If you’re suddenly faced with a large, necessary expense and find yourself scrambling for cash, you may want to consider taking out a personal loan. Personal loans can help borrowers fund everything from an unexpected medical expense to much-needed debt consolidation or even major life events like a wedding.

Here’s what you need to know about how personal loans work and how to find the right one for your situation.

What is a personal loan?

Personal loans are a form of installment credit that can be used by the borrower to cover a wide range of expenses. These loans are granted in a lump sum, which is paid back in fixed amounts, usually monthly, over time.

Personal loans can be used for any number of expenses, such as funding large purchases or covering unexpected emergency expenses. Personal loans can also be a good option for consolidating high-interest credit card debt, as they often have a lower annual percentage rate (APR) than many credit cards.

How do personal loans work?

Like other types of loans, personal loans consist of the principal, interest and any administrative and service fees. The principal, or the initial amount you borrow before fees and interest, can be several hundreds or thousands of dollars, with a typical repayment period between two and five years. Over that time, you’ll make regular payments that include a portion of the principal plus interest.

Personal loan interest rates can range anywhere from 10% to 29%, and they tend to be fixed over the life of the loan. You might also be charged certain fees to secure the loan, like a documentation or origination fee. Avoid surprises by making sure you’re familiar with the terms of your loan.