Three common types of loans are personal loans, auto loans, and mortgages. Most people will buy a home with a mortgage and purchase a new or used car with an auto loan, and more than 1 in 6 Americans had a personal loan in Q1 2023.
There are a number of differences between these types of loans, including what they're used for, loan amounts, APRs, payoff periods and collateral required. But one thing most loan types have in common is that the borrower gets a lump sum of money up front and pays it off over time.
Three Common Types of Loans Compared
| Loan Type | Personal Loans | Auto Loans | Mortgages |
| Uses | Nearly anything | Purchasing a car | To purchase a house |
| Payoff periods | 1 to 12 years | 2 to 6 years | Up to 30 years |
| Collateral required | None | The vehicle being financed | The home’s title |
| APR | 2.5% to 36% | 3% to 7% | 3% to 6% |
| Loan amounts | $1,000 to $100,000 | Varies by vehicle | Depends on your income and credit |
| Credit score required | 580+ | No universal minimum | 620+ for conventional loans |
If you're interested in a personal loan, check out the free pre-qualification tool on WalletHub. This tool allows you to see which lenders may approve you and what rates may be available to you.
This answer was first published on 01/28/22 and it was last updated on 10/02/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
