Nearly half of Americans take out personal loans for major purchases — here's a better alternative

If your personal finances are already feeling a bit precarious, having to cover a major expense feels like a bowling ball flattening your wallet, especially if you don't have enough money in the bank to cover it.

In fact, many turn to borrowing in this case. A recent Experian survey found that nearly half of Americans (42%) say they would rely on a personal loan to cover a major purchase. Other reasons for taking out a personal loan included paying for emergency expenses (35%), home improvement costs (33%) and education (17%).

A personal loan is a solid financing option because it's versatile and can be used for any expense — and it generally comes with lower a APR than a credit card — but it's also worth knowing of other financial products that are designed to help pay for specific needs, such as education for instance.

Here are three personal loan alternatives and when to use each.

Zero percent APR credit cards are designed to give you an introductory period where you can make purchases and pay zero interest on that balance month to month (for as long as the intro period lasts). This lets you stretch out the cost of a major purchase over several months without being charged interest. It's also an ideal financing option for covering an emergency expense that you can't pay out of pocket for; with a 0% APR credit card, that emergency doesn't put you in deep debt, as long as you pay it off over the promotional period.

Here are some of our top 0% APR picks:

A home equity line of credit (HELOC) is a revolving line of credit that lets you tap into your home's value and use the money for other expenses. HELOCs tend to offer lower interest rates compared to personal loans, which is why a HELOC can be a better option if you need to cover home renovations or home repairs.

Aven Home Equity Cash lets you take out a HELOC amount as low as $5,000, making it one of the more appealing lenders on our list of best HELOCs if you need to borrow smaller amounts. PNC Bank also lets you take out a small HELOC — as little as $100 and as much as $1 million — and is a fairly reputable household name.

If you're going back to school and need help paying for education, the first line of defense is usually to seek out every opportunity for "free money" available to you — think grants, institutional scholarships, fellowships and more. But at a certain point, you may find yourself still having a funding gap to cover.

Usually, you should consider federal student loans before private ones because federal loans get certain protections like forbearance and deferment (not all private lenders can work out these terms with you). And while you can sometimes use a personal loan to pay for school, as long as it's not prohibited by the lender, a private loan may make more sense.

Private student loan lenders often have higher funding amounts, allowing you to borrow up to the cost of attendance, even if the program costs hundreds of thousands of dollars; personal loans typically only let you borrow up to $100,000.

College Ave, for example, lets you borrow up to the cost of attendance with a $180,000 lifelong maximum. The company offers loans for undergraduate, graduate, international, parent, law, MBA, dental, medical and health professions.

There are still some instances where a personal loan is actually your better bet when it comes to handling big life expenses. For instance, personal loans are generally good options for debt consolidation since you can get a more favorable interest rate and pay down multiple debts faster.

A personal loan also comes in handy for unexpected, smaller expenses when you don't have enough savings, like a car repair. You can usually get approved and receive funding as early as the same or next business day.

Some of the best personal lenders offer fast funding, no prepayment penalties and flexible credit score requirements. Upstart considers applicants with credit scores as low as 300 (and even considers applicants with no credit history, though, they'll need to apply with a co-signer). Of course, we recommend applying with credit that's as healthy as possible since your credit score impacts what interest rate you'll get and you'll want to make sure that interest rate is as low as possible.

SoFi is another strong personal loan lender since you can apply for up to $100,000 and have as long as 84 months to repay the loan.

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*Fixed rates from 8.74% APR to 35.49% APR. APR reflect the 0.25% autopay interest rate discount and a 0.25% SoFi Plus interest rate discount. SoFi Platform personal loans are made either by SoFi Bank, N.A. or, Cross River Bank, a New Jersey State Chartered Commercial Bank, operating from its Delaware branch, Member FDIC, Equal Housing Lender. SoFi may receive compensation if you take out a loan originated by Cross River Bank. These rate ranges are current as of 02/23/26 and are subject to change without notice. Not all rates and amounts available in all states. See SoFi Personal Loan eligibility details at https://www.sofi.com/eligibility-criteria/#eligibility-personal. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors.