Company Name | Est. APR | Est. Credit Score Needed | Loan Amount | Loan Term |
SoFi | 6.49% to 21.78% | Good | $5,000 to $100,000 | 24 to 84 months |
LightStream | 3.49% to 19.99% | Good | $5,000 to $100,000 | 24 to 240 months |
Upgrade | 5.94% to 35.97% | Fair | $1,000 to $50,000 | 24 to 84 months |
Oportun | 7.99% to 35.99% | Poor | $300 to $10,000 | 12 to 48 months |
Upstart | Up to 35.99% | 300 | $1,000 to $50,000 | 36 or 60 months |
AmOne | 2.49% to 35.99% | Poor | $1,000 to $50,000 | Up to 72 months |
Rocket Loans | 5.97% to 29.99% | Good | $2,000 to $45,000 | 36 or 60 months |
PenFed | 5.49% to 17.99% | Good | $600 to $50,000 | 12 to 60 months |
Marcus by Goldman Sachs | 6.99% to 19.99% | Good | $2,000 to $45,000 | 36 to 72 months |
Discover | 5.99% to 24.99% | Good | $2,500 to $35,000 | 36 to 84 months |
What Is an Unsecured Personal Loan
An unsecured personal loan is a fixed rate loan, provided in
a lump sum and repaid in installments with interest, which does not require the
borrower to offer collateral. While home and auto loans are secured by an
asset, unsecured personal loans are not.
How Do Unsecured Personal Loans Work?
When you apply for an unsecured personal loan, you tell the
lender how much you need to borrow and provide your income information. The
lender will run a hard credit check, which will cause a small dip in your
score. If you’re approved, the money can be deposited into your bank account
within a few days. You’ll then pay back the loan in bi-weekly or monthly
payments of principal plus interest. Over time, you’ll pay back more than you
originally borrowed for the privilege of getting the lump sum at one time.
Reasons to Get an Unsecured Personal Loan
A personal loan without collateral can be used for almost
anything, but you should avoid using a personal loan to purchase something you
don’t need. Some good reasons to get a personal loan include:
- Home improvement projects
- Auto repairs
- Debt consolidation
- Medical bills
- Emergency travel
- Appliance replacement
- Planning a wedding
- Relocation
Veterinary bills
How to Get an Unsecured Personal Loan
While the process varies by lender, here’s what you can
typically expect.
- Check your credit so you know where you stand and can
dispute any errors
- Prequalify with a few lenders that offer a soft credit pull
- Choose the loan offer with the best rates and terms you can
qualify for
- Formally apply for the loan by uploading the required
documents
- Review your final offer and sign and accept your loan
documents
- Wait for the funds to be transferred to your bank account
- Set up one-time or ongoing repayments through the lender’s
online portal
Unsecured Personal Loan Interest Rates
Below are the average APRs on unsecured loans by credit
tier, according to data from online loan marketplace Credible. The overall
average APR across 24-month personal loans from commercial banks is 9.41%,
according to The Fed.
Credit Score | 3-Year APR | 5-Year APR |
Less than 600 | 30.64% | 29.32% |
600 to 639 | 26.62% | 28.19% |
640 to 679 | 22.06% | 22.17% |
680 to 719 | 16.35% | 17.84% |
720 to 779 | 12.02% | 14.01% |
780 or above | 8.89% | 11.38% |
Pros and Cons of Unsecured Personal Loans
Pros | Cons |
| More difficult to qualify for Higher rates than secured loans Doesn’t provide a grace period like credit cards
|
Alternatives to Unsecured Personal Loans
If an unsecured personal loan isn’t quite the right fit but
you’re still looking for an unsecured product, you might consider the
following:
- Paycheck Advance: If you just need a small loan, your
employer may provide you with an advance on your paycheck, or you can request
the money through a paycheck advance app.
- Crowdfunding: You might try a crowdfunding campaign to raise
money for your financial need, especially if it is medical or
veterinary-related.
- 401(k) Loan: You can borrow money from your 401(k) without a
credit check and without collateral. Just be sure to pay the money back with
interest to avoid penalties, and don’t choose this option if you’re planning to
leave your current job.
- Friends and Family: While it can be tough to ask for help, a
loan from friends or family will come with a lower rate (if any) and more
flexibility than an unsecured personal loan. Just be sure you have a plan for
repayment so you don’t destroy your relationships.
- Credit Card: A credit card can help you manage cash flow
issues without paying interest. If you can qualify for a 0% introductory APR
card, you may also use it for a large purchase or to pay down debt faster with
a balance transfer.
- Secured Options: If you’re not worried about default and
don’t mind putting forth collateral, you might consider a home equity loan,
HELOC, auto equity loan, or cash-out refinance.
Conclusion
No matter your financial need, your budget, and your credit
score, you have options when it comes to personal loans with no collateral. Aim
for the fewest fees and the lowest rates you can qualify for while ensuring the
lender offers a monthly payment that fits into your budget. Once your loan is
paid off, you’ll want to focus on building an emergency fund so you can avoid
needing to borrow in the future.