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Student loans are considered installment loans, or loans that are repaid through regularly scheduled payments or installments.

Revolving options, like credit cards, let borrowers take out varying amounts of money each month, repay it, and take out more money as they go.

Read on to learn more about student loans, installment loans, and revolving credit — plus how student loans may affect your credit.

What Is Revolving Credit?

Revolving credit is an agreement between a lender and an account holder that allows you to borrow money up to a set maximum amount (or credit limit). The account holder can borrow what they need as they need it (up to their credit limit) and choose to pay off the balance in full or make minimum monthly payments on the account.

As the account holder makes repayments, the amount available to borrow is renewed. Account holders can continue to borrow up to the maximum amount through the term of the agreement. Examples of revolving credit include credit cards and home equity lines of credit (HELOCs).

What Is Installment Credit?

Installment credit is a type of credit that allows a borrower to receive a lump sum loan amount up front, then make fixed payments on the loan over a set period of time. Before the borrower signs an agreement for an installment loan, the lender will decide on the interest rate, fees, and repayment terms, which will determine how much the borrower pays each month.

Common examples of installment loans include federal student loans, private student loans, mortgages, auto loans, and personal loans.

And for borrowers who opt to refinance student loans, those loans are installment loans as well.

Revolving Credit vs Installment Credit

Now that you know student loans are installment and not revolving credit, it’s helpful to understand how these two types of credit compare.

Here’s a high level overview on the differences between installment loans vs. revolving credit.

Revolving Credit

Revolving credit is a more open-ended form of credit obligation. Let’s use the example of a credit card:

1.   The cardholder uses the card to make purchases as they please, pays them off either in-full or partially each month, and continues to make charges on the line of credit.

2.   The amount of money the cardholder spends is their decision (up to their credit limit), and the amount of money they repay each month isn’t set in advance by the lender.

3.   The cardholder can pay off the account balance in full each month, or they can opt to pay the minimum and “revolve” the balance over to the next month (though this will accrue interest on the account).

An important note: To avoid any late fees or potential dings to your credit score, it’s important to pay your monthly revolving bill on time. It’s also wise to keep your balances low, as your credit utilization rate is a major factor in your credit scores.

Installment Credit

Installment credit is less open-ended than revolving credit. Installment credit is a loan that offers a borrower a fixed amount of money over a predetermined period of time. When a borrower signs the loan agreement, they know what the monthly payments will be and how they will need to make payments.

Let’s use the example of a student loan:

1.   The student borrows a specific dollar amount. The lender specifies the interest rate and repayment terms. In the case of federal student loans, interest rates and terms are set by federal law.

2.   The predetermined loan amount is released to the borrower. Typically, the funds are released in a single lump sum payment.

3.   The borrower repays the loan based on the agreed upon terms. Terms will be set by the lender for private student loans, or by law for federal student loans.

An important note: If you only have revolving credit (such as a credit card), taking out an installment loan can diversify your credit mix, which is a factor in determining your credit scores. While an installment loan adds to your total debt, its balance does not factor into your credit utilization ratio (which is specific to revolving credit).

Pros and Cons of Installment Credit

Student loans for undergraduate school, as well as student loans that are refinanced, are considered installment loans, which means they come with a starting balance, are disbursed to the qualifying borrower up front and in full, and are repaid over a set amount of time through a fixed number of payments. There are advantages and disadvantages to taking out an installment loan, and it’s important to be aware of them:

Pros of Installment Credit

Here’s a closer look at two key advantages of installment credit:

Predictable Payments

Installment credit payments are made on a set schedule that’s determined by the lender. This makes them a predictable, long-term strategy for paying off debt, and also makes it easier to factor them into your budget, especially if the installment loan has fixed interest rates.

The monthly payment for an installment loan with a variable interest rate may occasionally change.

Lower Interest Rates

Installment loans often feature lower average interest rates than credit cards or other forms of revolving credit. This can result in significant savings on interest charges over time, especially for large loan amounts.

Cons of Installment Credit

But there are also disadvantages to installment credit. Two key drawbacks include:

Accumulation of Interest

While often lower than credit card rates, interest on an installment loan is paid over the entire life of the loan, which can add up to a significant amount of money over time, particularly for long-term loans.

Prepayment Penalty

Some loans impose prepayment penalties if a borrower pays their loan off early. This isn’t necessarily the case for all installment loans — as mentioned, student loans generally don’t have prepayment penalties. But it’s important to read the fine print in the loan agreement to determine whether a prepayment fee will be triggered if the loan is paid off early.

Recommended: How to Avoid Paying a Prepayment Penalty

How Student Loans Affect Your Credit Score

Student loans, like other loans, are noted on your credit report and they may affect your credit in both positive and negative ways.

On the plus side, making consistent, on-time payments, can help borrowers establish a positive payment history, which is the most significant factor (35%) in a FICO® credit score. Successfully managing an installment loan can also help diversify your credit mix, which can also have a positive impact on your credit profile.

However, failing to make your loan payments can negatively impact your credit. A federal student loan payment is considered delinquent even when your payment is just one day late. After 90 days of missed payments, your loan servicer will report the delinquency to the national credit bureaus. Late payments can stay on your credit report for up to seven years.

(After 270 days of missed payments, your loan will go into default, which can have very serious consequences for your credit and your financial situation in general. If you are having trouble repaying your student loans, reach out to your lender or loan servicer right away to see what your options are.)

If you apply for a private student loan or student loan refinancing, lenders will typically do a hard credit inquiry, which may temporarily lower your credit score. Most federal student loans do not require hard credit inquiries.

Ways to Pay for School

There are a variety of ways to pay for college, including student loans, savings, financial aid, and scholarships. Here’s a closer look at your options:

Federal Student Loans

Federal student loans are installment loans available to students. To apply, students fill out the Free Application for Federal Student Aid (FAFSA®) each year. Federal student loans have fixed interest rates that are set annually by Congress, offer different repayment options, and have some borrower protections and benefits such as deferment and the option to pursue Public Service Loan Forgiveness.

However, there are borrowing limits for federal student loans, and other changes are coming to the federal student loan program as of the summer of 2026, so students may need to review other sources of financing when determining how they’ll pay for college.

Private Student Loans

Private student loans are installment loans you can use to pay for a college education. Private student loans are offered by private lenders. To apply for them, borrowers can browse the offerings of individual lenders like banks, credit unions, and online lenders and decide which private student loan works best for their finances. As a part of the application process, lenders will generally review the applicant’s (or their cosigner’s) credit history and credit score among other factors.

Private student loans can help bridge funding gaps after other sources of financing — such as federal loans, grants, and scholarships — have already been exhausted. This is because private lenders are not required to offer the same borrower protections as federal student loans. If you think private student loans are an option for you, shop around to find competitive terms and interest rates, and be sure to read the terms and fine print closely.

As mentioned, a borrower may choose to refinance private student loans at a later date, especially if they can qualify for more beneficial terms or a lower interest rate. Federal student loans can also be refinanced, but if a borrower chooses this option, they will lose access to federal benefits and protections like federal deferment and forgiveness.

Personal Savings

Using personal savings to pay for college means less debt and more flexibility. Not only that, but it costs significantly more to borrow money to pay for college than it does to use personal savings.

Using personal savings to pay for college means less debt and more flexibility. Using savings also allows you to save money on interest, which can make college less expensive. That said, not everyone has enough savings to cover the full cost of attending college.

Grants

Unlike student loans, which require repayment, grants are a type of financial aid that doesn’t require repayment. Grants are typically based on financial need. Completing the FAFSA will put you in the running for federal, state, and institutional grants.

Recommended: The Differences Between Grants, Scholarships, and Loans

Scholarships

A scholarship is a lump sum of funds that can be used to help a student pay for school. Scholarships usually don’t have to be repaid, and can be need-based or merit-based. You can find out about scholarships through your high school guidance office, college’s financial aid office, or by using an online scholarship search tool.

Work-Study Programs

Federal work-study programs allow students with financial need to work on- or off- campus and earn money through part-time jobs. The program encourages students to do work related to their course of study or community service.

Work-study programs are funded by the federal government. Students may be awarded a certain work-study amount by filling out the FAFSA. Not all schools participate in federal work study, however, so if you are interested in this option, make sure your school offers it.

The Takeaway

Student loans are a common form of installment credit. This means they are dispersed as a lump sum and require making fixed, regular payments over a predetermined period. Unlike revolving credit such as credit cards, student loans offer predictable budgeting and often come with lower interest rates.

Managing student installment loans responsibly can positively impact your credit profile. However, late or missed payments can have serious negative consequences. Understanding the differences between installment and revolving credit, and exploring various funding options for education, can empower you to make informed financial decisions for your academic journey and beyond.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Is a student loan an installment loan?

Yes, a student loan is an installment loan. This means you receive a lump sum of money up front and repay it over a set period with a predetermined number of regular payments.

Is a student loan a revolving loan?

No, a student loan is not a revolving loan. Revolving loans, like credit cards, allow you to borrow varying amounts up to a set credit limit, repay, and then borrow again. Student loans are installment loans, meaning you receive a lump sum and repay it with fixed, scheduled payments over a set period.

What are the benefits of an installment student loan?

The benefits of an installment student loan include predictable payments, which makes budgeting easier, and often lower interest rates compared to revolving credit. They also allow you to finance a major purchase like an education and can help diversify your credit mix.

Can student loans help build credit?

Yes, student loans can help build credit. Making regular, on-time payments on your student loan demonstrates responsible financial behavior, which contributes positively to your payment history — a major factor in your credit score. Successfully managing an installment loan like a student loan can also help diversify your credit mix, which can further enhance your credit profile.

What’s the difference between federal and private student installment loans?

Federal student loans generally offer lower rates and more borrower protections, such as income-driven repayment and potential for loan forgiveness. Also, they typically do not require a hard credit inquiry. Private student loans, offered by banks and other financial institutions, may have fewer borrower protections and repayment options, and usually require a credit check and potentially a cosigner. Interest rates and terms for federal loans are set by law, while private loan terms depend on the lender and borrower’s creditworthiness.

Photo credit: iStock/SDI Productions

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q425-031

A deck can turn your backyard into a dream destination. But the reality is, building one isn’t cheap.

A new 400-square-foot wood deck can set you back between $10,000 and $20,000 in 2025, according to HomeGuide, a home improvement website, while Angi put sthe average cost at $8,258. Project costs can vary based on where you live, the materials you use, the size of the deck, and other factors.

Whatever your deck plans entail, you’ll want to make sure you’re financially prepared. Here’s a closer look at the factors that can impact how much you could pay to have a professionally built deck added to your home.

Get an Idea of Labor Costs

No matter what kind of deck you’re building, count on labor taking up a big chunk of the budget. Generally speaking, it’s around 38% to 50% of the overall project costs. (The rest of the budget typically goes toward covering the cost of materials and other smaller expenses.)

One way to get a rough idea of how much you’ll pay for labor is to use the rule of two. This method involves estimating the total cost of the project (labor plus materials) and dividing that amount by two. The result is the estimate of labor costs.

The rule of two also works the other way around. Say you get a quote from a contractor who will be building your deck. To get an idea of the total cost of the project, simply multiply the labor cost you’ve been quoted by two.

While this method can provide a solid starting point as you plan your budget, it doesn’t factor in any unexpected costs that may crop up as your deck is being built.


💡 Quick Tip: With home renovations, surprises are inevitable. Not so with SoFi home improvement loans. There are no fees required, and no surprises.

Consider the Decking Materials

Another important factor to consider is the material you want to use for your deck. More durable decking material will likely cost you more, but could save in the long run with minimal upkeep or less-expensive repairs. Here’s a look at the average cost of common materials, according to Angi:

•   Pressure-treated wood: $2 to $5 per square foot

•   Composite decking: $12 to $22 per square foot

•   Bamboo: $3 to $10 per square foot

•   Cedar: $3 to $7 per square foot

•   Redwood: $5 to $35 per square foot

•   Metal: $15 to $20 per square foot

Of course, price is just one factor. You’ll also want to think about the climate where you live. Do you get a lot of snow in the winter? Is it very humid in the summer? Be sure whatever decking material you choose can stand up to the environment.

Choose a Design That Fits Your Budget

After materials and labor, the actual design of a deck can influence the overall cost of the project. To help keep prices low, you may want to stick with a simple design, traditional, squared-off corners, or even a smaller deck.

One affordable option? A ground-level deck, which sits within 30 inches from the ground. Because it’s so low, this type of deck requires fewer materials and structural reinforcements. And you won’t need to add a railing or stairs, which can be additional savings.

Factor In Additional Costs

While labor, materials, and design are the major players in a construction budget, there are other costs you’ll want to consider.

Permits are one example. Most towns and cities require permits for additional structures like decks. Deck contractors are usually well-versed in this process, and most will include the price of permits in their quotes.

If you’re building the deck yourself — or your contractor won’t pull a permit — you’ll need to handle the red tape yourself. Start by calling your local building department and explaining the project to them. If a permit is required, they can explain how the process works and provide you with the correct application form.

It’s also a smart move to factor in any costs you may incur once the deck is built. For instance, the new addition could increase your home insurance premiums. (Your agent can explain what changes, if any, you’ll need to make to your policy.)

You may also be hit with a higher property tax bill, since the addition of a permanent fixture like a deck typically increases a home’s value. To get an estimate of the change, contact your local building and tax departments.

Comparison Shop

Construction is similar to plumbing or automotive repair in that if you aren’t an expert, it can be hard to gauge the price. Whether you’re hiring a contractor or a carpenter, it can help to ask for bids from a few local professionals to ensure you have the right person for the job — and your budget. Ask potential candidates to provide photos of their projects and names of previous clients you can call.

For a long-term investment like a deck, going with the cheapest option might not be the best strategy. While there are ways to potentially lower the cost of a new deck, be sure you’re not sacrificing quality for price. After all, this is something that you and your family will hopefully be using for years.

Ways to Pay For a New Deck

While a deck brings comfort and enjoyment, the cost of building one can be significant. Here are some common financing options to explore. Including home improvement loans and home equity loans.

Personal Loan

If you need to access funds quickly, don’t want to use your home as collateral, and can afford to make the monthly payments, consider a personal loan.

With this type of loan, you borrow a lump sum from a lender, which you’ll pay back with interest. The money can be used for almost anything, including paying for a new deck. Personal loans are usually unsecured, which means they don’t require collateral. Instead, a lender will consider a borrower’s creditworthiness.

Most lenders offer a personal loan amount of $50,000, though some lenders offer lending up to $100,000. Repayment terms are usually two to seven years, and interest rates are typically fixed.

Recommended: Personal Loan Calculator

Fixed-Rate Home Equity Loan

If you’ve built up equity in your home and have a one-time cash need, you may want to look into a fixed-rate home equity loan.

This loan type, which uses your home as collateral, is fairly straightforward: You receive a lump-sum payment from the lender, which you’ll repay over a period of time with a set interest rate. The term of these loans typically spans five to 15 years, and the amount you borrow must be repaid in full if you sell your home. If you’re unable to make the payments, you could risk losing your house.

Note that the closing costs may be similar to the cost of closing on a home mortgage. As you’re comparison shopping, be sure to ask about the lender’s closing costs so you can prepare your budget accordingly.

Home Equity Line of Credit (HELOC)

If your deck addition turns into an ongoing project, and you want some flexibility to pay as you go, then a home equity line of credit (HELOC) may be a good fit.

A HELOC is revolving debt, meaning that as you pay down the loan balance, you can borrow it again during the draw period. That’s when you can use, or draw, funds against the line of credit, typically 10 years. After that, you can no longer draw funds. (Another important time period to keep in mind? The repayment period, which is the amount of time you have to repay the loan in full.)

Note that unlike a fixed-rate home improvement loan, a HELOC’s interest rate is variable. This means it changes to reflect the current interest rate, which could cause your monthly loan payment amounts to vary.

No-Interest Credit Cards

With a no-interest, or 0% APR, credit card, you won’t be charged any interest on your purchases for a set period of time. Some cards also extend the temporary 0% APR to balance transfers.

A no-interest credit card comes with low borrowing costs, which could make it an attractive way to finance a new deck. But qualifying for one of these cards can be difficult. And when the promotional period ends, a potentially high APR will start accruing on the remaining balance.

The Takeaway

Adding a deck onto your home can be a great way to enjoy your backyard and add to the value of your home. When budgeting for the cost to build a deck, you’ll want to factor in labor, materials, design, and extra expenses like permits, insurance premiums, and property taxes. Enlisting the help of a reputable, licensed contractor or carpenter can help ensure you get the deck you want, at a price you can afford.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How much should I budget for a deck?

A deck can cost anywhere from $2 to more than $75 per square foot, depending on size, material, complexity, and labor. The national average for a professionally constructed deck is about $7,320 or about $30 to $60 per square foot.

How much would a 20 x 20 foot deck cost to build?

A 20×20 deck (400 square feet) costs approximately $16,000 to $24,000 for professional installation. The price can vary significantly based on materials and labor.

Can you build a deck for $5,000?

It may be possible to build a deck for $5,000. If it’s a small deck, you use inexpensive materials, and/or you do some of the work yourself, you may be able to construct a deck for that price. The average deck currently costs slightly more than $8,000.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q425-010

Wedding bands are a symbol of a couple’s eternal love and commitment, but they’re also an added expense in the wedding budget. According to the wedding site The Knot, wedding bands can cost around $600 to $1,200 each. One way to potentially score a deal on your rings is by shopping during strategic times of the year.

Sales often occur in the weeks between Thanksgiving and Christmas. And you may find a bargain during September and October, when jewelers need to clear out old stock before the holidays.

But February, the month devoted to lovers, can also be a good time to shop for wedding bands. Here’s why.

Reasons to Buy Your Wedding Bands in February

There are a few reasons why you may want to shop for wedding rings during the shortest month of the year.

It’s a Popular Time for Proposals

Many people pop the question between Christmas Eve and New Year’s Day, and Valentine’s Day continues to be one of the most popular holidays for couples to get engaged.

Jewelers know this, and they often prepare for the influx of business by rolling out promotions on engagement rings and wedding bands. Consider hitting the stores between New Year’s Day and Valentine’s Day, before the crowds show up. And if you can, shop during an off-peak time of day when the store is quieter. You may find it easier to try to negotiate a better price for your bands.


💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A SoFi personal loan can help you fund major life events — without the high interest rates of credit cards.

Bridal Fairs Are Kicking Into Gear

Many bridal expos are held in February and March, offering couples a chance to see the latest wedding band styles without the sales pressure. Vendors are there to give tips as well as a good pitch, and some may offer limited-time, expo-related discounts.

Gather up information and coupons at the bridal fair, then give yourselves a day or two to regroup and possibly go make a purchase.

The Timing Works for a Summer Wedding

Jewelers typically recommend shopping for wedding bands at least three to four months before your wedding date — longer if you have your heart set on a one-of-a-kind design. That will give you time to look and look again, get the rings sized, and have any engraving or other customizing done.

For couples getting married in the summer — peak wedding season — this will mean starting the ring buying process in February.

How to Shop for Wedding Bands

No matter what time of year you shop for a wedding ring, it’s a good idea to do a little prep work before you hit the stores. Here are some things to consider doing ahead of time.

Set a Budget

You want bands you’ll love forever, but not at a price that will put you in debt for the rest of your lives. At the start, let your jeweler know what your budget is, and they can work with you to find rings within that range.

Consider a Wedding Set

If you haven’t settled on an engagement ring yet, you may want to look into purchasing a wedding set. This set includes your engagement ring and a matching wedding band. Buying both at the same time could save you money.

Shop Around

As with most major purchases, you’ll want to shop around for wedding bands. Visit different jewelers, including online shops, and don’t be afraid to ask questions about the pros and cons of different metals, gemstones, and designs.

Once you find the bands you want, try negotiating for a better price. You may be able to increase your chances of getting a deal by offering to pay all cash.

How to Pay For Your Wedding Bands

A wedding ring is usually cheaper than an engagement ring, but it can still take a significant bite out of your budget.

According to The Knot, the typical men’s wedding band costs around $600, while the average woman’s band runs closer to $1,200. Prices can vary widely based on a number of factors, including the metal type, overall design, and gemstones.

Here, a few common ways to finance wedding rings.

No-Interest Credit Cards

Larger jewelry stores usually offer some sort of in-store financing, including no-interest credit cards. You can also apply for one directly with a lender.

This option lets you buy the bands you want today, which is a major benefit. And it could make good financial sense if you’re able to pay off the balance before the promotional period ends. However, if you can’t, you’ll have to pay interest on whatever you owe. And that interest rate probably will be higher than other credit card or loan offers available to you.

Buy Now, Pay Later

Think of buy now, pay later (or BNPL) as a kind of installment payment plan. It allows you to purchase your wedding bands today and then spread out payments over a set number of weeks or months, often for zero or low interest. Klarna, Afterpay, and Affirm are all common examples of BNPL providers.

Usually, no minimum credit score is required for approval. Rather, providers will consider the amount available on the debit or credit card you’re using in the transaction, your history with that lender, and key details about the item you’re buying.

Also, a soft credit check is typically conducted to approve or reject your request, but it does not impact your credit score.

As with a no-interest credit card, if you pay off the BNPL plan as planned, you may not incur interest or fees. But if funds aren’t paid on time, or a longer-term plan is chosen, you could be hit with a high interest rate and/or late fees.

Personal Loan

You can get a personal loan from a bank, credit union, or online lender. Many, but not all, personal loans are unsecured, which means you won’t need to put up any collateral, such as a house or car. Instead, lenders will consider your creditworthiness.

Most personal loans are paid back within three to five years, and the interest rate tends to be higher if there is no collateral. The better your credit score is, the lower the interest rate and monthly payment will be. However, the lower the payment, the longer it might take you to pay off the loan.

Generally speaking, once you’re approved for a wedding loan, you can receive funds within days. In some cases, you may be able to get the money within a day or two. This quick influx of cash can come in handy if you’re planning to haggle for a better price on the band.

Recommended: Personal Loan Calculator

The Takeaway

Wedding bands currently cost on average between $600 and $1,200, but you may get a better deal by shopping in February and other sale seasons. Be sure to shop around, and when you find the ring you want, don’t be afraid to try haggling. In terms of financing your purchase, options include savings, no-interest credit cards, and personal loans.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is the best time of year to buy a wedding ring?

It can be wise to buy a wedding ring six to eight months before the ceremony to allow time for sizing, engraving, and other types of customization. That said, there may be sales at certain times of year to help make wedding rings more affordable. February, since it includes Valentine’s Day, can be a good month to shop for wedding bands.

What is the three-month rule for wedding rings?

The three-month rule says that an engagement ring should cost the equivalent of three months’ worth of salary. This concept was developed as a marketing tactic almost a hundred years ago.

How much should you spend on an engagement ring?

How much you spend on an engagement ring (or if you buy one at all) is a very personal decision. A long-standing guideline is to pay around three months’ worth of salary, but that was developed as part of a marketing program, so it’s really up to each couple to decide what amount they feel comfortable with.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q425-011

When it comes to your money, the more you know, the better equipped you are to make informed financial decisions. One piece of your overall financial picture that you may want to understand is how much you’re “worth.” This information can help you understand where you are with your finances now and what you need to do to reach your goals for the future.

Before we look at a net worth growth calculator table that shows you how you compare against other people your age, let’s dive a bit deeper into what net worth is and why it’s important.

What Is Net Worth?

Net worth is simply a total of all your assets minus any debts you have.

Those assets can include cash, real estate, intellectual property, and other items like jewelry, stocks, insurance policies, and bonds. The cash may come from a job you have or from unearned income, such as your Social Security payment

Having multiple assets does not necessarily mean you have a high net worth, particularly if you also carry significant debt. For example, you may have a million-dollar mansion, but if you have debts of $500,000, your net worth dwindles rapidly.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

How Does a Net Worth Calculator Work?

There are many personal net worth calculators available online, though you don’t need one to calculate your net worth. Just take the total amount of all your assets and subtract the total amount of your liabilities:

Some calculators will also factor in future growth so you can understand what your net worth will be in the future, as the value of your assets grows.

Recommended: What Is Disposable Income?

How to Calculate for Net Worth

As you can see, it’s fairly easy to calculate your net worth, though it may take time to gather the values of all your assets, such as the current value of a piece of high-end jewelry. But once you do, you can add up all your assets and then subtract your liabilities to calculate your net worth.

What Is the Average American Net Worth?

Knowing your own net worth is one thing, but where does it stand against other people in your age bracket? Generally, people see an increase in their net worth the older they get, and it can be helpful to use a net worth percentile calculator by age to see where you stand.

Here’s the average net worth by different age groups, according to the most recent data available from the Federal Reserve.

Why Is Net Worth Important?

Calculating your net worth is smart because it can help you understand where you’re strong financially (maybe you have little debt) and where you’re weak (maybe you’ve overextended your credit to buy your home).

It may also help you make plans for the future. For example, if your net worth is high, you might explore strategies for reducing taxable income, such as contributing more to a tax-deductible retirement account. And if your net worth isn’t where you’d like it, you can take steps to improve it.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

How to Increase Your Net Worth

If you’ve used a liquid net worth calculator, or compared your net worth to the table above and don’t feel like your numbers are as high as you’d like them to be, you can do a few things to increase your net worth.

If your debt levels are high, you can increase your net worth by decreasing that debt. Get a plan for paying off credit cards, student loans, car loans, and home mortgages. Consider increasing the amount you pay on each slightly to shorten your repayment period and decrease the amount of interest you pay on these loans and credit cards.

Creating a budget is one way to keep tabs on your finances as you’re paying off debt. A money tracker app can help make the job easier.

If you don’t have an abnormally high amount of debt but want to increase your assets, you might explore making more money. If you’re still in the workforce and have the ability to make a career change, you might consider cultivating potential high-income skills that could help you command a higher salary.

If you’re retired, you could take on part-time flexible work.

Recommended: Smart Financial Strategies to Reach Your Goals

The Takeaway

You may not be able to match the likes of Jay-Z and Beyoncé when it comes to net worth, but knowing yours can help you make smart financial decisions for the future. To figure out your net worth, you can subtract the total amount of your liabilities from the total amount of your assets. You can also use a personal net worth calculator; some will even factor in future growth.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How do I calculate your net worth?

Net worth can be calculated by subtracting all your liabilities from your assets. In other words, subtract everything you owe (debts, loans, credit card debts) from everything you have (cash, property, real estate, jewelry, stocks).

What is a good net worth by age?

A “good” net worth depends on your financial goals and age. For example, the average net worth for 35-44 year-olds is $548,070. Yours may be higher or lower than this.

What net worth is considered rich?

According to a 2025 survey conducted by Charles Schwab, Americans need an average net worth of at least $2.3 million to feel wealthy. However, that amount varies based on where you live.

Photo credit: iStock/Kanatip Chulsomlee

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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A signature loan is a type of loan that lenders can make without requiring any collateral. They’ll typically approve the loan based upon a person’s financials and credit scores — plus their signature on loan papers. This is also called an unsecured personal loan, a signature personal loan, good faith loan, or character loan.

Read on to learn more about signature loans, how they compare to other types of personal loans, and their pros and cons.

What Are Signature Loans?

Signature loans are unsecured personal loans. Unlike secured personal loans, a signature loan doesn’t require you to pledge collateral — an asset of value like a house or a bank account — that the lender can seize should you fail to repay the loan. Signature loans are approved based solely on the creditworthiness of the applicant.

Because the loan is unsecured, signature loans often come with higher interest rates than secured loans like car loans and mortgages. However, the interest rates for these personal loans are typically lower than credit cards.

You can use a signature loan for virtually any purpose, such as consolidating high-interest debts, a major purchase, or a medical emergency.

How Do Signature Loans Work?

A signature loan works in the same way as an unsecured personal loan. These loans are offered by many banks, credit unions, and online lenders. When you apply for a signature loan, the lender will consider a number of factors, such as your credit history, income, and credit score, to determine whether you qualify for the loan and what the rate and terms will be.

If you’re approved for a signature loan, the lender will issue you a lump sum of cash, which you will then repay (plus interest) in monthly installments over a set term, often 24 to 60 months.

A Quick Look at Secured Loans

A secured loan requires you to pledge collateral to secure the debt. For a car loan, it’s typically the vehicle that is being purchased with the loan proceeds. For a mortgage loan, it’s typically the house being financed or refinanced. If the borrower defaults on a secured loan, the lender seizes the collateral to recoup their losses.

Some personal loans are secured, while others are unsecured. Secured personal loans could have a savings account put up as collateral, as just one example. This strategy could be risky for the borrower, though, because it may tie up money meant to be used for living expenses or set aside for emergency circumstances.

A Quick Look at Unsecured Loans

A lender does not require any collateral on a signature personal loan, which is an unsecured personal loan. So should you default on the loan, you won’t lose an asset of value (though your credit will likely take a hit). However, an unsecured loan may be harder to qualify for and have a higher interest rate than a secured loan, due to the increased risk to the lender.

Common Reasons to Get a Personal Loan

Personal loans are versatile, with the borrower typically able to use the funds for any personal, family, or household purposes. Some common personal loan uses are:

•   Credit card debt consolidation Interest rates on credit cards can be high — the average annual percentage rate (APR) is currently over 22%. So you might use a lower-interest personal loan to combine credit card balances into one loan.

•   Home improvement projects Depending upon the size of the remodeling project, costs can range from hundreds of dollars to thousands — even tens of thousands. A personal loan can give the borrower the opportunity to conveniently pay for home repairs and upgrades.

•   Medical bills Unexpected medical expenses can quickly add up, putting a real dent in someone’s budget. Paying for them with a personal loan can often make more sense than using a high-interest credit card for that purpose.

•   Weddings From engagement rings to ceremonies and receptions, weddings can get expensive — and that doesn’t even include the honeymoon. Couples may decide to look into signature personal loans for weddings as a way to cover their expenses.

•   Moving expenses From moving supplies to renting a truck or hiring movers, the dollars can rack up, with a personal loan being one way to pay for the expenses.

Pros and Cons of Signature Loans

If you need loan funds fast, you don’t have collateral to pledge, or don’t want to tie up assets as collateral, a signature loan might be the right choice for you. Here are some of the pros and cons of signature loans:

Pros of Signature Loans

•   Funds disbursement is typically quick

•   There is no collateral requirement

•   Generally a wide range of loan amounts available

Cons of Signature Loans

•   Lenders may see unsecured signature loans as riskier than collateralized personal loans, so interest rates may be higher than secured loans.

•   Some lenders’ minimum loan amounts may be higher than some people need.

•   Short-term signature loans can be payday loans, which typically have extremely high interest rates and fees.

Signature Loans vs Personal Loans

A signature loan is a type of personal loan, specifically an unsecured personal loan. Each is approved based on the applicant’s creditworthiness, without collateral being a consideration. A secured personal loan, however, is not the same thing as a signature loan, since collateral is required to back up this type of loan.

As with other types of personal loans, online signature loan lenders are widely available, making it easy to compare lenders. Once approved for a signature loan, funds may be disbursed quickly, sometimes in just a few days. There are few restrictions on the use of the signature loan funds.

Signature Loans vs Revolving Credit

Signature loans are typically installment loans, with a lump sum loan amount repaid in equal installments over a set amount of time. Revolving credit, like a credit card or line of credit, works differently.

With revolving credit, you have access to a credit limit. You can then borrow money when you want to (up to your limit), pay it back over time, and borrow again as needed. You only pay interest on the amount you actually borrow, not the full credit limit.

What Are Signature Loans Commonly Used For?

There are few restrictions on the use of signature loan funds. One common use of a signature loan is to consolidate other, high-interest debt with the goal of either getting a lower interest rate or having a fixed payment end date.

Signature loan funds are also commonly used to pay for wedding expenses, medical expenses, or home renovation or repairs.

Advantages and Disadvantages of Signature Loans Online

Signature personal loans are widely available online and can be good choices for people who don’t mind not having a physical bank branch to drive to for transactions.

Advantages of signature loans online include:

•   Competitive rates Online lenders can often offer competitive rates because they don’t have the expenses involved in maintaining physical branches.

•   Convenience It can often be quick and easy to apply online (no driving, no appointments needed), and online lenders often offer streamlined processes which may result in quicker approval times.

•   Different criteria Some online lenders might focus more significantly on a borrower’s cash flow and employment history, perhaps allowing for a bit more wiggle room on credit scores than a traditional bank would be willing to give.

•   Additional benefits Online lenders may also offer more perks to their customers than a traditional bank offers.

There are, however, disadvantages to working with an online lender vs. a bank you have an established relationship with. Some to consider:

•   No history As an established customer of a traditional bank, you may qualify for a reduced interest rate, depending on your creditworthiness.

•   Potential scams Not all online “lenders” are legit so you’ll want to be wary of unsolicited offers, and only enter financial information on official, secure websites. It’s also a good idea to research the lender’s reputation before giving them your personal information.

•   No face-to-face interaction Unlike working with a brick-and-mortar financial institution, you likely won’t have the chance to meet with an online lender in person. If this is something you value and desire in a lender, the online loan option may not be for you.

•   Potential spam If you contact a number of online lenders directly to compare rates, you can end up on their email contact list, even if you don’t choose to work with them.

💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

Application and Approval Processes

Similar to an unsecured personal loan, a signature loan’s application and approval process is generally simple and straightforward.

Things to Look Out for When Getting a Signature Loan

It’s a good idea to review your credit report before shopping around for a loan. A free annual credit report can be requested from each of the three major credit reporting agencies. If there are errors or inaccuracies on your credit report, you can try to correct them before any lenders start the loan qualification process.

Credit reports don’t include a person’s credit score . However, you may be able to access that information through your bank, credit card issuer, or a reliable website at no charge.

When you’re satisfied that your credit report is accurate, you may want to compare lenders and consider getting prequalified. Many lenders will do a soft credit check at that point, which will not affect your credit score. You’ll be able to compare interest rates and terms from multiple lenders to find the one that works best for your unique financial situation.

Getting prequalified can give you a good sense of how much might be available to borrow, what the interest rate would likely be, and how that translates into a monthly payment.

Before applying, it’s important to know how much you need to borrow. You generally want to choose an amount that would cover the expenses at hand while trying to avoid borrowing more than necessary. Interest will be charged on the amount borrowed, not only the amount used.

When comparing prequalification quotes from different lenders, it’s a good idea to find out if there are any hidden fees, such as origination fees, late fees, or prepayment fees.

Typical Signature Loan Requirements

Each lender has unique application and approval requirements but may commonly ask for the applicant’s name, proof of address, photo ID, and proof of employment and income. After the application has been submitted, a lender will conduct a hard credit check to review the applicant’s credit report.

Besides checking credit scores, lenders like to see steady employment and enough income to meet expenses, including this new loan. Sometimes, having a cosigner or co-borrower might improve the chances of loan approval or help to secure a more favorable interest rate.

The Takeaway

A signature loan is an unsecured personal loan. It typically offers quick funding for a variety of uses, such as medical bills, wedding expenses, home improvement projects, or credit card debt consolidation. Though these loans typically have higher interest rates than secured loans like home equity loans, they can be a useful way to finance a variety of needs.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Are signature loans easy to get?

You typically need a good credit score to get a signature loan, since lenders want to be confident that you will repay the money.

Signature loans are unsecured, meaning you don’t have to pledge an asset of value (like a home or bank account) that the lender can seize should you fail to repay the loan. This raises risk for the lender. As a result, signature loans can sometimes be harder to get than secured loans like car loans.

Do you need a down payment for a signature loan?

No down payment is necessary for a signature loan.

What is the maximum that can be borrowed with a signature loan?

Lending limits will vary by lender, but you can often get as much as $100,000 in funding with a signature loan.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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