UPDATED: Mar 22, 2022

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Written By: Sara RouthierReviewed By: Joel OhmanUPDATED: Mar 22, 2022Fact Checked

Political Scientist Harold Dwight Lasswell said that politics can be defined as deciding who gets what, when, and how. However, we live in a world where money almost always decides who gets what, when, and how.

While money and, by extension, capitalism are not necessarily evil bogeymen plaguing the nation, politicians — with their oftentimes flawed natures and failures to live up to promises — can become problematic for the people who voted them into power and the general citizenry as a whole.

Fortunately, America can choose which politicians it elects and reelects. However, some of these politicians may have an unfair advantage in the size of their wallets — or, more specifically, the size of their campaigns’ bank accounts.

According to the Center for Responsive Politics, 2012 House of Representative election winners spent an average of $1,567,293, while losers only spent $496,637. 2012 Senate election winners spent an average of $11,474,077, while losers only spent $7,435,446. The Center also reported that in the 2010 election cycle, 86 percent of top spenders won their campaigns for a seat in the House of Representatives, while 81 percent of top spenders won their campaigns for a seat in the Senate.

In order to compete, some politicians choose to fuel their campaigns with personal loans. By personally funding their campaigns, politicians can add some much needed cash to their tours, should contributions run low.

However, just because political campaigns can borrow personal loans from candidates, that doesn’t mean that they should, because, like all forms of financing, borrowing money for political campaigns has both pros and cons.

A Politically Poor Decision

Mark Grimm, political consultant and President of Mark Grimm Communications, told loans.org that using signature loans, another name for unsecured personal loans, to fuel campaigns can be an unwise decision.

“Unless you have money to burn, personal loans for a campaign are a bad idea,” said Grimm. “First, it makes people wonder how committed you are — are you in or are you out? Secondly, it’s easy to get carried away in the heat of a campaign and provide money you shouldn’t be spending. Finally, it’s a hard pill to swallow to lose a campaign you have fought so hard in and also know you’ve burned a lot of cash.”

Grimm explained that campaigns usually don’t even need personal loans from candidates in order to function. While lower level campaigns at the town or local community level certainly require donations, higher offices do not. State and federal elections are reliant on special interest Political Action Committees (PACs). He also noted that funds can come directly from campaign committees that are established by the Democratic and Republican parties.

All talk about special interest groups and PACs aside, it is clear that there are established channels for funding campaigns, at least for candidates backed by the two major parties. It is apparent that the need to fund campaigns with personal loans is little more than a rarity in the grand scheme of the political process.

“That is the exception rather than the rule,” said Grimm. “They are less beholden to others if they self fund, but they are putting more of their money at risk, with no certain return.”

Grimm pointed out that using signature loans to fund campaigns can actually backfire and cast a candidate in a negative light.

“Raising money from others is a sign of support,” he said. “If no one is willing to give to you, there’s no enthusiasm for your campaign.”

As for the public being concerned about wealthy politicians throwing their money around, Grimm says that sentiment is overblown and misguided. Instead, he recommends concerned voters redirect their attention.

“They should be worried when campaigns are funded by special interests who care more about their cause than the public’s interests,” he said. “Self-funded campaigns are tough on the candidate. They take all the risk. There is the risk that a really wealthy person can overwhelm competitors with his/her money, but that same risk applies to challengers taking on incumbents with loads of special interest cash.”

An Upside to Political Personal Lending

Having previously worked on numerous campaigns, David E. Johnson, CEO of Strategic Vision, told loans.org that, in addition to special interest groups and PACs, trade associations also often endorse and contribute to campaigns. Despite the deep pockets of special interest groups, Johnson pointed out that individual contributions are a key to success, as well as a sign of constituent approval. He noted that using personal loans to fund political campaigns is a relatively new trend, as is having a candidate personally fund his or her entire campaign.

“Funding a campaign themselves means several things,” said Johnson.  “First it frees them up from the need of fundraising…  It also eliminates costs associated with fundraising that can be diverted to direct mail, GOTV efforts, and other campaign activities.  It also takes out the worry of a campaign budget as these candidates are able to write checks to match or sometimes triple any amount their opponent may raise.”

Johnson pointed out that the majority of self-funded candidates win their campaigns. However, he did note that there have been several exceptions, such as Steve Forbes in 1996, Al Checchi in 1998, Jon Corzine in 2009, and Meg Whitman in 2010.

“Self-funding candidates are no different than Super PACs or other organizations,” said Johnson.  “But as more and more enter politics, it might discourage other qualified individuals without a personal fortune from running for office.”

Hopefully America can one day be a country where the plans and ideas that politicians champion win them elections and reelections rather than the amount of money in their campaign’s bank account. That may seem naïve to some people, but, in a country built on ideas like freedom and inalienable rights, it is a more-than-desirable future.

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Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Written by Sara Routhier
Director of Outreach Sara Routhier

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman