Personal loans offer quick funds to pay off medical bills, cover emergencies, make car repairs, finance home improvements, take a vacation, and much more. You can also use a personal loan to refinance credit card debt to lower your monthly payment.
Current personal loan interest rates range from around 6% to 36%, with the best rates reserved for the most qualified borrowers. If you prequalify before applying, you can get a sense of rates that may be available to you without hurting your credit. Just note that you'll need to formally apply to see final rates and terms, which could impact your credit.
Best personal loans
- SoFi: Best overall
- PenFed: Best credit union
- Upgrade: Best for fair credit
- Discover: Best for no origination fees and low rates
- Splash Financial: Best quick loans for good credit
- Universal Credit: Best debt consolidation loans for bad credit
- LightStream: Best for home improvement loans and low rates
- Best Egg: Best close rates if prequalified
- BHG Money: Best for large personal loans
- OneMain Financial: Best bad credit personal loans
- Upstart: Best fast personal loans (for all credit types)
- LendingClub: Best online experience
Compare personal loan rates for March 2024
Advertiser DisclosureOverview
Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low — as of this writing, Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Note that unlike most lenders, Lightstream does not let you prequalify. Nor does it provide a contact phone number next to its customer service hours on its website.
Repayment terms
2 - 12 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the next business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Read full reviewOverview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Read full reviewOverview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Eligibility
Available in all 50 states
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Read full reviewOverview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Read full reviewOverview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number. Once you have a loan with SoFi, you may be eligible for unemployment protection and unemployment assistance.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Fees
Option to pay an origination fee (up to 6%) in exchange for a lower rate
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Read full reviewOverview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 8.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Read full reviewOverview
It’s worth considering a personal loan through Splash if you have good credit (ideally, a FICO score above 710). The platform offers loans from a wide range of lenders, and next-day funding is available. Plus, Splash has a live chat feature so you can get real-time answers without having to wait on hold or for an email. Loans are available up to $100,000 if you apply via Splash’s website.
Rates are competitive, but borrowers with excellent credit may find lower APRs elsewhere. If you need a repayment term longer than five years, you’ll need to look elsewhere as well.
Loan amount
$5,000 - $100,000 (up to $35,000 on Credible)
Eligibility
Available in all states except VT. OH and NM net disbursed amount must be greater than $5,000. MA must be greater than $6,000
Time to get funds
Same day available, typically 1-3 days
Loan uses
Debt consolidation, home improvement, medical expenses, major purchases
Read full reviewOverview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Read full reviewOverview
BHG Money stands out for offering the largest loan amounts — up to $200,000 — of any Credible partner lenders. Simply put, if you need an unsecured personal loan over $100,000, there are very few places to look, but BHG is one. You'll have up to 10 years to repay the loan, but you'll need an annual income of at least $100,000 to qualify and a FICO score that's 660 or higher. However, if you have a cosigner that meets these requirements, BHG will consider your application.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 2% and 4%, depending on your financial profile. Loan funds are available within three to 14 days of loan approval. Note that you can't prequalify with BHG.
Fees
Origination fees, late fees
Eligibility
Available in all states except Maryland and Illinois
Loan uses
Debt consolidation, baby (adoption), engagement ring financing, moving (relocation), business, home improvement, special occasion, cosmetic procedures, major purchase, taxes, credit card refinancing, medical expenses, vacation, wedding, other
Read full reviewOverview
OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Fees
Origination fee, unsuccessful payment fee, late fee
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Read full reviewBest personal loan lenders
The best personal loans of 2024 package competitive rates with high-value features like low or no fees, fast funding, easy prequalification, high customer satisfaction ratings, a wide range of loan amounts and repayment terms available, discounts, and easily accessible customer service. Or, they represent personal loans for fair-credit and poor-credit customers that are only available from specific lenders.
Best personal loans for excellent credit
Loan Amount
$5000 to $100000
Min. Credit Score
Does not disclose
No fees required
Large loan amounts available
Autopay and direct pay discounts
Same day funding
Long loan terms available
Good credit required
5,000 minimum loan amount
Overview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number. Once you have a loan with SoFi, you may be eligible for unemployment protection and unemployment assistance.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Fees
Option to pay an origination fee (up to 6%) in exchange for a lower rate
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Best credit union for personal loans
Loan Amount
$600 to $50000
No origination fee
Allows cosigners
Small loan amounts available
May fund in 1 to 2 business days
No discounts
Good credit required
Overview
PenFed is a credit union that offers personal loans to applicants with good credit. Though you'll need to become a member to receive a loan, membership is open to everyone. PenFed shines with no origination fees, small available loan amounts, and low interest rates. If you don't have a FICO score above 700, you may not qualify on your own, but can apply with a cosigner with good credit — which is not something most lenders offer.
PenFed doesn't have a minimum income amount, and offers live chat and an entirely online loan application process.
Fees
Unsuccessful payment fee, late fee
Time to get funds
Typically 1 to 2 business days after verification
Loan uses
Debt consolidation, home improvement, credit card refinancing
Loan Amount
$1000 to $50000
Fair credit borrowers eligible
Autopay and direct pay discounts
Can fund in as little as 1 business day
Mobile app
Secured loans available
High maximum origination fee
Cosigners not accepted on home improvement loans
Low J.D. Power ranking
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Best for no origination fees (and low rates)
Loan Amount
$2500 to $40000
Low minimum APR
May fund the next business day
Long loan terms available
Direct pay to creditors
No origination fee
No discounts offered
Secured loans not available
Overview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Eligibility
Available in all 50 states
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Best for quick loans for good credit
Loan Amount
$5000 to $35000
Excellent customer reviews on Trustpilot
Funding as soon as the same business day
Large loan amounts available
Possible origination fee up to 7.49% (through Credible)
Other lenders may have lower starting APRs
No cosigner option
Overview
It’s worth considering a personal loan through Splash if you have good credit (ideally, a FICO score above 710). The platform offers loans from a wide range of lenders, and next-day funding is available. Plus, Splash has a live chat feature so you can get real-time answers without having to wait on hold or for an email. Loans are available up to $100,000 if you apply via Splash’s website.
Rates are competitive, but borrowers with excellent credit may find lower APRs elsewhere. If you need a repayment term longer than five years, you’ll need to look elsewhere as well.
Loan amount
$5,000 - $100,000 (up to $35,000 on Credible)
Eligibility
Available in all states except VT. OH and NM net disbursed amount must be greater than $5,000. MA must be greater than $6,000
Time to get funds
Same day available, typically 1-3 days
Loan uses
Debt consolidation, home improvement, medical expenses, major purchases
Best debt consolidation loans for bad credit
Loan Amount
$1000 to $50000
Borrowers with bad credit considered
No minimum income requirement
Autopay and direct pay discounts available
Can fund in one business day
High APRs
Potentially high origination fees
Not available in Iowa
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Best home improvement loans and low rates
Loan Amount
$5000 to $100000
Same-day funding available
High maximum loan amount
No origination fee
Good credit required
No prequalification process
Not available in Vermont
Overview
Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low — as of this writing, Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Note that unlike most lenders, Lightstream does not let you prequalify. Nor does it provide a contact phone number next to its customer service hours on its website.
Repayment terms
2 - 12 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the next business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
High Close Rates if Pre-approved
Loan Amount
$2000 to $50000
Secured loans available
Low minimum income requirement
Scored second in J.D. Power's Consumer Lending Satisfaction Study
Funds in 1-3 business days
High close rate on loans through Credible platform
Origination fees
No discounts
Not available in DC, IA, VT, or WV
Overview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 8.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Best for large personal loans
Loan Amount
$20000 to $200000
Eligible applicants can borrow up to $200,000
Considers borrowers with fair credit
Long repayment terms
Cosigners allowed
Not available in MD or IL
No discounts
Minimum income required of $100,000 annually
Overview
BHG Money stands out for offering the largest loan amounts — up to $200,000 — of any Credible partner lenders. Simply put, if you need an unsecured personal loan over $100,000, there are very few places to look, but BHG is one. You'll have up to 10 years to repay the loan, but you'll need an annual income of at least $100,000 to qualify and a FICO score that's 660 or higher. However, if you have a cosigner that meets these requirements, BHG will consider your application.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 2% and 4%, depending on your financial profile. Loan funds are available within three to 14 days of loan approval. Note that you can't prequalify with BHG.
Fees
Origination fees, late fees
Eligibility
Available in all states except Maryland and Illinois
Loan uses
Debt consolidation, baby (adoption), engagement ring financing, moving (relocation), business, home improvement, special occasion, cosmetic procedures, major purchase, taxes, credit card refinancing, medical expenses, vacation, wedding, other
Best bad credit personal loans
Loan Amount
$1500 to $20000
Borrowers with poor credit may be eligible
Secured loans available
Allows cosigners
Can fund as soon as one business day after approval
High minimum APR
Process not 100% digital
Not available in AK, AR, CT, DC, MA, RI or VT
High maximum origination fee
Overview
OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Fees
Origination fee, unsuccessful payment fee, late fee
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Best fast personal loans for all credit types
Loan Amount
$1000 to $50000
May fund in 1 business day
No minimum credit score requirement on lender site
Low minimum APR
Trustpilot score of 4.9/5 stars
May charge a high origination fee
No discounts offered
Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Loan Amount
$1000 to $40000
Mobile app
Low minimum income requirement
High close rate on loans made through Credible
Available in all states
Origination fee
No discounts
Only 3- and 5-year repayment terms available
Overview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 6%.
Eligibility
Available in all 50 states
Time to get funds
Usually takes about 2 days
Loan uses
Debt consolidation, paying off credit cards
Methodology
We collected over 700 points of data on two dozen lenders to determine which lenders are best overall, and which are the best for specific uses and needs, such as personal loans for debt consolidation and personal loans for bad credit and fair credit. Criteria were sorted into categories, which were weighted as follows to determine the best personal loans overall:
- Rates and fees - 18%
- Loan terms - 18%
- Customer experience - 17%
- Eligibility - 14%
- Customer satisfaction - 10%
- Efficiency - 10%
- Options for poor and no credit - 9%
- Discounts - 4%
Examples of specific criteria collected include each lender's minimum and maximum fixed APRs, minimum and maximum loan amounts, minimum credit score and income requirements, time to fund, repayment terms, fees, and discounts. For a complete list as well as how we collected and verified data, please see our full Personal Loans Lender Rating Methodology.
When will interest rates go down?
If you're wondering whether to wait until rates drop to get a personal loan, it's a good idea to know where rates are likely headed. But that's not the only thing to consider. And it may not even be the most important.
The federal funds rate
The Fed left interest rates unchanged at its March policy meeting, but expects to make three cuts by the end of the year for a total rate reduction of ¾ of a percentage point. Rate cuts impact the federal funds rate, which sets borrowing costs between banks; banks, in turn, establish benchmark interest rates for consumers based on the fed funds rate. The target range for the fed funds rate is currently 5.25% to 5.50%, so we should expect that range to drop to 4.50% to 4.75% by the end of the year.
This could mean slightly lower personal loan rates later in the year, but the fed funds rate isn't the only factor that influences them.
Market conditions
Lower interest rates typically make it more affordable to borrow, but other market conditions may not provide the relief aspiring borrowers are looking for. Consumer debt is at an all-time high, and credit card and auto loan delinquency rates are on the rise. Plus, the unemployment rate is at its highest level since January 2022. In spite of lower interest rates, more consumers may have a harder time qualifying for low rates, or at all. This is borne out by internal Credible marketplace data as well — about three times as many borrowers were able to prequalify for a personal loan a year ago compared to now.
That said, borrowers who’ve maintained good credit and have sufficient income are most likely to benefit from lower rates — once the Fed starts making the cuts it expects to.
How to compare personal loans
When comparing personal loans, your preferences and priorities matter. But there are certain factors you should always consider when shopping for a loan.
- APR: A loan’s APR determines how much you’ll pay in interest and fees, expressed as a percentage. The lower the APR, the less you’re paying for the loan. The interest rate you qualify for depends on your credit score and income, but rates also vary by lender.
- Loan amounts: Whether you need $2,000 for a car repair or $50,000 for a medical bill, loan amount matters. You can expect loan amounts to range between $600 and $100,000, depending on the lender.
- Repayment terms: A loan’s repayment term is how long you have to repay what you borrowed. Typical terms range from 1 to 7 years. Make sure you choose a repayment term that works for you and your budget — the shorter the term, the higher your monthly payments.
- Fees: Most personal loans come with fees, and some lenders charge more than others. Look out for origination fees, application fees, annual fees, prepayment fees, and more.
- Cosigner option: If you don’t have good credit and think you’ll have a hard time qualifying for a loan on your own, look for a loan that accepts cosigners. Locking in a cosigner increases your chances of qualifying, as they accept the responsibility of paying back the loan if you’re unable to pay.
- Time to fund: Different lenders offer different funding times. If you need money fast, look for a lender offering fast funding. Some lenders can fund as soon as the same or next business day, but it can typically take up to one week.
- Lender reputation: With any financial product, it’s important to vet who’s selling it. Check out a lender’s reputation using customer reviews and sites like Trustpilot to make sure you’re borrowing from a lender with a sound reputation.
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What are personal loans used for?
You can use personal loans for a variety of purposes. Potential personal loan uses are extensive and include the following — but there are a few situations where you can’t use them (more on this below).
Debt consolidation loans
A common reason to borrow a personal loan is to consolidate credit card debt. If you have lots of high-interest debt, it might be advantageous to use a personal loan for debt consolidation. As long as you have decent credit and can qualify for a low-APR loan, you may end up saving money by consolidating. Just be aware of how fees can cut into potential savings.
Home improvement loans
If your house is in need of some TLC, you can fund your repair or project with a personal loan. While you could potentially get a home equity loan instead, those who don’t want to use their home as collateral or use up their home equity may feel more comfortable using an unsecured personal loan for home repairs.
Emergency loans
Though a personal loan shouldn’t take the place of an emergency fund, hard times may require borrowing. Emergency loans can cover all kinds of emergency expenses — from emergency car maintenance to unplanned medical bills. In these urgent situations, loans with fast funding can get money in your pocket as soon as possible.
Keep in mind: It’s generally best to avoid payday loans, which require you to pay back a loan as small as $500 in two to four weeks. However, the exorbitant APRs (some as high as 400%) can make a $500 loan skyrocket in cost.
Miscellaneous expenses
Personal loan uses don’t have to fit into the above categories. Some additional uses for a personal loan include paying for medical bills, vacations, moving costs, weddings, fertility treatments, and other big purchases.
However, personal loans have a few prohibited uses. Many lenders don’t allow you to use personal loans for things like college tuition, down payments on a house, investments, and business financing. In most cases, you wouldn’t want to, anyway. When it comes to things like paying for college or buying a house, there are cheaper ways to borrow.
Pros and cons of personal loans
Be sure to consider the pros and cons of taking out a personal loan before signing a loan agreement.
Pros
- Versatility: You can use personal loans for a wide array of expenses, including home repairs, medical bills, vacations, emergencies, debt consolidation, weddings, and more.
- No collateral: Personal loans are typically unsecured, meaning you don’t need to put up collateral to qualify for a loan. This can be reassuring if you’re worried about losing a valuable asset if you default on the loan. Secured loans, which do require collateral, are also available, though.
- Flexible terms: Personal loans often offer various terms to choose from. You can use a personal loan calculator to help you pick a term that works for your budget.
- Fast funding: Some lenders offer same-day funding, which can be invaluable if you’re crunched for time.
- Potentially lower interest rates: Personal loans often have lower interest rates than credit cards and other high-cost alternatives.
Cons
- Strict eligibility requirements: Because personal loans are usually unsecured, lenders are more cautious when approving applications. That means personal loans often have higher interest rates and are harder to qualify for compared to other types of installment loans.
- Fees and interest: Most personal loans come with fees — application fees, origination fees, late fees, prepayment fees, and more. And depending on your credit score and financial picture, interest rates can be higher than certain alternative financing options.
- Increased debt burden: Taking out a personal loan adds to your debt burden. This can make it harder to qualify for a mortgage, manage your budget, or save money in the future.
- Potential damage to credit score: Payment history is the biggest factor affecting your credit score. A single late or missed payment on your personal loan can impact your credit in a negative way.
How to apply for a personal loan
Applying for a personal loan is a straightforward process that varies by lender, but typically includes the following steps:
- Compare lenders: Before applying for a loan, check out the best personal loans listed above. Compare lenders based on APR, loan amounts, fees, funding times, reputation, and your other priorities.
- Prequalify: If a lender allows it, prequalifying for a loan can give you an estimate of your interest rate and loan terms without affecting your credit. Just keep in mind the actual loan offer may not be identical to the estimate.
- Pick a loan option: Compare the various loan options with the information you have available, and choose the one that works best for you.
- Complete the application: Fill out the loan application and provide the necessary documentation, like income and employment verification. Most lenders allow you to apply online. You will undergo a hard credit check at this point, which can temporarily lower your score by a few points.
- Get your funds: If you’re approved, you’ll sign the loan agreement and wait for your funds to be delivered to your bank account. Certain lenders can get you funds within a day, but some may take up to a week.
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What credit score is needed for a personal loan?
Different lenders have varying credit score requirements for personal loans. Your credit score represents your borrowing and repayment history, and it contributes to your ability to qualify for a personal loan. The FICO credit scoring model, which is used by most lenders, bases your score primarily on the following five factors:
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- Credit mix (10%)
- New credit (10%)
FICO scores fall between 300 and 850 — the higher the number, the better your score. Scores are divided into the following ranges, which lenders assess when reviewing your loan application:
- Less than 580: Poor
- 580 to 669: Fair
- 670 to 739: Good
- 740 to 799: Very good
- 800 and above: Exceptional
In general, the higher your credit score, the easier it is to qualify for a personal loan. Many lenders have minimum credit score requirements in the “fair” range, but applying with at least a “good” score gives you a better chance at qualifying. Plus, the better your score, the more likely you’ll secure the best interest rates.
Personal loans for bad credit
If you have bad credit, you’re not out of options — check out the best personal loans for bad credit. But if you can’t find anything with affordable APRs, or you’re having trouble qualifying for a bad-credit loan, there are a few other options:
- Apply for a loan with a cosigner: A cosigner signs your loan with you, making it easier for you to qualify for a loan with bad credit. If you don’t pay back the loan, however, the cosigner will be held responsible.
- Apply for a secured loan: Secured loans require you to put up collateral — like your car or equity in your house — when you borrow. They’re often easier to qualify for than unsecured loans because they’re less risky for the lenders offering them.
- Apply with a co-borrower: Applying with a co-borrower means you both agree to pay back the loan, and have equal access to the funds. In some cases, adding someone else’s income to your application may make it easier to qualify.
- Improve your credit: If you don’t need a loan right away, it may be beneficial to work on building your credit before submitting an application. Better credit can make it easier to qualify and get the lowest rates.
FAQ
What is a personal loan?
A personal loan is a type of installment loan you can use to finance a variety of personal expenses. Many personal loans are unsecured, meaning you don’t need to put up collateral in order to get one. You can get a personal loan from a bank, credit union, or online lender.
How do personal loans work?
After applying for a loan, qualifying, and signing a loan agreement, you’ll receive your personal loan in a single lump sum. Often, the lender deposits the money directly into your bank account. Interest will start accruing right away, and you’ll start repaying the loan in monthly installments based on the interest rate and term you agreed to.
Where to get personal loans?
You can get personal loans from banks, credit unions, and online lenders. Different lenders each have their pros and cons; for instance, online lenders often provide fast funding, but borrowers have to be comfortable with a 100% digital application. Keep this in mind — and compare APRs and terms — when shopping for a loan.
What are unsecured personal loans?
Unsecured personal loans are personal loans that don’t require collateral, often making them more difficult to qualify for. Secured loans, on the other hand, do require collateral. Collateral is an asset — often your home or vehicle — you use to back your loan. Many personal loans are unsecured.
How many personal loans can you have at once?
There isn’t necessarily a limit on the number of personal loans you can have at once. But lenders consider your debt-to-income ratio (DTI) when reviewing your application. Your DTI represents the amount of debt you have compared to your income, and many lenders require a DTI of under 35%. Depending on how much money you owe on existing personal loans, your DTI may make it difficult to qualify for another.
Can I get a personal loan with bad credit?
It’s possible to get a personal loan with bad credit, but it’s not as easy or as affordable as it is with good credit. Some lenders offer loans specifically for bad credit, but they often have higher interest rates and fees. Alternatively, you can apply for a loan with a cosigner or co-borrower, build your credit before applying for a loan, or apply for a secured loan.
How long does it take to get a personal loan?
It depends on the lender. Some lenders — especially online lenders — offer funding within a day of approval. Other lenders may need up to a week to get you the funds. If there are mistakes on your application, or if you’re missing application materials, funding can take longer.
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Meet the expert:
Emily Batdorf
Emily Batdorf is a personal finance expert, specializing in banking, lending, credit cards, and budgeting. Drawing on her scientific background, she's developed a knack for analyzing financial products in the context of different needs. She finds joy in helping readers understand their best options and shuns a one-size-fits-all approach.