Where Can I Get a Personal Loan?

Personal loans can come in handy at various moments in your life, whether you're moving across the country, tackling high medical bills, getting married, renovating a fixer-upper, or consolidating high-interest debt accumulated during a rough patch. But in today's market, determining where to get a personal loan — specifically where you'll qualify and get the best deal — can be overwhelming.

We'll walk you through the options, including online lenders, traditional banks and credit unions, personal loan marketplaces like Credible, and peer-to-peer lenders.

Online lenders

Going through an online lender is one of the best ways to get a personal loan. These lenders are either a digital extension of a large bank or credit union or an independent financial technology (fintech) company that specializes in lending.

Because of their lower overhead (no physical branches, fewer employees), online lenders are often able to offer the most competitive interest rates and lowest fees. Some online lenders even specialize in personal loans for borrowers with fair or poor credit — or no credit history at all.

Online lenders are known for their fast application and funding processes, but without physical locations, customer service can be lacking.

Advantages

• Low rates and fees: Though each lender is unique, online lenders often offer some of the lowest rates and fees in the industry.
• Easy application: For digital-first borrowers, applying for a personal loan with an online lender is fast and easy. You don't even have to get off the couch.
• Fast funding: Many online personal loan lenders offer same- or next-day funding for personal loans. Getting the money you need quickly is especially crucial in emergency situations, like car repair or a trip to the emergency vet.
• Options for fair and poor credit: Some online lenders specialize in personal loans for bad credit.

Disadvantages

• Customer service issues: Online lenders, particularly greener startups, may lack in the customer service department. Their hours could be limited, you might get stuck talking to a chatbot, and you can't get in-person help when you hit a brick wall.
• Security risk: If you're uncomfortable sharing sensitive information like your Social Security number online, you may be better served by an in-person bank or credit union.

Credit unions

Credit unions are another great source of personal loans with options for borrowers across the credit spectrum. (Many offer payday alternative loans for small loan amounts without a credit check.)

The best credit union personal loans typically have lower rates than what you'd find at a bank, and their eligibility requirements may be more lenient. Plus, credit unions are known for stellar customer service as not-for-profit community institutions; if you have a local branch, you can visit for help managing your loan at any time.

The catch? Credit unions are tougher to join than banks. They tend to have specific membership criteria, like living in a certain city or region, working for a certain employer, or belonging to a certain organization.

Advantages

• Competitive interest rates: Credit unions tend to have slightly lower loan rates on loans than banks. According to the National Credit Union Association, the average rate on an unsecured, 36-month, fixed-rate loan from a credit union is 10.74%, compared to 12.02% from a bank.
• Superior customer service: Credit unions are known for their high levels of personalized customer service. Community branches have dedicated staff who can help you navigate your loan and other financial situations.
• Other lending options: Some credit unions offer payday alternative loans, which, as the name suggests, are an alternative to expensive (and often predatory) payday loans. Rates are capped at 28% APR, and often no credit check is required.

Disadvantages

• Membership requirements: Credit unions generally have membership requirements. Some are easier to join than others, but your options may be limited if you don't fit the criteria.
• Slow processing and funding: Though it varies by credit union, you may not be able to get your loan approved and funded as quickly with a credit union compared to an online lender.
• Online platform: This varies by credit union, but digital-first consumers may find credit unions' online platforms (and mobile apps, if available) not on par with those of online lenders.

Banks

Banks offer many of the same perks as online lenders: For instance, you can typically apply for personal loans online with larger banks, but you can also visit physical branches if you need help applying or have questions. Some banks offer relationship discounts, e.g., lower rates for customers who have checking or savings accounts with the bank. And some offer same-day funding for existing customers with a checking account.

Advantages

• Best of both worlds: If the bank is large enough, you can usually apply for and manage your personal loan online, with an easy-to-use platform. But if you prefer personalized service, you can visit a local branch for assistance.
• Relationship discounts and perks: Customers who have bank accounts with a financial institution already may get a rate discount on loan products, such as personal loans. They may also benefit from same-day funding.
• Reputation: Many banks have a long-standing reputation that spans decades, unlike online lenders, which are relatively new by comparison. This can be a source of security for some borrowers wary of online companies.
• Lower maximum APRs: Personal loan interest rates at banks often top out in the mid or low 20% range. Online lenders, on the other hand, tend to have rates that top out at 36%.

Disadvantages

• Higher than average rates: Personal loans from banks may have higher starting rates than personal loans from online lenders. However, this might only make a difference if you have excellent credit.
• More stringent requirements: Though eligibility varies, banks typically have stricter requirements for borrowers than online lenders, such as higher credit scores and income requirements.
• Relationship requirement: Like credit unions, some banks require that you're an existing customer to access personal loans. Wells Fargo is one example.

Personal loan marketplaces

Personal loan marketplaces such as Credible allow you to prequalify with multiple lenders at the same time. You might also be able to prequalify with lenders that don't offer this option on their own website, such as LightStream and BHG Financial. This makes it easier to compare personal loans side-by-side to find the lowest rates and fees and the best repayment terms for your budget.

Advantages

• Fast and easy: Using a personal loan marketplace is fast and easy, and user interfaces are typically tech-savvy.
• Prequalification: With an online loan marketplace, you can prequalify with multiple lenders — no credit check required. And, as noted, some lenders you can prequalify with through a marketplace may not offer prequalification on their own website — this is a major perk if you want to limit hard credit pulls.
• Comparison shopping: Comparing several personal loan quotes can help you narrow down which lenders you're more likely to qualify with and the loan terms they're likely to offer. With one prequalification form on a marketplace, you could see several quotes. To see as many quotes from individual lenders, you'd need to fill out multiple prequalification forms.
• Customer support: Personal loan marketplaces have dedicated support teams, with real people who are typically easy to get in contact with. You can see this reflected in third-party reviews. For instance, Credible has a 4.8-star rating with Trustpilot and over 8,000 reviews.

Disadvantages

• You may have a different experience with the formal application: While you can get prequalified with multiple lenders in one spot using an online personal loan marketplace, you still need to click through to your preferred lender and apply directly with them.
• Not every lender represented: Personal loan marketplaces show you a wide range of personal loan options, but not every lender under the sun is represented — credit unions and banks, in particular, may be under-represented. Supplement your personal loan marketplace results with a few other options you research on your own, including other online and local lenders.
• Eligibility could differ: Minimum credit score and income requirements might differ somewhat through a loan marketplace vs what that lender offers directly. This is unlikely to be an issue for borrowers with good credit.

Peer-to-peer lenders

Peer-to-peer lending (sometimes called P2P lending, marketplace lending, or crowdfunding) is an alternative to traditional personal loans, often available to borrowers across the credit spectrum. Rather than borrow money from a specific financial institution, you borrow money from one or more investors through a peer-to-peer lending platform.

“P2P platforms often use different qualification criteria compared to traditional lenders, which can help some borrowers but work against others,” explains R.J. Weiss, certified financial planner and founder of The Ways to Wealth. “Just be careful with the terms and fees. These loans aren't as standardized as what you'd get from a bank, so you'll want to read the fine print closely.”

Advantages

• Better approval odds: If you don't have strong credit and are having trouble qualifying for a personal loan with a traditional lender, you may have more success through peer-to-peer lending. In some cases, your credit score and income may play less of a role in credit decision-making.
• Fast funding: Like online lenders, P2P lenders can generally fund your personal loan quickly.
• Easy application: As with online lenders, you can apply online — and it's a relatively easy process.

Disadvantages

• Less popular: Peer-to-peer lending isn't as mainstream as other forms of lending. Platforms are few and far between; Prosper is the major player in the space (though there are other options such as Kiva and Groundfloor), so your options may be limited.
• Less regulation: Banks, credit unions, and online lenders are highly regulated. P2P lending is a relatively recent option and faces fewer regulations, which could pose risks to borrowers.
• High costs: You may be able to secure a low APR through marketplace lending, but in some instances, APRs can be high, especially for borrowers with spotty credit histories.

How to choose a personal loan lender

A personal loan is a multi-year commitment. You get the money upfront, but payments can linger five to seven years — or sometimes longer. Make sure you choose the best personal loan that works for your needs now and for the next several years.

1. Review your budget

Examine your budget — your income and expenses — to determine how much of a monthly payment you can comfortably afford. Never commit to a monthly payment that your budget can't accommodate. And don't just think about today's budget; think about how your expenses might change over the next few years, like if you plan to move to a more expensive city, get married, buy a house, or have a child. Life changes like these can further strain your finances and make it challenging to afford a monthly payment.

“A loan is, in many ways, borrowing from your future self,” advises Weiss. “In some cases, that tradeoff makes sense, especially if the loan helps increase your future earning power or allows you to get to work. But it's important to make sure both your current self and your future self are aligned on whether that opportunity cost is worth it.”

2. Look at your credit score and report

Your credit score and history have a major impact on the loan amount you qualify for and the APR you're offered. Visit AnnualCreditReport.com to get a free credit report and make sure there are no errors. Then, get your score with Credible's free credit monitoring service or through your credit card's or bank's free credit score tool.

Knowing your credit score can help you understand which lenders to consider. Look at lender minimum credit score requirements to see which you might qualify with (you can see this in the lender table above). If your score is lower than the minimum, remove that lender from consideration.

3. Prequalify

Once you have a shortlist of lenders, prequalify to compare quotes side-by-side.

Use an online loan marketplace to compare several lenders at once. But consider supplementing that by prequalifying with other lenders not on the marketplace.

Prequalification involves a soft credit check, which doesn't affect your score. But quotes aren't offers of credit — your final rate could differ and it's possible you might not qualify at all.

4. Compare rates, fees, amounts, and timelines

Consider the following when comparing loan quotes:

• APR: For a full picture of how much a loan will cost, look at the annual percentage rate (APR), which reflects both the interest rate and upfront fees like origination fees. Often, the best loan is the one with the lowest APR.
• Fees: While the origination fee, if there is one, is accounted for in the APR, it still affects your bottom line. Origination fees are often deducted upfront from the loan amount. So if you borrow $10,000 with a 5% origination fee, you'd receive $9,500. Don't forget to consider other fees like late fees as well.
• Discounts: Consider which lenders offer discounts for autopay and direct payment to creditors (if you're consolidating debt). Note, you often need to sign up for autopay during the application process for the discount to apply.
• Loan amounts: You may need to accept a higher APR to get approved for the loan amount you need.
• Repayment terms: The longer the repayment term, the lower your monthly payment will be — but you'll spend more on interest in the long run. The shorter the repayment term, the less interest you'll pay. Loans with short repayment terms often have lower interest rates as well.

5. Consider customer reviews

Choosing the lender with the best rate and lowest monthly payment feels like an obvious decision, but there's one last thing to consider before applying: customer reviews on sites like Trustpilot, Google, and the Better Business Bureau (BBB).

After all, you'll be working with this lender for years; make sure the customer service and online platform (or mobile app) suit your needs. If you see red flags, rethink borrowing from them.

How to apply for a personal loan

Ready to borrow a lump sum of cash? Here's how to apply for a personal loan:

1. Research: Assess your financial situation, including your credit score and the monthly payment you can afford. Then, compare multiple lenders to find the lowest rates and fees, and the best repayment terms.
2. Gather documentation: Some of the paperwork you'll need for the formal application might include pay stubs, tax returns, bank statements, utility bills, a copy of your driver's license or passport, and employer verification. If you're taking out a personal loan to consolidate debt, the lender may require account information from your creditors.
3. Thaw your credit: If your credit is frozen with any of the three major credit bureaus, schedule a temporary thaw before applying. Getting approved for a personal loan usually requires a hard credit check, and lenders can't access your report if it's frozen.
4. Apply online or in-person: Most lenders have an online application with clear steps to guide you through the process. If working with a community bank or credit union, you may also be able to apply in person.
5. Review the loan terms and sign: Assuming you're approved, review the loan offer from the lender — verify that the rate, fees, amount, and repayment term match your expectations. If everything looks good, sign the offer and wait for your loan to be funded.