Choose a loan type
When you’re ready to plan that big wedding, breathe new life into your kitchen, buy a new set of wheels or simplify your existing debt, a personal loan could bridge your budget gaps to reach your goals. There’s a personal loan to fit nearly any need, which makes understanding exactly how they work key to getting the best rate and repayment terms you’re eligible for.
This guide shows you how to compare top online lenders to narrow down a personal loan that satisfies what you’re looking for. We’ll take you from consideration to application to approval — including the documentation you’ll need and how to get an edge on low rates.
Compare personal loans
Use this table to compare the interest rates, loan amounts and eligibility requirements of top online lenders.
What’s a personal loan?
A personal loan is money you borrow from a lender that’s paid back with interest over a set period of time — usually between one to seven years. Your lender will determine your loan amount, interest rate and fees based on factors like your credit score.
I want to…
How top online personal loan lenders stack up
|Max Loan Amount||APR’s as low as…||Best for…|
|Prosper||$35,000||5.99%||Finding a low-cost loan.|
|LendingClub||$40,000||5.99%||Finding multiple types of financing.|
|SoFi||$100,000||5.49%||Refinancing, especially student loans.|
|Upstart||$50,000||7.16%||Getting a loan with limited or poor credit.|
What can I use a personal loan for?
What can’t you use a personal loan for? This type of financing can cover almost any large expense or even consolidate your debt. Check out our guides below to see how you can use them to reach your next goal, take care of financial obligations or fund your next big purchase.
I want to…
Just some of the top personal loan providers we compare
What types of loans can I take out?
- General use personal loans
Some lenders offer general purpose loans to use as you see fit.
- Business loans
You can borrow funds to grow your small business or get advances on your unpaid invoices.
- Car loans
Lenders offer car loans to buy a new or used vehicle or refinance your current auto loan.
- Student loans
There are multiple borrowing options to pay for school, including public and private student loans. Lenders also offer student loan refinancing to help you get a better rate on what you’ve previously borrowed.
If you need cash right away or only want to make a small purchase, however, a using credit card can be a better choice.
Find out more about when a personal loan or credit card makes sense
What makes a personal loan competitive?
There are a few key features you’ll want to consider when comparing loans. To find the best deal, ask yourself these questions:
- Do I qualify for this loan? Don’t waste time researching a loan if you don’t meet the requirements.
- Does it match my needs? Will you be able to take out the exact amount you need and afford to pay it back in a reasonable amount of time? If not, you might want to look elsewhere.
- Does it have a competitive interest rate? Look at the rate itself, but also consider whether it’s fixed or variable — variable interest rates are subject to change.
- What are the fees? Most lender will charge application, origination, prepayment or late fees.
- How long will I have to pay it back? Aim for a loan term that gives you payments you can afford without being too long. Otherwise, you could wind up paying a lot in interest in the long run.
5 essential tips to get the best rate on a loan
Guides for even more answers to questions about personal loans
I want a personal loan — where should I look?
- Direct lenders
These lenders offer straightforward application processes so you can conveniently borrow money online. If approved, your loan amount will be deposited into your bank account. Compare direct lenders above.
- Lender matching services
Brokers can pair you with a lender that suits your needs. After you fill out a preliminary application with the broker, you’ll be matched with a lender who offers the loan type you’re looking for in the amount you need. The lender must still make a decision on your application before you receive your funds.
- Banks and credit unions
If familiarity is important to you, you can consider getting a loan through the credit union or bank you already have a relationship with. The application process may be expedited if you have an existing account with the institution. Keep in mind that banks and credit unions tend to have stricter eligibility criteria than other lenders.
- Peer-to-peer lenders
Relatively new to the financial market, peer-to-peer lenders operate as marketplaces that bring investors and borrowers together. They essentially facilitate the loan process between individuals rather than offering the loans themselves.
How much do personal loans cost?
Two main factors contribute your loan’s cost: Interest rates and fees.
- Interest rate. This is what the lender charges you to borrow money and is usually a percentage of the loan amount.
- Fees. There are a few fees that can add to the cost of your loan. It’s common to see origination fees up to 5% of the loan amount. Watch out for prepayment penalties if you plan to pay your loan off early. Lenders may also charge for late or missed payments and unsuccessful or failed payments.
Your combined interest and fees is known as an annual percentage rate (APR). Your APR can give you an idea of how much your loan is going to cost. Typical personal loan APRs can range from 5% to 20% APR, but can be higher for those with bad credit.
How can I get a lower rate on my personal loan?
Watch the 2-minute video above or read the tips below.
- Compare your options.
If you have a long banking history with a current bank or credit union, one option is to consider borrowing from that financial institution. However, online lenders offer a wide variety of loan types that may fit your needs better than what your bank offers.
- Find out your credit score and review your credit report.
You’ll generally need a score in the “good” range — 680 and above — to secure a decent rate. Your credit score and credit report are two different things. The latter is a detailed record of your credit history. Learn how to get a copy of your credit report and be sure to check for errors. Correcting incorrect listings, such as unpaid accounts that were actually paid, can help improve your credit score and help you get a better APR on a loan.
- Check rates, but don’t apply yet.
Loan applications may appear as inquiries on your credit report. Be sure to review the eligibility criteria to see if you may qualify. When comparing your options, you can also ask if the lender can give you a pre-approval before submitting your actual loan application. Asking questions before you fill out an application can help narrow down your options.
- Pay down your debt.
Having a lower debt-to-income ratio can improve the rates and repayment terms you’re ultimately offered. Aim to keep it under 20%.
- Only apply for the loan amount you need.
The amount you apply for has a direct influence on the rate you’re offered, so only ask for as much as you need.
Am I eligible for a personal loan?
Lenders take on risk when they lend large amounts of money to borrowers. That’s why they require applicants to meet certain eligibility criteria. Here are some common qualifications lenders look for:
- Good to excellent credit. Most lenders rely on credit scores when choosing borrowers to approve and even calculating specific loan terms. If you have poor or no credit, check out our guide on bad credit loans to see your options.
- Employment. Most lenders will require you to be steadily employed. Some lenders have minimum income requirements as well.
- US citizen or permanent resident. If you’re a US citizen or permanent resident, you’re able to apply for personal loans. Temporary residents are only eligible to apply with certain lenders and may need to build up a credit history. They may also need a US citizen to cosign the loan. You may be able to get one as a non-US resident if you have full-time employment and a US Social Security number.
- 18 or older. Since the age of majority varies by state, the minimum age for lenders varies as well and is usually between 18 and 21.
Personal loan application checklist
The application process differs between lenders, but they’ll generally ask for the following:
- Proof of your identity, like a government-issued ID, US passport or military ID
- Your Social Security number and date of birth
- Pay stubs, tax returns and other income details
- Banking details for disbursing your funds and elective automatic repayments
How to apply for a personal loan step by step
Step 1: Determine how much you need to borrow
The first thing you’ll need to do once you decide to apply for a loan is determine exactly how much money you’ll need. Borrowing too little or too much could leave you either unable to cover your costs or with extra money you’ll be repaying with interest.
Step 2: Choose a loan type
There are quite a few loan types available. Are you looking for a secured or unsecured loan? Do you want a fixed or variable interest rate? These are just a couple of questions to consider when choosing your loan type.
Step 3: Shop around
The first lender you come across may not have the best deal. Shop around and make sure to compare things like APR, fees, turnaround time, and term of the loan. You can check out our comparison table to compare these features. Be sure to read the requirements as well to make sure you qualify.
Step 4: Apply
Applying for a personal loan is typically a quick and straightforward process that goes something like this:
- Personal details. Gather the necessary information such as proof of identity (passport, driver’s license, or ID), proof of address (utility bills or lease), and proof of income (W-2s, pay stubs or bank statements).
- Loan application. This is where you request a certain loan amount, specify what you want the loan for and choose your terms. Many banks and lenders have applications online, so you avoid the hassle of having to go to a branch and fill out paperwork.
- Loan agreement. If you’re approved, sign the loan documentation and agree to all the terms. With most lenders you’ll have a certain amount of time to rescind the agreement, should you change your mind.
Step 5: Receive the funds
Many lenders require that you have a checking account to receive your money via direct deposit, but that’s not always the only option. Some lenders may be able to send you a check in the mail.
Step 6: Spend the money
If you take out a loan for something specific, such as a new car purchase or debt consolidation, the lender may send the funds directly to the company you owe. If you take out a general personal loan, the funds will go to you to use for the purpose specified in your application.
Step 7: Make payments on time.
It’s important to make your payments on time so you don’t end up paying extra in fees. Be sure to verify how you will be required to make payments. Can you pay by phone with a credit card or account number? Is there an automatic payment option?Back to top
Managing payments with a debt consolidation loan
Already have a lot of loans? You may want to streamline your bills with a debt consolidation loan. This financial tool is designed to gather multiple debts into one place, often under one fixed rate.
Look for a debt consolidation loan with a lower interest rate than what you’re already paying — that way you can also save on interest.
How can I grow my business with a small business loan?
It may sound counterintuitive, but sometimes taking on debt can actually strengthen your financial future. This is especially true when you’re looking to start up a new business, expand a current one or even fill in funding gaps while waiting for payment.
Business loan options vary by lender but could include:
- Traditional term business loans. National Business Capital, OnDeck and other online lenders offer more flexible loans to cover just about any business need.
- Asset-based secured loans. Lenders like Biz2Credit can provide loans against your inventory or equipment to offer you funding you may not have otherwise been eligible for.
- Peer-to-peer business loans. You can get funding from individual investors on online marketplaces like Bitbond and Able Lending to leverage the support of a network of people.
As with any loan, you’ll want to carefully compare the fees, terms and eligibility of the business loan you’re interested in.
Frequently asked questions about personal loans
How much can I borrow with a personal loan?
I have bad credit – can I still get a personal loan?
Where can I get the best personal loan?
How quickly can I be approved for a personal loan?
What's the difference between the interest rate and the APR?
Can I repay my personal loan early?
What is a prime borrower?
Can I get a loan if I'm on welfare?
What is the average interest rate on a personal loan?
Are personal loans bad for your credit?
How long can you take a personal loan for?
What happens if I spend my money on something other that what the loan was provided for?
Can I get in legal trouble for repurposing my loan?
Before you visit Laurel Road..
The most qualified applicants have a minimum credit score of 680. Laurel Road tends to be best for people with annual income above $60,000 and total debt of less than 40% their income. If you don’t think Laurel Road is best for you, explore other loan options.
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