For example, a mortgage loan typically requires that you put up collateral like your home or car. A personal loan, on the other hand, does not require you to provide any collateral. Additionally, you can choose a personal loan with an adjustable interest rate so that your payments are structured to gradually pay down the principal and minimize total cost over time. Other considerations when choosing a personal loan include the lender’s credit requirements, fees and terms. Some lenders may require a minimum credit score to approve you for a personal loan, while others may use other criteria, such as your credit utilization ratio or debt-to-income ratio, to evaluate your eligibility. In addition, it is important to check if the lender charges prepayment penalties, which are fees charged by some lenders when you repay your personal loan before the end of its term.