How We Choose The Best Personal Loan
- Loan features: Compare the best personal loans based on features like potential loan amounts, interest rates, and available repayment plans. Look for companies that will let you get the loan amount you need along with a monthly payment that makes sense for your budget and financial goals.
- Interest rates and fees: Strive to secure the lowest possible rate, but compare personal loan companies based on their rates to get the best among them. Also note that many personal lenders offer loans with no origination fees and no hidden fees.
- Application process: Look for a personal loan company that lets you check your rate without any impact to your credit score. Online lenders stand out because you can apply and get your loan funded without visiting a loan office in person.
- Qualification process: Have a basic understanding of each lender's qualificatio, such as minimum credit score or minimum income requirements.
- Customer support: Look for lenders that have robust customer service options, which may include a customer service hotline, an email form, or online chat options.
- Online user reviews: Compare lender reviews from past users on websites like Trustpilot and the Better Business Bureau (BBB). Keep in mind that all lenders have their share of negative reviews, but that the best ones have mostly positive reviews.
- Perks and Bonuses: Finally, check to see which personal loans come with perks and bonuses, such as refer-a-friend programs or incentives for signing up. Also check for auto-pay discounts that can lower your interest rate.
Main Features of The Best Personal Loans
|Company Name||Estimated APR||Minimum Credit Score||Loan Amount||Loan Terms|
|LightStream||3.49% to 19.99% APR with auto-pay||660||$5,000 to $100,000||36 to 240 months|
|Marcus by Goldman Sachs||6.99% to 19.99% APR||660||$3,500 to $40,000||36 to 72 months|
|Upstart||5.22% - 35.99% APR||300||$1,000 to $50,000||36 or 60 months|
|Best Egg||5.99% to 35.99% APR||550||$2,000 to $50,000||36 or 60 months|
|OneMain Financial||18% to 35.99% APR||Not disclosed||$1,500 to $20,000||24, 36, 48, or 60 months|
|Upgrade||5.94% to 35.97% APR||580||$1,000 to $50,000||24 to 84 months|
|Avant||9.95% to 35.99% APR||580||$2,000 to $35,000||24 to 60 months|
|Payoff||5.99% to 24.99% APR||550||$5,000 to $40,000||24 to 60 months|
|SoFi||6.99% to 21.78% APR with auto-pay||Not disclosed||$5,000 to $100,000||24 to 84 months|
|Rocket Loans||5.970% to 29.99% APR with auto-pay||Not disclosed||Up to $45,000||36 or 60 months|
What is a Personal Loan?
A personal loan is unsecured debt offered to borrowers in a lump sum. Most personal loans come with fixed interest rates, fixed monthly payments, and fixed repayment terms. This makes personal loans a good option for borrowers who need cash but don't want t the high interest rates and unpredictable monthly payment amounts of credit cards.
Reasons to Get a Personal Loan
Here are reasons to consider personal loans over credit cards:
- You want to borrow a lump sum of money and pay it off with a fixed repayment plan
- Fixed interest rates appeal to you, especially when you compare the high variable rates credit cards may charge
- You need cash to finance a large purchase or event
- You want to consolidate debt from high-interest credit cards, loans or other debt, like medical bills
- Your home needs major repairs, but you don't want to make it as collateral for debt
- Applying online and getting your funding quickly is important
How Do Personal Loans Work?
The best personal loan companies let borrowers check their rate online without a hard inquiry. From there, borrowers can look for the lowest personal loan rates, and the best terms to meet their needs. If they decide to move forward with the loan process, they will complete a formal loan application. After approval, the loan proceeds are electronically transferred to the borrowers' bank account — sometimes as soon as the next business day.
How to Qualify for a Personal Loan
To qualify for the best low APR personal loans, you should have a good credit score, or any FICO score of 670 or higher. Maintain a relatively low debt-to-income ratio and a steady income that proves your ability to repay. There are personal loans for bad credit as well, although they come with higher interest rates and fees.
How to Get a Personal Loan?
Although the the loan process varies by lender, the steps required to get a personal loan are fairly consistent among online lenders. The following steps can help you get the lowest personal loan rates and loan amounts you need.
- Step 1: Figure out how much you need to borrow, and use a personal loan calculator to see how your monthly payment might be.
- Step 2: Look at the best personal loan companies to see which lenders offer the loan amount and repayment terms you need.
- Step 3: Check your rate online and without a hard inquiry, and compare rates across at least three different lenders.
- Step 4: Look closely at loan terms, and compare loan options based on interest rates, repayment options, and fees.
- Step 5: Find the best personal loan for your needs, and move forward with the loan application.
- Step 6: Plan to share information such as your full contact details, social security number, and employment data during the loan application process.
- Step 7: Wait to receive notification that your personal loan application has been approved.
- Step 8: Receive your loan funds electronically in your bank account.
- Step 9: Begin repayment based on the repayment terms you agreed to in your load agreement.
Best Place to Get a Personal Loan
There are many places to get a personal loan, and the best option for you depends on your preferences. Consider the following options before you apply.
- Online Lenders: Online personal loans are easiest to apply for since you can complete your loan application and get funding from anyplace you have an internet connectin. Without a physical location in most cases, online personal loan companies often offer the lowest personal loan rates and best terms.
- Traditional Bank: Here, you may be in a better position to qualify if you have a long history with one of them. Their rates and terms will vary, however, so make sure to compare them with personal loans from other sources.
- Credit Union: Personal loans from credit unions provide competitive rates and terms c. If you already belong to a credit union, you should check their options to see how their personal loans compare to other lenders.
Personal Loan Interest Rates
While personal loan interest rates are based on factors like your debt-to-income ratio and overall financial health, one of the most important factors for determining your eligibility is your credit score. The chart below shows how your interest rate can vary based on your FICO credit score.
|Credit Score Range||Average Loan Rate|
|Excellent Credit (720 to 850)||10.3%–12.5%|
|Good Credit (690 to 719)||13.5%–15.5%|
|Average Credit (630 to 689)||17.8%–19.9%|
|Bad Credit (300 to 629)||28.5%–32.0%|
Pros and Cons of Personal Loans
Personal loans have their own advantages and disadvantages, especially when you compare them to other financial products. Here are some key personal loan pros and cons: