Blog Post

A personal loan can allow you to break up a big expense into manageable monthly payments or consolidate high-interest debts into one fixed payment at a much lower interest rate, saving you hundreds, more often, thousands of dollars. If used well, a personal loan can open opportunities to meet any goal or help soften the blow of unexpected costs.

How a personal loan works

Like all loans, the shorter the term, the lower the interest rate. Having good credit also helps make the loan more affordable. Using a personal loan instead of a credit card tends to be more cost effective as it gives you a fixed term of when it needs to be paid off, usually with a lower interest rate than most credit cards. A personal loan also has a fixed payment, creating more structure for budgeting your monthly expenses when paying back your loan. This is extremely helpful when trying to eliminate debt.

Unlike your auto loan or mortgage, a personal loan is unsecured. This means there isn’t an object of value used to back up the loan. The amount borrowed is deposited into your account or used to pay off either loans or bills in the form of a check. Because the personal loan is not intended for any one purpose, it can be used for almost any dream, goal, or plan.

Top uses for personal loans

• Consolidating debt (credit cards and other high-interest debt)
• Unexpected car repair costs
• Home improvements
• Wedding expenses
• Paying for a dream vacation
• Covering medical bills
• Covering a large purchase of any kind

What is a good rate?

According to Experian, the average personal loan rate for those with prime credit in August of 2022 is around 10.16% with expectations of it rising in the following months. A rate lower than the average is considered a great rate for this particular type of loan. See MembersAlliance rates here to compare.

Other loans to consider

Personal loans have a wide variety of uses, but sometimes there are specific loans for just the thing you need. For example, you can use a personal loan to buy a RV or a Snowmobile, but we also have Recreational Vehicle loans just for that purpose which may fit better and likely offer a lower interest rate than a personal loan.

When doing home renovations, another good loan to consider as an alternative to a personal loan is a Home Equity loan. A Home Equity loan allows you to tap into your home’s equity (the difference between what it’s worth to its value) and increase your borrowing power for a better rate than you might get with a personal loan.

The bottom line

Personal loans have incredible potential to help you and your budget stay on track while meeting your financial goals and overpowering financial challenges. Like any loan, deciding to open a personal loan needs thoughtful consideration. To help you get a visual of what a personal loan may cost, we have handy calculators available.

If you have questions or you’re ready to take out a personal loan, call and ask to speak with one of our experienced loan specialists, click, or stop by today! With rates starting at just 5.00%APR^*, our personal loans offer qualifying members an affordable way to borrow for their needs and goals.

^*APR = Annual Percentage Rate. MembersAlliance rates based on November 2022 personal loan rates.