Here's Why I've Never Taken Out a Personal Loan

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.


  • I generally don't like to finance purchases and pay interest on them in the process.
  • The only major purchases I've ever financed were a house and a car, and I took out a mortgage and auto loan because that made more sense.

If you're thinking about taking out a personal loan, you'll probably be in good company. U.S. personal loan balances amounted to $225 billion during the first quarter of 2023, reports TransUnion.

And it's easy to see why so many consumers are drawn to personal loans. Not only do they generally come with competitive interest rates (at least compared to credit cards), but they're very flexible in that they allow you to borrow money for any purpose. 

You could take out a personal loan to start a business or fix up your home. But you could also take out a personal loan to go on vacation, and that's your choice.

But while personal loans may be pretty popular among U.S. consumers, I've yet to take one out myself. And there's a big reason why.

I don't like to pay interest on the things I buy

Some people don't mind financing purchases and paying them off over time, all the while racking up interest in the process. But paying interest is something that bothers me, and it's something I aim to avoid at all costs. As such, I won't take out a personal loan for something I feel I can or should just save up for instead.

Let's say I want to take a vacation, only money is tight and I can't afford one at present. If I were to take out a personal loan to finance that trip, I wouldn't enjoy it. Rather, I'd spend the whole time worrying about the interest it would cost me and the monthly payments I'd be on the hook for upon my return. 

Now, I will say that just because I don't like paying interest doesn't mean I've never done it. The car that I drive right now is one that I financed via an auto loan. But that purchase was justifiable. 

I live in the suburbs and cannot get around without a car. It's just not doable. So while I didn't love having loan payments during the time I was paying off my car, I also didn't feel bad about myself for taking them on.

Similarly, when my husband and I bought our house years back, we, like most people, financed it with a mortgage loan. We didn't have hundreds of thousands of dollars at our disposal to sink into a home purchase, so we had to take out a loan. 

But other than my home, my car, and my education, I've never borrowed money. And so that explains why personal loans are something I personally have no experience with. 

Is a personal loan right for you?

There were times when I came close to taking out a personal loan, such as when we were finishing our basement and were looking at a large bill for that renovation. Ultimately, we decided to use a combination of my husband's salary bonus, cash from our savings account, and extra working hours (and income) on my part to pay for that renovation outright. 

If you're looking at a similar project that will improve your quality of life and potentially raise the value of your home, then a personal loan may be worth signing. Similarly, if you have an urgent expense you can't put off, like a home or car repair, and you don't have the cash in savings to pay for it, then that's a good reason to take out a personal loan.

But I wouldn't recommend signing a personal loan to finance a purchase that isn't really necessary, like a vacation. Even though a personal loan can be an affordable option for borrowing money, you're taking on debt nonetheless and spending money on interest. That's something you may want to try to avoid like I do.

Our picks for the best personal loans

Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow