Whether you want to consolidate debt, finance a home improvement project or need access to a large stream of money, a personal loan can be a helpful tool. With lower interest rates than credit cards and fixed monthly payments, personal loans offer financing for a variety of uses.
We’ve evaluated the major national personal loan providers and highlighted the best personal loan options below. As interest rates continue to rise, you can expect personal loan rates to also climb throughout the year. We’ll update this list regularly as interest rates change and new loan products are released.
- APR: 6.99% to 23.99%* (with Autopay; rates vary by loan purpose). Rates as of Jan. 24, 2023.
- Repayment terms: 2 to 12 years* (depending on purpose)
- Funding amounts: $5,000 to $100,000
- Funding timeline: As soon as same business day (conditions apply)
- Origination fee: None
- Other fees: None
- Minimum credit score required: Good credit
A division of Truist Bank, LightStream delivers just about everything you want in a personal loan: Flexible repayment terms, a $100,000 maximum, no fees and, in some cases, same-day funding. There’s also a relatively low APR range -- though, of course, your interest rate will reflect your specific credit profile. Note that LightStream’s home improvement loans (and boat/RV/aircraft loans) have longer terms than the company’s other loan types.
If you have a checkered credit history or blemished financial profile, keep in mind that LightStream’s credit requirements are stringent. When asked about its criteria for good credit, the company said that there’s “no single definition,” but that people who qualify for loans usually have several years of credit history with few delinquencies, a “manageable” amount of revolving credit card debt, some liquid savings and a stable and sufficient income.
- APR: 7.99% to 23.43% (with AutoPay)
- Repayment terms: 2 to 7 years
- Funding amounts: $5,000 to $100,000
- Funding timeline: Up to 7 days
- Origination fee: None
- Other fees: None
- Minimum credit score required: 680
SoFi’s personal loans have low rates, a $100,000 maximum loan amount and no origination, administrative or late fees. It’s also one of the few lenders that’s transparent about its credit score requirements -- though all loan providers take into account factors such as credit history and debt-to-income ratio when determining eligibility. It’s worth noting that SoFi routinely runs promotions on its site.
- APR: 6.99% to 23.24% (with relationship discount)
- Repayment terms: 1 to 7 years
- Funding amounts: $3,000 to $100,000
- Funding timeline: Next business day
- Origination fee: None
- Other fees: Rejected payment: $39; late payment: $39
- Minimum credit score required: None
The personal loan market has come to be dominated by a fleet of online banks that, in most cases, don’t have physical branches. With no branches to maintain, online lenders can often offer better online personal loan terms. But some people may feel more confident borrowing money after an in-person conversation with an employee from a bank located in their neighborhood. Among the big national lenders, Wells Fargo offers a reasonable range of APRs, flexible repayment terms and a wide array of funding amounts. One caveat: Wells Fargo may change fees for rejected payments (also called NSF or nonsufficient-funds payments) and late payments. And those can add up.
- APR: 9.95% to 35.95%
- Repayment terms: 1 to 5 years
- Funding amounts: $2,000 to $35,000
- Funding timeline: Next business day
- Origination fee: Up to 4.75%
- Other fees: late payment: $25
- Minimum credit score required: 600
For those with less than excellent credit -- referred to as fair credit by lenders -- Avant can be a good loan option. Though the company will accept a loan application from anyone, applicants with a score of 600 or higher “have the best chance of being accepted,” according to a company representative.
As with most financial products, if you have a less stable financial standing or consistent credit card debt, you should expect to pay higher fees and more interest for a personal loan. Avant charges up to 4.75% in administrative fees, depending on factors including your credit history and where you live. And if your credit score is 600 or lower, you will likely end up with a higher APR. Avant’s top rate annual percentage rate is a whopping 35.95%, which could end up costing you thousands of dollars in interest over the course of a loan. Proceed with caution.
- APR: 8.99% to 29.99%
- Repayment terms: 2 to 5 years
- Funding amounts: $5,000 to $40,000
- Funding timeline: 2 to 5 business days
- Origination fee: Between 0% and 5%
- Other fees: None
- Minimum credit score required: 640
With a low credit score requirement, lower-than-average APR and fairly flexible repayment terms, Happy Money is a personal loan worth considering if you have credit card debt. We like that Happy Money, formerly known as Payoff, allows you to check your rate and determine different repayment options before it runs a hard pull on your credit. That means if you want to compare personal loan offers -- and you should -- no harm will be done to your credit score until you officially apply.
Its loan funding amounts are lower than many competitors, but with average credit card balances for Americans sitting at $5,525 as of early 2022, this shouldn’t be an obstacle for average borrowers. Happy Money also notes that on average, borrowers who paid off at least $5,000 in credit card debt saw an average FICO credit score increase of 40 points after their first few payments, according to a 2021 Happy Money survey.
Best personal loans, compared
| Best for | Overall | No fees | Flexible terms | Low credit | Credit card debt |
|---|---|---|---|---|---|
| Lender | LightStream | SoFi | Wells Fargo | Avant | Happy Money |
| APR | 6.99% – 23.99%* (with Autopay). Rates as of Jan. 24, 2023. | 7.99% – 23.43% (with autopay) | 6.99% – 23.24% | 9.95% – 35.95% | 8.99% – 29.99% |
| Repayment terms | 2 – 12 years* (depending on purpose) | 2 – 7 years | 1 – 7 years | 1 – 5 years | 2 – 5 years |
| Funding amounts | $5,000 – $100,000 | $5,000 – $100,000 | $3,000 – $100,000 | $2,000 – $35,000 | $5,000 – $40,000 |
| Funding timeline | As soon as same day (conditions apply) | 7 days | Next business day | Next business day | 2 – 5 business days |
| Origination fee | None | None | None | Up to 4% | 0% – 5% |
| Other fees | None | None | Rejected payment: $39; late payment: $39 | late payment: $25 | None |
| Credit requirement (estimated) | Good to excellent. | 680 and up | N/A | 600 and up | 640 |
What is a personal loan?
A personal loan is an installment loan you can use for just about anything, whether that’s to pay medical bills, fund home repairs or cover an emergency. Interest rates are usually fixed and you’ll make fixed monthly payments over the life of your loan.
While there are secured personal loans that require you to put up collateral, most personal loans are unsecured. This means your eligibility is based solely on your creditworthiness and income. The higher your credit score, the more likely you are to get approved for a personal loan with a low interest rate and for the full amount you’re requesting.
How personal loans work
You can generally use personal loan funds for any purpose, other than paying for school and educational costs or for investing. Most people take out a personal loan to consolidate high-interest debt (like credit card debt), finance home improvements, pay for a wedding or cover a family-related expense or a medical emergency.
Once you complete your application and are approved for a loan, the funds are sent to your bank account. If you’re consolidating debt, your lender might use your loan to pay your creditors directly.
Your lender will send you information on your loan and payments. You’ll make payments every month until your loan is paid in full.
Calculating loan payments
Your loan payments are determined by how much you borrow, your repayment term and your annual percentage rate, or APR. Your APR rate includes your interest rate and any lender fees.
Say you borrow a $10,000 loan with a 9.99% APR paid back over five years. This would mean 60 monthly payments of $212.42 -- and would cost you $2,745.27 in total interest. A $10,000 loan at a lower rate of 8.99% APR repaid over seven years would require 84 payments of $160.84 -- and would cost you $3,510.56 in interest overall. Even though the APR on the first loan is higher, because the loan term is shorter, you save on interest.
Fees and APR determination
It’s important to compare lenders to see where you can get the lowest interest rate and fees. The higher your APR, the more you’ll pay on top of the principal amount you originally borrowed. Additionally, the longer your repayment term, the more interest you’ll pay.
Not everyone can afford to take out short-term loans, so it’s important to weigh which factors are important to you. You might want low, affordable monthly payments while someone else might want to pay off their loan sooner to save on interest despite a higher monthly payment.
How to choose a lender
With interest rates rising, we recommend shopping around for the least expensive personal loan.
APR and fees
Lenders make money by charging interest and fees. The higher the interest rate, the more money the lender makes. Generally, the best interest rates are reserved for borrowers with excellent credit, but interest rates can differ among lenders. That’s why it’s important to compare offers from multiple lenders to find the best rate.
When comparing lenders, make sure you compare the total cost of borrowing, including the interest rate and fees -- including origination fees, loan application fees, prepayment penalties or rejected payment fees. Some lenders may offer a low interest rate that’s offset by many fees, while others may charge a higher interest rate but fewer fees. Always read the fine print and do the math to find the best offer. It’s better to compare lender APRs, which includes both the interest rate and fees, rather than interest rates.
Repayment terms
The repayment term is how long you’ll have to repay your loan. A shorter term means a larger monthly payment, but you’ll be out of debt sooner and pay less interest overall. The longer the term, the smaller the monthly payment. If you’re on a strict budget, small monthly payments might be important to you. But if you can afford to pay more each month, you’ll save in the long run with a shorter term.
How quickly the loan is funded
If you need money quickly, pay attention to a lender’s loan disbursement timeline. Some lenders offer same-day funding after your application is approved, while others may take a few days or weeks to disburse the funds.
Best uses for personal loans
You can use a personal loan for almost anything. Two common uses are consolidating debt or paying for large, planned expenses, like home improvements projects. Debt consolidation is when you take out a personal loan and use the funds to pay off other debts -- such as credit card debt. Debt consolidation can combine your debt onto one new loan -- and may save you money if your new interest rate is lower than your old one.
We don’t recommend using personal loans for discretionary expenses like a vacation or wedding. Instead, consider saving up for those expenses and paying with cash. Similarly, although a personal loan can help you through a financial emergency, saving for an emergency fund can help you avoid taking on debt when unexpected expenses arise.
Pros and cons of a personal loan
Pros
Lower interest rates. Personal loan interest rates are typically lower than credit card rates. And unlike credit card interest rates, personal loan rates are fixed and won’t go up if benchmark interest rates increase.
Fast funding. Most personal loans distribute funds within a few days, and some lenders even offer same day funding.
No collateral. Most personal loans are unsecured, meaning they don’t require collateral. You won’t need to put an asset like your house or car on the line to get a personal loan.
Predictable monthly payments. Personal loans come with a fixed interest rate and fixed monthly payment, making it easier to plan and budget for.
Cons
May be harder to qualify for. Unsecured personal loans can be harder to qualify for than secured loans because the lender only looks at your credit score, credit history and income to determine your eligibility. Some personal loan lenders cater to borrowers with poor or fair credit, in exchange for a higher interest rate, which will cost you more over time.
Increased debt. Getting a personal loan increases your overall debt load and adds another commitment to your monthly budget. You’ll also increase your debt-to-come ratio, which could make it harder to qualify for more debt in the future.
Could potentially hurt your credit score. Applying for a loan requires a hard credit inquiry, which could temporarily ding your credit score by a few points. But the real danger is missing payments or defaulting on your loan. Doing so can seriously hurt your credit score and make it harder to qualify for other loans in the future.
Alternatives to personal loans
- Credit card. If you need money in the short-term and can afford to repay your balance within a month, a credit card may help. If you need more time to repay a balance or consolidate debt, consider a credit card with a 0% APR introductory offer or a balance transfer credit card. This lets you save on interest while paying off debt. Just make sure you can pay off the entire balance before the introductory period ends.
- Cash advance. You can use your credit card to get a cash advance, which lets you withdraw money directly rather than charging purchases to your card. However, this typically comes with high fees and interest charges.
- Home equity loan or home equity line of credit. If you own a home, you could apply for a home equity loan or home equity line of credit, also known as a HELOC. Home equity loans and HELOCs typically offer lower interest rates and larger loan amounts than personal loans, but the loan is secured by your home -- meaning your lender could seize your house if you fall behind on your payments.
Is a personal loan right for you?
A personal loan might be a good option for some people, but it’s not necessarily the best choice for everyone. A personal loan may work for you if:
- You have fair or good credit. The higher your credit score, the more likely you are to qualify for a personal loan at the best interest rate available.
- You can afford the monthly payments. Falling behind on payments or defaulting on the loan entirely will cause your credit score to drop, making it harder to qualify for new debt in the future. You should only take out a personal loan if you can comfortably afford the monthly payments.
- You need the money now. If you need money for a large expense now and have a plan for repayment, a loan may make sense. If you have a planned future expense like a wedding or vacation, consider saving up cash for it instead.
- You have limited alternative options. Explore other options before deciding if a personal loan is right for your situation. If you have a house, a home equity loan or HELOC may offer a lower interest rate -- but you’ll also risk putting your home up as collateral. If you want to consolidate debt, have good credit and know you can pay off your balance in full in less than a year, you might consider a 0% APR or balance transfer credit card to save on interest.
How to qualify and apply for a personal loan
How to qualify for a personal loan
Here’s what a lender will typically look at when deciding whether to approve your loan application:
- Your credit score and credit history. Your credit profile tells a lender how likely you are to repay your debts, based on past behavior. Every lender has its own minimum credit score requirements, but you’ll typically have an easier time qualifying for a loan -- and getting a favorable interest rate -- if you have good credit.
- Employment and income. Lenders want to know you can pay the loan back, so they’ll look for stable employment and sufficient income that can cover the monthly payments. Be prepared to provide documentation like bank statements, pay stubs, and tax returns to prove your income.
- Debt-to-income ratio and other debts. Your lender may also take into consideration your debt-to-income ratio, which shows how much of your monthly income is going towards your existing debts. Lenders want to make sure you’re not so overburdened by existing debts that you can’t afford a new one.
How to apply for a personal loan
- Review your credit score. Before you even look for lenders, it’s important to check your credit score and history to get a sense of how likely you are to qualify for a loan and what kind of rates you can expect. You can get a free copy of your credit report, which shows your credit history but not your score, from AnnualCreditReport.com.
- Compare lender offers. You should always compare offers from multiple lenders before choosing one. Many lenders will give you a personalized rate quote without you needing to fill out a full application or get a hard credit check. Compare the interest rate, fees and loan terms to find the best deal.
- Complete an application. After comparing lenders, it’s time to apply for a loan and provide any required documentation. This typically requires a hard credit check as well. If approved, you’ll typically get your money within 24 hours or a few days, depending on your lender’s loan disbursement policies.
- Manage your loan. After your loan is approved, make sure you review the terms and conditions of the loan and you understand when you need to make your payments and how to do so. Consider adding a calendar reminder or set up autopay so you never miss a payment.
FAQs
With interest rates rising, we recommend shopping around for the least expensive personal loan. Your credit score is the main criteria lenders will use to determine your loan APR, or annual percentage rate, which is the amount of interest and fees you’ll pay a lender over the duration of your loan. We recommend comparing APRs and loan terms to find the best option for your budget.
For example, borrowing $10,000 at a 9.99% APR paid back over five years would require 60 monthly payments of $212.42 -- and would cost you $2,745.27 in total interest. However a $10,000 loan at a lower rate of 8.99% APR, repaid over seven years would require 84 payments of $160.84 -- and would cost you $3,510.56 in interest overall. So, even though the APR on the first loan is higher, because the loan terms are shorter, you save on interest. You can use a loan calculator like Bankrate’s to help you compare personal loan offers.
Some loans may offer perks, such as autopay discounts. On the flip side, pay special attention to any origination fee, loan application fee, prepayment penalties or rejected payment fee. And be aware that submitting a loan application will trigger what’s called a hard pull, which may temporarily impact your credit score, even if you aren’t approved or decide not to take out the loan.
Most lenders look at an array of factors to determine eligibility for a personal loan. Yes, your credit score is important -- but so is your credit history, current financial situation (including employment status and annual income), debt-to-income ratio and any other debts and obligations. Lenders want to understand how likely you are to pay off the loan on time.
Having a credit score of 700 and up increases your chances of being approved and receiving a lower APR. A credit score under 600 may make it more challenging, though not impossible. Happy Money, for instance, recommends having a minimum credit score of 600 to apply -- but that doesn’t mean you’ll be disqualified with a lower score. Some lenders, like Upgrade, also use alternative credit history, such as rent and utility payments and a steady job history, to help determine your eligibility.
If you have low credit -- say a FICO credit score under 600 -- check out our best loans for bad credit recommendations.
Even if a lender doesn’t immediately charge you a fee if you miss a payment, you’re still responsible for paying off the loan. If your payment is more than 30 days late, your loan could be considered in default. Defaulting on a loan can carry severe consequences; your credit history will suffer, your credit score will plunge -- as much as 100 points per late payment -- and you’ll be far less likely to get another loan in the future.
If you continually miss payments, a lender can sell your debt to a collection agency that may charge its own fees and aggressively pursue you through emails and phone calls. Ultimately, a lender can take you to court to seek reparations if you don’t remedy the situation. Be careful, make your payments promptly and don’t borrow money that you can’t pay back.
A secured loan requires collateral, such as a car or a house. It makes the loan less risky for the lender, since the lender can seize this collateral to recoup its losses if you default on your loan.
But most personal loans are unsecured, meaning lenders only base your eligibility on your credit score, credit history and income.
Debt-to-income ratio, or DTI, is calculated by dividing all your monthly debt payments by your gross monthly income. That percentage, or ratio, gives you -- and lenders -- an idea of how much you can afford to borrow if you take out a loan. For example, if you make $4,000 a month and pay $1,000 in debt payments, your DTI would be 25% ($1,000 divided by $4,000).
Every loan provider has its own DTI requirements, but generally, the lower your DTI, the better your chances of loan approval.
In most cases, you need to prove you have the money to repay your personal loan. Many lenders require proof of income to qualify for a loan, and some have requirements for how long you need to be employed before you can get a loan. If you’re self-employed, you may still be able to get a personal loan if you can prove you have sufficient income, but expect more scrutiny during the application process.
More loan advice
- Best Installment Loans
- Best Low-Interest Personal Loans
- Best Debt Consolidation Loans
- Best Personal Loans for Bad Credit
- Best ‘Buy Now, Pay Later’ Apps
- Best Car Loans and Lenders
*Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.
Payment example: Monthly payments for a $10,000 loan at 6.99% APR with a term of 3 years would result in 36 monthly payments of $308.73.
Truist Bank is an Equal Housing Lender. © 2023 Truist Financial Corporation. Truist, LightStream, and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.
