Personal loan
A personal loan can be used to pay off credit cards and replace several card payments with one installment loan payment.
What this page covers
This explainer is designed to show what the option is, how the basic mechanics work, and which details people commonly compare before looking at providers, products, or tools.
- Plain-English steps for how personal loan works.
- A simple example that shows the moving parts without selecting a product.
- Comparison factors, calculators, and source links for deeper research.
How it works
A lender reviews credit, income, debt, requested amount, and other application details.
If approved, the loan has a fixed amount, term, payment schedule, and APR.
Funds may be sent to the borrower or directly to creditors, depending on the lender.
The borrower then repays the installment loan while the paid-off credit card balances become available credit unless the accounts are closed or unused.
Simple example
A person uses a 36-month personal loan to consolidate $8,000 of card debt.
This estimate is for illustration only. Actual APRs, fees, approval, and payment amounts vary by lender and borrower profile.