Meredith Mangan is a senior editor at Fox Money and expert on personal loans.
Updated October 4, 2024
Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”
A personal loan is a type of installment loan. It's often unsecured - meaning collateral isn't required - and offers a way to finance large purchases, cover unexpected expenses, or consolidate high-interest debt. If you're approved for a personal loan, you'll get the cash you need upfront in exchange for making fixed monthly payments over a set period of time.
Because the personal loan application process is fairly quick and funds can be used for a variety of purposes, personal loans are common - the Federal Reserve estimates that about 11% of adults or 31 million people had an outstanding personal loan at the end of 2022. To help you decide whether a personal loan is the right solution for you, we'll cover how personal loans work, what expenses they're best for, and how to qualify.
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
Loan amount
$5,000 to $100,000
Repayment terms
2 - 20 years, depending on loan purpose
Fees
None
Discounts
Autopay
Eligibility
Available in all states except RI and VT
Min. income
Does not disclose
Customer service
Email
Soft credit check
No
Time to get funds
As soon as the same business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
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
Loan amount
$2,000 to $50,000
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Discounts
None
Eligibility
Available in all states except DC, IA, VT, and WV
Min. income
None
Customer service
Phone, email
Soft credit check
Yes
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
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
Loan amount
$1,000 to $50,000
Fees
Origination fee
Discounts
None
Eligibility
Available nationwide
Min. income
$12,000
Customer service
Phone, email
Soft credit check
Yes
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
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)
Fees
Origination fee
Discounts
None
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
Min. income
$45,000
Customer service
Live chat
Soft credit check
Yes
Time to get funds
Typically 1-3 days
Loan uses
Debt consolidation, credit card refinancing, home improvement, major purchases
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%.
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
Loan amount
$5,000 to $100,000
Repayment terms
2 - 7 years
Fees
Option to pay an origination fee in exchange for a lower rate
Discounts
Autopay, direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Phone, email, live chat
Soft credit check
Yes
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
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)
Repayment terms
2 to 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Email
Soft credit check
Yes
Time to get funds
1 business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
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
Loan amount
$20,000 - $200,000
Repayment terms
3 - 10 years
Fees
Origination fees, late fees, other fees may apply
Discounts
None
Eligibility
Available in all states except Illinois, North Dakota, and Montana
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
Loan amount
$1,000 - $50,000
Repayment terms
3, 5, or 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Min. income
$25,000 annually
Customer service
Phone, email
Soft credit check
Yes
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
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
Loan amount
$1,500 to $20,000
Fees
Origination fee, unsuccessful payment fee, late fee
Discounts
None
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
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
Loan amount
$5,000 to $100,000
Repayment terms
2 - 20 years, depending on loan purpose
Fees
None
Discounts
Autopay
Eligibility
Available in all states except RI and VT
Min. income
Does not disclose
Customer service
Email
Soft credit check
No
Time to get funds
As soon as the same business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
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
Loan amount
$2,000 to $50,000
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Discounts
None
Eligibility
Available in all states except DC, IA, VT, and WV
Min. income
None
Customer service
Phone, email
Soft credit check
Yes
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
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
Loan amount
$1,000 to $50,000
Fees
Origination fee
Discounts
None
Eligibility
Available nationwide
Min. income
$12,000
Customer service
Phone, email
Soft credit check
Yes
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
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)
Fees
Origination fee
Discounts
None
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
Min. income
$45,000
Customer service
Live chat
Soft credit check
Yes
Time to get funds
Typically 1-3 days
Loan uses
Debt consolidation, credit card refinancing, home improvement, major purchases
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%.
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
Loan amount
$5,000 to $100,000
Repayment terms
2 - 7 years
Fees
Option to pay an origination fee in exchange for a lower rate
Discounts
Autopay, direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Phone, email, live chat
Soft credit check
Yes
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
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)
Repayment terms
2 to 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Email
Soft credit check
Yes
Time to get funds
1 business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
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
Loan amount
$20,000 - $200,000
Repayment terms
3 - 10 years
Fees
Origination fees, late fees, other fees may apply
Discounts
None
Eligibility
Available in all states except Illinois, North Dakota, and Montana
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
Loan amount
$1,000 - $50,000
Repayment terms
3, 5, or 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Min. income
$25,000 annually
Customer service
Phone, email
Soft credit check
Yes
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
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
Loan amount
$1,500 to $20,000
Fees
Origination fee, unsuccessful payment fee, late fee
Discounts
None
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
When you apply for a personal loan, the lender reviews your financial information, including your credit score and income, to determine whether you qualify and what interest rate and fees you'll pay. If you accept the loan offer, you'll receive a lump sum of cash in your bank account or can have it sent to your creditors (if paying off debt).
If the lender charges an origination fee, it is typically deducted from the initial loan proceeds. Origination fees can range from less than 1% to 12% of the loan amount, depending on the lender and the strength of your application. Personal loan amounts generally range from $1,000 to $50,000, but some lenders may offer up to $100,000 or more.
Shortly after funding, you'll begin repaying the loan in equal monthly payments over its repayment term, which is typically between one and seven years. However, terms can be much longer for certain types of personal loans - like home improvement loans. Each payment includes a portion of your principal, or the amount you borrowed, plus compensation for the lender, which is determined by your interest rate and calculated based on the principal.
Important
Lenders typically report your payment activity to the three major credit bureaus (TransUnion, Equifax, and Experian), so make your payments on time to avoid damaging your credit.
Personal loans rates are generally lower than credit card rates. According to data from the Federal Reserve, the average rate for two-year personal loans is 11.92%, compared to 21.51% for credit cards. Lenders are required to disclose a loan's annual percentage rate (APR), which reflects the total annual borrowing cost, including interest charges and upfront fees.
Personal loan APRs currently range from 6.99% to 35.99%. Loan rates are typically fixed rather than variable, which means your monthly payments will be predictable.
Few or no fees
Upfront origination fees between 0% and 12%
Many lenders charge an origination fee, a single upfront fee deducted from loan funds, between 0% and 12% of the loan amount for personal loans. Some personal loans, often including those for good-credit borrowers, don't come with an origination fee. Lenders may also charge incidental fees for late payments and insufficient funds.
Many repayment term options
One to seven years or more
Many lenders let you choose from personal loan repayment terms between one and seven years. Some loan purposes can come with much longer terms, however, such as home improvement loans up to 20 years. Choosing a longer term generally means making smaller monthly payments but paying more in interest over the life of a loan, while the opposite is generally true of shorter terms
Tip
Because of their longer terms, personal loans tend to be easier to repay than high-cost, short-term loans like payday loans. However, you may be able to get a repayment period of up to 30 years with a home equity loan or home equity line of credit.
Easy application process
Few minutes
It typically only takes a few minutes to fill out a personal loan application online. You may need to upload documents that prove your identity and income, such as a photo of your driver's license or pay stubs from your job.
Quick funding
Same day to within one week
Some personal loan lenders can disburse loan funds as soon as the same business day of approval for qualified borrowers who sign the contracts in time. In most cases, funding usually takes no longer than a week.
Many personal loan lenders prohibit borrowers from using the loan funds for college tuition, investments, or down payments on homes. Some lenders also restrict the funds to personal expenses, while others allow borrowers to start or grow a business with the money. Check your loan agreement for any specific restrictions regarding your loan funds.
Types of personal loans
Secured personal loan
With a secured personal loan, you offer the lender a valuable asset, like a home or vehicle, as a measure of protection in the event you can't repay. If you miss payments, the lender can take your property and sell it to help recover the funds.
The asset you offer, which is known as collateral, lowers the risk that the lender will lose money. Lenders tend to offer lower interest rates on secured loans as a result. It may also be easier to get approved for a secured personal loan with a low credit score.
Unsecured personal loan
Unsecured personal loans don't require collateral. The lender assesses its risk in lending to you by evaluating your financial information, like your income, debt, and payment history.
You may pay a higher interest rate on an unsecured loan relative to a secured loan and often need a higher credit score to qualify. While there's no risk of losing your property if you don't repay an unsecured loan, the lender will still report your late payments to the credit bureaus and can pursue legal action against you.
You can't afford to take on new debt because your current income doesn't cover your basic needs.
You're so overwhelmed with debt that you wouldn't be able to manage repayment even if you had more time or a reduced interest rate.
If either of the last two statements are true, find a nonprofit credit counselor through the U.S. Department of Justice's list of approved credit counseling agencies and check your eligibility for government benefits before taking on any new debt.
Personal loan requirements
Personal loan requirements vary depending on where you apply, but lenders are more likely to approve borrowers that meet the following criteria:
At least a fair credit score: Most lenders require a FICO credit score in the mid-600s or above, but some lenders specialize in bad-credit personal loans.
Stable income and lower debt-to-income ratio (DTI): Lenders want to make sure you have enough monthly income to repay the loan. They'll check your DTI, which is the portion of your monthly income spent on minimum debt payments, to make sure you're not overextended.
Good to know
If you’re applying for a secured loan, there may be additional requirements. For example, a lender that offers auto-secured loans may require you to own your car outright.
Some lenders are more flexible than others. In some cases, an excellent credit score (a FICO score of 800 or higher) can make up for a low income and vice versa. However, many lenders set minimum requirements for both income and credit score, though few disclose exact requirements to the public.
Most lenders allow you to prequalify online, which will give you an idea of whether you may qualify and what rate you'll get. However, obtaining prequalification does not constitute an offer or guarantee final approval. You can also increase your approval odds by applying with a cosigner or co-applicant who has good credit and sufficient income.
How to apply for a personal loan
Most online lenders offer a similar application process. If you're applying for a personal loan from a bank or credit union, you may be able to get assistance with the application at a local branch. Generally, you'll follow these steps:
1. Check your personal finances: View your free credit report at AnnualCreditReport.com and check for any errors, disputing them with the appropriate bureau(s) as needed. Next, look up your credit score. Many banking apps feature a credit check tool you can use to check your score, and you can also access your score from TransUnion, Equifax, Experian, or using Credible's credit monitoring tool. Finally, evaluate your budget to determine how much you can afford to spend on a monthly payment.
2. Research lenders: Look for lenders you may qualify with based on your credit score and income. To narrow down your options, compare rates, fees, terms, loan amounts, and funding times. You should also check each lender's reputation on customer review websites like Trustpilot.
3. Prequalify with multiple lenders: For each lender that offers prequalification, check your estimated rate on the lender's website by entering some personal information, such as the last four digits of your Social Security number. You can also use a loan comparison site to view multiple offers in one place. The process only takes a few minutes, and it won't hurt your credit, but proceeding to apply for a loan authorizes a hard credit check that can ding your score temporarily.
4. Choose a quote: Narrow down your prequalification quotes to the ones with affordable monthly payments - you want to make sure you can afford payments for the full term - then choose the option with the lowest total borrowing cost. You can use a personal loan calculator to help you compare costs.
5. Formally apply:Proceed with the loan application for the lender of your choice. This will require a hard credit inquiry, which will likely cause a slight dip in your score. You may need to answer additional questions or upload documents to complete the application.
6. Sign your loan documents: Review your loan agreement, which may differ from your prequalification quote. If you're happy with the final rate and you understand the terms, sign your loan documents to start the funds transfer. You can also contact a customer service representative if you have questions.
FAQ
Where can I get a personal loan?
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You can get a personal loan from a bank, credit union, or online lender. Banks may offer in-person customer service and convenience for existing account holders, but they might also have more stringent eligibility requirements and charge higher interest rates than credit unions. Borrowers with fair credit may have more luck with a local credit union or online lender. Online lenders tend to offer the fastest funding timeline.
What credit score do you need for a personal loan?
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Most personal loan lenders require at least fair credit (a FICO score above 580). Some online lenders, like Upstart, welcome borrowers with poor credit (a FICO score below 580). But approval always depends on other factors, like your income and other debts, as well.
Some lenders offer loan amounts up to $100,000, and BHG Financial offers personal loans up to $200,000 for qualified borrowers. However, most lenders cap loan amounts at $50,000, and your income, credit score, and existing debts will impact the loan amount you qualify for.
Some lenders can fund personal loans as soon as the same business day you sign your loan agreement, while others may take one to three business days. In most cases, you'll get the money within a week of approval.
If you're denied a personal loan, review the reason for denial and try to address the problem. If you were denied for financial reasons, you may need to improve your credit or apply with a co-applicant or cosigner. You should also try prequalifying with other lenders, which may give you different odds of approval.
