Smart Ways to Use Personal Loans in 2025

Personal loans can be a handy tool when you need extra cash. They are simple: you borrow money from a bank or online lender and pay it back over time, usually in 1 to 5 years. The good news is that some lenders are offering low rates right now. For example, LightStream has rates as low as 6. 24%, Wells Fargo at 6. 74%, and American Express at 6. 99%. One big plus is that most personal loans don’t require collateral, meaning you don’t have to put up your car or house as security. However, lenders usually want to see a good credit score, around 670 or higher, to get approved and lock in the best rates. If you pay off your loan early, you might save on interest, but some lenders charge fees for early payments, so always check the fine print.Personal loans can be used for almost anything legal, like covering unexpected bills or funding home improvements. If you have high-interest credit card debt, consolidating it into a personal loan could simplify your payments and save you money in the long run. Just remember, while personal loans offer flexibility, they should be used wisely to avoid falling into more debt. If your credit score is low, finding a personal loan can be tough. Lenders usually prefer scores of 670 or higher. Even with a fair score (580 to 669), your options might be limited, and you could end up with higher interest rates. It’s always a good idea to shop around and compare offers to find the best deal.