Best Personal Loans in California

When consumers pay only the minimum amount due per month, it results in hundreds if not thousands of dollars in interest throughout the years. Personal loans in California provide a great opportunity to consolidate debts, reducing the interest paid over time and the combined minimum monthly payment. 

On top of that, with such high credit card balances, it can be hard to improve a credit score to a good rating (670 to 739) or higher, if not keep it in that good range altogether. As of the end of 2022, California residents had an average credit score of 716, which places them above the national average of 710. But those credit scores could dip without proper diligence and financial management.

The best personal loans provide a unique opportunity to improve your financial situation and quality of life, provided you have the responsibility and diligence to manage your loan obligations. Applicants in California should carefully review options for personal installment loans to ensure the best possible rates and terms. Comparing your rates across multiple lenders can ensure you get the best deal for your credit history and financial situation.

Our team of financial experts ranked lenders based on our rating methodology for personal loans and found the best loans in California. This rating methodology evaluates all kinds of lenders based on APR, loan length, repayment terms, user experience, customer service, credit score history, banking and credit union use, and additional features.

Best Personal Loans in California - Full Overview 

Here is a list of some of the best personal loans available to residents of California. 

Main Features of The Best Personal Loans in California

If you seek a personal loan in California, you should consider what is most important to you. Regardless of where you live, most borrowers want a competitive yet low APR, high borrowing limits, fast funding, and a low credit score threshold. Prospective borrowers often look for a loan option to help them build or improve their credit, especially if they are below the good range. Check out this terms comparison of the lenders we discussed above.

How to Choose the Best Personal Loans in California?

Choosing personal loans in California doesn’t have to be that complicated. With time, patience, and homework, you can find a personal loan to meet your needs. However, our financial experts have made it a bit simpler by documenting best practices that you can use as a resource when choosing your personal loans. Our experts use these parameters to rank lenders, whether you are looking for personal loans for bad credit in California or payday loans in California.

Here’s what to look for:

• Loan features - All personal loans have unique features that impact your monthly payments and the interest rate. Applicants should understand the loan terms, the amount of the loan and any use limitations before they apply.
• Interest rates and fees - Identify the APR for the loan and read the fine print for origination fees (this fee is usually due at the time you receive the loan and is generally 1% to 10% of the loan amount), late payment fees, or early payoff penalties.
• Application process - The application process for a personal loan is largely consistent from lender to lender. When you apply for a loan from a California loan company, you will likely be subject to a hard credit check which impacts your credit score by five points and remains on your credit report for one to two years.
• Qualification process - Most lenders require income information and a variety of personal information (name, address, phone number, social security number, etc.) during the application process.
• Customer support - See the lender's options for communicating with them if you require help with your personal loan. Review their hours of operation and see what communication methods are available (in-person, phone, chat, or text).
• Online user reviews - Check Trustpilot and Google for reviews from borrowers that have used the lender you are considering.
• Perks and Bonuses - Some loan companies offer perks and bonuses such as payment flexibility or advanced technology (chat or text) for communications. Another popular and beneficial perk is the ability to access your credit score, which can help you stay on top of your credit.

Reasons to Get a Personal Loan in California

Without a doubt, California is an expensive place to live. The cost of living is well above the national average. Not only that, housing is more expensive, to begin with, gas is costly, food is more expensive even though grocery prices are on the rise everywhere, and housing utilities can cost a pretty penny. But despite all of this, Californians love their state. And like anyone else, they have various reasons for wanting a personal loan.

The most common reasons to get personal loans in California include:

• A desire to finance a large project such as home improvements, a dream vacation, or a wedding
• Consolidating debt by combining the balances of other credit cards and loans into one balance with one easier-to-manage monthly payment  
• A better option than a payday loan that can have interest rates of 400% or higher
• To fund a move or relocation to another state should California simply become too costly
• Unexpected expenses such as medical bills, funeral costs, etc.
• To purchase a new or new-to-you car, boat, recreational vehicle (RV), etc.

How to Get a Personal Loan in California 

Although the process varies by lender, the general process to get a personal loan in California works as follows.

1. Check your credit score. Even though the average credit score in California is 700, understanding where you fall in the credit score ranges can help you understand the rate terms and interest rates you might be eligible for. The FICO credit score ranges are as follows:

• Poor, 300 to 579
• Fair, 580 to 669
• Good, 670 to 739
• Very good, 740 to 799
• Excellent, 800 to 850

2. Review your monthly budget. The last thing you want is to take out a loan or go through all the steps to apply only to find out you can’t afford the minimum monthly payment. Take the time to review your finances and know what you have available for a loan payment each month. Set some money aside from emergencies, too, if you have a month where you come up short on cash.

3. Identify the lender(s) you want to apply to - remember that every time you apply for a loan, a hard credit inquiry will be conducted (this can impact your credit score by up to five points and will remain on your credit report for up to two years).

4. Fill out the application and include any requested documentation (such as the identification information listed below).

5. Wait for your loan approval - depending on the lender, this can take several minutes to several days. 

6. Once you have been approved, review your loan agreement for all loan terms and what will be expected of you throughout the course of the loan. Specifically, look to ensure the date of the agreement is accurate and that the interest rate and repayment terms are called out as part of the Truth in Lending Agreement.

7. Sign the loan agreement and submit it as requested - do not complete the loan agreement or accept the loan terms if you cannot meet the loan requirements.

Getting a personal loan in California is beneficial as the identification and verification requirements are easy to obtain. The lender will ask you for the following at the time of your application:

• A government-issued photo ID  such as your driver’s license, passport, permanent resident card, etc.
• Proof of income which could include bank statements, pay stubs, income statements, invoices, etc.
• Proof of your residency in California, such as bank statements, a utility bill that has come in the mail, etc.

Interest Rates of Personal Loans in California 

Personal loan interest rates in California have a unique restriction called the usary cap. California's maximum allowable interest rate for consumer loans is 10% per year.  For non-consumer loans, the interest rate can bear the maximum of whichever is greater between either 10% per annum or the “federal discount rate” plus 5%. This means that personal loans in California may have lower interest rates in some instances than in other states.

Your interest rate may be lower than the typical averages by credit score listed in the chart below.

*Interest rates for good to excellent credit scores may be lower than the scores listed in this table. This table provides averages by credit score and does not indicate the actual APR you may receive.

How to Deal with Loan Scams in California 

With a population of over 39 million consumers in 2023 spread across 163,696 square miles, consumers in California will inevitably be the targets of loan scams. However, spotting loan scams can save you time, money, and headache. 

Here is what to be on the lookout for.

• The lender guarantees approval before receiving any of your personal information.
• The lender isn’t registered in California - check with the Attorney General, Better Business Bureau, or California Department of Financial Protection & Innovation. 
• The lender demands payment up front - even with a secured personal loan, you will not be asked to provide a deposit until you have signed your loan agreement.
• The lender calls you, sends you a letter, or appears on your doorstep. According to the FTC, it is not legal for companies to over a loan in the U.S. over the phone or asks you to pay before the loan is delivered.
• You are unable to locate a physical address for the lender.
• The lender pressures you to take action immediately. A reputable lender will give you time to review the offer and loan terms and your loan agreement.
• The lender has hidden fees.
• The loan and terms sound too good to be true.

If you have a consumer complaint against a legitimate or illegitimate consumer loan lender in California or feel you are the victim of a loan insurance scam, file a complaint with the California Better Business Bureau.

Personal Loan Alternatives in California

If you cannot get a personal loan in California for any reason, there are installment loans and other alternatives to explore. You may wish to consider the following:

• Taking out a personal line of credit from your credit card issuer - however, note that this might come with a cost for a cash advance and may be subject to a higher interest rate
• Using the available credit on your credit card - if you can keep your balance below 30% of your credit limit
• Consider an emergency loan- be aware that understand that emergency loans often come with very high-interest rates and early payoff penalties
• Taking out a home equity loan or home equity line of credit against your mortgage
• Taking out a peer-to-peer (P2P) loan from an investor
• Explore a payday loan in California - however, you should know that under California law, the maximum amount a consumer can borrow in a payday loan is $300
• Taking out a small business loan if you are a small business owner
• Taking a 401(k) loan from your employer or investment firm
• Asking for a salary advance from your employer
• Getting a second job or a side hustle is a great way to earn some extra money to help you pay off debt or save up for a big purchase 

If you are experiencing tough financial times in California and a personal loan isn’t the right solution, you may be eligible for emergency financial assistance from the Community Services Agency (CSA). The CSA safety net can assist with emergency financial assistance for rent and utilities, gift cards to help during the holidays and for back-to-school expenses, and fee waivers for Mountain View Parks & Recreation programs. To learn more, visit their website or call (650) 968-0836 during regular business hours.

Conclusion

We know that California is not only a great place to live but also an expensive place to live. For this reason and more, California consumers are often looking for the best personal loans to help them maintain their quality of life with home improvement projects, a boat purchase, or a big event such as a glamorous wedding. This all said California residents and all eligible consumers in the U.S. must ensure that they can always make their minimum required monthly payments. Pay attention to your finances and budget to ensure you don’t take on a bigger financial burden than you can handle.