4 Types of Bank Loans for Personal Use

Personal loans can help cover you in the case of an unexpected or large expense, such as medical bills or a wedding. Personal loans can also be used to consolidate your debt and pay off high-interest credit cards or make home repairs.

There are different types of loans with various interest rates and rules. The type of interest rate you can secure is mostly based on factors such as your credit score and how much time you need to pay back the loan. The higher your score, the lower your interest rate may be.

We’ll cover four types of loans and what you need to understand about each:

Unsecured
Secured
Fixed-rate
Variable-rate

There are pros and cons to each kind of loan, so it’s important to understand the details so you know what to expect and can make an informed decision when you’re ready to move forward.

Pros and cons: Unsecured personal loans

Pro: You don’t need to use your home or car as collateral.
Con: You may pay a slightly higher rate of interest.

When a personal loan is unsecured, it means it doesn’t need to be backed by collateral from you, the borrower. This means the lender can’t take away your house or car in the event that you can’t pay back the loan.

Unsecured personal loans can range from $1,000 to $50,000 or more, depending on your credit score and financial history. The term, or length of time that is required to pay back the loan, may vary from one to six years or even be longer.

Interest rates also depend on your credit score. One thing to note is that because unsecured loans aren’t backed by collateral, they are considered riskier for lenders. This means interest rates on unsecured loans may be higher.

Pros and cons: Secured personal loans

Pro: Potentially lower interest rate, which may depend on the value of the collateral.
Con: You’ll lose your collateral if you can’t repay the loan.

The opposite of an unsecured loan is a secured loan, which is backed by collateral—your car, house, savings account, or other assets. If you default on the loan, the lender can take your collateral to cover their losses.

Because there is collateral involved, secured personal loans are considered to be less risky for lenders and may result in a lower interest rate for you. Also, because it’s less risky, lenders may have more flexibility for those with less than stellar credit.

The rise and fall of interest rates

Both fixed and variable rate loans are tied to the index rate, which is a benchmark set by banks. These rates tend to fluctuate, which will impact the rate on your loan.

Pros and cons: Fixed-rate loans

Pro: Predictability in future payments, knowing the Interest rate will never change.
Con: Potentially higher payments because of a higher interest rate.

Fixed-rate loans have interest rates that will not change over the life of the loan. Examples of fixed-rate loans are personal loans, student loans, and auto loans.

The predictability of fixed-rate loans makes it more simple for people who are budget-conscious or want stability in knowing how much their bills are each month. Also, rising interest rates won’t have any impact on the loan. Conversely, if interest rates happen to fall, you won’t benefit either.

Fixed-rate loans may come with higher interest rates.

Pros and cons: Variable-rate loans

Pro: A potentially lower interest rate, which means you’d pay less in interest over the life of the loan.
Con: If interest rates rise, your loan suddenly will become more expensive.

Variable interest rate loans move in tandem with the index rate, which means if it goes up or down, so does your interest rate.

Variable-rate loans may appeal to you if you’re looking for a short-term loan, a shorter time frame could work since the index rate likely won’t fluctuate all that much. A large loan that needs to be repaid over decades may be safer to choose a fixed-rate loan.

An example of when a borrower may have to take on a variable-rate loan is when refinancing a student loan.

The right personal loan

When choosing the right loan for you, think through what’s most important. Is it to pay less in interest over the life of the loan? How long do you expect to take to pay back the loan?

Lay out the circumstances of why you need a loan and how quickly you can pay it off. Then you can choose the loan that makes the most sense for you.

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.