A personal loan can be a smart way to consolidate debt, finance home improvements, pay for a wedding or cover a medical emergency. It’s among the most flexible of financial products, giving you more options than a credit card, which is usually best for purchases that can be paid off within a month, and a student loan or mortgage, which typically involve hundreds of thousands of dollars and take decades to repay.
Personal loan terms, in contrast, can range from one to 12 years, and lenders will allow you to use the money for just about anything (except paying for college or making investments). You pay a fixed interest rate, and, in most cases, the quicker you pay it off, the less you’ll spend on interest.
And though personal loan interest rates are fixed, they can vary widely — which gives you, as the consumer, choices. At the moment, annual percentage rates range from about 2% to nearly 30%, depending on the lender and your specific financial profile, which includes your credit score, credit history and debt-to-income ratio. Ultimately, you want to find the least expensive loan available, factoring in both fees and interest.
For example, borrowing $10,000 at a 9.99% APR paid back over five years would require 60 monthly payments of $201.81 (and would cost you $2,108.60 in total interest). Wells Fargo’s Rate and Payment calculator or SoFi’s Loan Calculator can help you get a sense for how interest rates and loan terms will impact your monthly payment and the total cost of a loan.
Best Personal Loans, Compared
$5,000 – $100,000
$5,000 – $100,000
$3,500 – $40,000
$2,000 – $35,000
$3,000 – $100,000
1-4 business days
Next business day
Next business day
Up to 4.75%
Rejected payment: $15; late payment: $25
Rejected payment: $39; late payment: $39
Credit requirement (estimated)
680 and up
600 and up
Before you apply for a loan, it’s worthwhile to shop around — but do so carefully. An initial inquiry will result in a soft credit check, which doesn’t affect your credit score. Submitting an application, however, will trigger a hard pull, which may impact your score — even if you don’t end up accepting the loan.
Lenders may advertise different types of loans for specific purposes such as paying for home improvements or consolidating debt. But, in most cases, there are only two major types of loan. With an unsecured personal loan, you borrow money and pay it back at regular intervals with a fixed rate of interest. A secured personal loan requires you to put up an asset as collateral. And though the best personal loans don’t charge fees for “origination” or “administration” or rejected payments, borrowers with lower credit scores, and fewer options, may have no choice but to pay them.
We’ve evaluated the major national personal loan providers and highlighted the best of them below. These lenders generally offer competitive interest rates, flexible repayment terms and quick funding (usually between one and four business days) — but specific loan availability, terms and conditions will be highly dependent on your particular financial situation.
APR: 2.49-20.49%Repayment terms: 2-12 yearsFunding amounts: $5,000-$100,000Funding timeline: One business dayOrigination fee: NoneOther fees: NoneMinimum credit score required: “Good Credit”
LightStream delivers just about everything you want in a personal loan: flexible repayment terms (including an extensive 12-year option), a $100,000 maximum, no fees, same-day funding and a low APR range — though, of course, your interest rate will reflect your specific credit profile. As such, we think it’s a great place to start your search for a personal loan. (Note that LightStream is a division of SunTrust Bank, which recently merged with BB&T to become Truist.)
Folks with a checkered credit history or blemished financial profile should take note: LightStream’s credit requirements are stringent. When asked about its criteria for good credit, the company said that there’s “no single definition” — but that people who qualify for loans usually have several years of credit history with few delinquencies, a “manageable” amount of revolving credit card debt, some liquid savings, and a stable and sufficient income.
APR: 5.99-18.53%Repayment terms: 2-7 yearsFunding amounts: $5,000-$100,000Funding timeline: Up to 7 daysOrigination Fee: NoneOther fees: NoneMinimum credit score required: 680
SoFi personal loans also feature low rates, a $100,000 maximum loan amount and no origination, administrative or late fees. It’s also one of the few lenders that is transparent about its credit score requirements — though all loan providers take into account factors such as credit history and debt-to-income ratio when determining eligibility. It’s worth noting that SoFi routinely runs promotions on its site; at the moment, the company is offering a bonus of up to $360 on some loans.
APR: 6.99-19.99%Repayment terms: 3-6 yearsFunding amounts: $3,500-$40,000Funding timeline: Up to 4 business daysOrigination fee: NoneOther fees: NoneMinimum credit score required: Not specified
Marcus doesn’t charge any fees and offers a relatively low APR range, with repayment terms up to six years. As one of the few mass-market products offered by the white-glove investment bank Goldman Sachs, it’s a bit surprising that the loan amount tops out at $40,000 — but if you’re looking for a low-cost, fee-free lender, these loans are worth a look.
APR: 5.99-24.49%Repayment terms: 1-7 yearsFunding amounts: $3,000-$100,000Funding timeline: Next business dayOrigination fee: NoneOther fees: Rejected payment: $39; late payment: $39Minimum credit score required: None
The personal loan market has come to be dominated by a fleet of online banks that, in most cases, don’t have physical branches. (With no branches to maintain, they can often offer better terms.) But some people may feel more confident about borrowing money after an in-person conversation with an employee from a bank located in their neighborhood. Among the big national lenders, Wells Fargo offers a reasonable range of APRs, no fees, flexible repayment terms and a wide array of funding amounts. One caveat: Wells Fargo may change fees for rejected payments (also called NSF or nonsufficient funds payments) and late payments. And those can add up.
APR: 9.95-35.99%Repayment terms: 2-5 yearsFunding amounts: $2,000-$35,000Funding timeline: Next business dayOrigination fee: Up to 4.75%Other fees: Rejected payment: $15; late payment: $25Minimum credit score required: 600
For those with less stellar credit — politely referred to as “fair credit” by lenders — Avant could be a good option. Though the company will accept an application from anyone, applicants with a score of 600 or higher “have the best chance of being accepted,” according to a company rep.
As with most financial products, those with a less stable financial standing can expect to pay higher fees and more interest for a personal loan. Avant charges up to 4.75% in administrative fees, depending on factors including your credit history and where you live. And if your credit score is 600 or lower, you will likely end up with a higher APR. Avant’s top rate is a whopping 35.99%, which could end up costing you thousands of dollars in interest over the course of a loan. Proceed with caution.
Other loans to consider
APR: 5.99-24.99%Repayment terms: 2-5 yearsFunding amounts: $5,000-$40,000Funding timeline: 2-5 business daysOrigination fee: Up to 5%Other fees: NoneMinimum credit score required: 640
APR: 5.99-29.99%Repayment terms: 3-5 yearsFunding amounts: $2,000-$35,000Funding timeline: 1-3 business daysOrigination fee: 0.99%-6.99%Other fees: Rejected payment: $15; late payment: $15Minimum credit score required: None
APR: 7.99-35.97%Repayment terms: 3- and 5-year termsFunding amounts: $1,000-$35,000Funding timeline: Next business dayOrigination fee: 2.9-8%Other fees: Rejected payment: $10; late payment: $10Minimum credit score required: None
APR: 7.98-35.99%Repayment terms: 3- and 5-year termsFunding amounts: $1,000-$50,000Funding timeline: Next business dayOrigination fee: Up to 8%Other fees: Rejected payment: $15; late payment: 5% of payment or $15, whichever is greaterMinimum credit score required: None
Frequently asked questions
What is a personal loan?
Most people take out a personal loan to consolidate debt, finance home improvements, pay for a wedding or other family-related expense or pay for a medical emergency — but lenders will allow you to use funds for any purpose other than paying educational expenses or making investments.
Personal loan amounts generally fall between $5,000 and $50,000, though some lenders will lend you as little as $1,000 or as much as $100,000. The average repayment period (or term) is between three and five years. Most institutions charge an interest rate between 10 and 15%, though they can go as low as 2.49% and as high as 36%. Borrowers may tailor a loan to their specific circumstances, though lenders may be less flexible if your credit history has blemishes.
Which factors determine my APR?
The factors that determine your eligibility for a personal loan will also dictate the APR you’re offered. An applicant with a high credit score, long and consistent credit history and stable financial standing will usually qualify for the lowest APR. Those with less sterling credentials will be subject to higher APRs. (One of the bitter ironies of financial services is that those who have less need to borrow are usually offered better terms.)
Loan size and term length will also play a factor; a shorter-term loan may have a lower APR, which is another good reason to pay back your loan as soon as possible. Though the notion of a low monthly payment can be appealing, longer terms usually result in higher total costs over time.
Do I need a certain credit score to qualify?
Most lenders look at an array of factors to determine eligibility for a personal loan. Yes, your credit score is important — but so is your credit history, current financial situation (including employment status and annual income), debt-to-income ratio and any other debts and obligations. Lenders want to understand how likely you are to pay off the loan on time.
Having a credit score of 700 and up increases your chances of being approved. A credit score under 600 may make it more challenging. That noted, if you are on the lower end of that range, a steady job or dependable income may be enough to compensate. Likewise, if you have a high credit score but recently lost your job or have many outstanding debts, you may be denied.
Payoff’s “Getting Approved” page includes a helpful criteria overview.
Once I’m approved, when can I expect to receive my funds?
Usually between one and three business days. That depends on whether any questions about your financial situation surface — and how quickly you respond to them. It’s worth noting that your bank plays a part — some checking accounts take longer than others when it comes to receiving transfers from outside institutions.
What are the alternatives to a personal loan?
The best alternative to taking out a personal loan is saving up and paying in cash. If that’s not possible, you could apply for a balance transfer credit card or other card that offers an introductory 0% APR period. You will need to pay off the entire balance during that introductory period, which usually lasts between six and 18 months, before being subject to the high APRs that are customary for these types of credit cards.
If your credit score is less than stellar, you may be eligible only for a secured personal loan, which may offer a lower interest rate, but which requires you to put up an asset as collateral.
What’s the difference between a secured loan and an unsecured loan?
Lenders may advertise different types of loans for specific purposes such as paying for home improvements or consolidating debt. But, in most cases, a loan is a loan — with two basic types. With an unsecured personal loan, you borrow money and pay it back at regular intervals with a fixed rate of interest. If you have a lower credit score, you may only be eligible for a secured personal loan, which will require you to put up an asset as collateral. And though the best personal loans don’t charge fees for “origination” or “administration” or rejected payments, borrowers with lower credit scores, and fewer options, may have no choice but to pay them.
What can’t I use a personal loan for?
Most lenders don’t allow loan funds to be used to pay for higher education costs such as college tuition or paying off a student loan. Some prohibit the use of loans for investing or real-estate deals. Each lender has its own short list of restrictions — and if you’re not sure, it’s always better to ask.
What’s the difference between a personal loan for debt consolidation, home improvement or some other purpose?
Nothing. Some lenders suggest that different types of loans are used for different purposes but, at the end of the day, they’re all essentially the same: You borrow the money and then you pay it back at regular intervals along with a fixed rate of interest.
What happens if I miss a payment or default on a loan?
Even if a lender doesn’t immediately charge you a fee if you miss a payment, you’re still responsible to pay off the loan. If your payment is more than 30 days late, your loan could be considered in default. Defaulting on a loan can carry severe consequences; your credit history will suffer, your credit score will plunge — as much as 100 points per late payment — and you’ll be far less likely to get another loan in the future.
If you continually miss payments, a lender can sell your debt to a collection agency that may charge its own fees and aggressively pursue you through emails and phone calls. Ultimately, a lender can take you to court to seek reparations if you don’t remedy the situation. Be careful, make your payments promptly and don’t borrow money that you can’t pay back.
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