What Happens If You Miss a Loan Payment?
June 24, 2026
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Compare personal loan options, credit score requirements and rates. Expert, fact-checked loan guides to help you borrow smart in 2026.
A personal loan is a fixed amount of money borrowed from a bank, credit union, or online lender that you repay over a set period, typically with fixed monthly installments and a fixed interest rate. Personal loans are usually unsecured, meaning you don’t need to put up collateral like a house or car. They can be used for almost anything, from debt consolidation to home improvements or unexpected expenses. The lender evaluates your credit score, income, and debt-to-income ratio to determine your eligibility and the interest rate you’ll be offered.
Most lenders require a minimum credit score of around 600 to qualify for a personal loan, though the best interest rates are typically reserved for borrowers with scores above 700. Some lenders specialize in bad credit loans and may approve applicants with scores in the 500s, though these often come with higher interest rates and fees. A higher credit score not only improves your chances of approval but also significantly reduces the overall cost of borrowing.
A secured loan requires you to pledge an asset, such as a car or property, as collateral. If you fail to repay, the lender can seize that asset to recover their losses. This typically allows for lower interest rates and higher borrowing limits. An unsecured loan, on the other hand, doesn’t require collateral, the lender approves you based on your creditworthiness and income alone. While more accessible, unsecured loans usually come with higher interest rates because they carry more risk for the lender.
When comparing personal loan rates, look beyond just the interest rate, focus on the Annual Percentage Rate (APR), which includes fees and gives a true picture of the loan’s cost. Compare repayment terms, since longer terms mean lower monthly payments but more interest paid overall. Check for additional fees like origination charges, late payment penalties, or prepayment penalties. Use online comparison tools or get prequalified quotes from multiple lenders, this usually involves a soft credit check that won’t affect your score.
The approval timeline varies by lender. Online lenders and fintech companies often provide instant or same-day approval decisions, with funds disbursed within one to two business days. Traditional banks and credit unions may take anywhere from a few days to a week, especially if additional documentation or verification is required. Having your financial documents, proof of income, ID, and bank statements ready in advance can significantly speed up the process.
