David Kimball, chairman and CEO of Prosper, stated that personal loans can be useful in the right circumstances but are not a one-size-fits-all solution. He advised borrowers to ask the right questions and choose a loan that supports their financial journey.
Kimball highlighted that personal loans offer predictable monthly payments due to fixed rates, which can make budgeting easier. He noted that this provides more stability than credit cards, without the risk of overborrowing. Loans can be repaid over terms as long as seven years.
As of January 2026, the average personal loan rate is 12.19%, while the average credit card rate is 19.64%. Borrowers with excellent credit may qualify for rates under 10%. Kimball emphasized that getting the lowest possible interest rate is critical because it directly affects the loan's cost.
Many personal loan lenders, especially online companies, offer quick approval and funding, often within one business day. Some lenders deposit funds the same day. Most personal loans are unsecured, meaning no collateral like a car or home is required, though secured loans are also available at lower rates.
Personal loans can be used for various purposes, such as home improvements, buying vehicles, or debt consolidation. Some lenders offer amounts up to $100,000. However, funds generally cannot be used for college tuition, investing, or illegal activities.
Kimball also addressed disadvantages, saying that while a personal loan can be helpful, it's not always the right solution. He warned that a single fixed monthly payment can become a burden if it strains the budget, potentially leading to stress and credit damage if payments are missed.
Personal loan lender origination fees, if charged, can range from 1% to 12% of the loan amount and are typically subtracted from the disbursed amount. Some lenders charge prepayment penalties for early repayment. Kimball advised reviewing all fees and penalties before applying.
Many lenders set a maximum payment period of five years, which could increase the debt-to-income ratio. Kimball noted that taking out a personal loan can help consolidate high-interest debt but may lead to deeper debt if bad money habits aren't addressed.
Personal loans require receiving all money at once and making payments on the entire balance, unlike credit cards which allow reuse of credit. Applying for a loan can temporarily lower credit scores due to hard inquiries, but this may be offset by reducing credit utilization, especially when paying off credit card debt.
Kimball concluded that loan providers may have complex terms, and it's imperative that borrowers fully understand these to ensure the loan helps advance their goal of financial freedom.