With so many online lenders to choose from, it can be overwhelming to find the right personal loan. That’s why we’ve put together this list of the best online loans, including options for good credit, home improvements, debt consolidation, and building credit.
- Best for good credit: SoFi
- Best for home improvements: LightStream
- Best for debt consolidation: Discover
- Best for building credit: Avant
- What are online loans?
- When is an online loan a good idea?
- Alternatives to online loans
- FAQs about online loans
Best for good credit: SoFi
Why a SoFi personal loan stands out: If you have good credit, you could lock in a competitive rate with a SoFi personal loan. With its autopay and member rate discounts, SoFi’s starting APR is lower than what you’ll find with most other lenders.
Pros
- Member-only perks
- No late fee or prepayment penalty
- Same-day funding available
Cons
- Possible origination fee
- High minimum amount of $5,000
- Unclear eligibility requirements
Read reviews of SoFi personal loans to learn more.
Best for home improvements: LightStream
Why a LightStream personal loan stands out: A LightStream home improvement loan can help you fund a project like a kitchen remodel or roof repair. You may borrow up to $100,000 and won’t have to worry about any appraisals or home equity requirements.
Pros
- Low rates through the Rate Beat program
- Same-day funding possible
- No fees or prepayment penalties
Cons
- Loans start at $5,000
- No option to prequalify
- Good credit required
Read reviews of LightStream personal loans to learn more.
Best for debt consolidation: Discover
Why a Discover personal loan stands out: If you have a lot of high-interest debt, a debt consolidation loan from Discover might make sense. You may qualify for up to $40,000, and Discover can pay your creditors directly so you don’t have to.
Pros
- No fees
- Offers next-day funding
- Flexible repayment terms of up to 84 months
Cons
- Good credit is required
- No co-borrowers allowed
- Maximum loan amount may be too low
Read reviews of Discover personal loans to learn more.
Best for building credit: Avant
Why an Avant personal loan stands out: Unlike many other personal loan lenders, Avant offers personal loans to borrowers with credit scores as low as 550. The lender reports to all three credit bureaus, so making on-time payments can help build your credit.
Pros
- Low minimum loan amount of $2,000
- Possible next-day funding
- Hardship support
Cons
- Admin fee of up to 9.99%
- Late and insufficient funds fees
- High maximum APR
Read reviews of Avant personal loans to learn more.
What are online loans?
Online loans are a lot like traditional loans, but the entire lending process happens online. Some lenders only operate online and offer these types of loans. But traditional banks and credit unions can also offer online loans. Most lenders let you prequalify for an online loan, so you can check potential rates and terms before you officially apply, without any impact to your credit.
To get an online loan, you can complete an application and submit any required documents digitally, typically on the lender’s website. Then, the lender will disburse your funds if you’re approved. You’ll repay the loan through fixed, monthly payments. You’ll never have to step foot into a bank or a brick-and-mortar institution.
When is an online loan a good idea?
An online loan should be on your radar if …
- You need funds quickly: It’s usually fast and easy to apply for online loans. Plus, many lenders offer same-day or next-day funding.
- You’re looking for better rates: Online lenders have less overhead than traditional lenders, so they can offer lower rates. You might score a more competitive rate with an online loan.
- You can’t qualify for a personal loan with a traditional lender: Some online loans come with lenient eligibility requirements. You can get approved, even with bad credit or no credit.
Alternatives to online loans
If you can’t wait long for cash but don’t want to get an online loan, consider these alternative options.
- Buy-now, pay-later apps — BNPL apps let you split up larger purchases like furniture or electronics into smaller payments over time. This way you don’t have to pay the full price upfront.
- Payday alternative loans — Offered by some federal credit unions, PALs are short-term loans with APRs that can’t be more than 28%. But you’ll have to join a credit union to get one.
- Payday advance apps — Pay advance apps let you access a portion of your paycheck a few days early. You can usually borrow up to $500.
Our methodology: How Credit Karma rates personal loans
Credit Karma’s editors evaluate personal loans by reviewing key features and how they compare to other popular lenders. Those features fall into the following three categories:
- Affordability — We start by checking if a lender’s rates are competitive: Are they higher than average, or are they lower than many competitors? Then, we analyze if fees — particularly origination fees — may make your loan more costly. Last, we’ll check if the lender offers rate discounts for things like automatic payments that may reduce your rate.
- Customer-friendly features — Taking out a personal loan is a big financial commitment, so we prioritize lenders that make things easier for you. For instance, does a lender offer a wide range of loan amounts for people with different borrowing needs? Does it offer at least several loan terms to give you more flexibility with your monthly payment? And, crucially, can it fund your loan quickly? A lender will also get bonus points for offering direct payments for debt consolidation or other customer-friendly features.
- Transparency — We believe personal loan terms should be easy to find and decipher. Prequalification, which lets you check what rate you may qualify for without a hard credit inquiry, is particularly important. We also check to see if a lender has been recently penalized by regulators.
Estimate personal loan costs
To better understand the total cost of any personal loans you’re considering, use an online calculator like Credit Karma’s simple loan calculator. A loan calculator can help you estimate your monthly payment and how much you’d pay in interest versus principal over the length of the loan.
FAQs about online loans
Each lender has their own credit score requirements. Some lenders look for good credit (670 or higher), but others are more lenient and accept borrowers with lower scores.
Some lenders offer online loans with same-day or next-day funding. But typically, you’ll need to apply on a business day to take advantage of it.
The best online personal loan depends on your credit score and loan purpose. If you want to fund a home improvement project, for example, LightStream is a good option. If your goal is to build credit, Avant is likely the better choice.
*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.