When money’s tight and you don’t have a strong credit history, personal loans can give you the lifeline you need. Whether it’s an urgent repair, a medical bill, or just to keep life ticking along, these loans provide quick access to funds, often without needing perfect credit or collateral. However, a common question people have is: What can personal loans be used for?
What are personal loans?
A personal loan is money you borrow as a lump sum and pay back in fixed monthly payments over a set period, usually anywhere from 12 to 60 months. Loan amounts can range from $250 to $3,000 or more, depending on your situation and the lender.
There are two main types of loans:
- Unsecured personal loans don’t require any collateral, like a car or savings. Instead, lenders look at your income, credit history, and ability to repay.
- Secured personal loans require collateral, which is something valuable you already own, like a car or savings account. If you’re considering this option, it’s worth knowing what can be used as collateral for a personal loan, since the right asset could boost your chances of approval and help you access better personal loan rates and repayment terms.
What can a personal loan be used for?
One of the best things about personal loans is how flexible they are. In most cases, you can use the money for almost anything, whether you’re dealing with an unexpected bill, trying to catch up on essentials, or planning something important.
Some lenders have rules about how the loan can be used, and depending on your state, local laws might apply too. So it’s smart to double-check the loan terms with your lender before you commit.
Essentials & Everyday Uses
Many borrowers use personal loans to cover everyday expenses or urgent needs that pop up unexpectedly. This is a common use for personal loans, and is usually allowed by most lenders.
Debt Consolidation
If you’re juggling multiple bills like high-interest credit cards, payday loans, or medical balances, consolidating your debt with a personal loan could simplify things. You can take out a personal loan to roll several debts into a single monthly loan payment. It’s easier to manage, and it could help you save money if the loan has a lower interest rate than your existing balances.
Vehicle Purchase & Repairs
Need to get your car back on the road? You might consider a personal loan to cover auto repairs, especially if you don’t have the funds up front. Some people also use a personal loan to buy a used car outright, particularly if they can’t qualify for a traditional auto loan.
Appliance Repair or Replacements
When your fridge stops working or your washing machine breaks down, a personal loan can also help you handle the cost quickly. It’s a practical way to handle repairs or replacements at home without draining your savings.
Tax Payments or IRS Bills
Falling behind on taxes can lead to penalties fast. Some lenders allow personal loans to be used for federal or state tax payments, including IRS debt. If this is your plan, check with the lender’s personal loan rates and terms first, as some may not allow this use.
Monthly Payments for Medical Care
Medical bills don’t always arrive all at once. If you’re on a payment plan with a doctor or hospital, a monthly installment loan might give you the money to pay off your balance up front and reduce the stress of ongoing bills.
Pet Medical Care
Emergency vet bills can come out of nowhere. Whether your dog needs surgery or your horse ends up in urgent care, a personal loan can help you cover the cost so your pet gets the care they need, without delay.
Medical & Dental Expenses
Healthcare can be expensive, even with insurance. Personal loans are often used to cover out-of-pocket costs like procedures, hospital stays, or dental work that insurance doesn’t fully pay for. It’s a way to get the care you need now and spread the cost out over time.
Adoption & Fertility Treatment
Starting or growing your family can be one of life’s most meaningful goals, but it can also be costly. Personal loans can be used to cover fertility treatments like IVF or adoption-related expenses, including legal fees and travel. That said, not all lenders allow this use, so it’s important to confirm upfront.
Travel for Medical Care
If you need to travel for treatment, whether it’s across the country or abroad, a personal loan can help with costs like flights, hotels, and even follow-up visits. Be sure to check with your lender since policies around medical travel vary.
Home Improvements, Housing Costs & Moving
Sometimes, your home needs a little work or a major change! Personal loans can be a smart way to handle housing-related costs, especially when you don’t have access to a home equity line of credit or simply need funds quickly.
Home Repair & Improvement
From fixing a leaky roof to remodeling your kitchen, personal loans are often used for home improvement projects. They’re ideal for repairs that can’t wait or upgrades that improve your quality of life. Unlike home equity loans, you don’t need to own a lot of equity to qualify.
Housing Payments
Some people need to borrow money to catch up on rent or mortgage payments in a tough month. It’s not a long-term fix, but it can help prevent falling behind and give you breathing room while you get back on your feet. Keep in mind, this use isn’t allowed by every lender, so it’s something to ask about first.
Moving House
Moving costs add up quickly, whether you’re relocating across town or out of state. Between hiring movers, buying supplies, and putting down deposits, a personal loan can help cover the costs of getting settled into your new place.
Life Events & Occasions
From once-in-a-lifetime moments to meaningful milestones, personal loans can help you cover the costs when life’s big events come around. While it’s important to borrow responsibly, many people use personal loans to fund experiences that matter to them and their families.
Holidays
The holidays can be a joyful time, but they can also bring financial pressure. Between gifts, decorations, family dinners, and travel, the costs can stack up quickly. If you’re already working with a tight budget, a personal loan can help cover holiday expenses without relying on high-interest credit cards.
Vacations
Some borrowers use personal loans to cover travel, accommodations, and related costs, whether you’re planning a trip to visit family, heading on a long-overdue getaway, or just taking time to reset.
Weddings & Special Occasions
Weddings, anniversaries, and graduations are all special moments worth celebrating. If you need help covering venue costs, attire, or even catering, a personal loan can be used to manage expenses without maxing out your credit cards.
Education Costs
Depending on the lender and your state’s laws, you might be able to use a personal loan for things like textbooks, exam fees, or non-traditional educational programs. Be aware though that most lenders don’t allow personal loans to be used for accredited college tuition, especially where federal loans are available. Always check the rules before applying.
Funeral Costs
Handling final arrangements can be overwhelming, both emotionally and financially. Some lenders offer personal loans to cover funeral expenses like services, transportation, or burial costs. It’s important to confirm the lender’s policies before you accept the loan.
What You Cannot Use a Personal Loan For
While personal loans are flexible, there are clear limits to what they can legally or contractually cover. Online lenders often have strict rules about certain uses, and state or federal laws may also apply. It’s important to understand what’s off-limits as misusing loan funds can lead to your loan being cancelled or you may face legal issues.
Here’s a breakdown of common restrictions:
Gambling or Betting Activities
Using a personal loan for gambling, whether it’s sports betting, casino games, or online poker, is typically prohibited by lenders. In many states, this is also restricted by law.
Illegal Purchases
Any purchase that’s illegal under federal or state law, like controlled substances, unlicensed firearms, or counterfeit goods, cannot be funded with a personal loan. Misuse of funds can result in legal consequences.
Investing in High-Risk Assets
Using a personal loan to invest in things like cryptocurrency, stocks, or other risky investments usually isn’t allowed. These types of investments can lose value quickly, and lenders don’t want you using borrowed money to take that kind of gamble.
Down Payments on Secured Loans
Using a personal loan for a down payment on another secured loan, like a mortgage or auto loan, is generally not allowed. Lenders want to make sure that your down payment comes from your own savings, not another form of debt.
Business Startup Capital
Starting a business can be expensive, but not all lenders allow personal loans for business use. If you need funds for a new venture, make sure your lender allows loans for this purpose, or consider a small business loan instead.
College Tuition
Federal regulations restrict using personal loans to pay for tuition at accredited colleges and universities. Instead, federal student loans and financial aid are the recommended options for higher education costs.
Ready to apply for a personal loan?
If traditional lenders aren’t an option or you’re dealing with a limited credit history, it can be tough to know where to turn. At Yup Loans, we make it easier to explore your options, even if you’ve been overlooked before.
We partner with lenders who take a broader view of your financial picture, not just your credit score. Whether you’ve had setbacks or are starting fresh, we’ll help match you with the best loan that works for your situation.
Request funds today and get connected with lenders who are ready to work with you. It’s fast, there’s no fee to apply, and you could get offers in minutes.
FAQs About How a Personal Loan Can Be Used
How does my credit score affect personal loan approval?
Qualifying for a personal loan when your credit score is low might feel difficult, but it’s not impossible. Lenders may look at more than just your credit history. If you have a steady income and can show that you’re able to repay the loan, you may still be approved.
Some lenders provide secured loans or allow you to apply with a co-signer, both of which can improve your chances. At Yup Loans, we work with lenders who specialize in helping people who don’t meet traditional credit standards, so you can get matched with loan offers that actually fit your situation.
Can I use a personal loan for debt consolidation?
Debt consolidation is one of the most common and approved uses for a personal loan. It allows you to combine multiple high-interest debts into a single payment, which can make repayment more manageable and potentially lower your overall interest cost.
What happens if I use a personal loan for something the lender doesn’t allow?
If you use a personal loan for something the lender doesn’t allow, like buying crypto or starting a business without permission, you could break the rules of your loan. That might mean you have to pay it back early or face other serious problems. It’s always a good idea to check what the loan can and can’t be used for before you apply.
How do I know if I can repay a personal loan?
Before you accept a loan offer, take a close look at your monthly budget and the total loan amount. Think about your income and expenses to make sure the payments will be manageable across the life of the loan. The goal is to improve your financial situation, not make it harder. At Yup Loans, we encourage borrowers to only take on what they can realistically repay.
Can a personal loan be used for anything?
Not quite. While a personal loan can be used for many different things, there are important limits. Most lenders have clear rules about what you can’t use the money for, and some restrictions are based on state or federal laws.