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When you need money, personal loans may provide the extra funds you need, whether you want to consolidate credit card debt, pay off medical bills or make home repairs.
Here’s our take on the best personal loans on the market — sorted by features and uses — to help you decide which one may be right for you. We’ll also give you a rundown of what you should know when shopping for a personal loan and tips on how to choose the best personal loan for you.
- Our top picks for the 7 best personal loans
- How we picked these loans
- What you should know about personal loans
- Personal loan terms to compare
- Tips on choosing a lender
Our top picks for the 7 best personal loans
We analyzed dozens of personal loan lenders and selected our top picks for the best personal loans out there, sorted by what we believe makes the loan stand out.
Best for debt consolidation: Marcus by Goldman Sachs
Why Marcus stands out: If you want to pay off multiple debts at once, Marcus can help you by sending payments to up to 10 creditors. Plus, Marcus doesn’t charge application, origination, prepayment or late fees, which can increase the total amount you have to repay.
Marcus offers personal loans ranging from $3,500 to $40,000.
- Competitive interest rates — Marcus offers competitive rates, but the company says “only the most creditworthy applicants” will qualify for its lowest rates. And loans with longer terms tend to have higher interest rates. If you want to use a Marcus loan to consolidate debt, be sure to compare the interest rate you’re offered to the rate you’re paying on any existing debts. If you can’t qualify for a lower rate, it probably doesn’t make sense to take out a debt consolidation loan.
- Strong credit needed — If your credit has some dings in it, Marcus might not be the best choice. According to the Goldman Sachs 2019 annual report, 85% of Marcus customers have FICO® credit scores of 660 or higher.
- Ability to prequalify — During prequalification, Marcus uses a soft credit inquiry that doesn’t affect your credit scores to estimate your potential rate and terms. Just remember, prequalifying doesn’t mean you’ll be approved for a loan. And if you are approved, you may qualify for a different rate and term than you saw during prequalification.
Best for home improvement: LightStream
Why LightStream stands out: LightStream — the online lending division of Truist Bank — offers personal loans ranging from $5,000 to $100,000, making it possible for you to tackle home improvement projects from small to large. (Take note, though, that you may see a different loan range through Credit Karma.)
If you don’t want to (or can’t) use home equity to fund improvements, LightStream might be a good option. The lender offers very competitive interest rates and promises to beat other lenders’ rates in certain circumstances.
- Good credit required — Without a strong credit profile, you may have difficulty qualifying for a loan with LightStream.
- No-fee promise — LightStream doesn’t charge fees like origination or application fees or charge a prepayment penalty for early repayment of its personal loans.
- No option to prequalify — You can’t check rates and terms without affecting your credit scores. Applying for a personal loan with LightStream will generate a hard credit inquiry, which may lower your credit scores.
Best for bad credit: NetCredit
Why NetCredit stands out: NetCredit looks at factors beyond your credit scores when evaluating your loan application. Plus, NetCredit reports payments to credit bureaus Experian and TransUnion, which can help you build your credit history if you make all your payments on time as agreed. NetCredit also offers access to online financial education courses to help improve your knowledge about a range of financial topics, including budgeting, credit scores, saving and more.
- High interest rates — Because NetCredit works with people who have bad credit, the interest rates the company offers are higher than what you may find from other lenders. But NetCredit’s rates are lower than what payday lenders typically charge.
- Fees — NetCredit charges origination and late fees in some states. But there are no fees for paying off your loan early, which can save you on interest charges, or for insufficient funds.
- Ability to prequalify — If you’re eligible to receive a loan from NetCredit, you’ll receive an offer with estimated rates and loan terms. NetCredit uses a soft credit inquiry, which doesn’t affect your credit scores, to make you a prequalification offer. If you accept the offer, a hard inquiry will be generated. A hard inquiry may negatively affect your credit scores for a short time.
Best for building credit: Upstart
Why Upstart stands out: Upstart is a lending marketplace that says it considers nontraditional factors, such as education, field of study, grade point average and job history, when making loan decisions. And the company accepts applications from people who don’t have enough information in their credit file to generate a FICO® score. If you’re trying to improve your credit scores, Upstart may be an option, as the lender considers applicants with VantageScore® or FICO® credit scores as low as 620.
Upstart offers personal loans ranging from $1,000 to $50,000 and repayment terms of three or five years. (You may see different terms if you apply through Credit Karma.)
- Range of interest rates — Upstart’s interest rates range from competitive to relatively high, and the average APR on a three-year loan is 15%, according to its website. For comparison, the national average APR for credit cards in May 2020 was 14.52%. Upstart’s rates are determined by factors such as an applicant’s credit, annual income, education and job history.
- Prequalification available — When you apply for prequalification, Upstart uses a soft credit inquiry, which doesn’t affect your credit scores, to provide estimated loan amounts and terms you might qualify for. But prequalification doesn’t guarantee approval. And if you are approved, your loan amount and terms might be different than what you saw when you applied for prequalification.
- Potentially fast funding — If your loan application is approved and you accept your loan terms by 5 p.m. Eastern time, Upstart says you’ll typically receive your loan funds by the next business day. When you can actually access those funds will depend on your bank.
Best for secured personal loans: Wells Fargo
Why Wells Fargo stands out: Wells Fargo offers both unsecured and secured personal loans. Securing your personal loan with assets in a saving or CD account may give you access to a lower interest rate or larger loan amount. Keep in mind that a secured loan does have a $75 origination fee.
The bank’s unsecured loans range from $3,000 to $100,000 and secured options go up to $250,000.
- Competitive interest rates — Wells Fargo offers competitive interest rates that are in line with what other large banks charge for personal loans. Plus, the bank offers autopay discounts to customers with eligible Wells Fargo accounts. To qualify for the lowest rates available, you’ll need strong credit and enough income to repay your loan on time.
- Prequalification not available — Wells Fargo doesn’t let you check your estimated rate and loan term before applying. To see your loan details, you must submit a formal loan application, which will generate a hard credit inquiry that can negatively affect your credit scores.
Best credit union for personal loans: Alliant Credit Union
Why Alliant stands out: You must be a member to apply for a loan from Alliant Credit Union, but it’s not difficult to join. If you’re a member or decide to become one, Alliant Credit Union offers competitive rates, debt protection plans and sometimes even same-day loan funding.
- Competitive interest rates — Alliant Credit Union offers competitive interest rates on its personal loans, which vary based on the loan term. Loans with shorter repayment periods have lower interest rates than loans with longer repayment terms.
- Debt protection plan — With Alliant Credit Union’s debt protection plan, your monthly payments may be suspended or canceled due to disability, involuntary unemployment or death — without additional interest, penalties or impact to your credit scores.
- Loan amounts — Alliant Credit Union offers personal loans in amounts ranging from $1,000 to $50,000 with repayment terms of 12 to 60 months.
Best for extra perks: SoFi
Why SoFi stands out: When you get a personal loan through SoFi, you may be eligible for a number of extra perks, including the lender’s unemployment protection program, access to financial advisors, a rate discount on your next loan and career advice. Plus, you’ll get support from SoFi’s online community, referral bonuses, and access to networking events designed to help you meet other SoFi members.
SoFi offers loan amounts ranging from $5,000 to $100,000 and repayment terms of two to seven years. (Your loan terms may differ if you apply through Credit Karma.)
- Competitive interest rates — SoFi offers competitive rates. If you’re approved for a loan, your actual rate will be determined based on your credit profile, loan term, annual income and other factors.
- No-fee promise — SoFi doesn’t charge origination fees that eat into your loan funds or prepayment fees that penalize you for paying off your loan early. And you won’t be charged a late fee if you don’t make your payment on time. But we don’t recommend making late payments because they will negatively affect your credit scores.
- Ability to prequalify — When you apply for prequalification, SoFi uses a soft credit inquiry. This allows you to check your estimated interest rate and loan term without affecting your credit scores. Just remember that prequalifying doesn’t guarantee you’ll be approved for a loan. And if you’re approved, your rate and term may not match what you saw when you applied for prequalification.
How we picked these loans
We reviewed more than two dozen personal loans to come up with our best picks. The criteria we weighed most heavily in our decision included interest rates, fees, loan amounts, the ability to prequalify, credit required and other perks, such as resources designed to help protect and improve your financial health.
What you should know about personal loans
There are many factors to consider when deciding if a personal loan is right for you, including interest rates, fees and repayment terms. Finding the best personal loan for you will take a little bit of work, but it’s worth the effort to get the best available offer from a reputable lender.
Many financial institutions, like credit unions, online lenders and peer-to-peer lenders, offer personal loans. But loan terms and conditions — which ultimately affect the total amount that you’ll have to pay back — can vary from lender to lender. That’s why it’s important to do your homework before you apply.
Where to start when shopping for a personal loan
You may want to start with the bank or credit union where you have your primary checking account or banking relationship. But if your bank doesn’t offer personal loans or you don’t think it’d be a good fit, you can do some online research to get headed in the right direction.
Consider using multiple online sources for information instead of relying on just one site to make your decision. Here are a few you may want to check out.
- Company websites — Many companies have websites where you’ll find details about loans and their rates, terms, fees and more. You’ll typically find the lender’s contact info online as well, so you can reach out if you need more info.
- Trusted online sources — Sites that are dedicated to educating people about financial services often provide information about loans and compare offers from popular lenders.
- Online reviews — You can find out what customers are saying about lenders by reading online reviews. Just remember that no matter what a customer review says (good or bad), there’s no guarantee you’ll have a similar experience with the lender.
- Consumer Financial Protection Bureau — The CFPB is a government agency created to ensure people are treated fairly by financial services companies. The site contains a searchable database where consumers can look for complaints filed against companies.
Personal loan terms to compare
Getting a loan is a big decision that can affect your finances for years.
Here are some personal loan terms to compare and consider.
Your interest rate is typically the factor that will have the biggest influence on how much you pay over the life of a loan, so the goal is to get the best rate possible. Rates vary based on the lender, your credit and a host of other factors.
Some lenders offer rate discounts if you sign up to have your loan payment automatically deducted from your bank account each month.
If you get an offer from a lender that offers this option, be sure to compare the discounted rate with the other quotes you receive so you can accurately compare loan offers.
Typically, people with higher credit scores qualify for lower rates than people with lower credit scores. But different lenders have different criteria for approving borrowers, so it makes sense to shop around.
Another factor that affects the total cost of your loan are the fees that come with it. Some loans don’t have fees, while others may have one or more of the following:
- Origination fees — Some lenders charge a fee for processing your loan application and disbursing the funds. They often range from 1% to 8% or more of the loan amount at major lenders.
- Processing fees — Your lender may charge you a fee for processing your payment each month.
- Prepayment penalties — Some lenders may charge a prepayment fee if you pay off your balance before the end of the loan term.
- Late-payment fees — Although late fees aren’t unique to personal loans, you’ll want to know if your lender charges them and how much they are.
Loan amounts and repayment terms
Personal loans often range from around $1,500 to $100,000, with repayment terms of 12 to 84 months, depending on the lender. If you choose a loan with a shorter term, you’ll typically pay less interest overall, but your monthly loan payments will probably be higher.
On the flip side, if you extend the loan term, your payments may be lower, but you’ll likely pay more in interest over the life of the loan.
It may be helpful to calculate the total interest you’ll pay over the life of the loan and compare your options that way.
How quickly you need money may affect where you want to borrow. Some lenders can turn around loan applications and have your money deposited into your account within one or two business days, while others may take five to 10 business days or more.
Lenders want to ensure that you’ll be able to repay your loan on time. Before they approve your loan application, they review several factors to determine your credit risk. Here are a few they may consider.
- Credit scores and reports — Your credit scores and reports help lenders predict how likely you are to repay a debt.
- Income — Lenders may want to check your income to help determine if you make enough money to repay the loan.
- Debt-to-income ratio — This ratio compares your monthly debt payments to your gross monthly income. Lenders use it to help determine whether you have too much debt to get another loan. The lower your debt-to-income ratio, the better.
The minimum thresholds for loan eligibility vary from lender to lender. If you’re not approved by one company, that doesn’t necessarily mean you won’t be able to get a loan with a different company.
Tips on choosing a lender
It’s important to work with a lender that fits your needs. But the details of the loan shouldn’t be the only criteria you use when selecting a lender. Here are a few more things you may want to consider.
- Location — If you like banking in person and want to be able to visit a local branch to speak with someone about your loan, consider choosing a lender with locations near your home or work.
- Features — If certain features, like being able to access your account online or through a mobile app, are important to you, you may want to select a lender that offers those features.
- Reputation — Lenders earn good reputations for a reason. It may be worth doing business with a lender that’s known for its great customer service and ethical business practices, even if it means paying a slightly higher rate.
Ultimately, the lender that’s right for you should have rates you can afford, terms to fit your budget and a service level you’re comfortable with. While there’s no “right” lender for everyone, there are some types of lenders to avoid.
Lender red flags
Here are several red flags to watch out for when evaluating personal-loan lenders. These can alert you to potential scams and illegitimate offers.
- They’re not registered in your state. Institutions that lend money to consumers must be registered in the states where they do business. You can find out if a lender is registered in your state by calling your state attorney general’s office or your state’s bank regulator.
- They make you an offer over the phone. Lenders doing business in the U.S. aren’t allowed to guarantee you a loan over the phone and ask you to pay before delivering.
- They offer guaranteed approval. Checking a potential borrower’s credit history is a standard lending practice, because financial institutions want to know how likely you are to repay a debt. If a company says you can get approved for a personal loan no matter how bad or nonexistent your credit is, beware. It’s probably not a legitimate offer.
- They request that you wire money or pay a specific person. If a lender asks you to wire money to a specific person, that’s a red flag.
Finding a personal loan you can afford from a lender you trust requires you to do your homework. Fortunately, you can tap into your personal network, speak with your existing lender, and access a variety of websites to get information to help you make an informed decision.