Personal loans are a type of unsecured loan offered by banks, online lenders, and other financial institutions. Unlike mortgages and auto loans which are secured by the purchased item (house and car respectively), personal loans generally require no collateral. Lenders assess the potential risk by considering a customer's credit score, salary, and other information. The funds are disbursed directly to the borrower or their creditors, and then paid back in installments the same as any other installment loan. Personal loans typically have a fixed interest rate and payment term, meaning that the amount you will pay per payment interval—each month, generally—does not change, and there is a set window of time in which you have to repay your debt before facing any late fees or penalties.

People use personal loans for a variety of reasons, including but not limited to: unexpected expenses (medical emergencies, vehicle repairs, emergency travel, etc.), credit card debt consolidation (credit cards can have much higher interest rates than personal loans), and large one-time expenses (weddings, home remodeling, etc.). 

Ultimately, choosing the right personal loan comes down to one thing: getting the best rate you can. APRs typically range between 4.99% and 35.99%. These days, there are many online providers that can tell you whether or not you prequalify in literally seconds. However, if you are going to peruse offers from different sites in order to find the best rate, make absolutely certain each lender is using a soft credit pull. Eventually, they will have to do a hard pull, but this should be after prequalification and you are certain of the lender you have selected. As with any loan, shorter repayment terms equal less money paid in interest down the line. Flexibility is also important. While some companies will offer more limited amounts of money, such as from $10,000-$25,000, other may lend up to $1 million. Also, companies might have term lengths that are adjustable within certain limits, say between 2 and 4 years, or have more finite options that restrict consumers to fixed terms, like 3, 5, or 10 years.

Due to their potentially high interest rates, it would be unwise to use an unsecured loan for a discretionary purchase like a vacation or shopping spree. Since personal loans aren't secured by any collateral, there's also a greater risk involved for lenders—who have no assurance that you’ll repay it. Take the time to look over your finances before taking out a loan to make sure you only borrow what you are able to pay back. Personal loans are a great resource when looking to get cash fast, but they can also ruin your credit if handled irresponsibly.  


Top 10 Companies

#1
Our Partner
9.7 / 10

  • Unsecured personal loans from $1,000 to $100,000
  • Loans for debt consolidation, large purchases, home improvement, medical expenses, and more.
  • Even compares top loan providers and matches you instantly
  • Rates starting at 4.99% APR 
  • Loan terms from 24-84 months
  • Funds available as soon as next business day
  • Loan search is free and will NOT affect credit score
#2
Our Partner
9.6 / 10
  • Innovative peer-to-peer loans trusted by 250,000+ 
  • No teaser rates - 5.99% to 35.99% APR 
  • Get $2,000 to $40,000 with 3 or 5 years to pay it back
  • Answer a few questions to get your lowest eligible rates instantly.
  • You can pay it off whenever without penalty.
  • Your money goes straight to your bank account via direct deposit. 
  • No prepayment penalties
  • A+ BBB rating
  • 640-740 credit score is ideal
#3
Our Partner
9.6 / 10
  • Consolidate debt, reduce interest rates by 25%, and save thousands! 
  • Borrow up to $40,000
  • Pay it back over 3-5 years
  • Rates from 5.99% to 35.89% APR (best APR requires excellent credit)
  • No prepayment penalties
  • A personal loan can boost your credit score up to 19 points
  • Lending Club has issued over $25 billion in loans
#4
Our Partner
9.5 / 10
  • Payoff members have raisesd their credit scores by 40 points.
  • Consolidate all your credit cards to one affordable monthly payment.
  • Fixed-rates between 8%­ and 25% APR.
  • NO prepayment penalties, application fees, or late fees. 
  • Loans for refinancing credit card debt from $5,000 to $35,000
#5
Our Partner
9.3 / 10
  • Rates starting at 4.84% APR
  • Fast funding process
  • Personal loans up to $40,000
  • Request personal loan in just minutes
  • An Equal House Opportunity lender
  • Repayment option of up to 84 months
#6
Our Partner
8.7 / 10
  • A+ Rating with the BBB
  • $35,000 loans for any credit type!
  • Free service to help you find the right loan for your needs
  • Pay it back in 6-72 months depending on lender terms
  • Max 35.99% APR
  • Loans for any purpose! Students, Cars, Vacations & more! 
#7
Our Partner
8.6 / 10
  • Request $1,000 to $35,000 for Credit Card Consolidation, Home Renovation, Major Purchase, Medical Bills, and more.
  • Completely FREE and secure loan-finding service that DOESN’T impact your credit score.
  • Huge network of lenders and lending partners.
  • Find out in minutes, repay in 24 to 84 months.
  • APR range from 4.84%-35.99%, minimum credit score 580+.
  • Get money in as soon as one business day.
#8
Our Partner
8.6 / 10
  • Up to $45,000 in personal loans
  • Loan terms from 3 to 5 years
  • No origination fees
  • Personal loans for debt consolidation
  • Earn $300 by sharing Laurel Road with a friend or a family member
  • FDIC-insured bank
#9
Our Partner
8.2 / 10
  • Recommended by 9 out of 10 customers
  • $35,000 maximum loan
  • From 9.95% to 35.99% APR
  • Loan terms of 2-5 years
  • Checking your loan options will not affect your credit score
  • No prepayment penalties
#10
Our Partner
8.0 / 10
  • You: have a college education, a job & good credit
  • Upstart: can get you $1,000 to $50,000 tomorrow 
  • Rates from 4.66%-29.99%, 3 & 5 year terms.
  • Applications do not affect your credit score
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How We Compare Personal Loans

Loan Specifics

40%

When evaluating personal loan providers, we take a look at several factors. One of these is the range of purposes for which lending companies will extend a loan. Many lenders want to know what you intend to use the loan for before they even offer a rate quote. Some companies, for example, limit the use of their personal loans to paying off credit card debt. Other companies are fine with other purposes. Nowadays, unsecured personal loans typically range from $5,000 - $35,000, but some of our providers will loan up to and over $1 million. The amount you can get approval for will vary according to the lender, and is dependent on your income, credit scores, and the terms of your loan, as well as other factors. The term length is the amount of time you have to repay it, which is typically between one and five years, although some lenders will extend terms all the way to twelve years. Keep in mind, though, that the shorter your loan’s term, the fewer payments you’ll make and the less interest you’ll pay in the long run. On the other hand, if you have a longer loan term, your payments will be smaller each month, but you will pay more interest during the life of the loan.

Most of the lenders we evaluate offer direct deposit to checking accounts. Additionally, if you are using the personal loan to consolidate debt or pay off multiple credit cards, some lenders pay creditors directly which is a convenient, time-saving alternative. Inquire about these options if this is something you would prefer. The decision time is the time it takes to get an answer on whether or not your loan is approved. Online lenders can make a decision in as little as a couple of minutes. The disbursement time is how long it generally takes to get the money into your hands or into the hands of the creditors it is meant to pay off. Usually the funds are deposited by the next business day, but some lenders offer same-day or overnight deposits.

You could also opt for some other service features designed to help you in times of need. Credit insurance insures your debt if you were to die or suffer from some disability. Unemployment protection would waive payments during a set period of joblessness. 

Loan Uses

The purpose of your loan can often come into play when lenders are making a decision. Some only provide loans for a few reasons and will not even consider you otherwise. Also, the purpose of your loan can influence APRs, fees, terms, etc. Debt and/or credit card consolidation are far and away the most popular reasons for personal loans, but some others include:

Home Purchase
Vehicle/Boat Purchase
Home Improvements
Medical Expenses
Wedding
Moving or Relocation
Pay for Education
Vacation
Start/Invest in a Business


Qualification

20%

Regardless of whether you're dealing with a loan matching service or a direct lender, all lenders will eventually require your social security number to do a credit check. Online matching services will sometimes initially do a soft pull, but when you are ultimately matched with a lender, there will be a hard pull. As we mentioned, personal loans are unsecured, so the risk is higher on the lender's side. By checking your credit, a lender will be able to see how you’ve managed previous debt and get an indication of how you may manage a loan with them. The minimum credit score accepted is typically in the low 600s, but of course this depends on the lender. Also, keep in mind 90% of personal loan companies will be looking for your official FICO score from Transunion, Equifax, or Experian. This score is generally not the same as the majority of free credit scores offered online. 

What other things lenders will look at depends on the entity you're dealing with. Lenders might want to know your debt to income ratio. They also may require you to verify your employment, job title, and salary. Still others might want to know the highest level of education you progressed to and even your GPA in some cases. In some cases lenders might require your monthly housing costs and verification of your liquid, non-liquid, and retirement assets.

When you apply for a loan, lenders will require that you submit personal information. Application information includes your name, Social Security number, government-issued identification, home address, phone number, email address, checking account information, and possibly more. Lenders also require that applicants be at least 18 years of age, and some require US citizenship or permanent residency.

 


Cost of Loan

20%

The most important factor that will influence the ultimate cost of a personal loan is the Annual Percentage Rate (APR). The APR is the interest rate charged for a whole year, including any fees or additional costs associated with the transaction. Generally, the lenders we evaluate will advertise an APR range. The better your credit score, the lower your APR will likely be since the lender’s risk is diminished. Also most personal loan providers offer a fixed interest rate, meaning the APR will not change throughout the life of the loan, making it easier to plan repayments. At the outset of the loan, many lenders charge application and origination fees. The application fee is what the lender charges to cover the expenses of processing the loan. The origination fee is usually expressed as a percentage of the entire loan amount (usually 1%-5%). Some of the lenders on our Top Ten List waive these two fees entirely. 

You will have to pay interest for each month you have the loan, so if you're able to pay it off earlier than expected, it will save some money. However, since lenders make their money from the interest earned on the loan, this also means they will not be making as much as they would if you stuck with your scheduled payments each month. As a result, some lenders will penalize you with early payment penalties. Many online lenders give you the freedom to repay the loan as early as you can, and get out of debt faster.

Just like any other debtor, if you have late or missed loan payments on your personal loan, you may be charged additional fees. Additionally, lenders have the right to report late payments to the credit bureaus, which could have a negative impact on your credit. If you think you will be behind on a payment or have to miss one completely, we highly suggest contacting your lender beforehand. They may be able to renegotiate the terms of your loan or waive the fee altogether. At the end of the day, the lender wants to be repaid, so they may be motivated to work with you to ensure they don’t lose their money.

Other Fees

Many online providers these days are advertising personal loans with no fees of any kind except for the APR. However, make sure to verify the exact details of this with the loan officer before you sign anything. Some ancillary fees associated with unsecured personal loans can include:

Application Fee
Pre Payment Penalty
Administration Fee
Returned Check Fee
Check Processing Fee


Lender Reputation

20%

To measure the quality of customer interaction with a given personal loan provider, we look at several factors. We take into consideration the number and subject matter of complaints as reported to the Consumer Finance Protection Bureau (CFPB), a U.S. government agency that since 2011 has compiled over 1.1 million complaints about financial institutions, banks, and other lenders. We also consider the Better Business Bureau grade as well as statistically significant BBB complaint percentages. We also take into consideration the company's Trustpilot score. 

Type of Lender

Personal loan providers generally can be classified as:

Banks
Credit Unions
Peer-to-peer lenders
Marketplaces - Online aggregators that offer competing quotes from affiliated lenders
Other financial institutions



What's important to know about Personal Loans?


Who can get a personal loan?

Anyone can apply for a personal loan. However, each lender has different requirements for who is eligible for a loan and typically looks at applicants’ credit history, current debt-to income ratio, and a number of other factors to determine how much of a risk you are to default on your loan. This process is called underwriting. If you have great credit, no other debts, and have a steady job with a regular income, lenders will see you as less likely to default on your loan and are more likely to approve you with more favorable terms. If you do not meet the lender's criteria, you will likely be denied for the loan, or be faced with extremely high interest rates.

Since all lenders have different underwriting requirements, it’s possible to be denied by one lender and be accepted by another. This is why shopping around is important.

What can I use a personal loan for?

Personal loans are most commonly used for debt consolidation, medical expenses, and household expenses. Unlike secured loans, personal loans can be used for almost anything. However, some loan companies ask prospective customers what they intend to do with the money they borrow. Answers to that may have an impact on the company's decision about whether to extend a loan offer.

Will loan companies keep my personal information safe?

As recent data breaches have shown, there is no such thing as an absolute guarantee of data security on the internet. Breaches happen.

Loan brokers that collect personal data about prospective loan applicants and match those customers with loan providers face a difficult security challenge. They must share some of the applicant's personal data with the loan companies they deal with, while at the same time keeping the data private and secure. They address this by stripping away much of the applicant's personal information before sending it to their partner-lenders. Each lender is provided with a general profile of the applicant, rather than with specific identifying information. When the customer chooses which loan offer to accept, he or she then supplies personal identifying information to that bank or finance company.

Though no one likes reading data privacy policies, personal loans are one internet transaction where we strongly recommend doing so. Be wary of companies that sell your data to 3rd parties for marketing purposes. This is when your information can become compromised. Some companies allow consumers to opt out of this kind of data sharing. But if opting-out isn’t available, or if a loan broker or lender doesn't publish its privacy policy, it’s safer to just stay away.

What happens if I can’t pay back a personal loan?

If you think that you will either be late or miss a payment, we suggest contacting your lender immediately.

Lenders generally charge a penalty for late payments. If you miss a payment altogether or have an outstanding payment due for more than a month, lenders have the right to report this to the credit bureaus, which will have a negative effect on your credit report. Late payments are one of the biggest factors in low credit scores and should be avoided whenever possible.

Contacting your lender before a payment is late demonstrates responsibility and a willingness to find a solution to the problem. Under those circumstances, lenders are sometimes willing to waive late payment fees, to give you more time to pay without reporting the late payment to the credit bureaus, or to renegotiate the terms of the loan.

Why do some lenders impose fees for paying off a loan early?

A lender makes money from the interest that is charged every month. If a borrower repays the loan earlier than expected, lenders will not receive the full amount of expected interest. As a result, some lenders charge early payment fees to make up for the interest they would lose.

However, not all lenders do this, so we suggest looking for a loan that gives you the freedom to pay it off and get out of debt as soon as possible.

What is a personal loan origination fee?

Some lenders impose a one-time charge in connection with their agreement to loan you money. This is called an origination or processing fee. Companies attempt to justify it by claiming that this fee reimburses them for the costs of processing the loan and running a credit check. However, if that were truly the case, the charge would be a modest and flat amount. As it is, many companies charge a percentage of the loan amount--sometimes as much as 5%--and call it a fee. In reality, this is just another kind of interest which wise consumers should factor into their decision about whether to take out a personal loan. If these "fees" are added to the regular interest on a personal loan, the total can produce a net interest rate that's considerably higher than what you think you're getting.

What is the interest rate and how is it determined?

The interest rate is the cost you pay to take out a loan, and is calculated as a percentage of your base loan amount. Interest rates are determined by the lender during the underwriting process, and usually directly correlate to the strength of the applicant's credit score. The stronger your credit is, the more likely you will receive a favorable interest rate.

The yearly interest rate and additional lender fees are often combined into one rate known as the Annual Percentage Rate (or APR). By looking at the APR, you can get a good understanding of how much you’ll pay for the loan, and help you budget your monthly loan payments.