Credible takeaways:
- A 401(k) loan lets you borrow from your retirement savings with no credit check, but you’ll miss out on potential investment growth while you repay.
- Unlike a 401(k) withdrawal, a 401(k) loan doesn’t carry income tax charges and penalties if paid on time or before you change jobs.
- The maximum you can borrow from a 401(k) is $50,000 but could be much less, depending on how much you have vested.
- Home equity loans, HELOCs, 0% APR credit cards, personal loans, and Roth IRA withdrawals are worthy alternatives to consider.
You can use a 401(k) loan to access retirement money early (before retirement) without having to pay income tax or early withdrawal penalties. 401(k) loans don’t require a credit check and the interest rate is usually lower than other borrowing options. Plus, the interest you pay goes into your retirement account.
Borrowing against your 401(k) can provide quick relief, but it comes with risks that could impact your long-term financial health. Before tapping your 401(k), learn how 401(k) loans work and what to look out for.
What is a 401(k) loan?
A 401(k) loan lets you take money out of your 401(k) account with the promise to return it plus interest. Payments are typically deducted from your paycheck and the repayment term lasts up to five years.
401(k) loans can be used to pay for a range of expenses, such as:
- Medical bills
- Home repairs or renovations
- Debt consolidation
- School-related expenses, like tuition, housing, or student loans
- Past-due rent, mortgage, or utilities
- A down payment on a home
- Emergency expenses
You don’t work with a lender to get a 401(k) loan like you would for a personal loan. Instead, you’re technically the lender, so any loan and interest payments go back into your 401(k). But if you switch jobs before paying off the loan, you’ll need to pay back the remainder to avoid taxes and early withdrawal consequences. For instance, you may have up to 90 days from your termination date to repay the loan in full.
Otherwise, the unpaid amount becomes a withdrawal, which is taxable. Plus, if you took out the loan before you turned 59½, you could owe a 10% early withdrawal penalty on any unpaid amount as well.
Tip
A 401(k) withdrawal is also referred to as a “distribution.”
401(k) loan vs. 401(k) withdrawal
A 401(k) loan is when you borrow money from your 401(k) with the intention of returning it, typically via regular payroll deduction. Removing money from your 401(k) without the intention of paying it back is a 401(k) withdrawal, also referred to as a distribution. These funds remain permanently removed from your account.
401(k) withdrawals are usually subject to a tax penalty of 10% if you’re under 59½. But there are exceptions. For example, you may be able to take a 401(k) hardship withdrawal — a maximum of $1,000 — penalty-free once annually to pay for an emergency personal expense. Some plans also allow withdrawals for qualified birth, adoption, or medical expenses. Still, your withdrawal will be taxable according to your income tax rate.
How does a 401(k) loan work?
A 401(k) loan has specific rules on borrowing limits and repayments. Understanding the risks of borrowing against your 401(k) can help you decide if it’s a good option.
Policies
401(k) policies differ between companies. “Some companies allow multiple loans at once, others cap borrowing at one loan at a time,” says Chris Heerlein, chief executive officer of REAP Financial. Your policy’s loan interest rate and repayment terms can vary from one employer to the next, too. Before borrowing, read your policy and ask your employer about restrictions on using your loan funds and what happens with your loan if you take a leave of absence or leave the company.
Borrowing limits
The most you can borrow from a 401(k) plan is $50,000. But you can’t borrow this amount unless you have at least $100,000 vested in your account because qualified plans only allow you to borrow up to half of your vested balance. The only exception is if half your vested balance is less than $10,000. Then you can borrow up to $10,000. For example, if you only have $15,000 vested in your 401(k), you could borrow up to $10,000.
These borrowing limits are the same even if your 401(k) plan allows multiple loans at once.
Say you have a vested 401(k) balance of $60,000. Per the IRS, you’d be allowed to borrow up to $30,000, or 50% of your vested balance. (Keep in mind, your 401(k) plan would need to allow 401(k) loans.)
You already took out a loan for $20,000 and have repaid $10,000 of it (you still owe $10,000). Now, you want to borrow a second 401(k) loan. You’d be allowed to borrow up to $20,000, since half of your vested balance is $30,000 and the two loans would total $30,000.
Loan interest and fees
Some 401(k) plans charge fees for your loan. This may be a one-time fee for establishing your loan, usually between $50 and $100. Some plan administrators may also charge a loan application fee and an annual maintenance fee.
You’ll also pay interest on your loan. However, the interest you pay goes back into your account. “Essentially the interest payment is like moving money from your left pocket to your right pocket,” says Andrew Hall, certified financial planner, wealth advisor, and vice president of Farther, a wealth management platform.
Good to know
The interest rate on a 401(k) is generally 1% to 2% plus the prime rate. The prime rate was 7.5% in late March 2025.
Repayment
Like other types of loans, you’ll repay a 401(k) loan over time with interest. Most plans require you to repay your loan in full within five years, although your repayment term may be extended if you’re using the funds to buy a home as your primary residence. You’ll also need to make payments at least once per quarter.
Changing jobs
If you leave your job when you have an outstanding 401(k) loan, you’ll need to repay the loan in full. This can happen if you quit or get terminated. If you can’t pay it off, your employer will treat it as a 401(k) withdrawal, meaning you’ll be taxed and charged the 10% distribution penalty if you’re under the age of 59½. For example, you may have up to 90 days after your termination date to pay back the outstanding balance in full.
Retirement growth
When you take a 401(k) loan, your funds stay in your account but aren’t eligible for the gains they’d typically receive. “While you’re technically borrowing from yourself, the real cost is lost growth,” says Heerlein, who had a client take out a $30,000 401(k) loan and pay it back over five years. “The market performed well during that period and had they left the money invested, it could have grown by tens of thousands. They repaid the loan, but the lost compounding set them back years.”
Plus, some plans may not allow you to contribute to your 401(k) while you have an outstanding loan. If this is the case and your plan includes employer-matching contributions, you could also lose out on thousands of dollars of “free” money (contributed by your employer) over the term of your 401(k) loan.
For these reasons, borrowing from your 401(k) can provide short-term financial relief but potentially leave you without as much of a retirement cushion later on.
Credit impact
A 401(k) loan doesn’t require a credit check and neither the loan itself nor your payments will be reported to credit bureaus. Even if you don’t repay the loan, it won’t appear on your credit report. So, in terms of impacting your credit, a 401(k) loan carries little risk.
Tip
Because a 401(k) loan doesn’t appear on your credit report, it’s not generally included in your debt-to-income calculation (DTI), so it shouldn’t affect other loans or credit you apply for.
401(k) loans vs personal loans
A personal loan doesn’t affect your retirement savings like a 401(k) loan. With a personal loan, you borrow from a lender and pay that lender back with interest. The lender decides your repayment terms and borrowing limit, but you may be able to borrow more and have longer to repay a personal loan compared to a 401(k) loan.
However, interest rates are often higher on personal loans and you’ll typically need a credit check to get one.
Here’s how 401(k) loans compare to personal loans:
| | |
|---|
| Have a vested balance in a 401(k) plan that allows loans | Generally, good credit and income that supports loan payments |
| Lesser of 50% of vested balance or $50,000; $10,000 if 50% of vested balance is less than $10,000 | Generally, $50,000, but over $100,000 with some lenders |
| Usually 1% to 2% above the prime rate (7.50% as of March 2025); paid interest returns to your 401(k) | 7% to 36% APR; APR is based on factors such as credit score and DTI; you pay interest to lender |
| Setup and annual maintenance fees may apply | Lenders may charge origination fees and late fees |
| Up to five years; longer if using the funds to buy a primary residence | Typically, 1 to 7 years, depending on lender and loan purpose |
| No credit check; does not count toward DTI; does not get reported to credit bureaus | Credit check typically required; slight dip in score after applying; late payments can affect credit |
| | Generally, 620, although some lenders accept lower credit scores |
| Loan funds aren’t invested while in repayment (you could lose out on market gains and compound interest) | None, unless your payments prevent you from contributing to your retirement fund |
| Unpaid loan is subject to income tax and a 10% early withdrawal penalty if under 59 ½ and without a qualifying exception | None, unless a lender forgives your loan |
What is the interest rate on a 401(k) loan?
Plan administrators base the interest rates for 401(k) loans on the prime rate. Usually, 401(k) loan interest is charged at 1% or 2% above the prime rate, which is 7.50% as of March 2025. That makes the interest rate on the average 401(k) loan around 8.50% or 9.50%.
Compared to personal loans and credit cards, 401(k) loan rates are lower. The latest Federal Reserve data lists an average annual percentage rate (APR) of 12.32% for two-year personal loans and 21.47% for credit cards.
401(k) loans: pros and cons
Borrowing from your retirement savings is something to think about carefully. Here’s what to consider.
Pros
- No credit check
- No credit impact
- Lower interest rate
- Pay interest to yourself
- Avoid withdrawal tax penalties
Cons
- May not be allowed
- Limited borrowing
- Reduced gains
- Fees
- Taxable distribution if unpaid
- May require spousal approval
Pros of a 401(k) loan
- No credit check: 401(k) loans come directly from your retirement savings, so there’s no need for a lender credit check.
- No credit impact: Loan payments aren’t reported to credit bureaus and so wouldn’t be typically considered if you apply for credit. Even if you don’t pay the loan back, it wouldn’t hurt your score. Instead, it would be treated as a withdrawal, which could result in steep tax consequences and penalties.
- Lower interest rate: The interest rate is usually 1% or 2% above the prime rate, which is lower than most personal loans (unless you have excellent credit) and credit cards.
- Pay interest to yourself: While 401(k) loans have interest, all interest you pay goes back into your 401(k) account.
- Avoid withdrawal tax penalties: Repaying your loan on time allows you to access your retirement funds without paying taxes and potential penalties on a withdrawal.
Cons of a 401(k) loan
- May not be allowed: Some employers don’t allow 401(k) loans.
- Limited borrowing: You can only borrow up to 50% of your vested account balance (up to a maximum of $50,000).
- Reduced gains: The money you borrow won’t participate in market gains, which can affect your 401(k)’s long-term growth.
- Fees: Some plans charge origination and maintenance fees, increasing borrowing costs.
- Taxable distribution if unpaid: If you don’t pay your loan back in full or change jobs before repaying it, the outstanding balance could become a taxable distribution. You also may owe a 10% penalty if you’re under 59½.
- May require spouse approval: You may need your spouse’s approval to borrow from your 401(k).
How to get a 401(k) loan
Follow these steps to apply for a 401(k) loan:
- Check your 401(k)’s rules: Your plan’s Summary Plan Description (SPD) outlines everything about your 401(k), including whether it permits loans. If so, the SPD will also detail repayment terms, loan limits, fees, and how to apply.
- Determine how much you need: Consider how much you really need to borrow from your 401(k) before cutting too deeply into your retirement savings and potentially limiting gains. Account for upfront fees in your calculations.
- Contact your plan administrator: Reach out to HR to request a 401(k) loan or ask how to do so. Ask any questions you have about the process.
- Apply: Follow the steps outlined in your SPD or by HR to apply. Many plans have online self-service portals to submit a digital application, but yours may require a paper application.
- Review loan terms: Read the loan agreement to understand your loan’s fees, interest rate, and repayment terms. Also, review what happens if you switch jobs or can’t repay.
401(k) loan alternatives
If you want to explore other options before getting a 401(k) loan, here are a few alternatives that won’t affect your retirement fund.
Personal loan
Personal loans provide a cash lump sum and allow you to pay it off over a period of years like a 401(k) loan. Personal loans are often available up to $50,000, depending on the lender, but some offer loans up to $100,000 or more, if you can qualify. Lenders consider your credit history, income, current debt, and the loan’s purpose when determining whether you qualify and what rate and loan terms to offer.
Tip
Compared to a 401(k) loan, you may have longer to pay back a personal loan — some lenders allow up to seven years, or longer for home improvement loans.
Kelly Gilbert, owner of EFG Financial, a financial and retirement planning firm, suggests comparing the APR of a personal loan to the interest you’d pay on a 401(k) loan and your average gains to find the best option for you. ”Let’s say the 401(k) loan interest is 6% annually and your average gains are 6% annually,“ says Gilbert. ”This means your opportunity cost on that loan is 12% annually. Any loan that charges less than 12% is a better loan for you to take.“
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 20 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.
pros
- Same-day funding available
- High maximum loan amount
- No origination fee
cons
- Good credit required
- No prequalification process
- Not available in Vermont
Repayment terms
2 - 20 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the same business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
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 9.99% 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).
pros
- 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
cons
- Origination fees
- No discounts
- Not available in DC, IA, VT, or WV
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
Overview
Upstart has one of the lowest available APRs of all Credible partner lenders and non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also 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.
pros
- May fund in 1 business day
- No minimum credit score requirement on lender site
- Low minimum APR
- Trustpilot score of 4.9/5 stars
cons
- May charge a high origination fee
- No discounts offered
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
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%.
pros
- Mobile app
- Low minimum income requirement
- High close rate on loans made through Credible
- Available in all states
cons
- Origination fee
- No discounts
- Funding not as fast as some competitors
Eligibility
Available in all 50 states
Loan uses
Debt consolidation, paying off credit cards
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.
pros
- Excellent customer reviews on Trustpilot
- Funding as soon as the next business day
- Large loan amounts available
cons
- Possible origination fee up to 7.49% (through Credible)
- Other lenders may have lower starting APRs
- No cosigner option
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
Loan uses
Debt consolidation, credit card refinancing, home improvement, major purchases
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.
pros
- Fair credit borrowers eligible
- Autopay and direct pay discounts
- Can fund in as little as 1 business day
- Mobile app
- Secured loans available
cons
- High maximum origination fee
- Cosigners not accepted on home improvement loans
- Low J.D. Power ranking
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
Overview
SoFi personal loans feature high loan amounts, competitive interest rates, same-day funding, and long loan terms, plus discounts for autopay and direct pay. Plus, SoFi offers live chat, a prequalification process that doesn't require your Social Security number, and free financial advice for customers. Unlike many other online lenders, SoFi is an FDIC-insured bank.
To qualify for an unsecured loan you may need to have good credit, but unlike other lenders, SoFi doesn't specify a credit score minimum. Minimum loan amounts start at $5,000.
pros
- Large loan amounts available
- Autopay and direct pay discounts
- Same day funding
- Long loan terms available
cons
- Not transparent about minimum credit score requirements
- 5,000 minimum loan amount
Fees
Option to pay an origination fee 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
Overview
Prosper is the only remaining true P2P marketplace in the peer-to-peer lending space that connects borrowers with individual investors for some loans. If you apply for a loan with Prosper, the funding may come from an individual who has chosen to invest in you.
Prosper offers personal loans between $2,000 and $50,000 with terms between 2 and 5 years, and funding as soon as one business day. You can use a personal loan through Prosper for a variety of purposes, including debt consolidation and home improvement. The platform has excellent customer service reviews on Trustpilot, as well.
pros
- Offers peer-to-peer lending (individuals can invest in personal loans)
- Can fund in 1 business day
- Open to borrowers with fair credit
- Low minimum APR
cons
- Origination fee
- Not available in Iowa or West Virginia
- No discounts
Eligibility
Available in all states except IA and WV
Time to get funds
On average, within 5 days of accepting your offer
Loan uses
Debt consolidation, home improvement, vehicles, small business, new baby expenses, and other purposes
Overview
Reprise may be an excellent option if you need a loan with bad credit. The lender says it will consider applicants with FICO scores as low as 560, and offers secured loans as well as some cosigned loans to help you qualify. Loan funds can be available the next business day once you’re approved. Plus, the company has a 4.7 Trustpilot rating — indicating generally satisfied customers.
But Reprise is not for everyone. Available loan amounts are relatively low at $25,000, and the minimum repayment term is relatively high at three years. The lender also charges origination fees, does not offer discounts, does not consider income from self-employment, and is not available nationwide.
pros
- Loans for bad credit
- 4.7 Trustpilot rating
- Secured loans available
- Cosigners considered
- Next-day funding available
- Easy to contact
cons
- Does not accept self-employment income
- Minimum 3-year loan term
- Relatively low maximum loan amount ($25,000)
- Origination fees up to 6%
- Not available nationwide
- No mobile app
- No discounts for autopay or direct pay
Fees
$15 late fee except where the state has a different limit (ie. NM), return payment Fees - $20 except where state has a different limit (ie – NM), and no prepayment penalty
Eligibility
Unavailable in CO, CT, HI, IA, ME, MD, MA, NV, NJ, NY, SD, VT, WA, and WV
Min. income
Sufficient disposal income
Time to get funds
1-7 business days depending on loan security type
Loan uses
Credit card refinancing, debt consolidation, emergencies, major purchases, medical and dental expenses, moving expenses, special occasions, unexpected expenses, vacation and travel
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.
pros
- Borrowers with bad credit considered
- $25,000 annual income requirement
- Autopay and direct pay discounts available
- Can fund in one business day
cons
- High APRs
- Potentially high origination fees
- Not available in Iowa
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
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.
pros
- Flexible eligibility requirements
- Offers secured options
- Competitive bad-credit loans
- Physical presence
cons
- Availability
- Origination fees
- High starting APR
- Low maximum loan amount
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
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 20 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.
pros
- Same-day funding available
- High maximum loan amount
- No origination fee
cons
- Good credit required
- No prequalification process
- Not available in Vermont
Repayment terms
2 - 20 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the same business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
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 9.99% 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).
pros
- 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
cons
- Origination fees
- No discounts
- Not available in DC, IA, VT, or WV
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
Overview
Upstart has one of the lowest available APRs of all Credible partner lenders and non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also 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.
pros
- May fund in 1 business day
- No minimum credit score requirement on lender site
- Low minimum APR
- Trustpilot score of 4.9/5 stars
cons
- May charge a high origination fee
- No discounts offered
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
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%.
pros
- Mobile app
- Low minimum income requirement
- High close rate on loans made through Credible
- Available in all states
cons
- Origination fee
- No discounts
- Funding not as fast as some competitors
Eligibility
Available in all 50 states
Loan uses
Debt consolidation, paying off credit cards
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.
pros
- Excellent customer reviews on Trustpilot
- Funding as soon as the next business day
- Large loan amounts available
cons
- Possible origination fee up to 7.49% (through Credible)
- Other lenders may have lower starting APRs
- No cosigner option
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
Loan uses
Debt consolidation, credit card refinancing, home improvement, major purchases
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.
pros
- Fair credit borrowers eligible
- Autopay and direct pay discounts
- Can fund in as little as 1 business day
- Mobile app
- Secured loans available
cons
- High maximum origination fee
- Cosigners not accepted on home improvement loans
- Low J.D. Power ranking
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
Overview
SoFi personal loans feature high loan amounts, competitive interest rates, same-day funding, and long loan terms, plus discounts for autopay and direct pay. Plus, SoFi offers live chat, a prequalification process that doesn't require your Social Security number, and free financial advice for customers. Unlike many other online lenders, SoFi is an FDIC-insured bank.
To qualify for an unsecured loan you may need to have good credit, but unlike other lenders, SoFi doesn't specify a credit score minimum. Minimum loan amounts start at $5,000.
pros
- Large loan amounts available
- Autopay and direct pay discounts
- Same day funding
- Long loan terms available
cons
- Not transparent about minimum credit score requirements
- 5,000 minimum loan amount
Fees
Option to pay an origination fee 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
Overview
Prosper is the only remaining true P2P marketplace in the peer-to-peer lending space that connects borrowers with individual investors for some loans. If you apply for a loan with Prosper, the funding may come from an individual who has chosen to invest in you.
Prosper offers personal loans between $2,000 and $50,000 with terms between 2 and 5 years, and funding as soon as one business day. You can use a personal loan through Prosper for a variety of purposes, including debt consolidation and home improvement. The platform has excellent customer service reviews on Trustpilot, as well.
pros
- Offers peer-to-peer lending (individuals can invest in personal loans)
- Can fund in 1 business day
- Open to borrowers with fair credit
- Low minimum APR
cons
- Origination fee
- Not available in Iowa or West Virginia
- No discounts
Eligibility
Available in all states except IA and WV
Time to get funds
On average, within 5 days of accepting your offer
Loan uses
Debt consolidation, home improvement, vehicles, small business, new baby expenses, and other purposes
Overview
Reprise may be an excellent option if you need a loan with bad credit. The lender says it will consider applicants with FICO scores as low as 560, and offers secured loans as well as some cosigned loans to help you qualify. Loan funds can be available the next business day once you’re approved. Plus, the company has a 4.7 Trustpilot rating — indicating generally satisfied customers.
But Reprise is not for everyone. Available loan amounts are relatively low at $25,000, and the minimum repayment term is relatively high at three years. The lender also charges origination fees, does not offer discounts, does not consider income from self-employment, and is not available nationwide.
pros
- Loans for bad credit
- 4.7 Trustpilot rating
- Secured loans available
- Cosigners considered
- Next-day funding available
- Easy to contact
cons
- Does not accept self-employment income
- Minimum 3-year loan term
- Relatively low maximum loan amount ($25,000)
- Origination fees up to 6%
- Not available nationwide
- No mobile app
- No discounts for autopay or direct pay
Fees
$15 late fee except where the state has a different limit (ie. NM), return payment Fees - $20 except where state has a different limit (ie – NM), and no prepayment penalty
Eligibility
Unavailable in CO, CT, HI, IA, ME, MD, MA, NV, NJ, NY, SD, VT, WA, and WV
Min. income
Sufficient disposal income
Time to get funds
1-7 business days depending on loan security type
Loan uses
Credit card refinancing, debt consolidation, emergencies, major purchases, medical and dental expenses, moving expenses, special occasions, unexpected expenses, vacation and travel
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.
pros
- Borrowers with bad credit considered
- $25,000 annual income requirement
- Autopay and direct pay discounts available
- Can fund in one business day
cons
- High APRs
- Potentially high origination fees
- Not available in Iowa
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
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.
pros
- Flexible eligibility requirements
- Offers secured options
- Competitive bad-credit loans
- Physical presence
cons
- Availability
- Origination fees
- High starting APR
- Low maximum loan amount
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
Home equity
If you own a home, you might be able to borrow against its equity in the form of a home equity loan or home equity line of credit (HELOC). A home equity loan usually has a fixed interest rate with consistent monthly payments, ideal for large expenses like debt consolidation or home renovations. A HELOC has a flexible draw period and a variable interest rate, which can work better for ongoing expenses or projects with uncertain costs.
Both options usually come with lower interest rates than unsecured personal loans and can be easier to qualify for. But if you default on payments, your home — the collateral for the loan — is at risk.
Read More: HELOC vs. Home Equity Loan: How to Decide
Roth IRA
You already paid taxes on money you contributed to a Roth IRA, so you can withdraw contributions tax-free and penalty-free at any time. The money you withdraw will permanently leave your account instead of getting repaid. But if you don’t have the extra funds to make 401(k) loan payments, a Roth IRA withdrawal could be a better option.
Important
You can withdraw contributions to a Roth IRA without penalty or paying taxes at any time. But any withdrawal of earnings before you turn 59½ could be subject to taxation and a 10% early withdrawal penalty.
0% APR credit card
For smaller expenses, consider a credit card with a 0% APR offer. Some credit cards have this option when you open a new account or feature limited-time 0% APR offers throughout the year. 0% APR offers usually last between 12 and 18 months, although some cards allow up to 21 months. It’s best to pay off the entire balance before the offer expires and the card’s regular APR takes effect.
Read More: Personal Loan vs. 0% APR Credit Card
Scale back 401(k) contributions
Adjusting your 401(k) contributions can give you additional cash flow without touching your existing retirement savings. “I’ve seen clients temporarily cut contributions to their 401(k) to free up cash, then ramp them back up once the crisis passes,” says Heerlein. But create a specific timeline for continuing your regular contributions to make sure you get back on track.
FAQ
Is it a good idea to borrow from your 401(k)?
Open
Borrowing from your 401(k) isn’t always ideal because it cuts into retirement growth. Also, if you leave your job before repaying, you could be on the hook for withdrawal taxes and penalties. Consider alternatives, like a personal loan or HELOC, before dipping into your retirement savings.
Should you use a 401(k) loan to pay off credit card debt?
Open
A 401(k) loan has much lower interest rates than most credit cards. But just because you can use a 401(k) loan for this purpose doesn’t mean you should. If you’re struggling to pay back debt and can’t qualify for a traditional debt consolidation loan, be very wary of sacrificing your 401(k).
Credit card debt is unsecured, which means it’s often dischargeable in bankruptcy, while your 401(k) is typically protected from creditors and not subject to liquidation in bankruptcy proceedings. If you already have bad credit, a 401(k) loan may not be the way to go, unless you’re confident you can get back on track.
How long does it take for a 401(k) loan to be approved?
Open
A 401(k) loan may be processed, finalized, and funded within a few business days. However, some loans can take up to one month to finalize.
How soon can I take out a 401(k) loan after paying one off?
Open
It depends on your plan’s rules. Some plan administrators let you have more than one 401(k) loan at a time, while others may limit you to only one with waiting periods of a few days to a few months.
Will my employer know if I take a 401(k) loan?
Open
Yes — if your plan is employer-sponsored, you’ll usually need to go through your employer to request a 401(k) loan.
What happens if you have a 401(k) loan and change jobs?
Open
You’ll need to pay your loan back in full if you leave your job. If not, you’ll get charged income tax plus a 10% penalty on the withdrawal if you’re under 59½. You may have a grace period during which to do so, such as 90 days from your termination date.
Who gets the interest on a 401(k) loan?
Open
You’re both the borrower and lender of a 401(k) loan, so any interest you pay returns to your 401(k) account. Still, that’s extra money you’ll need to account for each month to repay your loan.
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Disclosure: Some lending partners that participate in Credible’s comparison marketplace offer loans to borrowers with scores as low as 550. Borrowers with low scores will have fewer lending options than borrowers with higher credit scores.
Meet the expert:
Amy Boyington
Amy Boyington has covered personal finance for more than eight years. She's an expert on education and financial literacy.
