An unsecured personal loan is an installment loan offered by a bank, credit union, or other lender that isn’t backed or “secured” by any asset, such as your home or car. Instead, these loans are approved based on how likely the lender thinks you are to pay the loan back, which it determines by considering your credit score, debt-to-income ratio, income, and other factors.
Compare unsecured loan rates of May 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 — Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Unlike most lenders, Lightstream does not let you prequalify on its site. 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
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 8%.
Eligibility
Available in all 50 states
Loan uses
Debt consolidation, paying off credit cards
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.
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 700). 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 unsecured loans
Personal loans can be used for a variety of purposes, with some of the more common being emergencies, medical expenses, home improvement projects, and debt consolidation. We reviewed over 20 lenders and considered interest rates, loan terms, loan amounts, credit requirements, time to fund, and more to determine the best unsecured loans of 2023.
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.
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
Upgrade: Best for fair credit
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
Discover: Best for no origination fees (and low rates)
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
Splash: Best quick loans for good credit
Best 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 700). 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
Universal Credit: Best debt consolidation loans for bad credit
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
LightStream: Best home improvement loans and low rates
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 — Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Unlike most lenders, Lightstream does not let you prequalify on its site. 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
Best Egg: Best for high close rates if pre-approved
Best for 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
BHG Money: Best for large personal loans
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
OneMain Financial: Best bad credit personal loans
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
Upstart: Best fast personal loans for all credit types
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
LendingClub: Best online experience
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
Funding not as fast as some competitors
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 8%.
Eligibility
Available in all 50 states
Loan uses
Debt consolidation, paying off credit cards
Methodology
Credible evaluated the best personal loan lenders for unsecured loans based on factors such as minimum and maximum interest rates, maximum loan amount, funding time, loan terms, fees, discounts, credit and income requirements, and whether cosigners are accepted. Credible’s team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.
Learn more about how Credible rates lenders by exploring our Personal Loans Lender Rating Methodology.
How to compare unsecured personal loans
There are several factors you should consider to make sure you’re getting the best personal loan for you:
- Annual percentage rate (APR): One of the biggest things to consider is the APR, which determines how much borrowing will cost you. The APR takes both the interest rate on the loan and any upfront fees into account, such as an origination fee. APRs can vary widely, depending on your credit score, overall financial situation, and the lender.
- Fees: Many lenders charge an origination fee, usually calculated as a percentage of the total loan amount and automatically subtracted from the amount that’s disbursed to you. Some other fees might include a documentation fee, optional credit or disability insurance, and late fees.
- Loan term: The term of the loan refers to its length, or how long it will take you to pay it back off. Generally, a shorter loan term means a lower interest rate, lower total cost, and higher monthly payments. Personal loan repayment terms generally run from 1 to 7 years, but some lenders may offer longer terms, depending on the loan’s purpose.
- Loan amount: We reviewed lenders that offer loans as low as $600 up to $200,000. If you need a loan amount under $2,000 or above $50,000, be sure to only consider lenders that offer what you need. Avoid taking out more than you need, as this can significantly increase the cost of your loan.
- Monthly payment: When selecting a loan, make sure the monthly payment fits comfortably within your budget. While you want to pay the lowest interest rate and the fewest fees, you don’t want to hurt or even ruin your credit by missing payments or defaulting on a loan you can’t repay.
- Funding time: If you need a quick personal loan, compare loan funding times between lenders — that is, how long it’s likely to take from the approval of your application to the disbursement of funds to your account. This can vary widely from lender to lender, but many offer funding within 1 to 3 business days, and some offer same-day funding.
- Customer experience: Make sure that any lender you choose has readily available customer service and convenient payment options that work for you. For example, if you prefer to transact from your phone, make sure the lender has a mobile app to your liking.
- Lender reputation: Look at online reviews, check with your state’s regulatory agency, and look the company up with the Better Business Bureau. It’s likely you’ll see complaints for any lender, but if the same issues come up repeatedly, it could be a red flag.
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Eligibility requirements for unsecured personal loans
When you apply for a loan, you’re not just analyzing lenders — they’ll analyze you, too. Here are some of the things lenders will look at and ask for when they’re reviewing your loan application:
Your credit score and history
This is one of the most important factors a lender considers. Your credit score is a number that reflects your financial history, including your payment history, current debts, how much credit you’ve used vs. how much you have available, and how many new applications for credit you’ve made.
A high credit score means that lenders generally consider you a low-risk person to lend to — someone who pays their bills on time, has had accounts in good standing for a long time, doesn’t use too much of their available credit, and hasn’t been opening a flurry of new accounts. Lenders typically offer borrowers with high credit scores the lowest interest rates.
Debt-to-income ratio
Your debt-to-income ratio (DTI) is a simple equation of how much of your monthly income goes to repaying debt. You can calculate it by adding up all your minimum monthly payments, then dividing that number by your monthly gross income. A debt-to-income ratio of 36% or less is considered good, though some lenders will accept a higher DTI.
Employment and income
Lenders generally need to know you have an income and a job. They may request pay stubs, bank statements, or tax returns to verify your income. You should have enough income to comfortably make loan payments in addition to the payments you already have.
Loan amount
The total dollar amount you’re seeking needs to be in line with what you’re capable of paying back. If lenders don’t think it is, they may deny your application or approve you for a smaller loan amount. Make sure you’re not asking to borrow more money than you really need, or are able to pay back.
How to improve your chance of approval
If you’re concerned about getting approved or have had trouble doing so, these steps may help:
- Add a cosigner: Getting a personal loan with a cosigner with a strong credit history and low DTI can help you qualify for a loan. This is because the cosigner agrees to be responsible for your loan if you miss payments. Before you ask someone to cosign a loan with you, make sure you can afford the payments for the term of your loan. It can be incredibly damaging to your relationship if your cosigner is forced to cover your loan.
- Boost your income: If possible, improve your debt-to-income ratio by increasing your income. Seek a higher-paying job and consider gig or freelance work to supplement your earnings.
- Pay off debt: Another way to improve your chance of qualifying is to reduce your DTI by paying off smaller, existing debts. This, like many other credit-boosting measures, may take time and requires that you’re able to wait to take out a loan.
- Improve your credit: It’s always good practice to pay bills on time and reduce your debt load because it can have a dramatic effect on your credit score over time. A quicker way to improve your credit could be to pay for a service that reports payments like rent, utility, and your phone bill to the bureaus, such as Experian Boost and Self.
- Get a secured loan: If you attach collateral, such as your car or home, to secure the loan, it could help you qualify, as it gives the lender greater peace of mind that you’re committed to making payments. It also means your lender can seize or put a lien on your collateral if you don’t make payments or default. Having this option also reduces lender risk.
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How to get an unsecured personal loan
Consider these steps when getting an unsecured personal loan:
- Check your credit: Check your credit report first. If you note any errors, report them to the credit bureaus immediately, and wait for your score to reflect the changes before you apply. Knowing your credit score is also a good way to eliminate certain lenders, since most have minimum credit score requirements.
- Compare lenders: Shop around to compare interest rates, fees, loan amounts, and payment terms. Comparing APR ranges is a good way to start this process. Try to find each lender’s minimum credit score requirements as well.
- Prequalify: Once you’ve determined which lenders look good, prequalify with those that will let you. Prequalification provides an estimate of the APR, loan amount, and loan terms you might qualify for, without hurting your credit score. Note that a hard credit pull — which does affect your score — will follow when you submit a formal application. Prequalification is not an offer of credit, and final rates may be higher.
- Apply for a loan: When you have found the best option, submit an application. Expect to provide government ID, proof of income, and other documentation to support your application.
- Finalize loan and begin payments: Once approved, you’ll need to sign the paperwork prior to disbursement — make sure you read and understand the fine print before signing. Once you receive the money, you’ll begin making payments. Consider setting up automatic payments to help prevent missed payments, late fees, and damage to your credit score.
Tip
Use a personal loan marketplace to get a quick snapshot of rates and terms on personal loans. You can often prequalify with multiple lenders as well.
Learn More: How To Get a Personal Loan
Pros and cons of unsecured loans
Compared to secured loans, unsecured loans have upsides and downsides. Here are some of the major ones to consider:
Pros:
- No risk of losing your collateral: With an unsecured loan, you’re not pledging your home, car, or other asset, which means your lender can’t take it if you don’t make your payments.
- Simplified process: Without the need for collateral, the application process is based solely on your credit profile, which makes it faster.
Cons:
- APRs may be higher: Since the lender has no collateral to back the loan, it may perceive it as riskier than a secured loan, which usually means a higher interest rate and possibly higher fees.
- More difficult to qualify for: Without the backing of collateral, it may be difficult to get approved for a personal loan with an attractive interest rate, or get approved for one at all.
Differences between secured and unsecured loans
The difference between secured and unsecured loans is that the former are “secured” by an asset that you own. In essence, with a secured personal loan you are pledging something to the lender that it can claim if you don’t meet your end of the bargain. They are often backed by a home, a car, or sometimes a financial asset, like a bank account or certificate of deposit.
In contrast, unsecured loans don’t have any such backing. And while that makes the loan process simpler and doesn’t risk your possessions, unsecured personal loans often have higher interest rates than secured personal loans.
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FAQ
Can you get an unsecured loan with bad credit?
It may be challenging to get an unsecured loan if you have bad credit, but it’s possible. Personal loans for bad credit often feature high interest rates and higher fees, so be sure the cost makes sense before applying. Some lenders may allow you to add a cosigner to the loan, which means you’d use their good credit to qualify.
What are the different types of unsecured loans?
Common types of unsecured installment loans include personal loans and student loans. Other debts that are unsecured include most credit cards, medical debt, and business loans, as well as rent, cellphone, and utility bill payments if you’re late.
What are the common uses for unsecured loans?
Unsecured loans are often used to consolidate debt, renovate homes, pay for medical bills, fund weddings and vacations, and more. There are very few restrictions on what personal loans may be used for. However, you can’t use them to pay tuition costs or for a down payment on a home.
Meet the expert:
Hilary Collins
Hilary Collins is a finance writer and editor. She loves taking topics that could be dry and complicated and turning them into engaging stories with actionable takeaways.