Can I Spend My Personal Loan on Anything?

Feb 15, 2022

You really can use a personal loan for almost anything. Here’s how:


A personal loan is a great option when you need to make a larger purchase, but don’t want to rack up high interest rate credit card debt. It can also be used to consolidate that higher-rate debt. It’s important to understand the ins and outs of personal loans, though, before you apply.

So let’s get familiar with personal loans, and using them for:

What are Secured vs. Unsecured Loans?

Personal loans are typically unsecured, meaning that the financial institution will not hold anything as collateral that they can collect if you do not pay. Car loans, for example, are secured loans because the car is used as collateral to reduce the financial institution’s risk in the event the loan is not repaid.

So what does this mean for you? Essentially, it can be more difficult to qualify for a personal loan. Because the financial institution has no collateral securing the loan, to reduce their risk they may have stricter borrowing criteria.

What are the Rates and Terms for Personal Loans?

Personal loans typically have a fixed rate and term, both of which help you plan not only your monthly payments but when you will pay the loan off. A fixed rate means you will have the same interest rate for the life of the loan, making your monthly payment the same each month. Rates on personal loans tend to be slightly higher than rates on, for example, a car loan. This is because the loan is unsecured.

The term, on the other hand, is the length of the loan. For example, if your personal loan has a 36-month term, that means that you will pay the loan off in 36 months provided you don’t miss any payments.

Fixed Rates

How do I Qualify for a Personal Loan?

Lenders will look, at the very least, at your credit score and your debt-to-income ratio (DTI) before deciding to lend to you. Your credit score is a mathematical analysis of how likely you are to repay your loan on time. Your score factors in things like:

  • How many loans or credit cards you have
  • How well you pay your bills on time
  • How much of your available credit you’ve used
  • How old your oldest credit or loan account is.

Here’s how your credit score is measured

  Here's how your credit score is measured

 All of these factors are weighted and combined to assign you a score. It is very important to have a good understanding of what your credit score is before you apply for a personal loan. If your score isn’t high enough, there are steps you can take to work on improving it.

Want to improve your credit? Don’t do these things. (find out what they are in this 13-minute podcast episode). I Want To Improve My Score

DTI measures how much debt you currently have relative to your income. A DTI that is too high suggests you may be spread too financially thin to be able to make the payments on your personal loan. Even if you have a good credit score, a high DTI can cause some lenders to deny your application. Using a monthly budget tool is a great way to manage your finances and keep your debt at a manageable level. 

Get a better understanding of what a debt-to-income ratio is here.

What Are Personal Loans Used For?

One of the most appealing things about a personal loan is that you can use the funds for just about anything. Whether you want to pay off some debt, finance a home project, or even take a dream vacation, a personal loan provides you with the money you need to get it done. Some lenders will make stipulations if the funds are to be used for debt consolidation and require that the funds go directly to the institutions or card holders that you want to pay. Beyond that, though, the funds you receive from your personal loan are for you to use at your discretion.

Using a personal loan for home improvements

People generally associate home improvements with a home equity loan. You may have smaller projects, though, that you don’t want to tap into your home’s equity for. If the only project you want to tackle is refacing your kitchen cabinets, you might be hesitant to go through the appraisal process necessary to obtain a home equity loan. Your first instinct may be to use your credit card, but unless you can pay that card off quickly, you’re adding a lot of expense to your project in the form of higher interest rates. Using a credit card also means you may take longer to pay the project costs off since there is no definitive payoff date on a credit card.

Manage your improvement project like a pro. Grab your free guide to home improvements here.

Using a personal loan to fund smaller home improvement projects also keeps your equity intact for a future use. A very large expense - like an addition or a complete kitchen remodel - will likely require you to consider a home equity loan. Using a personal loan to pay for smaller projects protects your equity for any future needs. In addition, applying for a home equity loan is a more complex process than applying for a personal loan, and may involve additional costs like a home appraisal. Funding your home improvement projects with a personal loan requires a quick, easy and online application.

Personal loans are also more attractive than credit cards for home improvement projects. Putting a large charge on your credit card will add up over time thanks to higher interest rates. The example below shows that using a credit card means you could end up paying almost double the amount of interest.

Compare credit card and personal loan interest rates     


credit cards vs personal loans
All calculations based on bankrate.com payoff calculator


Using a personal loan to pay off medical bills

Funds from a personal loan can be used for any number of medical costs. From paying for deductibles to procedures not covered by insurance, you can use a medical expense loan for:

  • Emergency medical procedures. When your health is on the line, you don’t have time to wait for your insurance to process claims and pre-approvals. A medical expense personal loan may be able to provide you with the money required to seek the treatment you need.
  • Planned medical procedures. Most major health plans carry large deductibles. If you are scheduled for a medical procedure and are facing a deductible, a medical expense personal loan can help ease some of that burden.
  • Medical devices and supplies. Equipment such as walkers, wheelchairs, breathing equipment and ramps may not be covered by your insurance. Before using your credit card to purchase medical devices, consider applying for a personal loan. You may be able to purchase the equipment you need at a lower interest rate.
  • Elective medical procedures. Procedures like botox or cosmetic plastic surgery may not be covered by your insurance at all, leaving you to finance the entire expense yourself. A personal loan can help you to avoid using a higher interest rate credit card for your procedure.

If you are facing medical expenses, try talking to your medical provider first. Often, they are willing to work with you to establish payment plans. In addition, there are specialty medical credit cards that could be a viable option, if you can pay off the balance within the introductory term. View the terms of these specialty cards carefully, though, for the interest rate after the introductory period can be over 20%. Once you have talked to your medical provider and looked at other viable payment options, consider a personal loan to avoid using higher rate credit cards.

You can successfully navigate rough financial waters. This podcast episode highlights financial warning signs and why asking for help is so critical. Listen Now

Can I reduce my medical expenses?

Here are some tips to help you potentially lower your medical expenses:

  1. If your procedure is planned and not an emergency, ask about any available discounts. Be sure to find out well ahead of the procedure whether your insurance company will cover any or all of it. If not, talk to your provider so that they are aware of your financial situation.
  2. If you can, pay in cash. If you are paying for your procedure with cash, this saves the medical office on credit card processing fees, and ensure that they are getting payment immediately. Some providers will offer a discount for this.
  3. If you will require medical equipment, research community programs that may offer trial equipment so that you can determine which brand and style will work for you, without having to purchase it first.
  4. Be sure to check the billing and insurance statements thoroughly. Any small error in codes can impact how much you are being billed for the procedure.
  5. Be assertive, but not aggressive. Approaching your medical provider and insurance company in a calm but confident manner will go further than waiting until the stress of the situation overwhelms you. Medical offices and insurance companies know how costly medical expenses can be and are often willing to work with patients.

Using a personal loan to pay for college

It’s smart to always pursue what is referred to as “free money” first; in other words, look for financing made available via scholarships and grants. Ask the financial aid office, check your local library or do some research online to uncover scholarship and grant opportunities. Federal loans are often the next best bet, as they typically carry lower interest rates. You may also be able to find an on-campus job, either through a work-study program or not, to help defray some of the costs of your education.

Once your free and lower-cost options are exhausted, an education personal loan may be the solution you need. With fixed rates and flexible terms, a personal loan can help you fill the funding gap without insurmountable debt after graduation. Education personal loans typically carry a lower interest rate than other funding options, including credit cards. This is important because the lower the interest rate, the less money you are spending on interest charges and the more money you can be saving. More of your monthly payment is actually going towards the balance. Furthermore, the interest rate on a personal loan is fixed, meaning your monthly payment won’t fluctuate, as long as you don’t accrue any late charges.

Paying for college is one of the most overwhelming things families have to do. Get your free guide to college financing to help you navigate the process. Download My Copy

In addition, education personal loans usually have flexible, fixed terms. The length of the term will depend on your financial institution. At MHV, our education personal loans carry terms up to 60 months, giving you the ability to find a payment that you can manage within your budget.

Once your free and lower-cost options are exhausted, you may be able to use a personal loan or line of credit for tuition and other education expenses. The funds can be used for just about anything you’ll need to pursue your education, without piling on higher rate credit card debt. Before you apply for your loan, think about all of the expenses involved in your schooling. Do your other funding options cover them all? If not, come up with an amount that you will need to fill that funding gap. Think about costs like:

  • Books
  • Housing
  • Meal plans
  • Tuition
  • Fees
  • Transportation

Using a personal loan to go on vacation

With flexible terms and lower rates a personal loan can help bring your dream vacation to reality without racking up credit card debt.

Personal loans can be used to fill any funding gaps when planning your dream vacation. Putting a large charge on your credit card will add up over time thanks to higher interest rates. Using a credit card means you could end up paying almost double the amount of interest.


There are some things to consider before borrowing money to go on vacation, though. First, be sure that you have saved up as much as you can for the trip. You’ll want to borrow only what you absolutely need. Second, keep in mind that a personal loan is a financial commitment. If taking out a personal loan is going to impact your savings goals, it may not be the right time to take that trip. In other words, don’t put your financial foundation in jeopardy to take a vacation.

The funds from a vacation personal loan can be used for just about everything!

  • Plane tickets
  • Accommodations
  • Car rental
  • Dining
  • Cruises
  • Excursions
  • Theme parks
  • Anything else to make your vacation memorable!

How do I save money on vacation?

While a Personal Loan can help fill in the funding gaps when it comes to paying for your trip, there are ways to help cut costs for your upcoming vacation, too. Here are some tips to save money on your next vacation.

  • Look for discount codes. Websites like Groupon often have discounts on restaurants, rental cars and attractions. Use your credit card Reward points if you can.
  • Sign up for email alerts on airfare and hotel deals. You’ll be able to take advantage of deals you may otherwise miss. Websites including TravelZoo or TravelPirates will give you alerts on vacation deals.
  • Plan ahead! The more time you give yourself, the more research you’ll be able to do on your destination and ways to make it affordable. You can very often get a discount for buying tickets in advance. Giving yourself more time also means you’ll also be able to save more money towards your vacation.
  • Set up a Vacation Savings. At MHV, you can establish an additional Savings Account and use it exclusively for vacation planning! You can even set up an automatic transfer into your Vacation Savings!
  • Look for accommodations that include a kitchenette. You can save a bundle by preparing your own breakfasts and lunches, and only go out for dinners. Research places on AirBnB, VRBO, HomeToGo to find accommodations that will likely cost less than a hotel room.

How Much Can I Borrow?

The maximum amount you can borrow with a personal loan depends on the lender as each has its own specifications. At MHV, for example, you can borrow any amount from $500 to $25,000. While it may be tempting to borrow more than you need for a little extra spending money, keep in mind you’re paying back every dollar you borrow – with interest. You can estimate your monthly payment with our personal loan calculator. 

Get your free budgeting tool to help you manage your loan payment. Download Mine

What Should I Avoid When Looking for a Personal Loan?

Origination or Application Fees: Some lenders will charge an origination or application fee, which is an amount you pay the lender for them to fund your loan. There are many lenders that do not charge these fees.

Early Repayment Penalty: Lenders will sometimes charge a fee if you repay your loan before the term is up. Look for lenders that don’t include this fee.

Precomputed Interest: This method of computing interest will have you paying more interest if you pay your loan off early because it applies more interest in the earlier months of your loan. Look for interest computed using the simple interest method.

How Do I Apply for a Personal Loan?

Applying for a personal loan at most financial institutions is quick and easy. Most lenders, including MHV, even have online applications allowing you to complete the process from your phone, tablet or desktop. Lenders will often ask for certain documentation, including paystubs, tax information and the purpose of the loan. It’s a good idea to contact your financial institution to see if there are any requirements prior to starting the application process.

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