Key Takeaways
- You can use a personal loan for almost anything, which makes it an attractive option when you need cash.
- You should get a personal loan if you need fast funding, have decent credit, don't have the cash on hand, and can afford a monthly payment for the next several years.
- Reconsider a personal loan for discretionary expenses, like a vacation or wedding, and compare alternatives, like a home equity loan, for home improvements.
Earlier this year, TransUnion found that 23.9 million Americans have an unsecured personal loan; that's about 7% of the U.S. population. But was a personal loan really the right move for all 24 million of these consumers? Probably not.
So how do you know when a personal loan is the right choice and when it's better to explore other options? Below, we'll break down not only the pros and cons of personal loans, but also when you should — and shouldn't — get one.
What is a personal loan?
A personal loan is a lump sum of money you borrow, then repay with interest over a set number of years. Personal loans are typically unsecured (no collateral), and you can use them for (almost) anything. Common uses for personal loans include:
- Debt consolidation
- Home renovations and repairs
- Medical bills
- Moving costs
- Emergency expenses, such as car repairs and vet bills
When choosing a personal loan, you'll want to consider three key factors: annual percentage rates (APRs), loan repayment terms, and loan amounts (how much you can borrow). These factors can vary depending on your credit history, market conditions, and the lender you select.
- Personal loan interest rates are typically expressed as an APR and can range from 6% to 36%.
- Loan terms commonly run between two and seven years (repayment terms may be longer for some loan purposes, like home improvement).
- Some lenders let you borrow as little as $1,000 or as much as $200,000.
Learn More: How Do Personal Loans Work?
Good to know
APR accounts for the loan’s interest rate and any upfront fees, like origination fees. If the lender does not charge upfront fees, the interest rate and APR are the same.
Compare: APR vs. Interest Rate on a Personal Loan
Benefits of personal loans
When considering the pros and cons of personal loans, it helps to have a frame of reference. For instance, a personal loan compared to a home equity loan may have different advantages and disadvantages relative to a credit card.
Pros
- Fast funding
- Lower interest rates
- Flexible use cases
- Potential to improve credit
- No collateral required
- Simple interest
- Longer repayment terms
Cons
- Immediate credit score impact
- Monthly budget constraints
- Higher interest rates
- Fees
- Shorter repayment terms
- Temptation
But generally speaking, the best personal loans offer a number of advantages, including:
- Fast funding: Many lenders advertise same- or next-day funding for personal loans. Some others may take a few business days, but even so, personal loans hit your bank account fast. This is ideal in emergency scenarios where you need money ASAP.
- Lower interest rates: While personal loan rates may look high compared to auto loan and mortgage rates, they’re typically lower than a credit card’s APR. That often makes a personal loan a better choice than a credit card, particularly for a larger bill you can’t pay off in a month.
- Flexible use cases: Aside from a few exceptions — including starting a business, paying for college, and making a down payment on a house — you can use a personal loan for almost anything.
- Potential to improve credit: When you manage a personal loan responsibly, you’re impacting multiple credit score factors. Regular on-time payments can boost your credit score over time, and a personal loan also diversifies your credit mix. And if you use a personal loan to consolidate credit card debt, your credit utilization on those cards will drop to 0% — another great boon to your credit score.
- No collateral required: Most personal loans are unsecured; that is, you don’t have to put up collateral to get approved. Other loans, such as mortgages and car loans, use your property as collateral, meaning your home and car could be at risk of foreclosure and repossession, respectively, if you default.
- Simple interest: Unlike credit cards, personal loans charge simple interest. That means you won’t have to worry about being charged interest on unpaid interest.
- Longer repayment terms: If you’re comparing a personal loan to a BNPL loan, payday alternative loan, or cash advance app, personal loans have longer repayment terms that can translate into lower monthly payments.
Related: Long-Term Personal Loans: What To Know
Drawbacks of personal loans
As with any kind of loan, personal loans have some disadvantages to consider before applying.
- Immediate credit score impact: Applying for a personal loan typically results in a hard inquiry on your credit report. Hard inquiries lead to a drop in your credit score. Though small (less than five points) and temporary (one year), you shouldn’t take any negative credit impact lightly.
- Monthly budget constraints: Personal loans require a monthly payment until you’ve repaid the loan (plus interest) in full. You’ll need to make room in your budget to ensure you can keep up with that monthly payment, which could mean cutting other expenses or finding an additional source of income.
- Higher interest rates: Compared to alternatives like home equity loans, home equity lines of credit (HELOCs), and 0% APR credit cards, personal loans have higher APRs.
- Fees: Some personal loans may charge origination fees, which can run anywhere from 1% to 12%, depending on the lender and your credit profile. Other fees you may encounter include late payment fees and NSF fees.
- Shorter repayment terms: If you’re comparing a personal loan to a home equity loan or a HELOC, the repayment term is much shorter. The repayment term for personal loans can also feel inflexible when compared with credit cards, a common alternative to personal loans for small emergencies; as long as you make the minimum monthly payment, there’s no hard end date you need to strive for.
- Temptation: If you use a personal loan to consolidate credit card debt, you’ll need to resist the urge to start spending with those credit cards again, “or you could end up piling on more debt,” advises Uziel Gomez, Certified Financial Planner and founder at Primeros Financial. If you don’t have a good relationship with credit, Gomez recommends “sticking with disciplined repayment strategies,” like the debt snowball or debt avalanche method.
Tip
A longer repayment term can mean a lower monthly payment, but it often means you’ll pay more interest over the course of the loan.
Check Out: Best Credit Cards
When is a personal loan a good idea?
You might get a personal loan if you:
- Need money fast.
- Have a decent credit score and can qualify for a relatively low interest rate.
- Have room in your budget to handle the monthly payment.
- Have explored other non-debt options and are still coming up short.
Here are some scenarios when a personal loan makes sense:
You want to consolidate high-interest debt
Juggling multiple debts can be tough. Having various bill due dates throughout the month makes it easy to let one fall through the cracks. And if those debts are credit cards, they have the potential to rack up interest and late fees fast.
A solution? You can take out a debt consolidation loan and use the proceeds to pay off your other debts. Now, you’ll only have to keep track of a single monthly loan payment, ideally with a lower interest rate.
Tip
If you pay off multiple credit cards, don’t close them! Leave them open (but don’t use them); this helps boost your credit score by decreasing your credit utilization and maintaining your average age of credit.
When you need to make home improvements
Being a homeowner is expensive. For instance, when appliances and systems break down, you’re on the hook for costly repairs. A home improvement loan can help with the cost.
You can also use a home improvement loan to remodel your home. While expensive, doing so could boost your property value and earn you more money when you eventually sell your home.
A caveat regarding personal loans for home improvement
Personal loans aren’t your only option for home improvement. What makes them most appealing is the fast funding, but those interest rates can cost you in the long run.
Chad Gammon, Certified Financial Planner and owner at Custom Fit Financial, always asks his clients to consider two alternatives — home equity loans and home equity lines of credit (HELOC) — which take longer to fund but offer better rates.
“HELOCs have a [lower] variable rate that’s better than a personal loan, and they’re good for flexibility,” such as ongoing home improvements over time, Gammon says. And a home equity loan “is good for a larger, single renovation” and “typically has the lowest interest rate” of all three options (home equity loan, HELOC, and personal loan).
Note
If you don’t have sufficient home equity (typically, 15% to 20%), you may not qualify for a home equity loan or HELOC.
When you can’t cover unexpected expenses on your own
If you’ve explored all the logical options to pay what you owe — and still can’t come up with the money — you may have no other choice than to take out a personal loan.
While a personal loan can be expensive, depending on your credit, they’re a far safer and more affordable option than predatory payday loans. And they offer longer repayment terms than other quick cash options like cash advance apps, BNPL loans, and credit cards.
When you’re in an unhealthy environment
Finally, you might need to consider a personal loan if you’re in a place that is physically or emotionally unsafe and you need money to get out.
“A personal loan could be a viable option for someone living in an unhealthy environment who needs financial support to relocate to a safer place,” says Gomez. This could include leaving an abusive relationship or moving out of an apartment in an unsafe area or that has unsafe living conditions your landlord refuses to address.
When is a personal loan not a smart idea?
A personal loan isn’t always the right choice. Don’t take out a personal loan if:
- You have time to come up with the cash.
- You don’t need the money.
- You’re on a tight budget and won’t comfortably be able to afford the monthly payment.
- You haven’t yet explored other options.
Here are some scenarios when a personal loan doesn’t make sense:
When you could pay off the bill in under a month
If you don’t have the cash on hand to tackle a big expense but you will by your next pay day, you may not need to take out a personal loan.
Assuming the proprietor accepts credit card payments (and you have a credit card with a high enough limit), you could instead pay the bill with your credit card and take advantage of 0% interest during the card’s grace period.
Just make sure you pay off the credit card as soon as your paycheck hits, or else you’ll carry that balance over to the next month and could pay exorbitant interest on it.
When the expense isn’t necessary
If you don’t have to take out a personal loan, don’t. That means you generally shouldn’t take out a loan to buy Christmas presents, pay for a wedding, or fund a vacation.
Instead, focus on saving up for these discretionary expenses. Each month, deposit the money you would otherwise be spending on monthly loan payments into a high-yield savings account or CD with a maturity date that corresponds to when you need the funds.
You can get better financing options elsewhere
This may seem obvious, but it’s worth repeating. You should only consider a personal loan if you’ve exhausted other, often better options:
- Emergency fund: If you’re facing an emergency and have emergency savings, use it — that’s what it’s there for. Even if you have savings earmarked for something else, like a vacation or down payment on a house, you should spend it on emergency expenses rather than take on new debt. But you may want to think twice before completely depleting your emergency fund.
- Family loans: Borrowing from friends and family can be a touchy subject, and for many, it’s a non-starter. But if you are in a tough spot and believe a loved one would be willing to help, it’s worth asking. Just make sure you prioritize repaying them promptly, and if they say no, thank them for their time and move onto another option.
- Payment plan: Some expenses, like furniture and appliances, may cost more than you have in your savings, but you may not need a personal loan to purchase them. Often, stores offer 0% financing; as long as you pay off the item before the end of the promotional period, you won’t pay any interest. Similarly, doctors and hospitals are often willing to work out a payment plan for high medical bills.
Warning
0% financing offers often charge deferred interest. This means that if you don’t pay off the balance in full within the promotional period, you’ll owe interest on the original balance in full.
Personal loan interest rates
Personal loan interest rates depend on several factors, including current market conditions, your credit history, and the lender you choose. The rates below represent current Credible data for three- and five-year personal loans:
Compare Personal Loan Rates
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 Credible partner lenders and of all 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
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
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
Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
pros
- Mobile app
- Live chat
- Low maximum APR
cons
- Limited loan terms available
- No discounts
- Origination fees
- Not available in MA or NV
Eligibility
Available in all states except MA, MS, NV, and OH
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
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.
pros
- No fees required
- Large loan amounts available
- Autopay and direct pay discounts
- Same day funding
- Long loan terms available
cons
- Good credit required
- 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
Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 9.99%, and its top-range interest rates are among the highest of the lenders we reviewed.
pros
- Borrowers with bad credit considered
- Funds as soon as the next business day
- 2-year loan terms available
cons
- No discounts offered
- Origination fee
- Not available in HI, IA, MA, ME, NY, VT, WV, WA, AP, AE, and AA
Fees
Origination fee, late fee, dishonored payment fee
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, WV, WA, AP, AE, and AA
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
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
BHG Financial 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.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 3% and 4%, depending on your financial profile. Loan funds are available within five to 14 days of loan approval. Note that you can't prequalify with BHG.
pros
- Eligible applicants can borrow up to $200,000
- Considers borrowers with fair credit
- Long repayment terms
cons
- Not available in IL, ND, and MT
- No discounts
- Minimum annual income requirement of $100,000
- Funding takes at least five days
Fees
Origination fees, late fees, other fees may apply
Eligibility
Available in all states except Illinois, North Dakota, and Montana
Loan uses
Debt consolidation, credit card refinancing
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
Reach is an option if you have fair credit, especially if you need money fast. According to the company, 90% of Reach personal loans are funded within one day of approval.
It's a good choice for debt consolidation and credit card refinancing, but borrowers with excellent credit may not find the lowest rates with Reach. The company also charges more fees than some of its competitors and doesn't offer direct pay or autopay discounts. If you need a 7-year term loan, you'll need to look elsewhere. Reach personal loans are not available in all states.
pros
- Fast funding
- Can improve credit
- Fair-credit borrowers may be eligible
cons
- Limited use
- No direct pay discount
- Origination fee
- Limited availability: Not available in CO, CT, ME, NV, NH, TN, VT, WV, or WY
Fees
Origination Fee, $15 Late Fee, $25 NSF Fee
Eligibility
Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories
Time to get funds
Funds typically deposited into your account in 1 business day13
Loan uses
Debt consolidation, credit card refinancing
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 Credible partner lenders and of all 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
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
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
Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
pros
- Mobile app
- Live chat
- Low maximum APR
cons
- Limited loan terms available
- No discounts
- Origination fees
- Not available in MA or NV
Eligibility
Available in all states except MA, MS, NV, and OH
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
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.
pros
- No fees required
- Large loan amounts available
- Autopay and direct pay discounts
- Same day funding
- Long loan terms available
cons
- Good credit required
- 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
Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 9.99%, and its top-range interest rates are among the highest of the lenders we reviewed.
pros
- Borrowers with bad credit considered
- Funds as soon as the next business day
- 2-year loan terms available
cons
- No discounts offered
- Origination fee
- Not available in HI, IA, MA, ME, NY, VT, WV, WA, AP, AE, and AA
Fees
Origination fee, late fee, dishonored payment fee
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, WV, WA, AP, AE, and AA
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
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
BHG Financial 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.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 3% and 4%, depending on your financial profile. Loan funds are available within five to 14 days of loan approval. Note that you can't prequalify with BHG.
pros
- Eligible applicants can borrow up to $200,000
- Considers borrowers with fair credit
- Long repayment terms
cons
- Not available in IL, ND, and MT
- No discounts
- Minimum annual income requirement of $100,000
- Funding takes at least five days
Fees
Origination fees, late fees, other fees may apply
Eligibility
Available in all states except Illinois, North Dakota, and Montana
Loan uses
Debt consolidation, credit card refinancing
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
Reach is an option if you have fair credit, especially if you need money fast. According to the company, 90% of Reach personal loans are funded within one day of approval.
It's a good choice for debt consolidation and credit card refinancing, but borrowers with excellent credit may not find the lowest rates with Reach. The company also charges more fees than some of its competitors and doesn't offer direct pay or autopay discounts. If you need a 7-year term loan, you'll need to look elsewhere. Reach personal loans are not available in all states.
pros
- Fast funding
- Can improve credit
- Fair-credit borrowers may be eligible
cons
- Limited use
- No direct pay discount
- Origination fee
- Limited availability: Not available in CO, CT, ME, NV, NH, TN, VT, WV, or WY
Fees
Origination Fee, $15 Late Fee, $25 NSF Fee
Eligibility
Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories
Time to get funds
Funds typically deposited into your account in 1 business day13
Loan uses
Debt consolidation, credit card refinancing
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
FAQ
Does applying for a personal loan hurt your credit?
Open
Applying for a personal loan — or any kind of loan requiring a hard inquiry — has a small negative impact on your credit. However, the impact is short term; hard inquiries only affect credit scores for a year, and even then, such inquiries reduce your score by less than five points.
How does a personal loan affect your credit score?
Open
A personal loan has an immediate impact on your credit score. Applying for a loan results in a hard credit pull, which temporarily lowers your score by a few points.
That said, responsibly managing a personal loan can have a positive impact on your credit score:
- On-time payments: Make your required monthly payment on time each month, and the lender will report those on-time payments to the credit bureaus. This will increase your credit score over time.
- Credit mix: One factor affecting your credit score is your credit mix. A more diversified credit portfolio (i.e., different types of loans) can result in a higher credit score.
- Credit utilization: If you use a personal loan to consolidate your credit card debt — and keep those paid-off cards open — your credit utilization will decrease. And a lower credit utilization results in a stronger credit score.
Keep in mind, personal loans can also hurt your credit score if you fall behind on payments.
How much of a personal loan can I get?
Open
What can’t I use a personal loan for?
Open
You can use a personal loan for almost anything, but most personal loan agreements prohibit certain uses. In most cases, you can’t use a personal loan for:
- Starting a new business
- Paying for tuition
- Making a down payment on a home
- Gambling
- Illegal purchases (obviously)
How much will a personal loan cost long-term?
Open
How much a personal loan costs you over time depends on three factors:
- The APR: The higher the interest rate and any upfront fees, the more you’ll pay to borrow.
- How much you borrowed: Interest on a large loan amount results in a more expensive loan than that same interest rate on a lower loan amount.
- The loan term: A longer loan term may result in smaller monthly payments. But the longer you drag out a loan repayment, the more you’ll pay in interest overall.
You can use our personal loan calculator to determine how much you’ll pay in interest over the course of a loan — and the total cost of that personal loan by the payoff date.
Meet the expert:
Timothy Moore
Timothy Moore is a personal finance and travel expert. His work has been featured by Business Insider and Lending Tree.
