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A personal loan can be used for a variety of expenses or to consolidate debt. Before you apply, learn more about every phase of the process — from choosing the best lender to getting an edge on low rates.
Compare personal loans
Use this table to compare the interest rates, loan amounts and eligibility requirements of top lenders.
What's in this guide?
- Compare personal loans
- Some of the top lenders we review
- How top online personal loan providers stack up
- How much do personal loans cost?
- Personal loan rates by credit score
- How to compare personal loans
- How to apply for a personal loan
- VIDEO: 5 tips to get the best rate on a loan
- How can personal loans affect my credit score?
- Where can I get a personal loan?
- Top personal loan guides
- What lenders look for in a personal loan applicant
- Personal loan application checklist
- Is a personal loan right for me?
- Paying off a personal loan
- What can I use a personal loan for?
- Frequently asked questions about personal loans
Personal loans reviewed
Hours of research
Personal loan experts
Some of the top lenders we review
How top online personal loan providers stack up
|Max loan amount||APR ranges||Best for…|
|LendingClub||$40,000||6.95% to 35.89%||Finding multiple types of financing.||Read review|
|SoFi||$100,000||5.99% to 20.91%||Refinancing, especially student loans.||Read review|
|Prosper||$40,000||6.95% to 35.99%||Finding a low-cost loan.||Read review|
|Upstart||$50,000||6.53% to 35.99%||Getting a loan with limited or poor credit.||Read review|
How much do personal loans cost?
Three main factors contribute your loan’s cost:
- Interest rate. This is what the lender charges you to borrow money. It’s a percentage of the loan amount that typically ranges from 5% to 36%. Lenders can’t charge over 36% APR.
- Fees. It’s common to see origination fees up to 5% of the loan amount. Other common personal loan fees include 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.
- Loan term. Your loan term is how long you have to pay off a loan. Most lenders offer terms between 3 and 7 years. The longer your loan term, the more you pay in interest. But while you’ll pay less with a shorter term, your monthly payments could be much higher.
Your annual percentage rate (APR) is an expression of your interest rate and fees as a percentage. APR can give you an idea of how much it will cost each year you take to pay back your loan. It doesn’t include late fees, nonsufficient funds fees (NSF) or prepayment penalties.
Personal loan calculatorSee how much you'll pay
|Loan terms (in years)|
Personal loan rates by credit score
Personal loan APRs can range from 5% to 36% and vary widely by lender. And while having excellent credit can lower your rate, it can be quite difficult to qualify for the lowest possible number advertised.
Here’s what rate you might expect based on your credit score:
|Credit type||Score range||You might get an APR around…|
|Excellent||800 or higher||10%|
|Very good||740 to 799||12%|
|Good||670 to 739||15%|
|Fair||580 to 669||28%|
|Poor||579 and under||Not likely to get approved|
So who gets the lowest rate? People with long and impeccable credit histories, high salaries and almost no debt. Some lenders also don’t allow borrowers to qualify for the lowest rates unless they apply to borrow over a certain limit.
Rates can also vary based on factors like income, your debt-to-income ratio (DTI) and even your state. And even the best unsecured personal loan might have a higher rate than a loan backed by collateral.
Don’t have good credit? Consider applying with a creditworthy cosigner to get more favorable rates and terms.
How to compare personal loans
- Eligibility criteria. Don’t waste time researching a loan if you don’t meet the approval criteria.
- Loan amounts. Will you be able to take out the exact amount you need and can you afford to pay it back? Typically, good and excellent credit scores have higher borrowing limits.
- Interest rate. Look at the rate itself but also consider whether it’s fixed or variable — variable interest rates are subject to change.
- Fees. Some lenders charge origination, prepayment and late fees.
- Repayment term. Aim for a loan term that gives you monthly repayments you can afford without being too long. Otherwise, you could wind up paying a lot in interest in the long run.
- Restrictions on how you use the funds. You can use a personal loan for almost any purpose, but some lenders have spending restrictions. For example, many don’t allow you to use the funds to pay for education costs or investments.
- Collateral required. Secured personal loans require you to put up something you own as collateral — a car, a home or even a bank account. Unsecured personal loans do not.
How to apply for a personal loan
After you figure out how much you plan to borrow, you can begin the application process. Here’s what to expect:
- Choose a loan type. Decide if you want a secured or unsecured loan and if you want a fixed or variable interest rate.
- Shop around. The first lender you come across may not have the best deal. Compare factors like APR, fees, turnaround time and term of the loan.
- Prequalify. Prequalifying can give you an estimated offer based on a soft credit pull that gives your lender your estimated credit score. That way, you can compare your potential loan offers.
- Submit the full application. The loan application will require your contact details, proof of identity and proof of income. You’ll get a chance to specify your loan amount and choose repayment terms.
After your application is approved, you’ll sign a loan agreement. This contract outlines all the loan terms. Most lenders give you a period of time to sign, so you can ensure you’re comfortable with the full agreement.
VIDEO: 5 tips to get the best rate on a loan
How can personal loans affect my credit score?
If you make all of your payments on time and according to schedule, taking out a personal loan can help you build your credit. In fact, some lenders offer small-dollar, short-term loans with low interest rates that are designed to help borrowers build credit.
However, borrowing a personal loan can damage your credit if you fall behind on your repayments. Your ability to make your payments on time is the most heavily weighted factor credit bureaus consider when calculating your score.Back to top
Where can I get a personal loan?
You have a variety of personal loan providers to pick from. However, you’ll typically more loan options if you have stronger credit. Depending on the type of provider you choose, you can apply for a personal loan in person, online or over the phone.
Direct online lenders
Online lenders have more flexible lending criteria and offer a straightforward application process. If approved, your loan amount can be deposited into your bank account as soon as the next business day — but it may take up to a week.
Brokers and connection services
Brokers and connection services work slightly differently but have the same goal: to pair you with a lender that will approve you. Brokers have you fill out a preliminary application and often charge a fee for their service. Connection services are automated and don’t make lending decisions themselves.
Getting a loan from a bank might be the tradition choice, but it’s not the fastest. Banks tend to have stricter approval criteria and longer turnaround time. The benefit of borrowing with your bank is that some banks offer discounts to people who have an existing account.
If familiarity is important to you, consider taking out a personal loan at a credit union. Credit unions tend to evaluate your financial history with the institution, adding a layer of flexibility to approval. Similar to banks, credit unions tend to have longer approval and turnaround times than online lenders.
Relatively new to the financial market, peer-to-peer lenders operate as marketplaces that bring borrowers and investors together. A peer-to-peer loan is funded by a pool of individual investors online. Although the process of applying is a lot like that of a traditional loan, the turnaround time is often much longer.
Top personal loan guidesBack to top
What lenders look for in a personal loan applicant
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 that the best loan companies look for:
- Good to excellent credit. Most personal loan providers rely on credit scores. If you have poor or no credit, check out our guide to bad credit loans to see your options.
- Low DTI. You can calculate your DTI by dividing your monthly debt payments by your monthly income. Lenders can rely on this number as much as your credit score and normally don’t accept anyone with a DTI above 43%. A good DTI is anything below 36%, though under 20% is ideal.
- Employment. Most lenders require you to be steadily employed. Some lenders have minimum income requirements as well that can include wages, alimony, pensions or any other form of funds coming in on a regular basis.
- 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 but 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
- Utility bill in your name or other proof of residence
Is a personal loan right for me?
Ask yourself the following questions to determine if borrowing a personal loan is a good choice for you:
- How much do I need? Personal loans are generally better for larger one-time expenses since they come in a lump sum and most lenders have a minimum loan amount of $2,000.
- Do I have the time? Personal loans also require some planning since the application and funding process could take some time — typically at least a couple business days.
- Can I meet the employment requirements? Personal loans can be difficult to qualify for if you’re self-employed or unemployed — you’ll need to prove you’re able to pay it off to be approved.
- Do I have the credit score? You could have a hard time getting approved if you have a history of making late payments or have never taken on debt before.
Choose a loan type
Can’t I just use my credit card?
You could, but personal loans typically have lower interest rates than credit cards. In fact, people often take out personal loans to help them pay off their credit card debt at a more competitive rate.
But if you need cash right away or only want to make a small purchase, using credit card can be a better choice. It can take weeks to get your funds with some personal loans. You can also use credit cards for a wider variety of expenses, including education costs.
Find out when a personal loan or a credit card makes more sense
Paying off a personal loan
So you’ve been approved and the money is in your bank account. You’re done, right? Not quite. Now you have to pay it back according to the payment plan in your contract.
You can use a personal loan to cover a variety of purposes. In general, a personal loan can be used in place of your savings. So whatever you can pay for with cash — like a car, vacation or wedding — you can pay for with a personal loan. However, there are a few exceptions: Some lenders won’t let you use your loan funds to pay for college expenses or fund your business.Back to top
Frequently asked questions about personal loans
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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