Please ensure Javascript is enabled for purposes of website accessibility

This device is too small

If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.

Skip to main content

Best Personal Loans of September 2023

Review Updated
Dana George
Robin Hartill, CFP
By: Dana George and Robin Hartill, CFP

Our Loans Experts

Nathan Alderman
Check IconFact Checked Nathan Alderman
Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Personal loans represent an agreement between a borrower and lender. Once a loan application has been accepted, the lender makes a lump sum payment to the borrower, and the borrower pays the loan back in monthly installments.

Personal loans are best for those who have planned how they will spend the money and how it will be repaid. Listed below are the best personal loans for borrowers of all kinds, from those with poor credit scores to excellent credit scores.

Jump to: Take a closer look into each of the best loans

Best Personal Loans: Quick Picks

Here's a quick list of our top personal loans:

  • Our expert overall pick for the best personal loan: SoFi Personal Loans. We like it because loans are available for up to $100,000, making it ideal for large home improvement projects.
  • Best personal loan for debt consolidation: Citi? Personal Loan. With the highest interest rate coming in under 20%, it represents a good way to get rid of high-interest debt.
  • Best personal loan for emergency situations: Upstart. Very few lenders offer loans as small as $1,000.

Compare the best personal loan rates of September 2023

As of Sep. 19, 2023
Lending Partner Min. Credit Score Loan Amounts Apr Range Next Steps
Award Icon 2023 Award Winner
SoFi Personal Loans
Rating image, 5.0 out of 5 stars.


Min. Credit Score: 680 Loan Amounts: $5,000 - $100,000 APR Range: Fixed: 8.99%-25.81% APR (with all discounts)
Citi? Personal Loan
Rating image, 4.5 out of 5 stars.


Min. Credit Score: Good Credit Loan Amounts: $2,000 - $30,000 APR Range: 11.49% to 19.49%
Rating image, 4.0 out of 5 stars.


Min. Credit Score: None Loan Amounts: $1,000 - $50,000 APR Range: 5.20% - 35.99%
Award Icon 2023 Award Winner
Rating image, 4.0 out of 5 stars.


Min. Credit Score: Good credit Loan Amounts: $5,000 - $100,000 APR Range: 7.99%-25.49% (w/ AutoPay)*
Happy Money
Rating image, 4.5 out of 5 stars.


Min. Credit Score: 640 Loan Amounts: $5,000 - $40,000 APR Range: 11.52% - 24.81%
Rating image, 4.5 out of 5 stars.


Min. Credit Score: 580 Loan Amounts: $2,000 - $35,000 APR Range: 9.95% - 35.99%
Rating image, 4.5 out of 5 stars.


Min. Credit Score: 620 Loan Amounts: $5,000 - $50,000 APR Range: 7.99% - 35.99%
Best Egg
Rating image, 4.0 out of 5 stars.


Min. Credit Score: 550 Loan Amounts: $2,000 - $50,000 APR Range: 8.99% - 35.99%
Discover Personal Loan
Rating image, 5.0 out of 5 stars.


Min. Credit Score: 660 Loan Amounts: $2,500 - $40,000 APR Range: 7.99% - 24.99%

Rates quoted are with AutoPay. Your loan terms are not guaranteed and may vary based on loan purpose, length of loan, loan amount, credit history and payment method (AutoPay or Invoice). AutoPay discount is only available when selected prior to loan funding. Rates without AutoPay are 0.50% points higher. To obtain a loan, you must complete an application on which may affect your credit score. You may be required to verify income, identity and other stated application information. Payment example: Monthly payments for a $10,000 loan at 8.49% APR with a term of 5 years would result in 60 monthly payments of $205.12. ?Some additional conditions and limitations apply. Advertised rates and terms are subject to change without notice. Truist Bank is an Equal Housing Lender. ? 2023 Truist Financial Corporation. Truist, LightStream, and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

Citi Personal Loans Disclaimer:

**Rates as of 09-01-2023 . Your APR may be as low as 11.49% or as high as 19.49% for the term of your loan. The lowest rate quoted assumes excellent credit, and a loan term of 36 months or shorter. Otherwise, a higher rate will apply. For example, if you borrow $10,000 for 36 months at 15.99% APR, to repay your loan you will have to make 36 monthly payments of approximately $351.52.

There is a 0.5% APR discount if you enroll in automatic payments at loan origination. Additionally, existing Citigold and Citi Priority customers will receive a 0.25% discount to the interest rate. If you are in default, your APR may increase by 2.00%. No down payment is required. Rates subject to change without notice.

You must be at least 18 years of age (21 years of age in Puerto Rico). Co-applicants are not permitted. Loan proceeds cannot be used for post-secondary educational or business purposes.

If you apply online, you must agree to receive the loan note and all other account disclosures provided at loan origination in an electronic format and provide your signature electronically.

Credit cards issued by Citibank, N.A. or its affiliates, as well as Checking Plus and Ready Credit accounts, are not eligible for debt consolidation, and Citibank will not issue payoff checks for these accounts. If you are unsure of the issuer on the account, please visit for a list of Citi products and affiliates.

*Upstart Loan Disclaimer

The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.

*SoFi Personal Loan Disclaimer

Fixed?rates?from 8.99% APR to 25.81% APR reflect the 0.25% autopay interest?rate?discount and a 0.25% direct deposit interest?rate?discount. SoFi?rate?ranges are current as of 05/19/23 and are subject to change without notice. Not all applicants qualify for the lowest?rate. Lowest?rates?reserved for the most creditworthy borrowers. Your actual?rate?will be within the range of?rates?listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors.

Loan?amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly?rate?and reflects both your interest?rate?and an origination fee of 0%-6%, which will be deducted from any?loan?proceeds you receive.

Autopay: The SoFi 0.25% autopay interest?rate?reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.?Autopay is not required to receive a?loan?from SoFi.

The following payment example depicts the APR, monthly payment and total payments made during the life of a personal loan with a single disbursement. All loan rates below are shown with the autopay discount (0.25%) and direct deposit discount (0.25%). The monthly payment for a?$30,000?loan with a 60-month term and a fixed?annual percentage rate (APR) between 12.95% – 25.03%?would be?$681.82 – $881.07?in monthly payments, with total payments between?$40,909.47? – $52,864.05. Your actual interest rate may be different than the loan interest rates in these examples and will be based on term of loan, your financial history, and other factors, including your cosigner’s (if any) financial history. Lowest rates reserved for the most creditworthy borrowers. See details.

Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest?rate?reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your?Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account.?You are not required to enroll in direct deposits to receive a?Loan.

Best For: High income borrowers wanting low APR

Award Icon 2023 Award Winner
Logo for SoFi Personal Loans
Rating image, 5.0 out of 5 stars.
Minimum Credit Score
Loan Amounts
$5,000 - $100,000
APR Range
Fixed: 8.99%-25.81% APR (with all discounts)
Term Length
24 - 84 months

SoFi makes our list of best personal loans companies because of its well-known consumer-centric approach. It doesn't require fees, loan limits are high, and rates are low. You can also get a rate discount for setting up automatic payments.

  • Competitive interest rates
  • No fees or prepayment penalty
  • High maximum loan limit
  • Paused payments for unemployment
  • Same-day funding available
  • High minimum loan amount
  • High minimum credit score
  • No in-person support

Best for: Debt consolidation

Logo for Citi? Personal Loan
Rating image, 4.5 out of 5 stars.
Minimum Credit Score
Good Credit
Loan Amounts
$2,000 - $30,000
APR Range
11.49% to 19.49%
Term Length
12 - 60 months

Citi's personal loans are a great option for anyone hoping to consolidate high-interest debt. The company has been around since 1812.

  • Low loan amounts available
  • Relatively low interest rate (on the low end of the range)
  • No origination or prepayment fees
  • Good for debt consolidation
  • Long repayment term
  • Funds sent by mail can take five business days or more to arrive

Best For: Reducing high interest debt

Logo for Upstart
Rating image, 4.0 out of 5 stars.
Minimum Credit Score
Loan Amounts
$1,000 - $50,000
APR Range
5.20% - 35.99%
Term Length
36 or 60 months

We selected Upstart as a best personal loans lender because it can accommodate a wide range of borrowers with different needs. Upstart offers flexible lending guidelines, small loans, and low rates to qualified applicants. Loans can be funded in one day.

  • Accepts borrowers with low credit scores
  • Wide range of loan amounts
  • No prepayment penalty
  • Payment grace period
  • High upper-range interest rate
  • High origination fees
  • No cosigner allowed

Best For: Low APR with fast funding

Award Icon 2023 Award Winner


Logo for LightStream
Rating image, 4.0 out of 5 stars.
Minimum Credit Score
Good credit
Loan Amounts
$5,000 - $100,000
APR Range
7.99%-25.49% (w/ AutoPay)*
Term Length
24-144 months (varies by loan purpose)

We selected LightStream as a best personal loans lender because it offers high loan limits, no fees, low interest rates, a large autopay discount, and fast funding (sometimes same day). It prioritizes customer service and even pays unhappy customers for their feedback.

  • Competitive APRs
  • No fees or prepayment penalty
  • Same-day funding available
  • High maximum loan amount
  • Better APRs available
  • No pre-approval for personal loans

Best For: Paying off high-interest credit card debt

Happy Money

Logo for Happy Money
Rating image, 4.5 out of 5 stars.
Minimum Credit Score
Loan Amounts
$5,000 - $40,000
APR Range
11.52% - 24.81%
Term Length
24 - 60 months

We chose Happy Money as a best personal loans lender because we love its focus on paying off high-interest debt. Well-qualified applicants can get a very low rate. Happy Money discloses clearly what it wants in an applicant, so you'll know before you apply if it's a good fit.

  • Flexible payoff options
  • Designed to help boost your FICO? score
  • Customer service member advocates offer personal support
  • No application, early or extra payment fees, late fees, or check processing and returned check fees
  • May charge origination fees up to 5%
  • No autopay discounts
  • Funding slower than competitors

Best For: Low credit scores

Logo for Avant
Rating image, 4.5 out of 5 stars.
Minimum Credit Score
Loan Amounts
$2,000 - $35,000
APR Range
9.95% - 35.99%
Term Length
12-60 months

Avant makes the cut as one of the best personal loan lenders because this lender can accommodate borrowers who might not qualify somewhere else. The credit score requirements are lower than what other best personal loan companies require. Loans start at $2,000.

  • Lower credit score requirements
  • Relatively low minimum loan amounts
  • Fast funding
  • No prepayment penalties
  • Higher APRs
  • Administration fee of up to 4.75%

Best For: Borrowers who want to use a cosigner

Logo for Achieve
Rating image, 4.5 out of 5 stars.
Minimum Credit Score
Loan Amounts
$5,000 - $50,000
APR Range
7.99% - 35.99%
Term Length
24 - 60 months

Achieve is one of the best personal loan lenders because rates are low, especially for borrowers who use the money to pay off other debt. You can also use a cosigner if you need to. Loans can fund in a day.

  • Competitive interest rates
  • Allow borrowers with poor credit to get approved
  • No prepayment fee
  • Significant variation in origination fees
  • Isn't available in all states
  • High minimum loan amount

Best For: Consolidating high interest debt

Best Egg

Logo for Best Egg
Rating image, 4.0 out of 5 stars.
Minimum Credit Score
Loan Amounts
$2,000 - $50,000
APR Range
8.99% - 35.99%
Term Length
36 - 60 months

We chose Best Egg as a best personal loan lender because well-qualified applicants can get a very low interest rate here on loans up to $50,000. Most loans fund within a day. Also, borrowers get free access to their credit score and tips for improving it.

  • Low minimum loan amount (in most states)
  • Easy application process
  • Funds disbursed in as little as one day
  • Origination fees
  • No joint applications accepted

Best For: No origination or prepayment fees

Discover Personal Loan

Logo for Discover Personal Loan
Rating image, 5.0 out of 5 stars.
Minimum Credit Score
Loan Amounts
$2,500 - $40,000
APR Range
7.99% - 24.99%
Term Length
36 - 84 months

We chose Discover as a best personal loan lender because of its overall customer-friendly approach. There is no origination fee (other lenders can charge up to 8% of your loan amount). You get free access to your FICO? Score, which is nice if you're working to monitor or improve your credit.

  • Competitive APRs
  • No origination or prepayment fees
  • Debt consolidation support
  • Long repayment term

No cosigners accepted

  • I have been writing for The Ascent since 2019, but have covered business and finance since 1999. As a finance expert, I have developed a deep understanding of the intricacies of personal loans -- the good and not-so-good. I believe everyone deserves access to fair and transparent financial products and strive to provide readers with the accurate information they need to make an informed choice.

    -Dana George, writer for The Ascent, a Motley Fool service

Take a deeper dive into our personal loan reviews

Citi Personal Loan Review

Citi offers loans as small as $2,000, making it a convenient option for a borrower who only needs enough to get by and does not want to carry the debt for long. With a narrow range of interest rates, borrowers don't have to worry about being hit with a sky-high rate. However, with a loan term of up to 60 months, this could be an ideal loan for a person looking to consolidate existing debt.

Citi personal loan requirements

  • Credit score of 750 or more
  • Minimum annual income of $30,000
  • Age 18 or older (21 or older in Puerto Rico)
  • Social Security number
  • Verifiable bank account
  • U.S. citizen or permanent resident
What makes Citi personal loans different?

Citi stands out from the crowd by capping its current interest rates at under 20%.

SoFi Loan Review

SoFi offers loans from $5,000 - $100,000, with terms from 24 - 84 months. The lender offers flexible repayment options and unemployment protection. Once the borrower signs the loan papers, the payment can hit their bank account as early as the next day. SoFi is a particularly good option for borrowers who want to use the funds to pay off high-interest credit cards. In fact, SoFi will pay the credit card issuers directly, then reward the borrower with a rate discount for allowing direct pay. The minimum credit score required is 680.

SoFi personal loan requirements

  • Have a credit score of at least 680
  • Be 18 years of age or older
  • Be employed or provide evidence of imminent employment
  • If not employed, have a reliable source of income
  • Be a U.S. citizen, permanent resident, or non-permanent resident
What makes SoFi personal loans different?

SoFi is one of a handful of lenders that will pay off high-interest credit cards directly on behalf of the customer.

Upstart Personal Loan Review

Upstart provides personal loans to borrowers with credit scores as low as 300 in most states, and it's one of the few lenders that will consider a score that low. Loans of $1,000 - $50,000 are available, although Upstart does tack on an origination fee of 0% - 12%. Borrowers can choose terms of 36 or 60 months, and may receive their money one business day after signing.

Upstart lending requirements

  • Be 18 years of age or older
  • Have a valid Social Security number
  • Have an active bank account
  • Have an annual income of at least $12,000
  • Be a U.S. citizen or permanent resident
  • Not be a resident of Iowa or West Virginia
What makes Upstart lending different?

Without a doubt, the thing that sets Upstart apart from its competitors is its willingness to entertain loan applications with credit scores as low as 300.

Lightstream Loan Review

LightStream personal loans are available from $5,000 - $100,000, with no origination fees or prepayment penalties. Applicants need a score of Good credit or greater, but LightStream does allow co-applicants. Loan terms range from 24-144 months (varies by loan purpose). If an applicant has been approved for a personal loan with the same terms by another lender, LightStream will beat that lender's rate by 0.1%.

Lightstream lending requirements

  • Have a valid Social Security number
  • Have a clear plan for what you want to do with the borrowed funds
  • Be able to provide evidence of any available assets
What makes LightStream loans different?

The LightStream loan is far less expensive to get into than most loans. That's because there are no origination fees. Another thing that sets LightStream apart is that it allows you to bring a co-applicant who may have a higher credit score or more substantial credit history.

Happy Money Loan Review

Happy Money is designed for those who want to pay off high-interest credit cards. What sets Happy Money apart is the focus it puts on those who hope to build their credit scores and learn more about their own financial behavior. The lender offers a free six-week email course called "Peace," intended to help customers deal with financial stress in a positive way. Loans are available from $5,000 - $40,000 in all states except Massachusetts and Nevada, and come with terms of 24 - 60 months. There is an origination fee ranging from 0% - 5%.

Happy Money loan requirements

  • Be 18 years of age or older
  • Have a valid Social Security number
  • Have an active checking account
  • Not live in Massachusetts or Nevada
  • Have a credit score of 640 or higher
  • Have no current account delinquencies
What makes Happy Money Unique?

Happy Money is unique among lenders due to programs like Peace, as well as a personality and stress assessment. Rather than simply loan money, Happy Money seeks to educate borrowers and leave them with greater financial confidence. However, Happy Money's current lowest rate is higher than that of many other lenders.

Avant Lending Review

Avant accepts applicants with credit scores as low as 580, significantly lower than the national average. That's the good news. The not-so-good news is that applicants may pay a high interest rate and a loan origination fee of 0% - 4.75%. Plus, Avant charges a late fee of $25 and a returned check fee of $15.

Avant lending requirements

  • Have a monthly income of at least $1,200 (can include alimony, child support, or other maintenance)
  • Have a credit history that includes at least one account
  • Be able to apply on their own (no joint applications or co-signers are accepted)
  • Live in any state except for Hawaii, Iowa, Maine, New York, Vermont, or West Virginia
What makes Avant lending different?

Avant is one of the few credible lenders willing to loan money to those with poor credit scores. Loan amounts range from $2,000 - $35,000, making it possible to borrow a relatively small amount of money and pay it back quickly.

Achieve Personal Loan Review

Formerly known as FreedomPlus, Achieve requires applicants to have a minimum credit score of 620. Customers can borrow between $5,000 - $50,000. Terms stretch from 24 - 60 months. Borrowers can also count on paying an origination fee of 0% - 4.99%. The low end of the interest rate is not out of line with other lenders, particularly for borrowers with good rather than excellent credit.

Achieve loan requirements

  • Must be 18 years of age or older in most states; must be at least 19 in Alabama or Nebraska
  • Must be a U.S. citizen or permanent resident
  • Must have a Social Security number
  • Must provide proof of income
  • Must have a verified bank account
What makes Achieve loans different?

Achieve gives applicants with a fair credit score another option to consider. The rates are not the lowest and the fees can be costly, but it's an option that may allow a person to cover the cost of replacing their transmission or repairing tree damage.

Best Egg Loan Review

Best Egg borrowers can apply for $2,000 to $50,000. However, the loan will not be cheap. In addition, the only applicants offered the lowest rate must have a FICO? Score of at least 700 and earn a minimum of $100,000 annually. The high end of the rate will be prohibitively expensive for many borrowers. Best Egg also charges an origination fee of 0.99% - 8.99%, another factor that can make its loans expensive. Loan terms range from 36 - 60 months.

Best Egg lending requirements

  • Must have a minimum credit score of 550
  • Proof of income is required
  • Must have a U.S. address
  • Must have a valid Social Security number
  • Debt-to-income (DTI) ratio (including mortgage) must be 65% or less
  • Must live in any U.S. state except: Iowa, Vermont, West Virginia, or U.S. territories
What makes Best Egg personal loans different?

One bright spot for Best Egg is the fact that loan proceeds are often in the borrower's bank account as soon as the following day. Not all lenders can say the same.

Discover Personal Loan Review

The Discover Personal Loan is available in all 50 states plus Puerto Rico. Loan amounts range from $2,500 - $40,000. While $40,000 may not be enough to complete a remodeling project, it should be more than enough to cover a 50th-anniversary party, wedding, or emergency situation. Discover charges no origination fee, saving borrowers money upfront. Currently, terms range from 36 - 84 months.

Discover loan lending requirements

  • Minimum credit score of 660 is required
  • Applicant must earn at least $25,000 annually
  • Must be 18 years of age or older
  • Must be a U.S. citizen or permanent resident
What makes Discover personal loans different?

One thing that sets the Discover Personal Loan apart is its 30-day guarantee. If a borrower experiences a change in circumstances or even a change in heart, they have up to 30 days to refund the loan in full without paying any interest.

What to look for with the best personal loans

Listen as Matt Frankel, CFP? explains how to choose the right personal loan and why it could be a better borrowing option than other types of financing.

The lower the interest rate, the more money you save in paying back the loan. A great loan is one carrying a low interest rate. The interest on a loan is calculated as a percent of the total you borrow.

Look for your personal loan term sweet spot, the shortest term with the most affordable payment. The best loans fit your budget and timeline. The "loan term" is the period of time you have to repay a loan in full. Some people opt for a longer loan term because it keeps their monthly payments low. However, the longer you carry a loan, the more interest you pay in total.

The best personal loan lenders don't charge an origination fee. Other expenses -- like prepayment and late fees -- are kept to a minimum. Another key trait of a great personal loan is that it has no fees or very low fees. Fees can be sneaky. Say a lender offers you a low interest personal loan, but piles on fees. That loan may end up costing more than a loan with a slightly higher interest rate but no fees.

How to get the best personal loan rates

To get the best rates from loan companies, follow these three steps:

  1. Maintain a high credit score. A FICO? Score of at least 720 is normally enough to qualify for the lowest personal loan interest rates.
  2. Get a cosigner. If your credit score is not high enough to qualify for a good interest rate, a personal loan cosigner with an excellent credit score can help you get a better interest rate.
  3. Shop around for the best rate. Consider looking at traditional banks, credit unions, or even online personal loans. Do your research to find a lender that is offering the best personal loan rates. Many have an online prequalification tool that will give you a rate without hurting your credit score. In some cases, lenders will offer promotions and limited-time discounts.

When is a personal loan the best option?

If you know how you're going to spend the money and have a plan to repay it, a personal loan can be a good tool for accomplishing your goals. Most lenders don't care how you spend the money, as long as you pay it back as promised.

If you need the money quickly, make sure to check the lender's approval and funding timeline. Many lenders offer next day funding, and some even offer funding as quickly as the same day you're approved. The best loans like these can help you overcome financial roadblocks, even when you need cash fast.

Do interest rates matter?

Let's compare personal loan rates. Say you need to borrow $20,000 to replace the roof of your house, and you plan to get a loan with a five-year term. You're considering two options: Lender A and Lender B. Below, we've summarized these two imaginary lenders and how their interest rates would impact the cost of your loan.

Even a small percentage change can result in significant savings. It's clear that the lender offering the lower interest rate can save you money over the life of the loan. These are funds you can use in some other way, like investing for your future.

Lender A

  • Interest rate: 5.5%
  • Monthly payment: $382
  • Total interest paid over the life of the loan: $2,921

Lender B

  • Interest rate: 6.9%
  • Monthly payment: $395
  • Total interest paid over the life of the loan: $3,705

You may only pay an extra $13 per month for a loan from Lender B, but that small difference costs you $780 more over the life of the loan. For help finding low interest personal loans, check out our guide to good interest rates for personal loans.

What if I have bad credit?

You will likely pay a higher interest rate for a personal loan. If this is your situation, you have two options: You can take steps to raise your score and wait until it's in better shape before applying for a loan. The second option is to get a loan now, then refinance your personal loan later (when your credit score is higher and you can get a better rate).

What should personal loans be used for?

While personal loans can be used for anything, the key is to use them to improve your financial well-being. Here are some of the best reasons to get a personal loan:

  • Debt consolidation: Credit cards generally have higher interest rates. A personal loan can be used to consolidate your higher-interest debt to a lower-interest loan.
  • Home renovations: Certain home renovations can increase the value of your home. If you have equity in your home, a home equity line of credit (HELOC) may be a better financing option.
  • Career advancement: Paying for professional certifications, education, and training can boost your career prospects and opportunities for promotion or a higher-paying job.
  • Unexpected expenses: People should have an emergency savings account that has three to six months of expenses. If you don't, a personal loan can help cover a family emergency or help you recover from unexpected and expensive inconveniences.

What should personal loans not be used for?

Personal loans have higher interest rates than secured loans and if not used properly, can just increase your debt payments. It may be better to cut expenses or find additional ways to increase your income rather than take out a personal loan. Here are some expenses you should not use a personal loan for.

  • Extravagant vacations: A short-term trip can lead to long-term consequences. A personal loan should not be used to fund an elaborate vacation if the loan can't be paid back.
  • Celebrations (weddings/birthdays/graduations): If you can't afford to pay the loan back, you shouldn't get a personal loan for events that only last a day. Celebrations generally are planned in advance, so it is better to save up for it.
  • Extra spending money: Taking out a personal loan to raise your standard of living is not a good idea. You should avoid a lifestyle your current finances can't support.

How to get a personal loan

No matter where you apply to get a personal loan -- a bank, credit union, or an online personal loan lender -- the application process is the same.

Here are the steps to take.

Gather documents

No matter where you apply, the lender is likely to ask for the same documents. Getting them together before you apply can streamline the process and save you a great deal of stress. Here's what you need:

  • Proof of identification
  • Proof of address
  • List of monthly expenses
  • Evidence of how much your collateral is worth (if you're applying for a secured personal loan)

Whether it's a secured personal loan or an unsecured personal loan, the lender may ask about the purpose for the funds. Some personal loans are designated for specific purposes, like those to help consolidate existing debt, but those loan types are relatively uncommon.

Shop lenders

Take the time to shop for the best lender. Lenders make loan decisions based on a "soft" credit check, which has no impact on your credit score. This soft credit check gives the personal loan lender a sense of your credit history, including credit card debt and other debt (like an outstanding installment loan). If your credit score is not quite perfect, look for lenders that specialize in personal loans for fair credit or personal loans for bad credit.

Don't leave any gaps -- fill out the entire loan application and provide the lender with all documents requested. If you do this, it should not take long to hear whether your loan has been approved. Some of the best lenders let you know within minutes if your application has been approved.

Prequalifying for a personal loan

Personal loan prequalification or pre-approval allows you to get a sense of what loan terms are available. Most prequalification processes use a soft credit check, which doesn't impact your credit score. If you qualify, lenders will let you know how much you can borrow, the interest rate you will be charged, and how long you'll have to repay the loan. You can use this information to compare personal loans. If you do not qualify, you can learn what you need to do to improve your odds of getting a personal loan.

Compare loan offers

Compare loans of the same type side by side. If you have applied for unsecured loans, compare them only to other unsecured loan offers. And if you've applied for secured loans, compare them only to other secured loan offers.

Here's what to look for:

  • The lowest annual percentage rate
  • A repayment term that fits your budget
  • Loan amounts that match your borrowing needs
  • Lowest loan fees (ideally, you'll find a loan with no origination fee or prepayment penalty)
  • Perks like loan deferment when you're unemployed

Commit to a lender

A lender does not run a "hard" credit check until you let them know you want to proceed with a loan. So if you applied with five banks, only the bank you choose to work with runs a hard credit check.

A hard credit check is a deeper dive into your credit history, and it helps the personal loan provider make sure a borrower meets its minimum credit score requirement and has paid bills on time. Although the hard credit check may decrease your credit score, it's typically by less than five points. After a few months of regular payments, your score should rebound to its pre-loan level.

Note: If a low credit score means you don't receive a loan offer that works for you, consider taking time to improve your credit score. Boosting your score can only help you in the long run. Small changes like reducing your credit utilization, paying bills on time, and only applying for credit when needed can help raise your FICO? Score.

Sign loan documents

Whether you're working with an online lender or a brick-and-mortar financial institution, most lenders allow you to sign documents electronically. Read through the documents thoroughly before signing. Once you've signed, you're legally committed to whatever is written inside the four corners of the contract.

Wait for loan funding

Funds usually hit your bank account one to 14 days from the time of loan approval. If you need the money quickly, ask lenders about their fund distribution times as you shop for the loan. If you can't wait, make sure to work only with a lender that promises a quick distribution of funds.

What happens if your personal loan application is not approved?

If your personal loan request is denied, the first step is to find out the reason. Typically, you will be denied if your credit score does not meet the minimum qualifications.

You may have negative items on your credit report, not enough credit history, or high credit card balances. Another reason may be that your income doesn't meet the minimum requirements or your debt-to-income ratio is too high. There are other factors that could impact loan approval, such as your employment history, cash flow history, and available assets.

If you are denied, work on improving your credit history and credit score. Making on-time payments makes up the biggest piece of your credit score. Keep your credit card balances and utilization low. Pay down your credit card debt and ask your credit card company to raise your limits to help with your utilization.

Avoiding too many hard inquiries can also improve your credit. After you have increased your credit score, you will be in a better position to qualify for a personal loan.

What are the alternatives to personal loans?

Personal loans are not for everyone. Depending on your circumstances -- for example, if you need money to fund a project or pay an unexpected expense -- you may want to look at other options.

Here are two alternatives to personal loans.

Credit cards

A credit card can provide fast cash in an urgent situation. If you qualify for a 0% APR credit card, you have time (typically 12 to 18 months) to pay off the debt with no interest.

Only use a credit card with a 0% transfer offer if you're confident you can pay it off in full before the promotional rate expires. At the end of the promotional period, the interest rate shoots up to its standard rate, and you could get stuck trying to pay down debt as high interest piles on top.

Secured line of credit

A secured line of credit can help you snag the best rates for personal loans. When you take out a secured line of credit or secured personal loan, you typically pay a lower interest rate because you put up something of value as collateral. This may be anything of value, such as a car, home, boat, or jewelry.

A line of credit offers greater flexibility. You can borrow up to your credit limit, depending on what you need, and you only pay interest on the amount you borrow.

Online personal loan companies rarely offer secured lines of credit, so if that's the route you choose, plan on working with a brick-and-mortar bank or credit union.

How to pay off your personal loan

Since personal loans typically have higher interest rates, you want to pay them off as fast as you can. You will pay less interest and have more peace of mind if you don't have potentially tens of thousands of dollars to pay back. Here are some simple tips to help you pay back your personal loan faster without breaking the bank. Make sure you check with your lender to see if there are any penalties for paying off your personal loan early.

  1. Make bi-weekly payments. Most loans require you to make monthly payments. Instead, make a half-payment every two weeks. By doing this, your payments will be applied to the principal more often, so you end up paying less interest over time. Also, by making payments on your personal loan every two weeks, you will be making 26 total payments per year. This translates to one whole extra payment a year. This can shorten your loan payoff by months and in some cases years.
  2. Make an extra payment. If your lender will not allow you to split your loan payments, make an extra payment every year. Use a bonus, tax refund, or additional income for the extra payment. If the amount is too much to pay it at once, divide it by 12 and add it to your monthly payment to spread it out over time. The more money you are able to pay toward the loan, the faster you can pay it off. Consider getting a side hustle, selling things you don't need, or cutting your expenses to put extra money toward the loan.
  3. Round up your monthly payment. Round up your loan to the nearest $50 dollars. For example, if your loan payment is $230, round up to $250. For an even bigger impact, you could round up to the nearest $100. In this case, it would be $300. The extra amount may be small enough to not impact your budget, but it would help you pay down your personal loan sooner.
  4. Refinance your loan. If you have a high interest rate on your loan, look to refinance to get a better rate. Your credit score may have improved since you got the loan. Shop around to find the best rates.

Other personal loans to compare

If you look through our loan suggestions but don't find a loan that fits your needs, don't worry. No loan fits every borrower or every set of circumstances. Here are a few others to consider:

Taking out a personal loan is a big deal. You're committing to years of working with a specific financial institution and taking on new debt. Take your time to decide if you can comfortably afford a personal loan. If you decide you can, take time to find the loan that's just right for you.


  • While the loan term may run anywhere from one to 10 years, a term of three to five years is more common. That said, if you opt for a personal loan with no prepayment penalty, you can pay it off before the term ends. Doing so minimizes the amount you pay in interest.

  • Personal loans normally carry a lower interest rate than credit cards do, and in that way, personal loans are a better option. Another advantage of personal loans is that, unlike credit cards, they don't affect your credit utilization ratio, which you want to be as low as possible. That's why taking out a personal loan to pay off credit card debt often helps your credit score. But personal loans and credit cards both represent debt, and the best financial move is to pay either off as quickly as possible.

  • There is no limit on how many loans you can have from different loan lenders. Some lenders may limit the number of personal loans you can have. Loan companies will consider your debt-to-income ratio, credit score, as well as other factors when determining how many loans you can take out or how much you qualify for. If you have too many loans, then it can impact your credit score, making it more difficult to qualify for new credit or a better rate.

  • Unsecured personal loan rates generally have higher interest rates than secured loans do. The lender requires nothing more than good credit and your written promise to repay the loan as agreed. Compared to a mortgage or auto loan, personal loan lenders take more risk since there is no collateral to back up the loan in case of a default.

  • Personal loans have a fixed interest rate based on the creditworthiness of the individual applying for the loan. The higher your credit score, the lower you can expect the lender's interest rate to be. Even if your credit score is not as high as you would like, you may still qualify for a personal loan with bad credit. However, you'll likely pay a higher interest rate than other borrowers.

Our Loans Experts