Hanneh Bareham specializes in everything related to personal and student loans and helping you finance your next endeavor. She aims to help others reach their collegiate and financial goals through making loans easier to understand.
Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites.
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What To Know First
Bankrate's picks for the top personal loans considers the interest rates, terms and features each lender has to offer. We also lay out the benefits and drawbacks of personal loans along with rates and other information so you can decide if a personal loan is the right financial move for you.
Personal loans allow you to borrow a lump-sum to pay for a large expense and then pay it back over time in monthly installments. They have a couple of key factors to keep in mind when comparing options.
Personal loan interest rates currently range from about 6 percent to 36 percent. The actual rate you receive depends on multiple factors, such as your credit score, annual income and debt-to-income ratio. The best rate that you can qualify for might not be the best loan you can qualify for — consider additional features offered and the other listed factors as well.
How to apply for a personal loan Here are a few steps to follow when applying for a personal loan:
Determine how much you need. Calculate how much money you need and factor in any origination fees that may be deducted from you loan proceeds.
Check your credit score. The higher your credit score, the better APR you'll receive. Consider a co-signer if you have fair or bad credit for more favorable rates.
Get prequalified. Prequalification allows you to check your rates with multiple lenders without affecting your credit score.
Compare rates and loan terms. Look at a variety of lenders, including banks, credit unions and online lenders to see which offers you the most competitive rates.
Complete the application process. You’ll need to submit documents such as pay stubs, tax returns and personal identification.
How to choose the best lender It's always best to get quotes from a few lenders before applying for a personal loan so you can determine which has the best overall offerings for your situation. When comparing lenders, keep an eye on the following factors:
Approval requirements. Every lender has its own threshold for approving potential borrowers, considering factors like income, credit score and debt-to-income ratio. If you have below-average credit, look for lenders that utilize other approval criteria — like education and employment history — or allow co-signers.
Interest rates. The lowest advertised rate is never guaranteed, so compare your prequalification offers. When comparing your potential interest rates, also incorporate any fees or penalties — origination fees or application fees can significantly add to the overall cost of your loan.
Loan amounts. If you need a loan for something small, like a minor car repair, look for lenders that cater to lower amounts to avoid over borrowing. On the other side, if you need to make a big purchase you'll need to look for lenders that offer enough — and check that you can qualify for the full amount.
Repayment options. Look for lenders that offer multiple repayment terms so you can choose the one that makes the most sense for your situation. Long repayment terms will decrease your monthly payment, but if you have a smaller loan, a shorter repayment term will cut back on the interest you pay overall.
Unique features. Keep an eye out for lenders with any unique perks and restrictions. Also check that any lender you're considering will allow you to use your loan for the purpose you're intending.
Customer service. Investigate a company's customer service options and read the company reviews on its Better Business Bureau and Trustpilot profiles to ensure you have the support you need as you navigate the application process and repayment. But also keep in mind that people are much more likely to leave negative reviews than positive, look for obvious negative trends but also how the company responds to them.
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Explore loans ranging from $500 to $100,000
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Bankrate’s scores for personal loan lenders evaluate 11 data points related to loan costs and terms, as well as customer experience.
The annual percentage rate (APR) includes your interest rate, plus any loan fees. It reflects the total cost of borrowing.
The range of loan amounts that a lender will service. The maximum value is the largest amount a lender will give although this amount may not be available to borrowers who don’t have good or excellent credit. Amount ranges may vary for non-loan products. Term refers to the amount of time you have to repay the loan.
The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated.
Fixed rates and payments with a clear pay off date.
Flexible loan options: explore multiple options and pick the loan amount and term that best fits your budget and timeline.
Fast Funding. Money is sent to your bank account within a day of clearing any verifications. *
Automatic payments and ability to customize the due date: manage your account online or via the mobile app. No prepayment penalties.
Access to free credit score monitoring, educational tools, and personalized recommendations to help you understand and make the most of your credit.
Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 8.49%-35.97%. All personal loans have a 1.85% to 8.99% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's bank partners. Information on Upgrade's bank partners can be found at https://www.upgrade.com/bank-partners/.
Get a personal loan up to $50,000 with a fixed APR from 7.99% to 35.99%
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Use it for almost anything: consolidate debt or other unexpected expenses
GENERAL AFFILIATE DISCLOSURE UPDATE AS OF 03.2023
*Trustpilot TrustScore as of December 2022. Best Egg personal loans, including the Best Egg Secured Loan, are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender or Blue Ridge Bank, a Nationally Chartered Bank, Member FDIC, Equal Housing Lender. “Best Egg” is a trademark of Marlette Holdings, Inc., a Delaware corporation. All uses of “Best Egg” refer to “the Best Egg personal loan”, “the Best Egg Secured Loan”, and/or “Best Egg on behalf of Cross River Bank or Blue Ridge Bank, as originator of the Best Egg personal loan,” as applicable.
The term, amount, and APR of any loan we offer to you will depend on your credit sc¬ore, income, debt payment obligations, loan amount, credit history and other factors. Your loan agreement will contain specific terms and conditions. About half of our customers get their money the next day. After successful verification, your money can be deposited in your bank account within 1-3 business days. The timing of available funds upon loan approval may vary depending upon your bank’s policies. Loan amounts range from $2,000– $50,000. Residents of Massachusetts have a minimum loan amount of $6,500 ; Ohio, $5,000; and Georgia, $3,000. TO REPORT A PROBLEM OR COMPLAINT WITH THIS LENDER, YOU MAY WRITE OR CALL Joseph Walsh – Operations Manager, Email: ccrt-resolution@bestegg.com, Address: P.O. Box 42912, Philadelphia, PA 19101, Phone: 1-855-82-6353. This lender is licensed and regulated by the New Mexico Regulation and Licensing Department, Financial Institutions Division, P.O. Box 25101, 2550 Cerrillos Road, Santa Fe, New Mexico 87504. To report any unresolved problems or complaints, contact the division by telephone at (505) 476-4885 or visit the website https://www.rld.nm.gov/financial-institutions/. For a second Best Egg loan, your total existing Best Egg loan balances cannot exceed $100,000. Annual Percentage Rates (APRs) range from 8.99%–35.99%. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0.99%–8.99% of your loan amount, which will be deducted from any loan proceeds you receive. The origination fee on a loan term 4-years or longer will be at least 4.99%. Your loan term will impact your APR, which may be higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest APR. For example: a 5‐year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3‐year $5,000 loan with 7.99% APR has 36 scheduled monthly payments of $155.12. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. Best Egg products are not available if you live in Iowa, Vermont, West Virginia, the District of Columbia, or U.S. Territories.
All loans available through Achieve Personal Loans (NMLS ID #227977) are originated by Cross River Bank (a New Jersey state chartered commercial bank) or Pathward, N.A. (Equal Housing Lenders) and may not be available in all states. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Minimum loan amounts vary due to state-specific legal restrictions – please call an Achieve Personal Loans consultant for further details. Loan amounts generally range from $5,000 to $50,000 including origination fees, and are offered based on loan purpose and underwriting conditions. Repayment periods range from 24 to 60 months. APRs range from 7.99% to 35.99% APR and include applicable origination fees. Example loan: four-year $20,000 loan with a rate of 15.49% and corresponding APR of 18.34%, would have an estimated monthly payment of $561.60 and a total cost of $26,956.80. To qualify for a 7.99% APR loan, a borrower will need excellent credit, a loan amount for $12,000.00 or less, and a term of 24 months. Loan origination fees vary from 1.99% to 6.99%. Adding a co-borrower with sufficient income; using at least 85% of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could also help you qualify for lower rates. Average interest savings for personal loans range from 0% - 6% based on closed loans that qualified for one or more of our rate discounts in July 2022. †Times noted are estimates and can vary for a loan request from Achieve Personal Loans (NMLS #227977). Same day approvals assume that a fully completed application with all required supporting documentation is provided early enough on a day that our offices are open. Achieve Personal Loans consultants are available Monday–Friday 6AM to 8PM MST and Saturday–Sunday 7AM to 4PM MST.
The only personal loan with added peace of mind to cover your monthly loan payment (Loan Payment Insurance) for up to 3 months due to job loss or disability – continuing to reduce your principal balance on every Happy Money loan
Quickly check your rate without affecting your credit score
No prepayment, late, or check-processing fees
Overview: Happy Money (formerly Payoff) offers low APRs of 10.50 percent to 29.99 percent, making it an ideal lender for borrowers trying to consolidate credit card debt at a lower interest rate. This lender also offers free monthly FICO updates and reports payments to major credit bureaus in order to help borrowers build credit.
This offer does not constitute a commitment to lend or an offer to extend credit. Upon submitting a loan application, you may be asked to provide additional documents to verify your identity, income, assets, or financial condition. The rate and terms you may be approved for will be shown to you during the application process. Loans subject to an origination fee, which is deducted from the loan proceeds. Refer to full borrower agreement for all terms, conditions and requirements. Only loans applied for and issued on or after January 23, 2023, are covered under the TruStage™ Payment Guard Insurance Policy. Please refer to the certificate of insurance, provided to you with your loan origination documents, for terms and conditions of the coverage. Some exclusions apply. Claims must be submitted for review and approval to CUMIS Specialty Insurance Company, Inc. TruStage™ Payment Guard Insurance is underwritten by CUMIS Specialty Insurance Company, Inc and not by Happy Money. CUMIS Specialty Insurance Company, our excess and surplus lines carrier, underwrites coverages that are not available in the admitted market. Product and features may vary and not be available in all states. Certain eligibility requirements, conditions, and exclusions may apply. Please refer to the Group Policy for a full explanation of the terms. The insurance offered is not a deposit, and is not federally insured, sold or guaranteed by any financial institution. Corporate Headquarters 5910 Mineral Point Road, Madison, WI 53705.
We’ve helped over 4 million members start their journey out of debt
Get your cash in as little as 48 hours 1
Check your rate with no impact to your credit score 2
Take advantage of unique offerings—balance transfer loans, joint applications, auto loans, and other member perks.
Overview: LendingClub allows borrowers to add co-signers to their loans, making this a good fit for those who may not be able to qualify for a loan on their own, or who haven’t had a chance to build up their credit history yet
Competitive rates from 9.95% - 35.99% APR and terms from 24 to 60 months
Checking your loan options has no impact to your credit score.
Fast Decisions, see your loan options in minutes
Funding as soon as next business day
Overview: Avant is a popular lender for borrowers with fair to poor credit. Its minimum credit score requirement is 580 FICO and 550 Vantage, lower than many other lenders. Avant is also a good choice for borrowers who haven’t built up much credit yet.
Overview: Sofi offers a variety of loan amounts and repayment terms, and does not charge any fees. SoFi offers loans from $5,000 to $100,000 with term lengths from two to seven years.
Why SoFi is the best overall for personal loans: SoFi has all the features you would expect in a top-quality lender, including a variety of loan amounts, several repayment terms and zero fees. It also adds perks to help borrowers improve their financial stability and career, including the option to add a co-signer to your loan.
Pros
Soft credit check to prequalify
No fees
Unemployment protection
Cons
High minimum loan amount
Minimum credit score of 680 required
No co-signer release
Who it's for: Those who qualify or plan to use a co-signer.
Lender perks:
Autopay discount
Unemployment protection
Unique member benefits
Fees: None
Time to receive funds: In a few days; larger loans may take longer
Overview: LightStream is ideal for borrowers who want a longer repayment term and lower monthly payments on their loan. Lightstream also lets borrowers choose when to receive the loan money, allowing for further financial planning.
Why LightStream is the best personal loan for generous repayment terms: Its loan terms can reach up to seven years, which means you can take longer to pay off your loan and benefit from lower monthly payments.
Pros
Long loan terms
High maximum loan amount
Borrowers choose when to receive the money
Cons
Requires established credit
High minimum loan amount
No due date flexibility
Who it's for: Those with a strong financial history who want a longer repayment term.
Overview: Avant is a popular lender for borrowers with fair to poor credit. Its minimum credit score requirement is 580 FICO and 550 Vantage, lower than many other lenders. Avant is also a good choice for borrowers who haven’t built up much credit yet.
Why Avant is the best personal loan for people with bad credit: Avant specializes in lending to people with fair or poor credit. Most of its customers have credit scores between 580 and 700.
Pros
Long loan terms
Low minimum credit score
Household members' income eligible
Cons
High minimum APR
No co-signers or co-borrowers
Administrative fee
Who it's for: Those with a less-than-stellar credit score.
Lender perks:
Payment assistance options
Flexible qualification
Grace period of 10 days
Fees:
4.75% administration fee
Late fee
Dishonored payment fee
Time to receive funds: As soon as the next business day
Overview: Best Egg offers a low minimum APR of 8.99 percent and a reasonable rate cap of 35.99 percent. These relatively low rates make Best Egg a good option for borrowers looking to cut down on interest. This lender also offers flexible loan amounts ranging from $2,000 to $50,000 and is able to make direct payments to creditors on behalf of borrowers who take out debt consolidation loans.
Why Best Egg is the best personal loan for low APRs: Best Egg’s interest rates start as low as 8.99 percent APR for those with the best credit. It also offers fast approval and funding, depending on when you submit your application.
Pros
Low minimum loan amount
Direct debt consolidation disbursement
Fast funding
Cons
Minimum credit score of 600
No autopay discount
High maximum APR
Who it's for: Borrowers with good credit who are looking to consolidate debt.
Overview: Upgrade offers a wide range of loan amounts from $1,000 to $50,000 and a reasonable rate cap of 35.97 percent. Borrowers are able to receive their money as soon as the next business day after being approved, making Upgrade an ideal lender for those who need quick funding.
Why Upgrade is the best personal loan for fast funding: You can get your funds within one business day after approval with an Upgrade loan.
Pros
Option to add a co-borrower
Range of loan amounts
Direct debt consolidation disbursement
Cons
Minimum income not specified
High maximum origination fee
Low maximum loan amount
Who it's for: People with fair or less-than-ideal credit.
Lender perks:
Co-borrower and secured loan options
Reasonable APR cap
Fast funding
Fees:
1.85%-8.99% origination fee
$10 late fee
$10 returned check fee
Time to receive funds: Up to four business days if sent to borrower; up to two weeks if sent directly to creditors
Overview: Happy Money (formerly Payoff) offers low APRs of 10.50 percent to 29.99 percent, making it an ideal lender for borrowers trying to consolidate credit card debt at a lower interest rate. This lender also offers free monthly FICO updates and reports payments to major credit bureaus in order to help borrowers build credit.
Why Happy Money is the best personal loan for paying credit card debt: While the average rate for credit cards currently hovers around 20 percent, Happy Money loans start at 10.50 percent, which could save borrowers money on interest and help them get out of debt faster.
Pros
Low minimum APR
Free monthly FICO updates
Customer service available on weekends
Cons
Origination fee
Credit history required
Only for credit card consolidation
Who it's for: People who want to consolidate credit card debt.
Lender perks:
Free monthly FICO updates
Lower rates than most credit cards
Long maximum loan term
Fees: Up to 5% origination fee
Time to receive funds: As soon as the same day as approval
Overview: Upstart evaluates an individual’s entire financial picture when considering loan applications, not just credit history. This lender also lets borrowers change their payment dates in certain situations.
Why Upstart is the best personal loan for little credit history: Upstart has no minimum credit score requirements if you don't have credit history, and it evaluates more than just your credit score when you apply. The lender looks at your education, your job history and some credit score factors when determining your eligibility.
Pros
No minimum credit score requirement
Option to change payment dates
Low minimum loan amount
Cons
No joint loan options
Paper copies fee
High maximum APR
Who it's for: Borrowers who don’t have credit history or good credit.
Lender perks:
Flexible eligibility criteria
Flexible repayment date
Fast funding
Fees:
Up to 10% origination fee
5% or up to $15 late fee
$15 returned check fee
$10 one-time paper copies fee
Time to receive funds: As soon as one business day
Overview: LendingClub allows borrowers to add co-signers to their loans, making this a good fit for those who may not be able to qualify for a loan on their own, or who haven’t had a chance to build up their credit history yet.
Why LendingClub is the best personal loan for using a co-borrower: LendingClub allows co-borrowers, allows you to change your payment date and will pay creditors directly if you're consolidating debt.
Pros
Joint application available
Flexible payment date
Direct debt consolidation disbursement
Cons
High maximum APR
Potentially high origination fee
Late fee not specified
Who it's for: Borrowers who need a co-borrower.
Lender perks:
Option to change payment date
Direct debt consolidation payment to creditors
Joint applications available
Fees:
3%-6% origination fee
Unspecified late fee
Time to receive funds: As soon as two business days
Overview: PenFed offers a wide range of loan amounts from $600 to $50,000, making it ideal for borrowers who only need to borrow a small amount. PenFed also has seven days a week customer service and a low minimum APR of 7.74 percent. Since PenFed is a credit union, becoming a member also comes with added perks and opportunities to improve your financial wellness.
Why PenFed is the best personal loan for small loan amounts: You can get a PenFed personal loan for as little as $600, which is ideal if you don’t need a lot of cash and don’t want to incur much debt.
Pros
Low minimum loan amount
Customer service available on weekends
No origination fee
Cons
High minimum credit score
PenFed savings account required
Low maximum loan amount
Who it's for: Existing PenFed members who want a small loan.
Lender perks:
Small loan amounts
Member benefits
Customer service 7 days a week
Convenient mobile app
Fees:
$29 late fee
$30 returned payment fee
Time to receive funds: Same day at brick and mortar; one to two business days online; five to seven days via check
Requirements: Must maintain PenFed savings account
Overview: TD Bank offers personal loans from $2,000 to $50,000 and has a low APR rate cap of 21.99 percent. TD Bank offers personal loans in 15 states.
Why TD Bank is the best personal loan for few fees: TD Bank charges only one fee: a late payment fee of 5 percent of the minimum payment due or $10, whichever is less. It doesn't have any origination fees, monthly fees, annual fees, prepayment fees or insufficient funds fees.
Pros
Wide range of loan amounts
Soft credit check with prequalification
Option to change the payment date
Cons
Eligibility requirements not specified
Only available in 15 states
No direct payments to creditors
Who it's for: People who live in the 15 states TD Bank serves.
Lender perks:
Quick funding
Ability to change payment date
Few fees
Fees: 5% up to $10 late fee
Time to receive funds: As soon as one business day
Overview: For those looking for in-person service, PNC has nearly 2,700 locations. Borrowers who already have a relationship with PNC are eligible for an autopay percentage rate discount. PNC Bank also allows borrowers to submit joint applications.
Why PNC Bank is the best personal loan for in-person banking: Sometimes you just need to see someone face to face. PNC Bank has nearly 2,700 locations across 19 states and Washington, D.C., making it a good choice for people who prefer in-person banking.
Pros
Short minimum term length
Autopay discount for existing PNC customers
Joint application available
Cons
Low maximum loan amount
Eligibility requirements not disclosed
Branch visit may be required to close
Who it's for: Those looking for in-person service.
Lender perks:
Nearly 2,700 locations across 19 states
Low minimum loan amount and term
Autopay discount
Fees: Unspecified late fee
Time to receive funds: Not specified
Requirements:
Have a Social Security number
A valid address of at least two years
One form of photo ID
Calculate your loan payment
Use our calculator to find the perfect loan repayment plan for you. Enter in the loan amount, term and interest rate to get your estimated monthly payment and total interest accrual.
What is a personal loan?
Personal loans are short- and medium-term loans that consumers can receive from banks, credit unions or private lenders like online marketplace lenders and peer-to-peer lenders. The loan funds can be used for just about any purpose, such as paying off other debt, financing a home renovation or paying for family needs, like a wedding or adoption.
A personal loan is repaid in monthly installments, similar to a car loan or home mortgage, with loan terms typically ranging from 24 months to 60 months or even longer. Personal loans are usually unsecured, meaning they are not backed by collateral such as a car, house or other assets. Approval and funding process is often faster than that of a home equity line of credit, which lets you borrow funds as you need them rather than in a lump sum.
What are current personal loan interest rates?
Personal loan interest rates, like most other costs, have gone up in the past year. Currently, you can expect to pay 6 percent to 36 percent, depending on your credit score. As of March 22, 2023, the average personal loan interest rate is 10.82 percent. The better your credit score, the more likely you are to qualify for a personal loan with the lowest interest rate available. Compare personal loan offers to see what you are eligible for before applying for a personal loan.
Average personal loan interest rates by credit rating
The interest rate you're offered is based on your credit health; namely, your score. Those with less-than-stellar credit are often seen as more 'risky' to lenders and are more likely to be offered higher rates. Borrowers with good-to-excellent credit are more eligible for the lender's most competitive rates and terms.
Before applying for a loan, make sure to prequalify or look at the lender's requirements and rates, as well as your own credit score to estimate your potential interest rate.
CREDIT BAND
CREDIT SCORE RANGE
AVERAGE PERSONAL LOAN INTEREST RATE
Excellent Credit
720-850
10.3%-12.5%
Good Credit
690-719
13.5%-15.5%
Average Credit
630-689
17.8%-19.9%
Bad Credit
300-629
28.5%-32%
Excellent-credit loans
Excellent-credit loans are geared toward borrowers with excellent credit scores, typically between 720 and 850. Having such a high credit score can come with many benefits, including average APRs as low as 10.3 percent — though some lenders go even lower. If your credit score falls into this range, look for excellent-credit lenders with low advertised rates and few fees.
Good-credit loans
Good-credit loans offer competitive interest rates and generally low fees. You're considered to have good credit if you have a credit score between 690 and 719, and with such a high score, you may qualify for average APRs as low as 13.5 percent. However, if you have good credit and are interested in a personal loan, shop around; you may be able to qualify for an even lower interest rate.
Fair-credit loans
If you have a fair or average credit score, it can be hard to find a personal loan that offers reasonable rates and fees. If your credit score falls between 630 and 689, your credit score is average. While this is considered a less-than-stellar score, you still may be able to qualify for a personal loan with an average APR as low as 17.8 percent. This list of the best personal loans for fair credit features lenders that cater to people with scores in the mid-600s.
Bad-credit loans
You can get approved for a loan even with bad credit, although you won't qualify for the best APRs. If your credit score is between 300 and 629, the best interest rate available could be around 28.5 percent. However, a bad-credit loan, even one with a rate close to 30 percent, is a better financial option than a payday loan. To see what rates are available, compare offers from a few bad-credit lenders.
How to improve your chances of getting approved for a personal loan
While each lender has differing eligibility requirements, there are a few things you can do across the board to increase your eligibility odds.
Prequalify. If you are unsure what interest rate you might qualify for with a lender, the easiest way to find out is by prequalifying online. Most lenders allow you to do this without hurting your credit score.
Shop around and compare rates. Each lender offers unique features, requirements and benefits. It is always important to do your research and prequalify with a few lenders before deciding on one.
Check your credit. Your credit score impacts the rates and lenders you will likely qualify for. Knowing where you stand can help you figure out where to look. If you have less than stellar credit, bad credit loans tend to have reasonable interest rates for low credit borrowers.
Pay off other debts. If possible, pay down high interest debt before applying. This can increase your approval odds and can help you score better rates.
Reduce your loan amount and repayment term. If you are able to, it may be smart to take out a smaller loan. The larger the loan you take out, the higher the interest rate is likely to be. In addition, larger loans come with longer repayment periods, which means you will pay more in interest over the life of the loan.
Apply with a co-signer. Applying with a co-signer with strong credit history can increase your approval odds and help you qualify for a lower interest rate.
Pros and cons of personal loans
There are a number of benefits and drawbacks to consider before taking out a personal loan.
Pros:
Personal loans come in one lump sum, usually with a fixed interest rate.
You can get money quickly, sometimes within as little as a day, depending on the lender you choose.
Many are unsecured loans, which means you don't need collateral like your home or car to borrow money.
Interest rates are much lower than those of payday loans, which charge upward of 400 percent.
Flexibility and versatility allow you to use a personal loan for almost any purchase.
Unlike highly risky payday loans, personal loans give you a reasonable amount of time to repay the loan.
You may have easier payments if you consolidate debt and have a single, fixed-rate monthly payment instead of several accounts to manage.
Cons:
APRs are generally higher than those of some secured loans.
If you have a low credit score, you might not qualify.
Some lenders charge fees, like origination, late and prepayment fees. The lower your credit score, the more likely you are to have a lender that charges more fees.
Some lenders don’t allowco-signers, which means you can only use your credit score and history to qualify.
You’re adding another bill to your monthly payments, which could stretch or even break your budget.
You can increase your overall debt if you use it to consolidate your debt but continue to spend on your credit cards.
Personal loans often have higher monthly payments than the minimum payment on credit cards.
Common types of personal loans
There are many reasons to take out a personal loan, and with the exception of a few lenders, most allow you to use the funds for any purpose. Here are some of the most common scenarios that lead borrowers to take out a personal loan and how to find the best lender if you're in a similar situation.
Debt consolidation is when you pay off several debts with a new personal loan, then pay off the personal loan through monthly payments.
Who it’s best for: Personal loans for debt consolidation are best for people who have several high-interest debts, generally through credit cards.
What to watch out for: Look carefully to make sure the debt will cost less in the long run. Don’t consolidate debt unless you can get a better interest rate, and check to make sure any fees don’t add costs to the loan.
When to get started: If you have several high-interest debts, generally through credit cards, and can qualify for a lower interest rate with a personal loan, you may want to consider it.
How to get started: Evaluate what debts to consolidate and how much money you could save on interest rates, then compare top lenders. Get quotes from lenders to estimate how much you could save.
About 1 in 6 Americans report using a personal loan to pay off medical debt and roughly 41 percent of Americans carry some form of medical or dental debt. Using a personal loan can alleviate the immediate stress of receiving a hefty medical bill.
Who it’s best for: Someone who doesn't wish to spend all of their emergency fund or savings to pay off their medical debt.
What to watch out for: Make sure to only borrow as much as you need and watch the interest rates to make sure that you don't end up paying thousands more than your original debt. Also check if there are financing options through the hospital first.
When to get started: After speaking with the hospital and your insurance company on your repayment options. Start researching lenders as soon as possible to avoid any missed or late payments on your debt.
How to get started: Look for lenders that offer low interest rates and flexible repayment options. If you have thin credit, enlist the help of a co-signer to boost your chances of scoring competitive rates.
Unexpected expenses like a car repair can throw off your monthly budget, and a small emergency personal loan can alleviate the immediate cost.
Who it’s best for: Anyone dealing with a large emergency expense who doesn’t have the option of rainy day savings or a payment plan to pay for it without putting it on a high-interest credit card.
What to watch out for: A loan will cost more because of interest rates, so it’s best to avoid getting a loan unless it is absolutely necessary. Look for the lowest APR you can qualify for, and don’t take out a large loan than you need. If possible, see if there are other options before getting a loan.
When to get started: If there’s an emergency and you need a significant amount of funds in a short time, get started as soon as you know that a personal loan is the best option for you.
How to get started: Look for lenders that offer approval and cash fast so you can take care of the emergency expenses quickly.
A personal loan may be a great way to pay for a large home renovation project and boost the equity in your home.
Who it’s best for: People who can make home renovations that will increase the home’s value and can make the payments on the loan without financial hardship.
What to watch out for: The goal is to increase your financial stability, so don’t get a loan with high APRs or fees that will outweigh possible benefits.
When to get started: Apply for a loan once you determine how much you need by getting estimates from contractors. You don’t want to apply for more or less than you need, so you should have a good idea of what to expect first.
How to get started: After you have project estimates, look for lenders that offer home improvement loans and find the one that will offer you low APRs.
Between booking venues, vendors and purchasing the perfect outfit, weddings often require that couples spend a large amount of money in a few short months. While a personal loan may not cover all of the costs, it can make them more manageable.
Who it’s best for: Anyone who needs a large amount of money in a short period of time to cover their wedding expenses.
What to watch out for: Make sure the loan offers the most competitive rates for your finances and doesn't break the budget.
When to get started: If possible, try to cut costs to avoid having to take out a loan. Once you decide that a personal loan is the best route, apply in a timely manner so as to meet the vendor contract deadlines.
How to get started: Shop around and compare lender offers by prequalifying with at least three lenders.
Personal loans are often used to cover large events and travel costs, like honeymoons, major holidays and bat mitzvahs. While they're not recommended as a first-resort option for financing these expenses, they can fill funding gaps after exhausting all of your other options.
Who it’s best for: Anyone who needs to make a large purchase.
What to watch out for: It’s not generally a good idea to take on a lot of debt, especially for something that only lasts for a short period of time. It’s better to save up or cut expenses than to be paying for something with added interest for years afterward.
When to get started: If you have determined that a personal loan is the best way to go, apply for the loan by the deadlines you would need for the major event or when you plan to make the large purchase.
How to get started: Shop around with different lenders to find the best option for what you have in mind for your purchase or event. The lender that will work best for you depends on your needs. For example, if you are looking to buy a boat, try looking into lenders that offer boat loans. If you want to buy an RV, an RV loan may help you find options that will work best for you.
Taking out a personal loan to cover holiday-related expenses shouldn't be your first choice, as you could end up paying down these expenses — with added interest — for years down the road. However, if you do need to use a personal loan, take out the smallest amount possible and make sure the monthly payments fit comfortably into the budget.
Who it’s best for: Borrowers with good financial health and large holiday expenses who don't want to cut into their savings.
What to watch out for: Review the terms and conditions to ensure that the lender does not engage in predatory behavior and offers repayment terms that work for you.
How to get started: Carefully compare and review the lender details to make sure the rates they offer aren't predatory. Prequalify with multiple companies before applying to make sure they offer competitive interest rates and terms that meet your needs.
How to manage a personal loan
Effectively managing a personal loan comes down to your ability to make the monthly payments. It's imperative that you understand the full responsibility and predicted repayment timeline prior to taking out the loan. If you miss the monthly payments or are unable to make them, contact the lender as soon as possible to see if any hardship payment relief options are available.
If you need a lower monthly payment, consider a longer repayment term. While it will increase the amount you'll repay over the life of the loan in interest, a longer term can take the immediate payment responsibility off of your shoulders. Regardless of your financial situation, make sure you're aware of your lender options prior to applying so you have resources and don't risk any negative credit outcomes.
Alternatives to a personal loan
If a personal loan isn't the right option for your financial situation, there are other ways to get the funds you need. Here are a few of the most popular alternatives to a personal loan.
A personal line of credit is similar to a credit card, but can come with lower interest rates than plastic typically carries. You don't have a set amount you're limited to borrow upfront and can tap into the funds when necessary. However, lines of credit could tempt you to spend more than you can afford and may come with additional fees, so read the terms and conditions before signing on the dotted line.
P2P loans function like personal loans, but are funded by a group of investors, rather than an institution or lender. P2P loans could come with more lenient credit requirements, making them a good option for those with thin credit.
With a balance transfer card, you move high interest debt from multiple cards onto one, singular card. A balance transfer card will generally come with a 0 percent interest introductory period that usually lasts 12 to 24 months. After the period is over, rates are typically much higher, so make sure you're able to pay down the balance.
Home equity loans or a home equity line of credit (HELOC) are good ways for homeowners to use the equity in their home as collateral — usually to fund bigger projects that will increase their home's value. Keep in mind that you run the risk of losing your home if you don't make the monthly payments, so make sure the payments fit well within your budget.
Keep in mind that the best option for you will depend on what you're using the money for, how much you need and your financial health. Never borrow more than you need and make sure the monthly payment fits comfortably in your budget.
How Fed rate hikes impacts personal loans
In order to combat inflation, the Federal Open Market Committee (FOMC) raised interest rates seven times in 2022. It has continued to raise rates in 2023 — landing at 4.75-5 percent most recently. Lenders often respond to these hikes by increasing personal loan interest rates along with the rates of other credit products.
FAQs about personal loans
APR stands for annual percentage rate and refers to the extra amount borrowers pay on top of their loan amount, or principal. APR is different from your interest rate; it equals your interest rate plus any loan fees.
Secured loans are backed by a piece of the borrower’s property as collateral, typically a vehicle or house. Because the borrower stands to lose personal property if they default, secured loans tend to have lower interest rates.
Unsecured loans are not backed by collateral, but instead by the borrower’s creditworthiness. Because the lender takes on more of a risk with an unsecured loan, interest rates tend to be higher. Lenders also require that borrowers seeking unsecured loans have higher-than-average credit scores. Learn more about the key differences between secured and unsecured loans.
You will generally need several documents to apply for a personal loan, including documents that prove your identity and financial status. You'll generally need at least an ID, income verification and proof of address. These documents and the rest of your information will help the lender determine what origination fee you will pay if applicable.
Personal loan costs vary by lender. For excellent credit, there are some lenders that don’t charge any fees. You’re only responsible for paying back the principal (or the amount you borrowed) plus interest. The lower your interest charges, the less you’ll pay back over the life of the loan.
Calculate your potential loan payments to help you decide whether you can afford the personal loan you’re considering.
When it comes to shopping for personal loans, the better your credit score, the more options you have. Generally speaking, there are three main places that provide personal loans:
Online lenders: Online lenders also make it easy to compare rates, APRs and fees and apply online.
Banks: Applying with a bank could get you a lower rate or access to other member benefits if you have an existing banking relationship. Plus, it could be a good option if you prefer in-person customer service
Credit unions: A local credit union may offer more affordable rates and fees than banks and online lenders, especially if you're already a member. However, it's important to be aware that some credit unions may not offer prequalification, so applying could cause a temporary dip in your credit score.
While it may depend on the lender, a personal loan can generally be used for any legal expense. The most common uses for a personal loan are debt consolidation, home renovations and emergency expenses. However, some lenders do restrict certain uses, like using the funds to pay for education-related costs.
The exact loan amounts available often depend on your credit score and the lender. Borrowers with excellent credit are more likely to have access to the full range of loan amounts that a lender offers. Most lenders have minimum loan amounts from $1,000 to $5,000, and maximums can stretch from $50,000 to $100,000.
Lenders often use your debt-to-income ratio — your total debt as compared to your annual income — as an indicator of financial health; most recommend a DTI of under 50 percent for approval. Before applying, calculate your DTI through a calculator or manually add up your debts and divide the total amount about your monthly gross income.
Methodology
To select the top personal loan lenders, Bankrate considers 15 factors. These factors include credit requirements, APR ranges, fees, loan amounts and flexibility to account for a wide range of credit profiles and budgets. Of the 32 lenders reviewed, 12 made Bankrate's list of best personal loans. Each lender has a Bankrate rating, which consists of three categories. These categories include:
Affordability: The interest rates, penalties and fees are measured in this section of the score. Lower rates and fees and fewer potential penalties result in a higher score.
Availability: What the minimum loan amounts are, its eligibility requirements and loan turnaround are considered in this category.
Customer experience: This category covers customer service hours, if online applications are available, online account access and mobile apps.
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