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Our Top Picks For Personal Loans

Our top lenders and loan marketplaces have a great range of options and interest rates for consumers that are based on their credit, financial situation, reason for a personal loan, and the type of loan they are searching for.

Best Personal Loan Marketplace For Consolidating Credit Card Debt: Credible

  • Minimum Credit Score: 600
  • APR: 5.40% to 35.99%
  • Loan Range: $1,000 to $100,000
  • Term Length: 12 to 84 months

Why We Like It:

  • $200 Best Rate Guarantee
  • Get personalized loan rates in less than 2 minutes
  • Partnered with 17 of the top lenders in the US

Credible offers personal loans through a loan marketplace to consumers with excellent credit.

To apply for Credible, you must:

  • Be a US citizen or permanent resident
  • Be at least 18 years of age
  • Have a valid checking account in your name
  • Have good to excellent credit

You can receive your personalized loan offers in just a couple of minutes by filling out a single online form.

You simply have to create an account and enter some basic personal and financial information. Credible authorizes a soft credit check to learn more about your financial history, which they can complete quickly since they work with the three major credit bureaus (Experian, Equifax, and TransUnion).

If you pre-qualify, you are sent your loan offers by Credible's vetted lenders. You can choose your desired loan and complete the full application with your lender.

Credible's client support team keeps in touch with you through the entire loan process. Customers can contact them through phone, email, or chat to speak directly with a representative.

Best Personal Loan For Bad Credit: 5KFunds

  • Minimum Credit Score: No minimum credit score
  • APR: 5.99% to 35.99%
  • Loan Range: Up to $35,000
  • Term Length: 2 to 72 months

What We Like:

  • Competitive rates
  • Large network of lenders
  • US-based customer service that can be reached easily by phone or email

5KFunds is a completely free online lender comparison service that allows you to quickly find the best loan for your specific needs, regardless of your credit history. They have an extensive partner network of over 100 lenders that offer competitive interest rates and fast funding.

To apply for a loan from 5KFunds, you must meet the following criteria:

  • Be at least 18 years of age
  • Be a US citizen
  • Have a steady stream of income
  • Have a valid bank account, preferably with direct deposit

5KFunds' application process only requires you to fill out some basic financial information. They do not require an initial credit check requirement and pre-approval takes as little as 90 seconds.

If you pre-qualify, you will be contacted by your lender to complete the application process and receive your loan terms from them directly. Some lenders may perform a hard credit check at this time, which lowers your credit score.

5KFunds services are completely free, although partner lenders may charge fees that are disclosed in your loan terms. You can receive your funds directly deposited to your bank account as soon as the next business day.

Best Personal Loan For Fair Credit: Upgrade

  • Minimum Credit Score: 600
  • APR: 8.49% to 35.99%
  • Loan Range: $1,000 to $50,000
  • Term Length: 24 to 84 months

What We Like:

  • Unsecured loans with fixed interest rates
  • Funds that are directly deposited as quickly as the same business day

Upgrade is a fairly new personal loan company that offers online personal loans for those with fair to excellent credit.

To apply for a loan from Upgrade, you need to meet specific eligibility requirements:

  • Be at least 18 years of age (or 19 in some states)
  • Be a US citizen, permanent resident, or be living in the US with a valid visa
  • Have a valid and verifiable bank account
  • Have a valid email address
  • Live in one of the eligible states
  • Have at least 3 years of credit history

Upgrade's application process can be filled out on Upgrade’s home page. You simply enter some basic information like your loan amount, the reason you want to borrow, and some personal details in order to check your rate.

Once this is done, Upgrade shows you multiple loan options or will notify you that your application has been denied. If you decide on an offer, Upgrade authorizes a hard credit check and verifies your bank account information before directly depositing your cash as soon as the same business day.

Upgrade Disclaimer: Personal loans made through Upgrade feature APRs of 8.49%-35.99%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's lending partners. Information on Upgrade's lending partners can be found at https://www.upgrade.com/lending-partners/.

Best Personal Loan For Good Credit: GuideToLenders

  • Minimum Credit Score: N/A
  • APR: 4.99% to 35.99%
  • Loan Range: $1,000 to $40,000
  • Term Length: 24 to 84 months

What We Like:

  • Peer-to-peer online marketplace
  • Competitive rates

Guide to Lenders offers a P2P online marketplace to connect borrowers with interested investors.

To qualify, you must meet a few requirements:

  • You must be a US citizen
  • Be at least 18 years of age
  • Have a verifiable bank account
  • Have a steady source of income

Applicants can receive multiple offers based on their credit after filling out a secure form, which is a simple form that only takes a few minutes. You only need to provide some basic information like your name, annual income, date of birth, email, phone number, and zip code.

If you are preapproved for any loans, you can compare them and choose the best loan offer for your situation. Guide to Lenders does not authorize a hard credit pull, but your lender will conduct one after you have chosen a loan in order to check your credit history.

Best Personal Loan For Major Purchases: LightStream

  • Minimum Credit Score: 660
  • APR: 7.49% to 24.49% with AutoPay (rates vary by loan purpose)
  • Loan Range: $5,000 to $100,000
  • Term Length: 2 to 7 years

Why We Like It:

  • No extra fees
  • $100 loan experience guarantee and the ability to beat any qualifying rate
  • Available nationwide
  • Autopay discount

LightStream is our top pick for major purchases due to their high loan amount and lower-than-average rates. They provide fast funding times and a wide range of loan terms.

LightStream is unique in the fact that your interest rate is based on the reason you take out your loan. To apply for LightStream, you must meet several requirements:

  • Be at least 18 years of age (or your state's minimum age requirement)
  • Have an excellent credit score
  • Have a credit history of at least five years
  • Have a low debt-to-income ratio
  • Have a minimum $50,000 annual income
  • Have a history of on-time payments

You can apply directly on LightStream's website and choose the type of loan you want to take out. If your credit history isn't ideal, you can apply with a cosigner to qualify for better loan terms.

LightStream doesn't require a pre-approval process and instead authorizes a hard pull from Experian and Equifax. This look at your financial history helps determine your loan amount, term length, monthly payment, and interest rates.

After you have created your account and entered your personal information, you must upload documents proving your identification and income. Once your application is processed, you will be notified if you are approved and you can receive your funds as quickly as the same business day.

Contact: Please contact us with any questions at [email protected].

APR representative example: Assuming a loan of $10,000 with a 72 month (3 year) repayment period, 7.99% interest rate and 11.51% APR, and a $350 origination fee, the borrower will receive $9,650 after the loan funds and will repay $313.32/month (for a total amount repaid of $11,279.43).

Best Personal Loan For Excellent Credit: SoFi


Minimum Credit Score: 660 APR: 5.95% to 14.75% for fixed rates with AutoPay, 5.825% to 14.365% for variable rates with Autopay Loan Range: $5,000 to $100,000 Term Length: 3, 5, or 7 years

Why We Like It:

  • Competitive low rates
  • High loan amounts up to $100,000
  • Flexible loan terms
  • Unemployment protection program
  • No origination fees, closing costs, or prepayment penalties.

Social Finance, also known as SoFi, is an online lender that provides loans and exclusive benefits for individuals with excellent credit.

SoFi looks at several factors including credit history, a high-income career (or potential high-income career in a growing field), degree, education, financial history, and payment history in order to determine if you are a reliable borrower. You must also meet a few other requirements:

  • Be a US citizen or permanent resident
  • Be over 18 years of age
  • Live in one of the eligible states

To apply, you simply create a username and password and fill out some basic personal information like your education and career. After SoFi has processed your information and performed a soft credit check, you can see which loans you are eligible for. From there you can choose between a fixed or variable rate loan.

Once you have chosen a loan, SoFi authorizes a hard credit check and if you are approved, you must upload documentation (like your driver’s license or paystub) and choose a bank account for your funds before signing the loan agreement.

In addition to their loans, SoFi also provides many value-added benefits, such as an unemployment protection program and exclusive networking events.

What is a Personal Loan?

A personal loan is a type of loan you can get from a bank or another lender. You can use a personal loan for things like buying a car, consolidating high-interest debt, making home improvements, or paying for a vacation. When you take out a personal loan, you receive your funds in a lump sum and then pay it back over time with interest. Different companies offer different rates and loan terms, so it’s essential to compare multiple offers to find the best one for you.

Most personal loans are unsecured, meaning they do not require any collateral or security to back them up. These types of loans are usually offered by banks, credit unions, and other financial institutions. They’re often more difficult to qualify for than secured loans, as there is no collateral that lenders can seize to guarantee repayment if you default. Unsecured personal loans usually come with higher interest rates and stricter eligibility requirements to qualify.

In contrast, secured personal loans are backed by an asset, such as a house or car, that the lender can seize if the borrower defaults on the loan. These loans are much less common but typically have lower interest rates and more flexible repayment terms because they pose less risk to lenders.

How do Personal Loans Work?

The process of applying for a personal loan typically begins by researching and selecting a loan provider that suits your needs. Once you identify a suitable lender, you’ll need to complete an application and provide supporting documents such as identification and proof of income. The lender will then assess your credit history and financial situation to determine if you qualify for a loan and what interest rate will apply. They may call you to confirm the details of your application or ask for additional documentation as necessary.

If you qualify for a loan, the lender will present you with a loan agreement that includes your interest rate and other terms and conditions of your loan. Once you sign the agreement, the lender will release the funds to your account, which you can use for their intended purpose. You’ll also be required to start making regular payments on your loan—typically monthly—composed of both principal and interest.

Reasons to Get a Personal Loan

Taking out a personal loan can be a great option if you need access to funds quickly and don’t want to put your assets at risk with secured financing options. In addition to offering fast funding speeds, personal loans are flexible and funds can be used for a wide range of purposes. These are some of the most common reasons to get a personal loan:

  • Debt consolidation: Personal loans are a good way to consolidate existing debts into one manageable monthly payment. This can help you save money on interest rates and eliminate the stress of keeping track of multiple payments.
  • Home improvements: Personal loans can be used for home improvement projects such as renovating a kitchen or bathroom, making energy-saving upgrades, or building an addition, patio, or deck.
  • Business startup costs: A personal loan can provide small business owners with the funds to cover startup costs such as rent, inventory, supplies, and marketing expenses.
  • Educational expenses: Most lenders won’t let you pay for college tuition with a personal loan. However, you can use this type of loan to cover expenses like textbooks, living expenses, and other educational materials that may not be covered by scholarships or grants.
  • Medical bills: Taking out a personal loan is one way to cover unexpected medical bills, ranging from emergency care to major treatments like surgery. Many of these treatments require upfront payments that most people don’t have saved in their bank accounts. Taking out a personal loan is one way of paying these expenses without having to dip into savings that could be needed elsewhere.
  • Emergencies: Emergencies can happen at any time, and when they do, it is important to have access to cash. Personal loans can be a great way to cover unexpected expenses without resorting to credit cards or payday loans with unreasonable interest rates.

While it’s also possible to finance a vacation or wedding with a personal loan, it’s not typically a wise financial decision. Personal loans often come with high interest rates and fees that can add up quickly, increasing the overall cost of the event. Additionally, taking on debt to finance a trip or celebration can put added stress on an already expensive experience. By avoiding personal loans to fund leisure activities, you can better manage your finances and avoid unnecessary debt.

How much can I get with a personal loan?

Personal loan amounts typically range from a few thousand dollars to $100,000 or more, depending on your income, credit history, and other factors. Additionally, the type of loan you choose—secured or unsecured—will also impact the amount you qualify for. You may be able to borrow more with a secured loan, but only if you have the collateral, such as a vehicle or home, to support a higher loan amount. If you’re applying for an unsecured loan, lenders are typically willing to lend up to a certain percentage of your annual income, with allowances made for monthly payments for your other debts.

Understanding personal loan interest rates and fees

When it comes to personal loans, one of the most important factors to consider is the interest rate and the annual percentage rate (APR). Your interest rate is the annual cost of borrowing money, which is typically expressed as a percentage of the loan amount. Your APR, on the other hand, includes not only the interest rate but also any fees associated with the loan, which provides a much more accurate representation of the total cost of borrowing.

Credit Score Possible APR Range
Excellent (740-850) 3.49% - 6.99%
Good (690-739) 6.99% - 10.99%
Fair (630-689) 10.99% - 17.99%
Bad (300-629) 17.99% - 35 %

The interest rate you qualify for can depend on a variety of factors, including your income, credit score, employment history, other existing debts, and the loan amount and loan term. Lenders typically use complex formulas to determine your risk level, affecting the interest rate they offer you. Generally, the better your credit score and financial history, the lower your interest rate and APR will be. For this reason, it’s essential to review your credit report and shop around with different lenders before applying to ensure you can secure the best rate and terms based on your circumstances.

These are some other fees you may encounter when taking out a personal loan:

  • Application fee: An upfront charge to cover costs associated with reviewing a loan application, such as credit checks and background verification.
  • Origination fees: A fee charged by the lender for processing and approving a loan.
  • Service fees or maintenance charges: These are fees that lenders may charge annually for providing customer service or managing accounts over time.
  • Late payment fee: A fee charged when you make a payment after the due date.
  • Insufficient funds fee: A fee that may be charged if your monthly payment bounces or fails to process due to insufficient funds in your account.
  • Prepayment penalty: A fee that is charged if you pay off your loan early.

How to Choose the Best Personal Loans

A personal loan is a tool that you can use to assist your financial needs in any situation, such as funding your education, renovating your home, and even paying off other debts.

Personal loans have much more competitive interest rates and terms than credit cards, making it an ideal option for consolidating your credit card debt or anything that requires a large amount of cash.

Picking a personal loan is an important decision and it can be difficult to find the best one for your situation, so we've assembled a list of the best lenders and marketplaces that fit your personal profile. We use the following criteria to assess the best lenders:

  • Transparency: Look for a company that provides important information upfront. Many companies have a loan calculator to help you find your interest rate based on your financial situation, while your loan terms and ranges can be easily found by filling out a short online loan request form or calling the company directly.
  • Time in business: Longevity in the personal loan industry is always a good sign of a reputable company.
  • Customer service and reviews: Check reviews to determine if a company is right for you. Your lender's reputation, customer service, responsiveness, and accreditation matter. You can check the BBB, Trustpilot, and Yelp to see real customer reviews and find the answers to the following questions:
    • Can this company be easily contacted by phone, email, or live chat 24/7?
    • Do they respond quickly to any questions or concerns I may have?
    • Will they keep me updated during the process?
  • Pricing and fees: In addition to your interest rates, some lenders may charge you extra fees such as application fees, late fees, origination fees, or processing fees -- these could become costly over time. Be sure to take this into consideration before agreeing to your loan terms. Most of our top lenders charge competitive rates, minimal fees, and no prepayment penalties.
  • Loan amounts: Your lender should offer loan amounts that go as high as you need, all while keeping reasonable interest rates. Some of our recommended lenders only offer amounts up to $5,000, while others may offer loans up to $100,000.
  • Speed of funding: Online lenders are well known for being able to directly deposit your funds to your checking account, which means you can receive your loan much quicker than if you went through a bank or credit union. Most of our top lenders offer same-day funding.
  • Types of loans offered: In addition to interest rates and fees, you can also choose between a variety of loans, such as fixed and variable loans. Fixed rates stay the same throughout the life of the loan, while variable rates fluctuate depending on the economy. These usually start lower and increase during the loan term; however, most lenders cap the interest rates at a certain point. Lenders may also allow cosigned loans, which is when a trusted friend or family member cosigns a loan with you. While this can help you get lower interest rates, it is a risky option since your credit and your co-signer's credit is on the line. If one person defaults, the other is responsible for paying the loan back.
  • Repayment period: If you are able to, it's better to choose a shorter repayment period and save money over the life of the loan. If you pick a long repayment term, you end up paying more over the life of the loan due to interest -- even if your monthly fixed amount is lower. Monevo offers the lowest starting interest rates out of all the top loan comparison marketplaces we reviewed.
  • Nationwide service: Most of our recommended lenders offer their services in most US states.
  • Ease of application: Top online lenders make applying for a loan much simpler and quicker than banks and credit unions. The majority of online lenders and marketplaces will have you fill out one single online application that asks for basic personal and financial information like your name, address, employment information, income information, Social Security number, and loan information before connecting you with your loan offers.
  • Your personal credit history: This last factor depends on you. Whether or not you have good or bad credit determines what type of loans you qualify for. Your creditworthiness is determined by a number of factors, such as your loan repayment history, which gives lenders an idea of how much of a risk you are as a borrower. With a high credit score, your interest rates will be much lower; however, you can still get a loan even with lower credit scores.

Where to apply for a personal loan

There are several places to apply for a personal loan, including traditional financial institutions like banks and credit unions, online lenders, and paper-to-peer lenders. Depending on your borrowing needs and qualifications, you may even opt to borrow from friends and family. Here’s where to apply for a personal loan and how each option stacks up:


Traditional banks offer a range of loan amounts to fit different financial needs—usually up to around $50,000, though borrowing limits may be higher (some go as high as $100,000). To qualify, banks often require a good credit score, a stable income, and a low debt-to-income ratio. Interest rates may be fixed or variable, and banks may charge origination fees, late payment fees, prepayment fees, or other charges.

Personal loans from banks typically have stricter credit requirements than credit unions and online lenders. Still, they may come with more competitive interest rates than online and alternative lenders. Unlike credit unions, banks do not impose membership requirements, though some require that you maintain an account at the bank to qualify.

Generally, individuals with a steady source of income, good credit history, and a clear repayment plan are ideal candidates for a personal loan from a bank–especially if they’re already customers of the bank. If you can demonstrate financial responsibility and have a solid plan to repay the loan, you are the best candidate for a personal loan from a bank.

Credit unions

Personal loans offered by credit unions typically range from $500 to $30,000, depending on the credit union and the borrower’s creditworthiness. Interest rates are usually more competitive than those available from banks and online lenders and can range from around 6% to 18% APR. Eligibility requirements vary among credit unions but typically include being a member of the credit union, having a good credit score, and having a steady source of income.

Credit unions offer a unique advantage over banks and online lenders because they are non-profit organizations that prioritize member service over profit. This means they often offer more competitive rates and terms than other traditional lenders. In addition, credit unions are typically more understanding of their members’ financial situations and may be willing to work with them to find a loan that meets their needs.

Online lenders

Online lenders are financial institutions and marketplaces that offer personal loans through their websites or apps. These loans typically range from $1,000 to $50,000 (though some go as high as $100,000), with interest rates ranging from 8% to 30% or more.

Online personal loans are typically the easiest to qualify for and usually require applicants to have at least some minimum credit score, proof of income, and some other basic financial and personal information. These lenders focus on providing a fast, convenient, and accessible option for individuals seeking personal loans, as they allow borrowers to easily compare rates and apply for loans quickly and easily online without having to visit a bank branch or other financial institution.

Online lenders offer quick applications and high approval rates. In comparison to traditional banks and credit unions, online lenders have more lenient eligibility requirements but higher interest rates. While banks and credit unions may offer lower interest rates, the process for approval may take longer and require more documentation, making online lenders a convenient option if you need quick access to cash.

Peer-to-peer lenders

Peer-to-peer lenders are online lending platforms that connect borrowers with investors willing to lend money. The process is simple: borrowers apply for a loan, and if their credit and financial history meet the desired lending criteria, they receive funding from individual investors. Peer-to-peer loans typically range from $2,000 to $50,000, though some peer-to-peer loans for business are larger, ranging up to $500,000. Interest rates are typically determined by the borrower’s credit score, with rates ranging from 7% to 36%.

Peer-to-peer lenders offer a convenient and flexible alternative to traditional bank loans, with the added benefit of potentially lower interest rates for those with strong credit histories. If you need money quickly and don’t want to go through the hassle of applying for a loan at a bank or credit union, a peer-to-peer loan may be a good alternative.

How to apply for a personal loan

Follow these steps to apply for a personal loan:

Check your credit

Before applying for a personal loan, it’s important to check your credit score and review your credit history. This will help you understand where you stand in terms of creditworthiness and give you an idea of what kind of interest rate and loan amount you could qualify for. One way to do this is by requesting a free copy of your credit report from one of the three major credit bureaus—Equifax, Experian, and TransUnion. Alternatively, you can also sign up for an independent credit monitoring site like Credit Karma or check your credit through your bank.

Determine how much money you need

Before you apply for a loan, determine how much money you actually need. Taking out more than necessary could result in higher interest payments over time. It can also make it difficult to pay back the loan. On the other hand, taking out too little can leave you with insufficient cash to cover your expenses. Once you know what amount will best suit your needs, you can begin shopping around for lenders.

Get pre-qualified

Many lenders offer pre-qualification services that make it easier to compare offers and find the best loan for your needs. Pre-qualifying is typically a quick process where you answer basic questions about your financial situation and credit history and then receive an estimate of what kind of loan terms you may qualify for without any hard pulls on your credit. The lender will then use this information to give you a preliminary loan offer with terms that fit your situation.

Compare loan providers

Once you are pre-qualified with multiple lenders, compare the loan amounts, terms, APRs, and fees to find the best loan for your needs. If you’re unsure of which lender to choose, consider talking to a financial advisor or credit counselor who can help guide you in the right direction. You may also want to check online reviews of various lenders you’re considering to see which have provided the best customer experience to other borrowers.

Gather all necessary documents

After you choose a lender, you’ll need to gather documents that you’ll need to provide as part of your application. This includes proof of income (tax returns, pay stubs, etc.), bank statements showing current debts, and a valid ID. This paperwork is often necessary to verify your identity, creditworthiness, and income.

Submit your application

When you have your documentation together, it’s time to prepare and submit an application for your loan. This can typically be done online and includes information such as your name, address, employment history, income, and other financial details. Make sure that all of your information is accurate before submitting your application.

Once your application is approved, the lender will confirm the loan offer’s final interest rate and terms. If you accept these terms, you will receive the money in a lump sum or in installments, depending on the lender’s policies. The lender will also provide details of your loan repayment schedule, which you should read carefully before accepting your offer.

How long does it take to get a personal loan?

It can take anywhere from a couple of days to a few weeks to get a personal loan, depending on the provider you choose and the type and size of the loan you’re applying for. Online lenders are typically faster when it comes to processing loan applications. Traditional banks and credit unions may take longer, as they often require more documentation and have longer processing times.

How to choose a personal loan provider

With so many lenders in the marketplace offering different rates and terms, it can be difficult to find the one that’s best for you. There are several factors that should be taken into consideration before applying. These include your credit score, income level, loan amount, and term desired, as well as fees and other charges associated with taking out a loan. Where you currently bank, the intended use of funds, and how quickly you need funds can also be significant.

Evaluate qualification requirements

Before applying for a personal loan, make sure you understand the provider’s qualification requirements. This may include meeting minimum credit score and maximum debt-to-income requirements, among other criteria.

Compare rates and fees

Different lenders offer different interest rates and fees. Take time to review each lender’s terms before making a decision. Be sure to compare the APR (annual percentage rate), which includes both interest and other fees associated with the loan.

Compare repayment terms

Repayment terms can vary widely between lenders. Some offer flexible repayment options, while others may require a fixed repayment schedule. Make sure the lender you choose offers a repayment term that works best for your budget.

Calculate your total cost

It’s important to understand all of the costs associated with taking out a personal loan before accepting a loan offer. Calculate the total cost of borrowing, including fees and interest rates, to ensure you’re getting the best deal possible.

Read reviews

Reviews from past customers can help determine if a particular lender is right for you. Read through customer feedback on third-party websites or consult friends and family who have had experience with a specific lender.

Prioritize customer service

When choosing a personal loan provider, consider the levels of customer service each lender offers. Read reviews and look for providers that offer excellent customer service with quick response times. Additionally, some lenders may offer additional services such as financial advice or credit counseling to help you manage your loan and finances. Choosing a provider that offers these services can be beneficial if you have separate financial needs.

Watch out for scams

Be wary of lenders that promise too-good-to-be-true deals or require upfront fees. Avoid any lender that asks for money before you sign a loan agreement, as this is likely a scam. Do your research and only work with reputable lenders to ensure your financial safety.

Pros and cons of personal loans

Taking out a personal loan can be a great way to finance large purchases or consolidate debt, but it's important to understand the potential pros and cons before you make any decisions.

Personal loan pros

  • Affordable interest rates: Personal loan interest rates are generally more affordable than those available with credit cards, making them an attractive option for financing larger purchases or consolidating debt.
  • Quick access to funds: Depending on the lender and your financial situation, you could be approved for a personal loan in as little as one business day after submitting your application and have access to funds soon after that.
  • Flexible repayment options: Many lenders offer repayment plans for different budgets, including weekly, bi-weekly, or monthly payments, lump sum payment options, and others.
  • Fixed monthly payments: Interest rates on personal loans don’t fluctuate, so you know exactly how much you’ll need to pay each year.
  • No collateral requirements: Unlike secured products like auto loans and mortgages, unsecured personal loans don’t require any collateral, so you’re able to borrow money without putting any of your assets at risk.

Personal loan cons

  • Higher interest rates: Personal loans come with higher interest rates than auto loans or mortgages, as they aren’t collateralized.
  • Limited loan amounts: Depending on the lender, you may not be able to borrow as much money through a personal loan as you could through a secured product such as an auto or mortgage loan.
  • Credit score requirements: Most lenders require applicants to have a good credit score to qualify for a personal loan. If your credit score is too low, you may not be able to get a loan, or the lender may offer a higher interest rate than you might find with a secured loan.
  • Prepayment penalties: Some lenders may impose a penalty for prepaying the loan before the end of its term.
  • Origination fees: Many lenders charge an origination fee as part of their loan process, which can add anywhere from 1% to 10% of the amount borrowed to the overall cost of the loan.
  • Increased debt: Taking out a personal loan can add to your overall debt and may not be the best option if you are already overextended with other forms of credit.

Alternatives to personal loans

When considering taking out a personal loan, explore all available options before making a decision. Depending on your situation and needs, there may be other more suitable alternatives that can meet your needs without the long-term commitment of a personal loan. Here are some common alternatives to personal loans:

  • Credit cards: Credit cards provide a revolving line of credit you can use for purchases or balance transfers, and you make monthly payments based on the outstanding balance. That said, credit card interest rates may be as high as 36%. If you have an excellent credit score, look for a card with a 0% introductory APR. These typically last for nine to 12 months and can act as an interest-free loan if you pay off your balance before the introductory period ends.
  • Home equity loans and HELOCs: A home equity loan allows homeowners to borrow against the value of their property by taking out a second mortgage in addition to their existing one. Similarly, a HELOC lets you access a revolving line of credit that’s secured by your home equity. These loans usually come with low interest rates, making them an attractive option compared to personal loans. However, failure to repay the loan may result in the lender foreclosing on your property.
  • 401(k) loans: Many employers offer 401(k) plans, which allow employees access to funds through borrowing from their retirement plan at generally favorable terms such as low interest rates or no repayment fees. These loans won’t impact your credit score, and you won’t have to pay interest to a third party. That said, borrowing against your 401(k) means the funds won’t remain invested and earning interest.
  • Friends and family: Borrowing from friends and family can be a great alternative to personal loans if you have someone willing to lend you money. With this type of loan, there are often no fees and sometimes no interest associated with borrowing. However, a loan from friends or family can damage relationships if not handled carefully, so make sure you agree to the loan repayment terms in writing and that everyone understands their responsibilities under the agreement.


In general, it’s worth putting in the effort to shop around and compare multiple lenders to find the one offering the lowest interest rates and fees.

Frequently Asked Questions

What is a good interest rate for personal loans?

A good interest rate for personal loans is typically anywhere from 7.5% to 15%. However, the rate you get depends on various factors, including your credit score and financial history. Generally, the better your credit score and financial history are, the lower your interest rate and APR will be.

How are rates determined for personal loans?

Rates for personal loans are determined by a variety of factors, including the borrower’s credit score and financial history, intended use of funds, and the loan repayment period. Generally, the better your credit score and financial situation, the lower your interest rate. Additionally, professional creditors may look closely at how much debt you already have compared to your income when determining rates.

What can I use a personal loan for?

You can use a personal loan for a variety of purposes, including debt consolidation, home improvements, medical bills, education expenses, and more. Depending on the lender you use, you may even be able to use personal loan funds to cover unplanned expenses like rent or car repairs. It’s important to note that some lenders do not allow borrowers to use their loan funds for certain expenses, such as gambling or adult entertainment. Be sure to check with your lender before applying to know what kind of purchases are approved.

How many personal loans can you have at one time?

There is no strict limit to the number of personal loans you can have at one time. However, lenders will look at how much debt you currently have relative to your income when determining your eligibility for a new loan. If you already have too much existing debt, then lenders may not be willing to give you a new loan.

Can you refinance personal loans?

It is possible to refinance a personal loan, though this process involves applying and being approved for a new loan and using it to pay off the existing loan. While this can help borrowers save on interest payments over time, payments may be higher if interest rates have gone up. Different lenders have their own requirements for refinancing, so make sure that you meet their criteria before proceeding with the process.

Is personal loan interest tax deductible?

In most cases, personal loan interest is not tax deductible. Interest paid on loans from non-financial institutions such as friends and family are also typically not eligible for a deduction on your taxes. However, there are some exceptions where your interest payments could be tax deductible, such as if the loan was used to purchase investments or business assets. Additionally, if you have taken out a loan to finance education costs that would otherwise be eligible for an education credit or tuition deduction, then the interest may also be tax deductible.

Can I get a personal loan with bad credit?

Many lenders offer loans to borrowers with less-than-perfect credit, though there may be certain restrictions and higher interest rates. Some lenders specialize in providing loans to people with bad credit or no credit history, so consider those options if possible. Keep in mind that having a co-signer can also help improve your chances of getting approved for a loan, even if you have bad credit.

Does getting a personal loan affect your credit?

Getting a personal loan affects your credit in a number of ways. When you apply for a personal loan, the lender will do a hard credit check, which stays on your credit report for a period of months or years. Once you’re approved, having a personal loan appears on your credit report, which can increase your score if you’re making regular payments on time and in full. If you fail to fulfill the terms of your loan, that can also appear on your credit report and may hurt your ability to qualify for other financing.

Can you consolidate personal loans?

You can consolidate personal loans by taking out a new loan to pay off multiple existing loans, sometimes with lower interest rates or longer repayment terms. This can help you save on interest payments over time while simplifying your debt repayments into one monthly payment. However, it’s important to note that there may be fees associated with loan consolidation and other restrictions depending on your lender, so make sure to compare different offers before making a decision.