DEFINITION of 'Personal Interest'

Interest that taxpayers pay on personal and consumer loans. Personal interest is nondeductible, and the rates charged for this type of interest are often quite high. Personal interest that is received by the lender is usually reported on a cash basis.

BREAKING DOWN 'Personal Interest'

Personal interest includes interest on car loans, credit cards, loans for appliances and furniture and interest on loans made by one person to another.

Many consumers elect to take out lines of credit on the equity in their homes so that they can pay off their personal-loan balances and deduct the interest on their lines of credit instead.

RELATED TERMS
  1. Consumer Interest

    A type of interest that is charged for personal loans, including ...
  2. Loan

    The act of giving money, property or other material goods to ...
  3. Mortgage Interest

    The interest charged on a loan used to purchase a residence. ...
  4. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
  5. Standing Loan

    A type of loan where payments are made of interest only. Repayment ...
  6. Cumulative Interest

    The sum of all interest payments made on a loan over a certain ...
Related Articles
  1. Managing Wealth

    When Are Personal Loans a Good Idea?

    You never want to borrow money for frivolous reasons, but these five circumstances might warrant it.
  2. Tech

    Good Credit? Try This Credit Card Alternative

    Personal loans are a credit card alternative to try if you've got great credit and you want to lock in a lower interest rate on what you borrow. [underlined word is credit card alternative]
  3. Personal Finance

    How To Apply For a Personal Loan

    Learn about different avenues for applying for a personal loan, and learn valuable tips to help you get your personal loan application approved.
  4. Personal Finance

    Home Improvement Loans: What Are Your Best Options?

    If you plan on taking out a home improvement loan, you should know what your options are and which ones might be best for your situation.
  5. Personal Finance

    Different Needs, Different Loans

    Find out what options are available when it comes to borrowing money.
  6. Personal Finance

    Simple Interest Loans: Do They Exist?

    Yes, they do. Here is what they are – and how to use them to your advantage.
  7. Personal Finance

    An Insight Into American Personal Loan Habits (DFS)

    A survey commissioned by Discover Personal Loans reveals interesting information about American financial habits.
  8. Managing Wealth

    Personal Loans: Compare the 6 Biggest Banks

    Need a personal loan? You may stop by one of these big banks for help. Their offerings vary in size, rates and loan types, which means you have options.
  9. Investing

    Forces Behind Interest Rates

    Interest is a cost for one party, and income for another. Regardless of the perspective, interest rates are always changing.
  10. Personal Finance

    The Smartest Way to Tap Your Home Equity

    Using your home as a source of funds can be a smart choice in some situations. Just be sure to run the numbers carefully.
RELATED FAQS
  1. Are personal loans tax deductible?

    Find out whether interest on personal loans is tax deductible and what types of loan interest can be used to reduce your ... Read Answer >>
  2. Can personal loans be transferred to another person?

    Learn whether it is possible to transfer a personal loan to another person, and find out what happens when you default on ... Read Answer >>
Trading Center