Best Personal Loans of September 2023
Get personalized pre-qualified rates from multiple lenders.
- 2 Minute Process
- Loans from $600 - $200,000
- Rates from 6.40% - 35.99% APR
- Loan terms of 12 - 84 months
- Rated A+ by the BBB
Loan Amount: $1,000 - $50,000
- APR: 5.99% - 35.99%
- Loan Term: 3 - 120 months
- Explore all your options at once and find the best offers for you
- You can get your funds in as little as 1 day from approval
- Loan consultants available to help you understand your options
Sample loan: a four-year $15,000 loan with an interest rate of 15.49% and an APR of 18.34% will require an estimated monthly payment of $421.20 and a total cost of $20,217.43.
A+ Rating with the BBB. Free service to help you find the right loan for your needs.
- Loan amounts of $250 - $35,000 for any credit type
- Pay it back in 3 mo - 6 years depending on lender terms
- Rates from 5.99% - 35.99% APR
- Loans for any purpose! Students, Cars, Vacations & more
Marketplace for all types of loans
- Get $500 - $10,000 in one business day
- Rates fluctuate from 5.99%-35.99%
- Loan terms between 3 - 36 months
- Compare loan offers without obligation to accept them
- No collateral needed
*Rates and APYs are subject to change. All information provided here is accurate as of September 7, 2023.
Personal loans are a versatile financing tool with a wide range of loan terms and relatively fast underwriting. You can use the acquired funds for a variety of purposes including debt consolidation, large purchases or costly home renovations.
Our best personal loans reviews include essential information such as credit score requirements, available loan terms, minimum and maximum loan amounts and starting annual percentage rates. Read on to learn more about the top personal loans of 2023.
Why trust Money on personal loans
To pick the best personal loan companies, we researched more than 40 personal loan companies and compared loan rates, fees and available payment options. We also verified each company’s track record with the Consumer Financial Protection Bureau and the Federal Trade Commission.
Our Top Picks for the Best Personal Loan Companies of September 2023
- LightStream – Best Variety of Loan Options
- Credible – Best Marketplace
- LendingTree - Best Marketplace Runner-Up
- SoFi – Best Online Lender
- Upstart – Best for Low Credit Scores
- PenFed – Best Credit Union
- U.S. Bank – Best Bank
- Prosper - Best Peer-to-Peer Lender
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Best Personal Loan Reviews
Best Variety of Loan Options: LightStream
Our PartnerPros- Online application
- No origination fees
- No prepayment penalties
- No late payment fee
- Co-applicants allowed
Cons- Requires good-to-excellent credit (670 to 800 FICO score)
- No pre-approvals
- High minimum loan amount
- No refinance option for Lightstream loans
HIGHLIGHTS- Term Lengths
- 2 - 7 yrs
- Loan amounts
- $5,000 to $100,000
- APR
- 7.49% - 25.49%
- Minimum credit score required
- 670
- Autopay discount
- 0.50%
- Turnaround time
- Same-day possible
- Loan uses
- Any purpose
Why we chose it: LightStream is our best personal loan for variety of loan options because it offers several loans and terms ranging from two to eight years, which is longer than most competitors.
LightStream, a division of Truist Financial Corporation, offers unsecured loans you can use for any purpose. Repayment terms go up to eight years, and customers receive a 0.50% discount for enrolling in AutoPay. Additionally, the Rate Beat program offers a 0.10% discount if a borrower is offered a lower APR by a competing loan lender (if approved for the same loan options offered by LightStream).
Lightstream charges no fees for its loans: no origination fees, no late fees and no prepayment penalty. However, Lightstream only approves loans for borrowers with good to excellent credit. Lightstream also considers borrowers’ debt-to-income ratio, payment history and assets in its evaluation of creditworthiness.
As part of its customer satisfaction guarantee, LightStream will pay you $100 if you’re not satisfied with your experience post-closing. (This guarantee expires after 30 days from loan closing.) We also like LightStream’s sustainability measures — not only is the online loan process largely paperless, the company partners with American Forests to plant a tree for every loan closed.
Best Marketplace: Credible
Our PartnerPros- Compare rates from multiple lenders
- Prequalify with a soft credit pull
- Co-signers allowed
- Best Rate Guarantee incentive of $200
Cons- Not a loan servicer
- Loan approval requirements vary per lender
HIGHLIGHTS- Term Lengths
- 12 - 84 months
- Loan Amounts
- $600 - $200,000
- APR
- 6.40% - 35.99%
- Minimum Credit Score Required
- Varies by lender
- Autopay discount
- Varies by lender
- Turnaround time
- Varies by lender
- Loan uses
- Varies by lender
Why we chose it: Credible ranks as the best personal loan marketplace because borrowers can compare multiple quotes from some of the top-rated personal loan lenders with competitive starting APRs.
Credible’s lending platform lets you compare quotes from 17 lenders in as little as two minutes — without making a dent in your credit score. The company features an excellent network of reputable lenders, including SoFi, LightStream, PenFed and others.
Additionally, Credible offers a $200 Best Rate Guarantee incentive. If you find a personal loan with a lower rate on a competing website and submit your claim within 10 days of receiving Credible’s personal loan rates, the company will give you a $200 gift card. Note that to qualify, you must submit proof that you’ve closed on the loan from the competing lender.
The company welcomes applicants with a variety of credit histories, but applicants with excellent credit histories tend to see more loan offers, more flexible repayment terms and lower interest rates. Credible also offers tools to check how prequalifying rates are affected by adding different co-signers.
Best Marketplace Runner-Up: LendingTree
Pros- Compare quotes from five lenders
- Transparent lender profiles that include eligibility requirements
- Free credit and debit analysis tool
Cons- Prepayment penalties may apply
- Origination fees may apply
HIGHLIGHTS- Term Lengths
- 12 - 84 months
- Loan Amounts
- $600 - $50,000
- APR
- 6.99% - 35.99%
- Minimum credit score required
- Varies by lender
- Autopay discount
- Varies by lender
- Turnaround time
- Varies by lender
- Loan uses
- Varies by lender
Why we chose it: LendingTree is our best personal loans marketplace runner-up because it offers access to more than 300 lenders who provide loans for a wide range of credit situations.
Like Credible, LendingTree is an online marketplace where you can shop for personal loans offered by reputable lenders. You can receive multiple offers within minutes from companies such as Best Egg, LendingClub, PenFed Credit Union and Discover.
LendingTree’s user-friendly website provides clear information on its lenders’ current starting annual percentage rates, as well each lender’s loan terms, loan amounts and minimum credit score requirement. Generally, the minimum credit score required is around 580, but some lenders also accept low credit scores.
Another plus for LendingTree is its personal loan payment calculator, which you can use to help estimate monthly payments based on loan term, estimated interest rate and loan amount. However, LendingTree did not secure the top position as its maximum loan amount is lower than that of Credible.
Read the LendingTree full review
Best Online Lender: SoFi
Pros- No late payment fees
- No origination fee for qualified borrowers
- Unemployment protection for up to a year
- Same-day funding possible
- Ranked third in J.D. Power's 2023 Consumer Lending Satisfaction Survey
Cons- If required, origination fee could be up to No Fees Required of total loan amount
- No smaller loans; minimum to borrow is $5,000
- Good to excellent credit strongly recommended
HIGHLIGHTS- Term Lengths
- 2 - 7 yrs
- Loan Amounts
- $5,000 - $100,000
- APR
- 8.99% - 25.81% (with AutoPay)
- Minimum Credit Score Required
- 680
- Autopay discount
- 0.25%
- Turnaround time
- Same-day possible
- Loan uses
- Any purpose
Why we chose it: SoFi is the best online lender for personal loans because of its ease of use, fast application process and additional services, such as unemployment protection and one-on-one financial planning.
SoFi offers unsecured personal loans of up to $100,000, one of the highest loan amounts on this list. While good to excellent credit is ideal, SoFi also considers alternative credit data — free cash flow, professional history and history of financial responsibility — when evaluating loan applications.
If you don’t meet SoFi’s requirements, you can apply with a co-borrower. (Note that adding a co-borrower will extend the loan review process by one to two weeks).
Additionally, SoFi offers unemployment protection for up to a year. If you lose your job, you can request to modify your monthly payments. SoFi Checking and Savings account holders may get an additional discount, too. In addition to the AutoPay rate reduction, you may be eligible for another 0.25% off your interest rate if you receive direct deposits of at least $1,000 per month.
The application process is entirely online and can be completed in a matter of minutes. While most applicants will have to wait a few business days to receive their funds, some can have their loan amounts deposited the same day the loan is approved.
Best for Low Credit Scores: Upstart
Pros- Accepts low credit scores and borrowers with minimal credit history
- Considers alternative credit data, such as education and employment
- No prepayment penalties
- Next-day funding possible
Cons- Offers only two repayment terms
- Charges origination fee
- Additional fee for paper statements
HIGHLIGHTS- Term Lengths
- 3 - 5 yrs
- Loan Amounts
- $1,000 - $50,000
- APR
- 6.40% - 35.99%
- Minimum Credit Score Required
- 300
- Autopay discount
- Unavailable
- Turnaround time
- Next-day possible
- Loan uses
- Any purpose
Why we chose it: Upstart is the best personal loans lender for low credit scores because it uses alternative factors in determining borrowers’ ability to repay. Beyond credit scores, its AI-powered application process considers more than 1,500 creditworthiness factors.
Upstart gives poor credit borrowers the opportunity to obtain a personal loan through its AI-powered loan application, which takes into account alternative information that can indicate your ability to repay the loan. These factors include your job history, the highest level of education you've received and your area of study.
About 100 banks and credit unions are part of the Upstart marketplace, where you’ll find lenders that accept borrowers with low credit scores or limited credit histories. Furthermore, even individuals who are currently unemployed may apply for a loan as long as they have received an employment offer with a start date within six months of the loan application date.
You can check your rate before applying, and loan funds can be disbursed as early as the next business day after you close on the loan. Note that, despite the consideration for other creditworthiness factors, rates and loan terms for poor credit borrowers are less favorable than those with good to excellent credit scores.
Best Credit Union: PenFed
Pros- Physical branches nationwide
- No prepayment penalties
- No origination fees
Cons- Membership fee
- No co-borrowers allowed
HIGHLIGHTS- Term Lengths
- 1 - 5 yrs
- Loan Amounts
- $600 - $50,000
- APR
- 8.49% - 17.99%
- Minimum Credit Score Required
- Undisclosed
- Autopay discount
- Unavailable
- Turnaround time
- One to two business days
- Loan uses
- Any purpose
Why we chose it: PenFed is our pick for best credit union for personal loans because it offers both a nationwide presence of traditional brick-and-mortar locations. Plus, the credit union doesn’t charge certain fees that other financial institutions require.
PenFed Credit Union offers a broad range of repayment term options and loan amounts for its personal loans. Additionally, unlike with most financial institutions, borrowers don’t have to pay a loan origination fee and aren’t penalized for paying off their loan early.
The credit union offers a lower APR range than many other financial institutions we evaluated, and potential borrowers can apply individually or with a co-borrower. Non-members can apply for a personal loan and only need to join if they choose to accept the loan offer.
Membership was previously limited to the military, certain government agencies and residents of eligible locations, but as of 2019, PenFed is open to all. You can establish membership by opening a PenFed savings account with a $5 deposit.
Best Bank: US Bank
Pros- No origination fees or prepayment penalty
- Fast funding
- Online loan application
Cons- Minimum 720 credit score for non-U.S. Bank customer
- Loan limit is $25,000 for non-U.S Bank customer
HIGHLIGHTS- Term Lengths
- 12 - 84 months
- Loan Amounts
- $1,000 - $50,000
- APR
- 8.74% - 21.24%
- Minimum Credit Score Required
- 660
- Autopay discount
- 0.50%
- Turnaround time
- Within hours for U.S. Bank customers
- Loan uses
- Home improvement and all-purpose loans available
Why we chose it: U.S. Bank is the best bank for personal loans because it offers competitive APRs and quick funding — within hours, according to the lender — if you’re an existing customer with a credit score of 660 or higher.
U.S. Bank has a starting APR that competes with the best personal loan rates in the industry. The bank offers several loan types: personal loan, home improvement loan, personal line of credit, home improvement personal line of credit and reserve line of credit (which protects your U.S. bank checking account from overdrafts).
There’s also an emergency Simple Loan for short-term or emergency expenses available exclusively to U.S. Bank checking account customers. The minimum loan amount starts at $100 and goes up to $1,000. While the Simple Loan has a $6 monthly fee for every $100 you borrow, it could be a good alternative if you need a smaller amount quickly. Additionally, U.S. Bank doesn’t charge any fees for missed payments on Simple Loans.
Note that if you do not have a bank account with U.S. Bank, potential personal loan borrowers will be subject to stricter credit score requirements (720 FICO) and a loan limit of $25,000.
Best Peer-to-Peer Lender: Prosper Personal Loans
Pros- Suggested credit score minimum of 640
- Co-signers allowed
- Check your rate with a soft credit inquiry
- Next-day funding possible
Cons- Charges origination fee
- Charges late fees for missed payments
- No discount for automatic payments
HIGHLIGHTS- Term Lengths
- 24 - 60 months
- Loan Amounts
- $2,000 - $50,000
- APR
- 6.99% - $35.99%
- Minimum Credit Score Required
- 640
- Autopay discount
- None
- Turnaround time
- Next-day possible
- Loan uses
- Any purpose
Why we chose it: Prosper is our pick for best personal loans peer-to-peer lender because of its competitive APR and fast funding.
Prosper is a peer-to-peer lending marketplace offering loans funded by investors. It offers borrowers $2,000 - $50,000 loans with terms between two to five years. Funds could be available via direct deposit within one business day after closing on your personal loan.
You can check your rate using Prosper’s personal loan calculator, which includes different loan types, such as debt consolidation, home improvement and business. No credit check is required until you accept an offer and formally apply.
While Prosper does charge an origination fee for its loans, the rate ranges from 1% - 5% of the total loan amount. This is somewhat lower than other companies we evaluated that also charge an origination fee. However, there are fees for late payments ($15 or 5% of the unpaid monthly payment, whichever is greater) and insufficient funds or returned payments ($15).
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Not all of the banks, credit unions, fintech companies and other financial institutions we evaluated made it to our best personal loans list. Below you’ll find a selection of some of the personal loan lenders we considered.
Best Egg Personal Loans
Pros- Next-day funding possible
- Loan terms from 2 - 5 yrs
- APR from 8.99% - 35.99%
Cons- High origination fees
- Not available in six states
Best Egg offers a variety of personal loans for various purposes, ranging in amount from $2,000 - $50,000. The company ranked second in J.D. Power’s 2023 Consumer Lending Satisfaction Survey. However, Best Egg’s origination fees are fairly high (0.99% to 8.99%) compared to other lenders we evaluated.
Why Best Egg didn’t make the cut: Best Egg didn’t make our list because its personal loans are not available across all of the U.S. and, depending on the borrower, the loan origination fee could be as high as 8.99%.
LendingClub Personal Loans
Pros- Pre-approval available
- No prepayment penalties
- Accepts co-borrowers
Cons- Low loan maximum at $40,000
- 3% - 6% origination fee
- Higher starting APR at 9.57% than other lenders we evaluated
LendingClub is an online bank that offers peer-to-peer personal loans. There are no prepayment penalties and you are allowed to have cosigners, but the maximum low limit is relatively low at $40,000 and origination fees could be as high as 6% of the total loan amount.
Why LendingClub didn’t make the cut: We didn’t include LendingClub on our list because its origination fee max is higher than some other lenders we evaluated. Additionally, its loan amount maximum is comparatively low.
USAA Personal Loans
Pros- Variety of personal loan options
- Low number of CFPB complaints
Cons- Higher starting APR (9.74%) than other lenders we evaluated
- Limited membership
- No pre-approval
USAA features a variety of loan options ranging from $1,000 - $100,000, with repayment terms ranging from 12 - 84 months. Applications for loan terms longer than 60 months must meet higher credit and risk standards than loan terms up to 60 months. Additionally, loan APR ranges are higher than many competitors and its services are only available for military members and their families.
Why USAA didn’t make the cut: USAA was not included in our top list because their loan offerings are limited to military members and their families, as well as the higher than average APR on their loans.
Wells Fargo Personal Loans
Pros- Accepts fair credit scores
- No origination fee or prepayment penalty
- Over 8,000 physical branches
- APR from 7.24% to 23.24% with AutoPay discount
Cons- Recent settlement with Consumer Financial Protection Bureau for customer abuses
- Doesn't accept co-borrowers
- Late fees may be charged for missed payments
Wells Fargo is one of the largest and oldest banks in America. Its personal loans — available to Wells Fargo customers with fair credit or better — range from $3,000 - $100,000. Borrowers can pick a repayment term between 12 - 84 months. The presence of over 8,000 physical branches can also appeal to borrowers who prefer in-person service.
Why Wells Fargo didn’t make the cut: The recent issues with the Consumer Financial Protection Bureau (CFPB) kept Wells Fargo out of our top picks. In December of 2022, the bank agreed to pay more than $2 billion to customers and $1.7 billion in fines due to financial harm caused by unlawful fees and interest charges.
Avant Personal Loans
Pros- Accepts fair credit scores
- Loan terms from 2 - 5 yrs
- Starting APR of 9.95%
- Loans up to
Cons- High loan origination fees
- Administration fees
- Federal Trade Commission (FTC) civil lawsuit
Avant uses a proprietary algorithm to determine borrowers’ creditworthiness, making its underwriting more lenient. However, it charges high origination and administrative fees and has less competitive rates. Moreover, in January 2022, the Federal Trade Commission returned $3.7 million to Avant customers after alleging the company had engaged in deceptive loan practices.
Why Avant didn’t make the cut: Avant didn’t make the top list due to its high loan origination fees, its administration fees and a recent FTC lawsuit that forced the company to return millions of dollars to its customers.
Discover Personal Loans
Pros- No prepayment penalty
- Next-day fund disbursement
- Loan terms of 3 - 7 yrs
- APR from 7.99% to 24.99%
Cons- $39 late payment fee
- $25,000 minimum annual income required
- No cosigner option
- High minimum and low maximum loan amounts ($2,500 - $40,000)
Credit card issuer Discover also originates loans with 0% in origination fees and which you can repay over a period of three to seven years. However, its loan amount minimum is a bit high at $2,500, and its maximum of $40,000 is lower than many other companies we evaluated. However, Discover’s annual percentage rates on personal loans are competitive.
Why Discover didn’t make the cut: Discover didn’t make our top list due to its minimum income requirement and the fact that it doesn’t allow co-signers on loans.
Personal Loans Guide
Personal loans can be used for a variety of purposes. Many of these loans offer great benefits such as flexible terms and low interest rates. Our guide outlines everything you need to know, including how they work and what qualifications you need to get a personal loan.
- What is a personal loan
- Types of personal loans
- How do personal loans work?
- Personal loans pros and cons
- What are personal loans used for?
- How to get a personal loan
- Best place to get a personal loan
- How to compare personal loan lenders
What is a personal loan?
Personal loans are a specific type of installment loan that typically have fixed interest rates and shorter repayment terms, usually ranging from 12 and 72 months. These loans can be used for a variety of purposes such as consolidating debt, financing home improvement projects, covering medical bills or financing large purchases, events or vacations.
Types of personal loans
There are two basic types of personal loan: secured and unsecured loans.
Secured loans
Secured personal loans require collateral, which is a guarantee of payment in the form of an asset you own such as your house, car, stocks and bonds or even a certificate of deposit account. If you default on these loans, the lender can sell these assets and use them to pay off the debt.
Unsecured loans
Unsecured loans don’t require collateral, and therefore, won’t lead to foreclosure or loss of assets. However, these loans usually carry higher interest rates, and defaulting will still significantly impact your credit score. Most personal loans are unsecured loans.
How do personal loans work?
You can request personal loans from banks, credit unions or other financial institutions.
Lenders will look at different factors when evaluating your application. These include:
- Debt-to-Income Ratio (DTI).This is your monthly debt — such as mortgage payments, credit card debt, alimony or student loans — divided by your gross monthly income. This shows banks how much of your income is being used to pay existing debt and whether you can afford to pay this new loan. Overall, the lower your DTI, the likelier you are to get approval.
- Credit score. Lenders will review your credit profile and look at your score. Most lenders set a minimum credit score requirement of 660 but others might consider additional factors when determining your creditworthiness. It’s a good idea to check your credit yourself before applying for a loan. If you need help doing that, make sure to read our article on how to check your credit score.
- Credit utilization ratio. Banks will review how much of your available credit you’re currently using. Most lenders favor a credit utilization ratio below 30%.
Most personal loans have fixed interest rates and are processed quickly – once approved, you could have money deposited into your bank account within 24 to 48 hours.
Average interest rates on personal loans
The average interest rate on personal loans starts at about 7%, according to the companies we evaluated. However, the lowest rates are offered only to borrowers with excellent credit. Depending on your credit profile, a personal loan interest rate may be higher — up to 35.99%.
Here’s how annual percentage rates may vary according to credit scores:
HOW YOUR CREDIT SCORE AFFECTS INTEREST RATES
Credit Score*
Possible APR Range*
600-619
30.70% - 35.83%
680 - 699
22.11% - 27.22%
720 - 739
16.53% - 21.65%
780 - 799
12.43% - 17.54%
840 - 850
12.43 - 17.54%
Personal loans pros and cons
Although personal loans can be an easy way of getting money in your pocket quickly, there are drawbacks. Knowing the cons as well as the pros will help you determine if a personal loan is the best financial product for your situation.
Pros- Low interest and fixed rates. For borrowers with good to excellent credit scores, personal loans offer lower interest rates than credit cards.
- Doesn't require collateral. Personal loans are typically unsecured, so they don't require you to guarantee the loan with an asset (such as your home or vehicle).
- Flexibility of amount. The loan amount you're approved for will depend on your credit score. With good credit, you could get a loan of up to $100,000 for anything from purchasing a new laptop to renovating your home.
- Get money fast. Once approved, most lenders send you the money quickly. Some do so in as little as 24 hours.
Cons- Higher APRs. Personal loan APRs tend to be higher for those with low credit scores. Sometimes interest rates can be as high or higher than for credit cards.
- Higher monthly payments. Personal loan payments are often higher than the minimum monthly payment on credit cards.
- Hard to qualify if you have a low credit score. Most financial institutions require at least a 620 FICO score in order to approve a loan.
If your credit score is too low to secure a personal loan, you may want to check out our list of the best loans for bad credit if you want to explore different options.
What are personal loans used for?
Many people use personal loans to pay for large, unplanned expenses, such as medical expenses or car repairs. Others take out loans to pay for a vacation, a wedding or home improvement projects. Personal loans can also come in handy when you want to consolidate or refinance existing debt.
- Emergency expenses. Unforeseen medical, car repair or funeral expenses can often throw you and your finances into disarray. A personal loan helps you cover these expenses when they come up and gives you time to pay off the expense over the term of the loan.
- Home improvement. You can take out a personal loan to cover expenses related to the repair or remodeling of your home. Making improvements to your home also helps you boost your home equity.
- Debt consolidation. A common use of personal loans is for consolidating and refinancing existing debt. Many do this to lower monthly payments or take advantage of lower interest rates, especially if they have high-interest debt.
- Moving costs. Moving costs can quickly add up when you factor in not only having to move your belongings, but also possibly buying new appliances or furniture. A personal loan helps you cover these costs so you can focus on settling into your new home.
- Major purchases or events. Personal loans are also a way of paying for big purchases you plan to make. An example of these are for weddings, vacations, a new energy-saving appliance or even a laptop.
- Auto financing. Some people opt for a personal loan to buy a car because these are less restrictive than car loans and they don’t require using the vehicle as collateral. Others use personal loans when buying cars from other people and not directly from a company or used car dealer.
While you can buy a car with a personal loan, we don’t recommend it because it's more expensive. Because they don’t require collateral, interest rates on unsecured personal loans are higher and typically incur more fees than auto loans do.
How to get a personal loan
Regardless of whether you want to get your loan from a traditional bank, a credit union, an online lender or P2P, there are steps you’ll have to follow to get your loan.
- Do the math. Take a hard look at your finances and determine if you can afford the new loan payment. Some banks offer fast, online prequalification, which could let you know how much you’d likely be approved for and, in most cases, does not impact your credit. You can also use an online personal loan calculator to get an idea of what you’ll have to pay every month for the loan.
- Check your credit scores. Personal loan lenders run a credit check to determine your creditworthiness and interest rate. Lenders usually require a minimum credit score of 620, but most prefer 660 and above. Having a credit score that’s considered good or better will get you the lowest APRs.
- Choose a type of loan. Before applying, you must choose between a secured or unsecured loan. Remember that secure loans require collateral, so you’ll have to decide whether you want to put assets down as collateral in exchange for more favorable interest rates.
- Evaluate and compare lenders. Before you apply for a loan, evaluate the lenders you’re interested in using. Compare each of the lenders’ loans, fees, services and benefits to find out which best fits your needs and wants. Don’t forget to look at customer reviews as well to get a sense of what other borrowers have found helpful or inconvenient.
- Apply and provide documents. Gather the documents you’ll have to provide the lender and contact the lender to apply. These documents are usually an identification (driver’s license, passport or social security card), a utility bill to verify your address and a bank statement or tax return as proof of income.
- Review the loan terms. Read the terms and conditions carefully before accepting. Depending on the lender, receiving your funds could take anywhere between one business day to a week.
- Start making payments. As soon as you’re approved and receive your money, start keeping track of your account and find out when your payments are due. We recommend you set up automatic payments to avoid paying the penalty or fees that most lenders charge for missed payments.
Best place to get a personal loan
You can get personal loans from banks, credit unions, or from online and peer-to-peer lenders such as the ones featured on our list.
It’s important you only apply to reputable lenders since you’ll have to provide your personally identifiable information on your application, including your social security number and address.
Banks
Brick-and-mortar banks are ideal if you prefer in-person customer service. At your local bank you can get solutions tailored to your situation as well as advice on your finances. As banking becomes ever more digital, most brick-and-mortar banks are now able to offer you the best of both worlds. The drawback of old-school banks is that they may charge higher fees and penalties than online lenders and credit unions.
Online Lenders
Online lenders offer convenience and speed. You can apply and receive your money online from anywhere (we suggest you use a secure WiFi connection). Another perk of online lenders is that some pass on their overhead cost savings to you and offer better APR rates and lower fees. Additionally, some online lenders use alternative credit data, making them an excellent option for borrowers with shorter or non-traditional credit histories.
Credit Unions
Unlike traditional banks, credit unions are nonprofit financial institutions. Any potential borrowers must first become a member, but this can offer some benefits — being a member not only gives you access to their products, but also to profits and savings. This means access to higher interest rates on savings accounts and CDs and lower APRs on loans. Their accounts are insured by the National Credit Union Administration (NCUA) and this same administration caps the loan interest rates offered by credit unions at 18%.
Peer-to-Peer
Another way of getting a loan is from a peer-to-peer (P2P) lender, a type of online lender that connects borrowers to funding from individual investors and companies. In peer-to-peer lending, because you get the money from another individual or institution, the lending companies only facilitate the loan. This type of loan gives people with low credit scores or limited credit history greater chance of approval.
Do note that P2P lenders often charge additional fees and higher personal loan interest rates.
How to compare personal loan lenders
When choosing a lender, it’s important to understand the terms and the true costs of the loans they offer. It’s also important to get acquainted with the many factors they evaluate when processing your application. For example, in addition to your credit score, banks will also take a look at your employment history, credit utilization and your debt-to-income ratios, among other things.
Read the following 5 tips to compare personal loan lenders and make an informed decision.
1. Check the lender’s prequalification and preapproval requirements
When you’re getting ready to apply for a personal loan, you’ll often hear the terms prequalification and preapproval. Both these terms involve an assessment of your current financial situation. Sometimes these terms are used interchangeably; however, often there are important differences to be aware of.
- Prequalification involves a “soft” inquiry, or a “soft credit check,” meaning it won’t leave a mark on your credit report. A prequalification lets you know whether you’d be approved for a loan and can give you a rough estimate as to the amount you could borrow. It does not, however, mean you’re approved for the loan.
- Preapproval involves a “hard” credit inquiry, which can slightly impact your score. Because it’s a more thorough evaluation of your finances, pre-approval can give you a better idea of the final amount and APR you will qualify for.
2. Compare interest rates vs annual percentage rate
It’s important to know the difference between interest rates and APR when comparing loan options.
- Interest Rate is an additional percentage, fixed or variable, that the lender will charge you to borrow the principal, or the amount you agree to borrow from a lender.
- Annual Percentage Rate (APR) is the total annual cost you’ll pay for a loan. It takes into account the loan terms and includes the loan principal, the interest rate, plus all additional fees, such as origination fees, administrative fees and/or discounts.
3. Look for any additional fees
When applying for a loan, it’s important to read the fine print and look for any additional fees the bank may charge.
Here are some of the most common types:
- Origination fees. Lenders may charge a fee for administrative processes and costs involved in your loan. These fees, also known as administrative or underwriting fees, are included in your APR rate and usually range from 1 to 8% of your loan total.
- Prepayment fees. Some lenders may charge you a fixed fee or percentage of the total loan if you pay your loan early. The time frame for payoff and any applicable prepayment fees will be stated in your loan agreement.
- Late payment fees. Lenders may charge a fixed amount (could be as high as $50) or a percentage of the payment due if you don’t pay on time. Some loan providers might offer a grace period. Note that if you’re more than 30 days late in your payment, the lender could report it to the credit bureaus which may affect your credit score.
4. Consider their customer support
Customer support is an important aspect of the services offered by lending companies. Consider the type of support you prefer and be sure to check whether the lender offers your preferred mode of communication. Most financial institutions offer the following:
- Chat
- Phone
- Physical location
- Mobile app
5. Understand the terms of the loan
Personal loan repayment terms can range anywhere from a few months to eight years. As for repayment frequency, payments may be bi-weekly or monthly — this depends on the lender and your specific situation. Additionally, you may be able to set your own payment date within the terms required.
However, it’s important to understand how repayment terms change your total loan amount. While a longer repayment term will lower your monthly payment, you will pay more in interest over the life of the loan.
Here’s an example of how your total debt changes alongside term lengths, according to the personal loan calculator by LendingTree, our pick for best personal loans marketplace.
INTEREST VS. LOAN TERMS
Loan Amount
Loan Term
APR
Monthly Payment
Total Interest
Total Owed to Lender
$5,000
36 months
8.00%
$156.68
$640.55
$5,640.55
$5,000
60 months
8.00%
$101.38
$1,082.92
$6,082.92
$5,000
84 months
8.00%
$77.93
$1,546.21
$6,546.21
Note also that many lenders do not penalize borrowers for early repayment. If you have a longer loan term, consider making extra payments to shorten the life of the loan and cut down on interest owed.
Alternatives to personal loans
Personal loans aren’t the only way to consolidate debt or pay for household repairs. You might also look into one of the following options:
- Balance transfer credit card. With a balance transfer, you move your debt from one card to a different card with a lower APR and other introductory benefits, such as reward and points programs. Many cards will offer an introductory 0% APR specifically for balance transfers. Typically, this option is available to those with very good or excellent credit.
- Credit card advance. A credit card cash advance is a short-term loan that you can get from your credit card issuer at almost any ATM machine. However, these cash advances are usually subject to high APRs.
- HELOCs vs. home equity loans. Both home equity lines of credit (HELOCs) and home equity loans allow you to tap into your home’s equity and use your home as collateral. They usually have lower APRs than personal loans. Additionally, whereas HELOCs are a revolving line of credit and have variable rates, home equity loans provide you with a lump sum upfront and have fixed interest rates.
- Cash-out refinance. In a cash-out refinance you replace your old mortgage with a larger one and receive the difference as a lump sum. The benefits are that you may be able to obtain a lower interest rate than your existing rate and receive funds in a relatively short amount of time.
- Retirement account loans. You’re allowed to borrow up to 50% of your 401k balance (with a cap of $50,000) without getting penalized by the IRS, as long as you repay it within five years. These loans often have low interest rates. However, keep in mind you’d be repaying that loan with money that has been taxed (while the funds invested in a 401k are pre-tax dollars).
- Emergency Assistance Loans. Many people consider applying for a personal loan when facing an emergency or when struggling to pay their bills. If this is your case, you might also want to consider these other options for financing assistance.
- Federal rental assistance. The Emergency Rental Assistance (ERA) program provides funding at the state and local level for those who need assistance with rent and utility payments, internet and costs associated with moving, including security deposits. You can check out the Consumer Finance Protection Bureau’s website to find programs in your area.
- HUD grants and programs. The U.S. Housing and Urban Development (HUD) Program offers the Housing Choice Voucher Program (Section 8) and housing counseling services. Additionally, HUD will provide housing inspection assistance through their Real Estate Assessment Center (REAC) to ensure the house is structurally sound and sanitary.
- Disaster relief. If you’ve been the victim of a natural disaster, the Federal Emergency Management Agency (FEMA) could help you obtain temporary housing, funds for household repair, as well as other expenses approved by your state through the Individuals and Households Program (IHP).
Types of loans to avoid
Payday loans and title loans are also immensely popular alternatives to personal loans, especially for borrowers with fair to poor credit. There is also a lesser-known type of quick loan called the tax anticipation loan. However, we do not recommend any of these options for several reasons.
- Payday loans are typically small, quickly funded loans. Payday lenders keep a postdated check or request direct access to your checking account so they can withdraw the funds by the following payday. However, their sky-high interest rates — often as high as 400% — can make the debt balloon so quickly that borrowers find themselves unable to repay them.
- Title loans use your car title as collateral, and lenders can repossess and resell your car or motorcycle if you don’t pay it back in time. Although these loans are relatively easy to qualify for, they have extremely high interest rates, typically from 100 to 300%.
- Tax anticipation loans give you an advance on your tax refund and act much in the same way as a payday loan. They are issued through a third-party lender once you provide proof that you’re owed a tax refund.
Failing to pay off these loans on time has trapped many borrowers in an endless debt cycle. If you have poor credit, make sure to look into bad credit loans and secured credit cards aimed specifically at high-risk borrowers.
Latest News on Personal Loans
Can You Pay Off Loans Early? Rest assured, you can pay off your loan early but you should be aware of two potential downsides: some lenders charge prepayment penalties and your credit score might drop. That being said, reducing your overall debt burden is worth a minor credit score decrease and many personal loan providers don’t penalize borrowers who pay off early.
A Credit Crunch Is Looming. Here’s How It Could Affect Your Wallet. Loans, credit cards and mortgages might become harder to access. Banks had already tightened lending requirements in response to federal interest rate hikes but experts anticipate more restrictions in light of recent bank collapses.
Best Personal Loans FAQs
What is an unsecured personal loan?
Unsecured loans are the most commonly offered type of personal loan. These loans don't require collateral, meaning that the borrower doesn't have to put up any valuable assets as a guarantee for payment. However, this also means that unsecured loans increase the risk for the lender. Consequently, unsecured loans usually come with higher interest rates than secured loans.
Unlike with a secured loan (a mortgage, for example), you won't lose any assets if you were to default on an unsecured loan; however, your credit will take a hit, hindering your ability to get another loan in the future.How many personal loans can you have at once?
Technically, there is no limit to the number of personal loans you can have at once. That said, financial institutions place limits on the number of loans they're willing to give any one borrower at a time. These policies may vary depending on your particular circumstances. Additionally, the more debt you have, the less likely you are to be approved for a loan.How long does it take to get a personal loan?
How long it takes to get a personal loan depends primarily on the lender. Many online lenders offer same-day funding, so long as your loan is processed by a certain time of day. Others, particularly banks and credit unions, may take a few days to process your application and send funds your way.What is a good interest rate for a personal loan?
A good interest rate for a personal loan in today's market is about 7%. However, this low rate is only offered to borrowers with excellent credit — and lenders don't offer rates this low, period. More likely, you'll see rates between 12% and 20%.
When evaluating a personal loan offer, consider the repayment terms and total cost of the loan against the purpose of borrowing.Can I get a personal loan while unemployed?
While it's not impossible to get a loan while unemployed, it will be difficult without a job offer or another source of income. Some lenders may still extend you a loan offer, but keep in mind that interest rates will likely be high, as you'll pose a higher risk of default.How We Found the Best Personal Loans
Our methodology to find the best personal loans for our readers included an in-depth evaluation of 40 banks, credit unions, marketplaces and peer-to-peer lenders taking into account the following:
- Loan rates and fees. We chose banks that provided the most affordable loans, that is, those that offered lowest interest rates and fees. We also evaluated which banks offered the most benefits and unique offers.
- Loan term flexibility. We preferred banks that offered customers with multiple term options and ways to pay.
- Customer satisfaction. We evaluated how banks ranked in J.D. Power’s Customer Satisfaction surveys and checked any complaints filed with the Better Business Bureau (BBB).
- Regulatory compliance. We checked for complaints and reports filed with the Consumer Financial Protection Bureau (CFPB) database and the Federal Trade Commission (FTC).
Summary of Money’s Best Personal Loans of September 2023
- LightStream – Best Variety of Loan Options
- Credible – Best Marketplace
- LendingTree - Best Marketplace Runner-Up
- SoFi – Best Online Lender
- Upstart – Best for Low Credit Scores
- PenFed – Best Credit Union
- U.S. Bank – Best Bank
- Prosper - Best Peer-to-Peer Lender
