Personal loan FAQ: Rates, Eligibility, and Repayment

Personal loans have been around far longer than credit cards, but the convenience of credit cards has overshadowed personal loans until now. Online lenders have made personal loans a convenient, simple, and popular way to bridge financial gaps – but for many people personal loans feel like a relatively new option and we get a lot of questions about how personal loans really work. As a company at the forefront of this new way to borrow, we love that you’re asking questions. So, here’s everything you always wanted to know about personal loans.

About Personal Loans

What is a personal loan?

A personal loan is typically a fixed-term installment loan that is repaid in equal monthly payments over a set period. It is typically unsecured, meaning it does not require collateral.

What can a personal loan be used for?

Personal loans can be used for almost anything. The two most common use cases are paying down existing debt at a lower rate, also known as refinancing or credit card consolidation, and making a purchase when you don’t have the money currently available. Examples include wedding loans or home improvement loans. Many people use credit cards for these types of purchases, but fixed-rate loans will often help you save money.

Eligibility and approval

Who is qualified for personal loans?

Almost anyone. But different types of borrowers have different options available to them. Rates and loans are largely determined by a borrower’s credit history and credit score, limited history and low credit will reduce options and raise rates.

How do lenders decide whom to lend to?

Each lender has established a formula to determine whom to lend to and at what rate. This process is known as underwriting. Typically lenders will look at many factors including your credit history, your current debt-to-income ratio, and your expenses in assessing your creditworthiness.

How are interest rates determined?

Interest rates are proportionate to risk. Based on their own individual underwriting, each lender assesses each borrower’s risk of defaulting. The lower the risk, the lower the rate the lender will offer. Lenders also look to make a profit on the personal loans they make, so the interest rate includes both the cost of the risk and the cost of servicing the personal loan.

What credit score do I need to qualify?

Credit scores are a quick and standardized way to understand a person’s creditworthiness. While each credit reporting agency (Equifax, Experian and TransUnion) has its own formula, there are 5 factors that make up your score:

Payment history – Your track record of paying bills on time
Credit utilization – The percentage of available credit you’re using
Length of credit history – How long your accounts have been open
Credit mix – The variety of credit types you have (cards, loans, etc.)
New credit inquiries – Recent applications for new credit accounts

All of these factors matter to lenders when they are trying to evaluate whether to lend to you and how much.

We believe that credit scores only tell part of the story, which is why we include education² and employment information in our underwriting.

What are the costs and fees to apply for a personal loan?

Once the personal loan has been finalized, most lenders will take out an origination fee before transferring the money. This fee is only charged once and is essentially to help the lender pay for the cost of issuing the loan. This fee is generally removed from the funds you receive, so if you take out a $10,000 loan with a 4% origination fee, you would receive $9,600 from the lender.

Most personal loans do not have loan application fees, so there is usually no cost to applying for the loan if you do not get it. If you are unsure, ask before applying as most application fees are nonrefundable.

What is the difference between an interest rate and an APR?

The interest rate of a personal loan is the amount of money you are charged for borrowing money. Interest is applied in a regular balance to the outstanding principal on your loan. This does not include the origination fee, or any other fees charged by your lender. The APR is a rate intended to include all fees, so you can more easily compare loan offers from different lenders who may have different fees for their loans.

What is the difference between fixed rate vs floating rate?

Feature	Fixed Rate	Floating Rate
Interest rate	Stays the same for the life of the loan	Can change after an initial period (e.g., 1 year)
Monthly payment	Predictable and consistent	May fluctuate over time
Best for	Borrowers who want stability	Borrowers comfortable with potential rate changes
Risk	None from rate changes	Rate typically fluctuate based on prime rate

Note: All loans from Upstart have a fixed interest rate. Floating rates often start lower (sometimes called a “teaser” rate) but usually fluctuate over time.

Why does increasing my monthly payments change the total amount I will pay?

One thing many borrowers don’t realize is that they can often pay their loans off early. While some lenders charge a fee for early repayments, most do not. When you make payments above your required monthly payment amount, you reduce your outstanding principal on your personal loan. This will reduce the interest you pay – and the amount of your next required payment – allowing you to pay your personal loan off faster and with less interest cost to you.

We created this loan calculator to help you evaluate different loan offers and the benefits of increasing your monthly payments.

Why does your loan calculator say my APR goes up if I pay off my personal loan early?

One of the interesting elements of APR is that it is a calculation based on your actual payment schedule, and not really a fixed condition of the loan. Most personal loans have a fixed interest rate and origination fee. When you pay off your loan faster, that origination fee is being paid in a smaller number of payments, increasing the portion of total payments that go toward interest and fees, and thus the APR.

What is a floating rate loan?

While most personal loans (and all loans from Upstart) have a fixed interest rate, some personal loans allow the rate to change over time – usually after an initial period such as 1 year. Typically the rate will increase based on some external measure like the prime rate. It’s important to know if your rate is fixed or floating, because a floating rate will likely mean that your required monthly payment will increase in the future. Because this rate usually goes up, the lower initial rate is sometimes called a “teaser” rate.

How soon can I get my money after my personal loan is approved?

It depends on when and where you apply for your personal loan. It can be as little as 24 hours (which is the case for many of our borrowers) or as long as a month. Having all of the necessary documents available before applying should speed up the process.

What documents are required during application?

Each lender will have a slightly different application process. Almost all lenders will ask for your name, address, and social security number, which is used to run a credit check. Depending on the type of loan and lender, you may need to show pay stubs, tax returns, transcripts, or SAT scores.

Can I get a second personal loan?

That depends on several factors, but most likely you can. Lenders will re-assess your creditworthiness, so your payment history on your current personal loan, any changes to your credit report, and any increase or decrease in your income and expenses would impact your ability to get another loan. Also, your current personal loan will be taken into account when lenders assess your debt to income ratio to determine if too much of your income is going towards paying debt. If you have been making on-time payments on your loan, it’s likely your credit score has improved and your rate may be lower on a new loan.

What are prime borrowers?

While there is no official definition, prime borrowers are typically defined as people who meet the following criteria:

Credit score above 720
No delinquencies on their credit report
More than 6 years of credit history

Can people without established credit get personal loans?

Yes, Upstart was the first online lender to offer loans to borrowers with no credit score. Traditional lenders do not lend to people without credit because they don’t know how to evaluate their creditworthiness.

If I have less than perfect credit, can I get a loan?

Yes, but the lower your credit score the more expensive the loan will be. Generally speaking, if you have a credit score lower than 620, the only loans available are going to be through subprime and payday lenders with rates ranging from 29-400%.

Can I appeal an adverse action notice?

If you believe your loan was denied because of incorrect information (e.g. an error on your credit report or additional income), then you can submit corrected documentation to prove that you qualify. But, if you do not qualify based on the lender’s underwriting criteria, you can’t appeal the lender’s decision.

What is the difference between a secured and unsecured loan?

Secured loans have something of value tied to them for the lender to use as collateral. In the event that you do not repay a secured loan, that item is repossessed by the lender. This gives the lender a way to get their money back in a worst-case scenario. Common secured loans are mortgages and auto loans.

Unsecured loans do not have any property tied to them, so they often have slightly higher rates than secured loans because the lender has more risk.

Secured vs. Unsecured Loans at a Glance:

Type	Collateral Required	Examples	Interest Rates
Secured	Yes	Mortgages, auto loans	Generally lower
Unsecured	No	Personal loans, credit cards	Generally higher

What happens if I can’t repay?

Before you miss a payment, reach out to your lender and let them know what’s going on. Lenders are more likely to work with you before you have months of missed payments and mounting fees. One you miss a repayment, lenders will reach out to you to figure out how to get your personal loan back on track. If you remain behind on your payments, lenders will report this to the credit agencies, which will have a negative impact on your credit score.

What happens if you miss a payment:

Contact your lender immediately – Explain your situation before missing a payment
Late fees accrue – Most lenders charge fees after a grace period (often 10–15 days)
Lender outreach – The lender will contact you to discuss getting back on track
Credit reporting – Missed payments (typically 30+ days late) are reported to credit bureaus, negatively impacting your score
Collections – Continued non-payment may result in your account being sent to collections

Loan comparison

How does applying affect my credit score?

Submitting a formal application may involve a hard credit inquiry, which can temporarily lower your credit score. Opening a new loan may also affect your overall credit profile.

What is the difference between secured and unsecured personal loans?

Unsecured loans do not require collateral and are approved based on credit and other factors. Secured loans require an asset as collateral, which may reduce lender risk but increases borrower risk if payments are missed.

Curious about how it all works? Check your rate

Upstart Network, Inc. (NMLS #936133) is not a lender. All loans on its marketplace are made by regulated financial institutions.

All mortgage lending is conducted by Upstart Mortgage, LLC dba Upstart Home Lending. (NMLS #2443873). Equal Housing Opportunity.

Checking your rate won’t affect your credit score: When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.
Upstart’s model considers education: Neither Upstart nor its lending partners have a minimum educational attainment requirement in order to be eligible for a loan.
41% more approvals and 33% lower rates than a traditional model: As of publication in April 2026, and based on a comparison between the Upstart model and a hypothetical traditional model using Upstart data from Jan – Dec 2025. For more information on the methodology behind this study, please see Upstart’s Annual Access to Credit results here.
Unsecured Loans: While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. There may be an option to secure your personal loan through Upstart with your vehicle, which will require a lien to be placed on the vehicle. It is important to review your promissory note for these details before accepting your loan.
Loan amounts from $1,000 -$75,000: Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($1,500), MA ($7,000). Maximum loan amounts may vary by state.
Closing and funding timeline: In April 2026, 10% of funded HELOCs achieved a closing timeline of 2 days or less and a funding timeline of 7 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2025 Home Lending Study reports an average industry closing time of 37 days.
APRs from 6.2% – 35.99%, with 3 or 5 year terms: The full range of available rates varies by state. The lowest rates are only available to the most qualified applicants. A representative example of payment terms for an unsecured Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 17.50% and a 7.25% origination fee of $725, for an APR of 21.23%. In this example, the borrower will receive $9275 and will make 60 monthly payments of $252. APR is calculated based on 5-year rates offered in March 2026. There is no downpayment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Instant deposits: To receive instant funding, your bank account must support instant transfers. If your account does not support instant transfers, funds will be available to you depending on your bank’s transaction processing time and policies.
Always On Commitment: We are committed to maintaining your credit limit as long as you continue to meet program eligibility and account requirements. To ensure the safety and security of all our members, we reserve the right to adjust or close lines in specific circumstances, including account default or late payments, suspected fraud, violation of our terms of service (including abusive behavior), or when necessitated by legal or regulatory requirements.
Cash Line draws: You may request a draw at any time. Only one draw may be outstanding at a time; after it is fully repaid, you may request another.
HELOC APRs as low as 6.52%: Terms shown here are subject to change without notice. APRs for initial advances range from 6.52% to 18.00% based on rates offered as of April 2026. The lowest rate is only available to consumers willing to become a member of a credit union and to those who meet a minimum FICO score of 780, CLTV under 70%, and DTI under 45%. Your actual rate will depend on many factors such as your credit history, combined loan-to-value ratio (CLTV), line amount, loan term, lien position, and property state. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
No annual fee, prepayment penalty, or fees to redraw: Terms shown here are subject to change without notice. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
2,500+ Variables:As of 3/31/2026. “Variables,” often also referred to as “features,” refers to raw variables and combined variables considered in our AI models. A “raw” variable is a non-combined, conceptually distinct unit of data, such as “applicant-reported savings.” A “combined” variable is data that has been transformed, combined, or otherwise engineered from a raw variable or set of raw variables, such as “applicant-reported savings” divided by “loan amount.
Fully automated loans: In Q2 2026. Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end (from initial rate request to final funding for personal loans and small dollar loans, and from initial rate request to signing of the loan agreement for auto loans) with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period.