You’ll need to make sure your credit score is up to scratch to benefit from the very best personal loans online – if it could do with some polishing, now could be the time to consult credit repair services (opens in new tab). Yet even if you have poor credit, you’re unlikely to be barred from taking out a personal loan altogether. There are some lenders that specialise in bad credit loans, albeit with higher rates and less pleasing terms than those reserved for borrowers with a more favorable credit history, but the options are there nonetheless – and if you stick to the agreement, you could even improve your score (opens in new tab) as the loan progresses. Either way, there is much to consider when deciding between the top rated personal loans online, from the fees they charge to the range of loans they offer, and the following guide is designed to help you narrow the options down. That’s because we’ve highlighted the best personal loans online that cater to a variety of needs, including the loan that’s best for debt consolidation (opens in new tab) and the one that comes out on top for new borrowers. There’s also good personal loans that we’ve rated as best-in-class due to their low rates, lack of fees and exemplary customer service. Yet while this can be a great starting point, if you want a more tailored list of the loans that could be right for your particular needs, this is where a broker such as Credible (opens in new tab) can come in. By filling in a single form you’ll have access to a whole range of lenders, and better yet, they’ll come to you with their very best quotes, giving you the best chance of finding the personal loan that’s perfect for you.
1. Marcus by Goldman Sachs: Best personal loan online overall
Marcus by Goldman Sachs has one of the best customer service ratings of all the personal loan companies out there, which is one of the reasons it ranks top of our list of the best online personal loan providers. Loans come with a range of benefits like low starting rates, a lack of fees and flexible payment options. The ability to change the due date up to three times during the life of the loan is a nice feature as is the relatively low credit score required for such a low starting rate. You can skip one payment per year and it will simply be added to the end of your loan term. The lack of hard credit pull is appealing but that’s not to say this is ideal for lower credit rating borrowers as it won’t allow co-signing and does require a minimum 660 credit score.
2. Lightstream: Best personal loan for strong credit
Lightstream personal online loans are some of the best available right now with excellent rates, a high top-end loan amount, long term options and no fees. While the application process does require a hard credit pull, this loan is only for those with a good credit score of 660 and above. If you’re worried about a rejection then you should avoid this loan company. Rate undercutting means Lightstream will offer you 0.10% less than any other offer you get from a competitor. With up to a 12-year loan period this is ideal for anyone looking to carry out a big project that costs a lot and needs repayment spread. All that and if you’re unhappy you’ll get $100 back for your troubles if you complain within 30 days.
3. Upstart: Best personal loan for new borrowers
Upstart, as the name suggests, is a personal loan for those just starting out in the world of borrowing. That means both those with little or no credit history and those with poor credit ratings could find they are approved by Upstart where others have said no. This applies particularly to graduates with a coding background since this company was started by ex-Google employees. Upstart looks at more than just credit scores with a high value put on potential future income, so graduates with a good degree could do well. The catch is that rates start a little higher than the competition and there are fees, including origination and late fees. But with super-fast funding, this is one of the best personal loan options out there, especially for graduates.
4. SoFi: Best personal loan for security
SoFi requires a good credit score to get one of its loans but should you qualify then you can enjoy lots of benefits. The starting rate of 5.99% is decent and the top end amount of $100,000 is generous. But it’s the membership perks and security we like. That security comes in the form of a forbearance feature that will protect you should you become unemployed. This lets you pay interest-only for up to a year while you find a new job. Membership benefits include lower rate second loans and invites to private events with business owners, career counsellors and mentors. There are no fees and total transparency on these loans but you may have to wait up to seven days for funding to come in.
5. Prosper: Best personal loan for medical fees
Prosper personal online loans offer a way for those with lower credit scores of 640 to get a loan at a decent starting rate of 5.99%, but the company also specializes in medical bill payments. This is a peer-to-peer loan meaning it comes from multiple investors. As such the top-end rates are very high at 36% and late fees and origination charges do apply. Soft credit checks won’t affect your credit rating and if you are in no rush you can get a lower APR on your loan. The specialist healthcare loans go up to a higher amount and have lower top-end rates, but require a higher credit score.
6. Lending Club: Best peer-to-peer personal loan
Lending Club is the original peer-to-peer loan company that allows investors to spread money across loans meaning borrowers can get credit without going to a bank. You’re still required to have a credit history and decent score but it is aimed at paying off debt and will even consolidate multiple credit cards for you by paying them, so you’re left with one fixed-rate loan. This starts low at 5.99% but shoots up to 34.99% at the high end. This is great for improving credit rating while clearing debt and even allows co-signing, so those with a credit score as low as 540 can be eligible for a loan. An interest-only hardship payment plan is a nice security net for those struggling to repay. But with a 1 - 6% origination fee and 5% late fee it’s not perfect.
7. Avant: Best personal loan for low credit scores
Avant is one of the best personal loans for those with a low credit score. Not only does this only require a score of 580 but it also carries out a soft credit check first so you don’t need to risk lowering it further. This will cost you though as even the low-end rate is 9.95% APR which climbs to a heady 35.99%. Charges are clear with both origination and late fees made obvious from the start. There are flexible payment options to help if you get into any trouble repaying this loan.
8. Regions: Best personal loan for non-US citizens
Regions is a very rare personal loan company as the Regions Bank is willing to take applications from, and will actually fund, non-US citizens. This is also a great loan for those seeking smaller dollar amounts from their loan with flexible lines of credit. While this onnline loan company does cater for those with less impressive credit scores, the rates can be higher in those instances, topping out at 17.99% APR. You can make some savings with deposit secured loans and by using autopay. The downsides are that you must have a Regions checking account and there are both origination and lates fees.
9. Payoff: Best personal loan for debt consolidation
While this is a personal loan specifically for debt consolidation, it won’t pay off who you owe directly - like some competitors will. That is kind of a positive though as it fits with the company’s ethos of empowering and educating the borrower to clear their own debts and become better at handling money themselves. This is done through a host of supportive tools including learning resources, online chat assistance and a member advocate for personal guidance. The end result should be regular, on-time payments, which help improve credit score as the loan is paid back.
How to apply for a personal loan
Applying for a personal loan online in many cases is simple. The initial application process may only take a few minutes. Information varies from lender to lender, but you’ll most likely be asked to provide your address, employment status, estimated credit rating, Social Security number and income information. You may also be asked to provide further supporting documentation such as proof of income and your address. This basic information helps the lender or broker determine whether you are a good candidate for a loan. Your credit will also be verified using the three major credit-reporting agencies. Many lenders run what is called a “soft credit check” that will not negatively affect your credit score.
What can you use a personal loan for?
A personal loan is one of the few types of loan with few to no restrictions on what you can use the funds for. Where mortgages must go toward a house, student loans must cover college expenses, and auto loans go toward a car, personal loans – in most cases – can be used for nearly anything you can think of, be it a personal or a household need. Typically, people use personal loans for things like moving expenses, vacations, medical emergencies, large purchases and to consolidate debt, among other things. Still, it isn’t unheard of for lenders to set limits on what you can use the money for, even though it isn’t standard practice. A lender may specify that you cannot use your personal loan to pay for a car or to cover business or college expenses. The lesson here is to read all the fine print attached to any personal loan you are considering. That way, you won’t be blindsided by strict requirements that limit how you can spend the money you borrow.
Factors that influence your loan rate
As with most loans, your credit rating is scrutinized. Each lender has its own requirements, but you’re more likely to obtain a personal loan if you have good credit and a dependable, steady income. If you have not established credit through traditional lines, such as credit cards, a mortgage or auto loans, the lender may consider your payment history with other bills such as utilities or rent. Interest rates can vary greatly. If you have good credit, you can likely obtain a competitive rate. If your credit is bad or marginal, you can expect to pay a much higher rate, or you may not receive an offer at all. Lenders may also evaluate your income. Many have minimum income requirements, and these vary from lender to lender, but usually the requirement is a few thousand dollars per month, depending on the loan size and your debt-to-income ratio.
Personal loan fees to consider
The first fee to consider is the actual interest rate. Rates vary greatly. Just a few percentage points in the long run can make a huge difference, so you’ll want to shop for the best rate possible. A second loan expense to consider is origination fees. Not all loan companies charge this fee. The origination fee is taken from the loan balance. For example, if you get a $10,000 loan but the lender charges an origination fee, your initial deposit won’t be the full $10,000 because the origination fee has been taken out. The last fee is a check-processing fee. Most companies nowadays add an extra charge to process check payments.
Personal loan rates for good credit
Loan offers, as well as their terms and rates, vary wildly depending on your credit score. If you have a good credit score, which is considered to be any score at or above about 690, you’ll have better loan opportunities available. Additionally, if you have good credit, it’s more likely that your loan will have lower rates, more flexible terms and fewer fees, if any. This is especially true for people whose credit scores are considered to be excellent, which is above 720. Individuals with a good credit score will also have a wider variety of lenders to choose from, be it from one of myriad online sources or from your personal bank or local credit union. If your credit score is good, we recommend taking the time to shop around for the best loan, so that you end up with one that has the best terms and conditions, fewest fees, lowest rates and, ideally, payment flexibility.
Best personal loans for bad credit
If your credit is far from excellent, don’t fret: There are likely plenty of loan options available to you. The caveat, however, is that with a bad credit score – that is, any score below about 630 – your loan’s rates are likely to be higher. You’ll find that your options are more limited and that you may also have to deal with higher monthly payments or inflexible terms. The lenders that offer loans to people with low credit scores typically scrutinize your credit history more intensely than they would for applicants with higher scores. Before signing on to any old loan, we recommend checking out the personal loan options at your local credit union first as they have your best interest at heart and usually have a cap on the interest rate they can charge you. If you have a really low credit score and think you might not pre-qualify for a loan, your other options are to get a co-signer for your loan, borrow against your home’s equity or ask a relative or friend to take a loan out for you in their name. Payroll advances and borrowing against your 401K or life insurance are also options, but they aren’t something we recommend, as they have steep interest rates and can end up hurting your credit in the long run.
How to get the best personal loan for you
Do your research: Though it’s tempting to grab the first loan you see, taking the time to research your options can pay off – quite literally – in the long run. Before applying for a loan, look at any requirements it may have. Does it require a co-signer or collateral? Does the lender run a soft or hard credit check? Are there better options through your bank or local credit union? Knowing the answers to these questions can help point you in the right direction. See if you pre-qualify: Many loans give you the ability to see if you are eligible for them before formally applying. The pre-qualification process typically requires you to verify your employment, age, residency and income, and it may involve a credit check. Be sure to check whether the lender will do a soft or hard credit check, so your credit score isn’t unnecessarily impacted. Shop around: There are thousands of loan options out there from a variety of lenders. Once you get pre-approved, taking the time to shop around gives you a better chance to find the best deal for your needs. While looking around, it’s important to keep in mind what a lender will get out of you taking out a loan through them. Many lenders are predatory, advertising a great deal while disguising sky-high interest rates and fees or ridiculous terms. Try to avoid loans with variable interest rates that flux over the life of the loan, in favor of fixed rates instead. Your best bet is a loan through your local credit union. Apply: Before formally applying for a loan, be sure to read any fine print. Here you should be able to see all the fees, rates, terms and conditions attached to the loan. You should also be able to see any hidden fees here, including application fees, establishment fees, origination fees or early repayment fees. If you’re unsure about anything in the fine print, we recommend contacting the lender directly and asking for clarification. Get approved: This is the easiest step! The lender will inform you that you have been approved and for how much. Note that some lenders may approve you for an amount exceeding what you needed; and though it’s tempting to accept the full amount, doing so can cost you more in the long run with fees and interest. Receive your funds: Once you’re approved, you’ll receive your money either by direct deposit or physical check. How long it takes to get your money varies by lender. With some lenders, it may take a couple of weeks; with others, you’ll receive the money the same day that you’re approved. Repayment: You’ll start paying back the loan according to the terms set forth by your lender. In most cases, you’ll have a set monthly payment. If you want to pay off the loan all at once, check beforehand to see if the lender allows you to do so without penalty.
Managing your loan
One of the benefits of getting an online personal loan is that it’s easier to manage than one you’d take out in person at a bank or credit union. Once you log on to your lender’s website, you should be able to view all pertinent details for your loan. In most cases, you should be able to view related documents, along with your current balance, next payment amount and due date, payment instructions, a single payment portal and lender contact information. Good lenders will also provide you with your payment history, automatic payment setup, the ability to view and edit your account information as well as a way to review your loan’s rates, fees, terms and conditions. They’ll also have an intuitive and clearly labeled interface that makes it easy for you to view all of your pertinent information, and they won’t try to hide anything from you in confusing menus or fine print. We also like lenders that provide a mobile app so you can view your loan, its related information and even make a payment, no matter where you are. Good lenders may also include a link where you can view your FICO credit score, allowing you to manage both the loan and your credit while repaying the loan. Your payment options? Your lender should provide you with at least two ways to make a payment on your loan. The easiest way to make a payment is to set up autopay – the amount due will be deducted from your account automatically each month. This is also the easiest way to ensure you don’t miss a payment, which can negatively impact your credit score and possibly even affect your interest rates or other loan terms. You should also be able to make a manual online payment or call the lender’s customer service number to make a payment over the phone. Depending on the lender, other repayment methods may be available as well, including mailing in a check or cash, or making a payment in-person at a brick-and-mortar branch. We found that, in addition to offering multiple convenient payment methods, the best lenders also make it easy for you to make a payment. Whether you’re making a payment over the phone or online, they should provide step-by-step instructions for paying your bill every time. This feature is especially handy for those who haven’t made a payment through the lender before. Typically, your physical or online bill will give you instructions and provide a way for you to review extra information online. Contact information for the lender should also be readily available and clearly listed on the bill or website portal so you can quickly get ahold of them should you have any questions about making a payment or you encounter a problem when trying to make a payment. If you call in, some lenders have an automated interactive voice response system that can help you make your payment without ever having to talk with a representative. What happens if you default on your loan? It is fairly easy to get a personal loan – the tricky part is making payments regularly and repaying it in full. With a bank account and a decent internet connection, you can easily set up auto payments and not spend another minute worrying about the loan. But what happens if you miss a payment or end up defaulting on the loan? Depending on factors like your loan terms, your location and the lender, you could be considered in default after missing just one payment, or it could take months of missed payments. Typically, when you default on a loan, you can expect your credit score to take a hit, and the blemish on your credit report could remain there anywhere from three to 10 years. This bad mark could even affect your chances of getting a job or buying a house down the line. Beyond that, the lender could potentially sue you or place a lien on your assets. If that happens, you can end up on the hook for paying court or attorney fees. In court, the contract you signed with the lender saying you agreed to repay your loan will most likely be held against you. The lender could also send your debt to a collections agency, and you could have your tax refund or wages garnished or even be required to repay your overdue balance in a single, immediate lump sum. Keep in mind, you still owe a payment even if you don’t receive a bill – mail can get stolen or lost, you may forget to change your address after you move, or the lender may put in fine print that it is a paperless company and will never send you a physical bill. Either way, it is your responsibility to contact the lender over the phone or online if you don’t know when your bill is due. Depending on the lender, you may also be able to change your payment due date.
Differences between online lenders and banks
When thinking about getting a loan, it’s worth knowing the difference between types of lenders. Though online lenders and banks both offer a similar product, that’s where the similarities end. From paperwork to loan rates, we recommend reading up on how these two lender types vary so that you can make the smartest decision for your financial needs. Online lenders: One of the biggest benefits of shopping for a personal loan online is you can easily compare multiple loan options from several lenders at the same time. Additionally, online lenders have less stringent application processes that don’t require as many qualifications. Many don’t even require a hard check on your credit. Online lenders also boast more unsecured options, less paperwork, and quicker approval and funding times, so you can get the money you need fast. On the other hand, it is easy to get scammed online. With so many loan options at your fingertips, it can quickly become difficult to tell which lenders are trustworthy and which only have their best interests at heart. Once you choose an online lender, you’ll also find that you have limited support options. Whether you have questions about filling out the application or about the loan itself, you’ll only have the communication tools they provide to you. This could be troubling if you don’t understand some of the terminology or their website goes down. Online loans typically also have higher APRs and more fees. Banks: Getting a loan from a brick-and-mortar bank brings peace of mind. Banks usually offer bigger loans for cheaper, meaning lower APRs and fewer fees. And while online lenders typically only offer unsecured loans, banks usually have secured options as well. Going into a bank to get a loan also means you can get help filling out your application from someone in person. They will also be able to answer more questions and provide helpful support throughout your entire loan process. The downsides to getting a loan from a bank aren’t many – at least not compared to online lenders. A bank may require more paperwork and have a more rigorous application process. They may pull a hard credit check and ask you to provide more extensive documentation. It usually also takes longer for your loan to get approved and funded through a bank. And you’ll have access to fewer loan options. Differences aside, what matters most is what you bring to the table. Your qualifications, credit score and history, and total needed loan amount, are all individual factors that help shape the loan offers you quality for. It’s no secret that people with excellent credit scores and a healthy credit history have access to both more loan options and better loan options than those with a poor credit score.
Getting a personal loan through your Credit Union
If a traditional loan doesn’t seem like the perfect fit, check out the personal loan options available to you through a credit union. You can use these loans for pretty much anything, just as you would with a traditional personal loan. Since credit unions are not-for-profit organizations, you can expect to receive a lower interest rate on your loan than you would elsewhere, even if you have an average or poor credit score. Credit unions are member-owned and designed to focus on the needs of their members rather than profits, which is why they can offer lower rates and fees. Typically, credit unions can offer you secured and unsecured personal loan options. A secured loan requires you to make a deposit as collateral, which the credit union will use to cover its losses should you default on the loan. This type of loan has lower rates than the secured option and may allow you to earn interest on your deposit. An unsecured loan doesn’t require this and is the more common option. No matter which option you choose, however, credit union loan rates are much more affordable than nearly any other option out there.
Your Rights as a consumer
Lenders are legally obligated to provide consumers certain protections. Legal documents are often confusing, and the loan process can be overwhelming. Perhaps you are unsure what questions to ask. Below is a list of your consumer rights and the questions you are entitled to ask. This isn’t a complete list. The Federal Trade Commission (FTC) website offers some helpful resources in the consumer information section of its website. Some of your rights include the following:
Credit decisions cannot be based on your race, color, gender, national origin or other such identifiers. Credit decisions can, however, be based on your financial status. If you feel you have been unlawfully discriminated against, contact your state attorney general’s office.You do not have to reveal your marital status if you are applying for a loan in a non-community property state.Creditors are not allowed to discriminate if you receive public assistance.Within 30 days of applying for a loan, you should receive notification whether you’ve been accepted or rejected.
You have the right to ask for the following:
If you are denied your loan request, ask why. There may be information on your credit report you may not be aware of, or there may be incorrect information. You also have the right to obtain a free copy of your credit report.Inquire about the total cost of the loan, including interest, fees and other charges. While a low monthly payment may seem attractive, you may discover, on closer analysis, that it is not in your best interests. For example, some lenders charge fees for processing check payments.Request clarification on any terms or legal language you do not understand. Do not sign any type of legal agreement if you do not fully understand the terms.
Avoiding personal loan scams
Loan scams are real, and you should be wary of offers that seem too good to be true. The FTC and other consumer-rights groups regularly warn consumers about loan scams. Here’s how you can protect yourself:
Always be suspicious of unsolicited loan offers. If you receive a phone call or mail you didn’t request, you should be careful.Be wary of lenders that are not interested in your credit history. All legitimate lenders and banks will evaluate your credit history.Verify that the lender you are considering is registered in your state.Do not send any money to a lender that asks you to make a payment upfront before you’ve received your loan funds. Legitimate lenders will not ask you to do that.If you’re using a loan broker, always verify the bank or institution. Do your research. Physical locations, P.O. boxes, etc., should be thoroughly investigated.If you have bad credit and are seeking a personal loan, you’ll need to be extra cautious. That said, there are numerous legitimate lending agencies available to help those with marginal credit. In addition, each state provides free resources to those desiring to improve their credit. In many states, it is the Consumer Credit Counseling Service that can assist you.
How to monitor your credit
Keeping an eye on your credit is important even when you aren’t actively seeking out a personal loan. Monitoring your credit can help you make smarter financial decisions and potentially even help you get qualified for better loans with better rates and terms. The better your credit is, the more likely you are to be approved for a personal loan, especially one with good rates and terms. Learning about your credit’s health and history can give you an idea of how likely you are to be approved for a loan, or if it’s even a good time for you to be applying for a loan. There are many ways to monitor your credit, all of which are easy and cost little to nothing. The Federal Trade Commission states that you are entitled to “one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies.” Additionally, most banks and credit cards provide similar services, or you can use a third-party app like Mint, Credit Karma or Wallethub. Mint helps you track your spending and provides a credit report and education about credit scores. Apps like Credit Karma can provide you with your credit scores from TransUnion and Equifax, with regular updates. They let you view the factors that affect your credit, such as credit card utilization, open accounts, hard inquiries and payment history. These apps can even recommend credit cards and loans tailored to your credit history and help determine if you pre-qualify for them.
Should I get a co-signer for a personal loan?
If you’re applying for a personal loan and aren’t confident you’ll be approved or worry that a low credit score might leave you with a high rate, getting a co-signer can help. Having a co-signer with a higher income or better credit history improves your likelihood of being approved and can get you a better rate and terms. When looking for a co-signer for a personal loan, you need to keep a few things in mind. First and foremost, your co-signer is a loan guarantor – they appear on all paperwork, and if you fail to make timely payments, they become liable. This means late payments don’t just affect your credit. They affect your co-signer’s credit too. Failing to make payments on time opens your co-signer to liability and could damage your relationship with that person. Unlike student loans, most personal loans don’t have a co-signer release period. If you want to relieve your co-signer of their responsibilities later on, you need to refinance the loan to remove them as a co-signer. To do this, you need to improve your personal financial situation to the point where you can get approved solo. This means making on-time payments on all your debts, not just your personal loan. Also, improve your debt-to-income ratio by paying down other debts. Ultimately, the decision to have a co-signer on your loan depends on their willingness to help you and open themselves to liability. If you have friends or family who are willing to help you out, make sure you stay on top of payments to ensure they aren’t left footing your bills. A home equity loan or line of credit can be an attractive alternative to a personal loan. If you’ve owned your home for a while and have built up significant equity, you may be able to tap into it and get a better rate than you would on a personal loan. Deciding which type of loan to get depends on several factors, including your equity in your home, how much money you need and your credit score. Typically, you can take out personal loans in amounts ranging from $10,000 to $100,000. The limit on a home equity loan depends on your home’s value and how much of the existing mortgage you’ve paid off. Most lenders only lend up to 85 percent of your available loan to value, which is the difference between your loan balance and your home’s current value. So the loan amount will be less than your total equity. If you only need a small sum of money, a personal loan may be the better option. However, you could consider a home equity line of credit – it has the flexibility of a credit card and may have better rates than a personal loan. Another factor that may guide your decision is your credit score. Personal loans tend to have stricter credit requirements than home equity loans – a poor credit score can affect your rate, loan amount or even your approval. Typically, to get the best rate on a personal loan, you need a credit score in the 700s. Home equity lenders’ credit requirements aren’t as strict. Typically, you can get good approved and even secure a good rate if you have a score in the mid-600s. One drawback of a home equity loan is the application process is longer than that for a personal loan. The process is similar to the one you go through to get a regular mortgage – you need to have your home appraised, and it can take up to a month to get approved.
Can I use a personal loan to pay for school?
The short answer is yes – you can use a personal loan to cover tuition and other costs associated with higher education. However, there are several reasons this may not be a good choice, especially since rates for both types of loans tend to be comparable if you have good credit. If you need help paying for school, check with the federal government first. Fill out a FAFSA form to see what aid you’re eligible for. Your credit score isn’t used to determine whether you are eligible for a federal loan, so that isn’t an impediment. In addition, there’s no age limit on a FAFSA, so you can apply for federal aid even if you’re older and considering going to school. Lenders consider your credit score when you apply for private student loans, and they have higher rates than federal loans. However, they’re available in larger amounts, so a private student loan may be an option if you’ve already taken out $57,500, or $31,000 if someone can claim you as a dependant, from the federal government – the max it allows. To get a good rate on a private student loan, you need a score in the 670 range or better. It may seem like a good idea to get a personal loan in lieu of a private student loan, but student loans generally have features that make them a better choice. The primary reason to get a student loan to pay for school is you don’t have to make payments until you complete your education, and most have a six-month deferment period. With a personal loan, you need to begin making payments immediately, which can be a problem if you want to focus on your studies and not work while you are in school. Student loans also have a variety of forbearance and deferment options that aren’t available with personal loans.
Best student loans
