 TITLE: Personal Loan vs. Cash Advance: Which Is Best? CONTENT: How Does a Personal Loan Work?\n------------------------------\nA personal loan is a type of installment loan, which means you'll borrow a certain amount and pay it back in fixed monthly payments for a specific period of time. Personal loans are generally unsecured, which means they're not backed by collateral—such as a house or car—that the lender can take possession of if you don't pay as agreed.\nMost lenders will use your credit score to determine your eligibility and interest rate, plus your debt-to-income ratio (DTI), which indicates how much of your gross earnings go toward debt each month. You're more likely to get approved, and get the lowest rates, if your credit score is higher than 670 and your DTI is under 36%. There are lenders that cater to those with lower scores and higher DTIs, however. Some, like Upstart, also use alternative data like employment and education history to assess eligibility, which has been shown to lead to higher applicant approval rates.\nAs of the second quarter of 2019, the average personal loan interest rate was 9.41%, according to Experian data. But rates can range from about 6% to above 100% depending on the lender, your credit and other factors. Terms commonly range from 24 to 60 months, with some reaching 84 months. The size of the personal loan you're approved for depends on your creditworthiness, but loans are typically available in amounts from less than $500 and up to $100,000. END