More consumers turned to personal loans in 2025 than in recent years for a variety of reasons. For many, debt consolidation was the goal, while others needed a lump sum to cover a large expense.
If you’re curious about personal loans and whether one might suit your financial goals, then don’t worry — we’ve got you covered.
How do personal loans work?
A personal loan is a type of installment loan that provides a lump sum of money upfront, and you repay it in fixed monthly payments over a set period of time.
These payments typically include both principal and interest, and the interest rate is often fixed, making your monthly payment predictable. Personal loans are typically unsecured, (depending on the amount requested) meaning they don’t require collateral, such as a car or home.
What can I use a personal loan for?
You can use the funds for a wide range of expenses, including consolidating high-interest debt, covering medical bills, paying for home improvements, or handling unexpected expenses. Some people also use personal loans for major life events like weddings or moving costs.
One of the biggest reasons borrowers turn to personal loans is the flexibility they offer.
Can you use a personal loan to buy a car?
Yes, you can absolutely purchase a car with a personal loan; many borrowers use them for private sales. However, you will find lower interest rates by using the vehicle as collateral.
Shopping around and comparing loan options for a vehicle will ensure you get the best financing for your specific financial situation.
How to get a personal loan with bad credit
Getting a personal loan with bad credit isn’t impossible, but getting approved may take some homework on your side. Getting a personal loan through a community bank that will consider additional factors such as income and employment history can help, as well as using a co-signer or starting with a smaller loan amount.
Do personal loans build credit?
Yes, personal loans can help you build credit by making on-time payments each month for a minimum of 12 months. A positive payment history is an essential part of building a good credit score. It also helps you with your overall credit mix, since a personal loan is a specific type of loan.
Keep in mind that missed payments will hurt your credit score for seven to ten years, so make sure you borrow responsibly.
What credit score do you need for a personal loan?
The credit score needed varies by lender, but generally speaking, borrowers with better credit scores qualify for the lowest interest rates and most favorable terms.
How long does it take to get a personal loan?
The approval process also depends on the lender, with some offering same-day approval, while others may take several business days. Once approved, the funds are typically available the same time as the date the final paperwork is signed.
Getting your documentation in place, including pay stubs, personal identification, and the information for the vehicle, if it applies, can make the process move along even faster.
Can you pay off a personal loan early?
Most personal loans allow you the option of paying the loan off early, which is a smart move for reducing the amount of interest paid over the original term of the loan. However, some lenders do charge a pre-payment penalty, so it’s important you confirm this before borrowing.
Can you refinance a personal loan?
Yes, you can refinance a personal loan, which may make sense if you receive a better interest rate, more favorable terms, or you’ve improved your credit score.
How to apply for a personal loan
Applying for a personal loan is usually a straightforward process. You will:
- Complete an online or in-person application
- Provide necessary documentation and information
- Wait for loan approval (at Peoples National Bank of Kewanee this is typically the same day or 24 hours)
- Designate where you’ll have the funds deposited
If you’re interested in a personal loan or have further questions regarding the approval process, contact one of our lending specialists at Peoples National Bank of Kewanee today.
