What Is a Personal Loan and Should I Get One?

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Personal loan agreement being signed by woman
Image Credit: Dreamstime

Have you seen an influx of personal loan offers showing up in your mailbox? These unsecured loans promise access to capital to help you pay off high-interest credit card debt, make improvements to your home and more.

But in reality, there’s both hazard and opportunity here for potential borrowers. The key is knowing which is which, according to money expert Clark Howard.

Here’s What You Need to Know About Personal Loans

The market for personal loans is a growing one. Everyone from big Wall Street firms like Goldman Sachs and American Express to smaller fintech lenders like SoFi and Lending Club want a piece of this market.

No wonder, then, that there’s nearly $160 billion in outstanding balances on personal loans, according to analysis from LendingTree.com. Meanwhile, some 20 million consumers now have at least one of these loans.

“If you have high-interest debt, this is a great opportunity for you to get out from under it,” Clark says of personal loans in general.

Yet the idea of personal loans isn’t all roses for consumers. For instance, those who take them out will most likely see their credit scores drop under a new credit scoring model being introduced this summer.

So before you sign on the dotted line, here’s what you need to know…

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What Is a Personal Loan?

Contact Clark’s Consumer Action Center — a FREE helpline open Monday-Thursday from 10 a.m. – 7 p.m and Friday from 10 a.m. – 4 p.m. EST. We have volunteers available to answer YOUR concerns! Call Team Clark @ 404-892-8227.

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