are granted based on the borrower’s creditworthiness and ability to repay—not their current assets.

If you need to consolidate debt, spruce up your home, or tackle a surprise expense, a personal loan could be your ticket to financial flexibility.

For further reading on personal loans and when to use them, SEE ALSO:

• Personal Loans for Moving Expenses
• Personal Loans for Home Improvement Projects
• Personal Loans for the Summer
• Personal Loans for Debt Consolidation
• Personal Loans for the Holidays

How does a Personal Loan Work?

Now, onto the nitty-gritty of personal loans. The process of getting a personal loan typically begins with the borrower submitting an application to the lender like a bank (either in person or online). This application includes information about the borrower's financial situation, employment status, and credit history. Then, the bank conducts a credit check to review the borrower's creditworthiness and determine the terms of the loan.

Once the lender gives you the green light, it’s time to talk numbers. One of the key factors to consider when taking out a personal loan is the interest rate. Some loans come with fixed rates that stay the same throughout the life of the loan, while others have variable interest rates which fluctuate based on market conditions. The Annual Percentage Rate (APR) gives you the full scoop on how much your loan will really cost, factoring in both the interest rate and any extra fees.

Personal loans come in all shapes and sizes, depending on the lender and what’s going on with your finances. Loan terms dictate how long you will be paying back your loan and how much you will be paying each month. Typically, the longer the term, the smaller the monthly payment

PRO TIP: Be sure to review your loan agreement to fully understand the ins and outs, including origination fees or prepayment penalties.

Best Place to Get a Personal Loan Near Me:

Personal loans aren’t just a financial lifeline; they are a tool for turning dreams into reality and tackling life’s unexpected curveballs. Personal loans offer flexibility and accessibility for a variety financial needs. Whether you're covering medical expenses, renovating your home, or moving across the country, a personal loan can provide the support you need, when you need it.

The best personal loan at Academy Bank is called the Express Loan, featuring:

• Loan amounts from $250 to $15,000
• Fixed terms and monthly payments to simplify your budget
• Low credit scores considered with a satisfactory account relationship
• Automated payments so you’ll never miss one. Set it and forget it!

How to Apply for a Personal Loan:

If you're already part of the Academy Bank family, you can apply for an Express Loan in just minutes. For new clients, we will set up a checking account first, then deposit your loan there!

Member FDIC

Subject to credit approval. Restrictions Apply. Direct deposit relationship required. Origination fee, 10% or $100 whichever is less. Annual Percentage Rate (APR) is based on credit score. Only one personal loan allowed to any borrower at any time. Loan terms are based on the loan amount.