Best Personal Loans of June 2023

A personal loan can serve a variety of purposes, from emergency bills to debt consolidation to home improvement

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When you need to borrow money for a big expense, a personal loan is generally the best way to go. It’s way cheaper than a credit card, and you can use it for almost anything: consolidating high-interest debt from credit cards, paying for home repairs and upgrades, or even things like vacations and weddings (although most financial experts recommend only borrowing money for needs, not wants).

To help narrow your search down, here are our top recommendations for the best personal loans for different situations, including offers from our partners. In creating our rankings, we evaluated 38 lenders across 40 different loan, lender, and customer service criteria. These criteria included costs, loan terms, eligibility, and additional features such as pre-approval policies

Best Personal Loans of June 2023

If youre not seeing anything in the results that are a good fit for your needs, consider warranties from these companies:
Company APR Credit Score est. Loan Amount More Details
Best for Younger Borrowers
APR With Autopay Discount
8.99% - 25.81%
Recommended Minimum Credit Score
Not Disclosed
This lender does not disclose its minimum credit score requirements.
Loan Amount
$5,000 - $100,000
See Details Check Rates
Best With a Co-Borrower
PenFed Credit Union
APR Range
7.74% - 17.99%
Recommended Minimum Credit Score
Not Disclosed
This lender does not disclose its minimum credit score requirements.
Loan Amount
$600 - $50,000
See Details Check Rates
Best for Small Loans and Bad Credit
APR With Autopay Discount
8.49% - 35.99%
Recommended Minimum Credit Score
This lender does not disclose its minimum credit score requirements.
Loan Amount
$1,000 - $50,000
See Details Check Rates
Best Big Bank
U.S. Bank
APR With Autopay Discount
8.74% - 21.24%
Recommended Minimum Credit Score
This lender does not disclose its minimum credit score requirements.
Loan Amount
$1,000 - $50,000
See Details Check Rates
Best for Excellent Credit
APR With Autopay Discount
7.99% - 29.99%
Recommended Minimum Credit Score
Not Disclosed
This lender does not disclose its minimum credit score requirements.
Loan Amount
$2,000 - $50,000
See Details Check Rates
Best for Debt Consolidation
APR Range
6.99% - 24.99%
Recommended Minimum Credit Score
This lender does not disclose its minimum credit score requirements.
Loan Amount
$2,500 - $40,000
See Details Check Rates
Best for Fair Credit
First Tech Federal Credit Union
APR Range
8.99% - 18.00%
Recommended Minimum Credit Score
This lender does not disclose its minimum credit score requirements.
Loan Amount
$500 - $50,000
See Details Check Rates
Best for Emergency/Quick Funding
Rocket Loans
APR With Autopay Discount
9.12% - 29.99%
Recommended Minimum Credit Score
Not Disclosed
This lender does not disclose its minimum credit score requirements.
Loan Amount
$2,000 - $45,000
See Details Check Rates
Best for Military Service Members
Navy Federal Credit Union
APR Range
7.49% - 18.00%
Recommended Minimum Credit Score
Not Disclosed
This lender does not disclose its minimum credit score requirements.
Loan Amount
$250 - $50,000
See Details Check Rates
Filter (9)
Why Trust Us
Lenders reviewed
Loan features considered
Data points analyzed
Primary data sources used
Investopedia collected key data points from several lenders to identify the most important factors to borrowers. We used this data to review each lender for fees, accessibility, repayment terms, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right borrowing decision for their needs.

Best for Younger Borrowers : SoFi

  • APR Range: 8.99% - 25.81%
  • Loan Amount: $5,000 - $100,000
  • Loan Terms: 24 months - 84 months
Pros & Cons
  • Zero fees

  • Same-day funding

  • Unemployment protection

  • Small loan amounts not available

  • Rates a touch higher than other lenders

  • Doesn’t allow co-signers, only co-borrowers

Why We Chose It

SoFi offers excellent loan rates, even if they’re not the absolute lowest. A more important feature in its favor, however, is its unemployment protection. If you lose your job, SoFi will work with you to put your loan into forbearance while it offers you assistance and resources to find a new job. That might come in handy during a recession, for example. 

SoFi is also one of the few lenders to truly charge zero fees on its loans—not even late fees. (There are other consequences if you pay late, though, like a potential hit to your credit score.) It’s also very fast; nearly nine out of 10 people who signed their loan agreement before 7 p.m. Eastern Time received their funds on the same day they applied, according to 2021 data from the company. 

Putting your personal loan into forbearance can be a helpful way to pause payments if you run into problems. However, interest will still accrue, causing your loan balance to grow rather than shrink. 

  • Available in all states and Washington, D.C.
  • Must have a source of income or a job starting in the next 90 days
  • Must be a U.S. citizen, permanent resident, or non-permanent resident alien

Best With a Co-Borrower : PenFed Credit Union

  • APR Range: 7.74% - 17.99%
  • Loan Amount: $600 - $50,000
  • Loan Terms: 12 months - 60 months
Pros & Cons
  • Pre-qualification available

  • Membership open to anyone

  • Smaller loan amounts available

  • Allows co-borrowers, not co-signers

  • Doesn’t offer any interest rate discounts

  • Must join credit union if approved for a loan

Why We Chose It

If your credit isn’t the best, PenFed is a good option to consider. Not only is it quite tolerant of fair credit scores already, but if you still need help, you can apply with a co-borrower. This is a bit different from a co-signer, who essentially agrees to repay your loan for you if you default. A co-borrower, on the other hand, agrees to be responsible for the loan along with you right from the get-go. 

Some other benefits of PenFed are that you can get pre-qualified before you commit to fully joining the credit union, if you’re not already a member. And membership is open to anyone. Some credit unions, such as Navy Federal, don’t have the option to pre-qualify for a loan and have more restricted membership. 

You’ll generally need to open a savings account and keep a small amount in it (usually around $5) to establish your membership with a credit union. It’s not a huge hassle, but it is more work than most other lenders require.

  • Must be a member of the PenFed Credit Union, or join during the application process
  • Must be the age of majority in your state
  • Must have a valid Social Security number or individual taxpayer identification number
  • Must have a verifiable source of income

Best for Small Loans and Bad Credit : Upgrade

  • APR Range: 8.49% - 35.99%
  • Loan Amount: $1,000 - $50,000
  • Loan Terms: 24 months - 84 months
Pros & Cons
  • Relatively low minimum recommended credit score

  • Next-day funding

  • Can change payment due date

  • Discounts for using other Upgrade products

  • High origination fee

  • Short-term loans not available

  • Not available in Washington, D.C.

Why We Chose It

If you don’t need to borrow a large amount and don’t want to go through the hassle of joining a credit union (which often offer smaller-dollar loans), then Upgrade might be your best bet, especially if your credit isn’t the greatest. If you’re open to switching banks, there’s also a lot to say for Upgrade, which offers plentiful rewards and discounts for using its other financial products too. 

The downside is that Upgrade’s loans are a bit on the pricey side, especially if you do have bad credit. Depending on your loan profile, you’ll have to pay an origination fee ranging from 1.85% to 9.99%. We’d also like to see shorter-term loan options offered, such as six months or even just one year. 

  • Recommended credit score of 560 or higher
  • Debt-to-income ratio of 75% or less
  • Must have a valid email address and bank account
  • Available in all states except for Washington, D.C.
  • Must be a U.S. citizen or permanent resident or have a valid visa

Best Big Bank : U.S. Bank

  • APR Range: 8.74% - 21.24%
  • Loan Amount: $1,000 - $50,000
  • Loan Terms: 12 months - 84 months
Pros & Cons
  • Can apply in person

  • Same-day funding available

  • High customer satisfaction ratings

  • More loan restrictions for non-customers

  • Few borrower assistance plans

  • Branch locations only available in 26 states

Why We Chose It

Big banks have a reputation for being not quite so customer-friendly, but that’s not the case with U.S. Bank, at least for personal loans. In addition to low rates on loans, it was rated as the second-best bank for quality customer service in 2022, according to a J.D. Power survey.

U.S. Bank’s personal loans are easiest to apply for if you’re already a customer, because you can do it all online. But if you’re not already banking with U.S. Bank, you can still apply for a personal loan. You’ll just need to apply in person, and you’ll be a bit more limited in your loan options (a maximum amount of $25,000, with a term length up to five years). Since U.S. Bank isn’t available in every state across the country, this means some people won’t be able to apply. 

  • Must have a credit score of 660 or higher (higher for non-customers)
  • Must be the age of majority in your state
  • Must live in a state where U.S. Bank operates
  • Must have a valid Social Security number

Best for Excellent Credit : Regions

  • APR Range: 7.99% - 29.99%
  • Loan Amount: $2,000 - $50,000
  • Loan Terms: 36 months - 60 months
Pros & Cons
  • Ultra-low rates

  • In-person applications accepted

  • Can use savings or vehicles as collateral

  • Limits on who can apply online

  • Not available in Western or Northeastern U.S.

  • Smaller loan limits for non-Regions customers

Why We Chose It

If you live in a state where Regions operates and you have excellent credit (usually defined as 800 or higher), consider yourself lucky. This lender offers some of the lowest-cost loans out there for people with excellent credit, although you can use collateral or find a joint applicant if your credit isn’t the best. 

However, there are some limits to be aware of. If you’re not a current Regions customer, you’ll need to call or visit a Regions branch to apply. Only current Regions customers are eligible to apply online, and only if you’re applying as a solo applicant. Anyone with a joint applicant—current customer or not—will need to apply in person.   

  • You must have a valid Social Security number.
  • You must have a verifiable source of income.
  • You must have a valid bank account.
  • If you are a Regions customer, you must provide your online banking credentials or your ATM or debit card numbers.

Regions’ personal loans are only available in the 15 states—primarily in the South, Midwest, and Texas—where Regions operates.

Best for Debt Consolidation : Discover

  • APR Range: 6.99% - 24.99%
  • Loan Amount: $2,500 - $40,000
  • Loan Terms: 36 months - 84 months
Pros & Cons
  • Quick funding

  • 30-day interest-free loan guarantee

  • Can send funds directly to old creditors

  • Doesn’t offer any rate discounts

  • Doesn’t allow co-signers or joint applicants

  • Can’t use loan to consolidate debt from Discover

Why We Chose It

Discover offers some of the best personal loan rates for debt consolidation (or almost any other purpose, really). If you are consolidating debt, a good feature to look for is a lender who will send the funds directly to your old creditors to pay off your old debt. This saves you an extra step (and the temptation to not use the loan funds for their intended purpose). Discover does offer this ability. 

However, if you’re looking to consolidate any other debt from Discover, such as its popular credit cards, you may need to find another debt consolidation loan. Discover doesn’t allow you to use the funds to consolidate any other Discover debt. In addition, it does offer a nice interest-free money-back guarantee where you can return the loan funds within 30 days if you change your mind, but this doesn’t apply to debt consolidation loans since that money is generally already spent.

  • Minimum recommended credit score of 660
  • Must be the age of majority in your state
  • Must be a U.S. citizen or permanent resident
  • Must have an income of $25,000 or more

Loan funds cannot be used to repay a secured loan, such as a car loan, or to directly pay off a Discover credit card.

Best for Fair Credit : First Tech Federal Credit Union

  • APR Range: 8.99% - 18.00%
  • Loan Amount: $500 - $50,000
  • Loan Terms: 24 months - 84 months
Pros & Cons
  • Secured loan options

  • No membership restrictions

  • Debt protection plans available

  • Doesn’t offer rate discounts

  • Doesn’t offer short-term loans

  • Need to open a separate savings account

Why We Chose It

Credit unions have a reputation for being more willing to work with people who have fair credit (a score from 580–669, according to FICO) than your average lender, and First Tech FCU is no exception. The upper end of its APR range is quite low (18% is the maximum for credit unions), making for an excellent rate option for people who have fair credit. You can also use your stocks or First Tech FCU certificates and savings accounts as collateral for a secured loan, if necessary. 

If you’re worried about being able to make your payments, First Tech FCU also has you covered here too. You can purchase an optional Debtsafe debt protection plan with your loan so that if something happens, you can have some of your payments or even your entire loan canceled entirely.

  • Must be the age of majority in your state
  • Recommended credit score of 600 or higher (or have a creditworthy co-signer)
  • Must be a member of First Tech FCU

To join First Tech FCU, you must meet one of the below criteria: 

  • Have a family or household member that is a current member of First Tech FCU
  • Work for one of the credit union’s partner employers 
  • Work or live in Lane County, Oregon
  • Belong to the Computer History Museum or the Financial Fitness Association (you can join online; digital memberships start at $15 per year)

Best for Emergency/Quick Funding : Rocket Loans

  • APR Range: 9.12% - 29.99%
  • Loan Amount: $2,000 - $45,000
  • Loan Terms: 36 months - 60 months
Pros & Cons
  • Same-day funding

  • Able to change due date

  • Rate discount for autopay

  • High origination fee

  • No co-signers or joint applicants

  • Not available in Iowa, Nevada, and West Virginia

Why We Chose It

If you’ve run into an emergency and need money fast, Rocket Loans is one of the best lenders. If you complete your loan application, receive an approval decision, and sign the final agreement before 1:00 p.m. ET on a regular business day, Rocket Loans will submit an ACH deposit that same day. Depending on your bank’s policies, the money will then show up right away or it could take a few days.

Rocket Loans says its application approvals generally happen in “real time,” but you may need to provide extra documents in some cases. If you round up a copy of your driver’s license, recent pay stubs, current bank statements, and your most recent tax return in advance, you can speed up the loan approval process in case the company does request these documents.

  • Must be a U.S. resident
  • Must be at least 18 years old
  • Available in all states except Iowa, Nevada, and West Virginia

Best for Military Service Members : Navy Federal Credit Union

  • APR Range: 7.49% - 18.00%
  • Loan Amount: $250 - $50,000
  • Loan Terms: 6 months - 180 months
Pros & Cons
  • Same-day funding

  • Secured loan options

  • Wide range of loan terms and loan amounts

  • No option for pre-qualification

  • Restrictive membership criteria

  • Unable to modify payment due date

Why We Chose It

You’ll need to become a Navy Federal Credit Union member before you apply for this loan, and membership is only open to active duty service members, veterans, civilian contractors, and their family members. If you’re able to get past that hurdle, though, there’s a lot to like about these loans. 

NFCU personal loans cover an extremely broad range of options. You can get a small $250 loan to tide you over until payday or take out a big $50,000 lump sum to consolidate your debt or remodel your home, for example. The only downside is there isn’t any pre-qualification option. But if you get all of your loan shopping done within two weeks the credit scoring models will mark those all as one credit inquiry, thereby limiting the damage to your credit score.

  • Must be the age of majority in your state
  • Must have a verifiable source of income
  • Must be a member of the credit union

Not everyone is eligible for Navy Federal Credit Union membership. To join, you must belong to one of the following groups: 

  • Active duty service members
  • U.S. military veterans
  • Family members of qualifying service members or veterans
  • Department of Defense civilian employees and retirees

Compare the Best Personal Loans of June 2023

Best For
APR Range
Average Origination Fee
Late Fee
Time To Receive Loan
Loan Amount
Latest Repayment
Reset All
SoFi Best for Younger Borrowers 8.99% - 25.81% 0.00% $0.00 0 days $5,000 - $100,000 84 months Check Rates
Hide, not for me
PenFed Credit Union Best With a Co-Borrower 7.74% - 17.99% 0.00% $29.00 1 day $600 - $50,000 60 months Check Rates
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Upgrade Best for Small Loans and Bad Credit 8.49% - 35.99% 1.85%–9.99% $10.00 1 day $1,000 - $50,000 84 months Check Rates
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U.S. Bank Best Big Bank 8.74% - 21.24% 0.00% $29.00 0 days $1,000 - $50,000 84 months Check Rates
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Regions Best for Excellent Credit 7.99% - 29.99% 0.00% 5.00% - $100.00 0 days $2,000 - $50,000 60 months Check Rates
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Discover Best for Debt Consolidation 6.99% - 24.99% 0.00% $39.00 1 day $2,500 - $40,000 84 months Check Rates
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First Tech Federal Credit Union Best for Fair Credit 8.99% - 18.00% 0.00% $10.00 to $25.00 0 days $500 - $50,000 84 months Check Rates
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Rocket Loans Best for Emergency/Quick Funding 9.12% - 29.99% 1.00% - 7.00% $15.00 0 days $2,000 - $45,000 60 months Check Rates
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Navy Federal Credit Union Best for Military Service Members 7.49% - 18.00% 0.00% $29.00 0 days $250 - $50,000 180 months Check Rates
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*APR ranges for some companies include a discount for automatic payments or existing bank customers.

Final Verdict

Personal loans are one of the most versatile financial products out there since you can use them for just about anything you want, and you can get one from nearly every lender. SoFi is a good choice for young borrowers with its low costs, helpful customer programs, and lightning-quick funding speed. 

If you prefer working with credit unions, PenFed or First Tech is your best bet unless you’re military, in which case we might recommend Navy Federal. Don’t be afraid to shop with big banks, either, because you might find some surprisingly low-cost options, such as with U.S. Bank.

Personal Loan Calculator

Use our personal loan calculator to zero in on a loan amount and term that fits your credit, your financial history, and your budget.

Personal Loan Rates Over Time

Personal Loans: Pros and Cons


  • Quick funding times: Some personal loan lenders offer same-day funding in some cases, although a turnaround time of a few days is more typical. See the best fast personal loans here.
  • Easy loan application: It’s usually a quick process to submit an application, and many lenders even offer an automated approval process.
  • Offered by many types of lenders: Personal loans are some of the most popular loan types offered through banks, online lenders, and credit unions. 
  • Generally cheaper than credit cards: In February 2023, the average credit card interest rate was nearly twice as high as the average personal loan rate.
  • Can use funds for just about anything: Most lenders allow you to use the loan proceeds for whatever you want, barring a few exceptions such as illegal activities, gambling, and sometimes secondary education expenses. 


  • Origination fees: Some lenders charge origination fees, which can be financed with your loan or paid out of your loan proceeds, meaning the amount you actually see deposited in your account may be smaller than you requested.
  • Can harm your credit: You may see a small dip in your credit score right after you apply for the loan, but this is usually temporary. If you make any late payments, however, it can harm your credit for a longer period of time.
  • Can be expensive and difficult: It can be tough to get approved if you don’t have good credit. The lower your credit score, the more you’ll generally pay in interest and fees.
  • More expensive than some other options: Personal loans are cheaper than accounts like credit cards, but it’s usually cheaper yet to use things like home equity loans or HELOCs if that’s an option for you—especially if you don’t have good credit. 

Guide to Choosing the Best Personal Loans

Best Place to Get a Personal Loan

If you’re looking for a personal loan, some of the best places to get one are banks, credit unions, and online lenders. If you need funds quickly, choose a lender that offers a simple online application and fast funding. Many banks and credit unions allow you to apply online and get funding quickly, but you’ll generally need to have good credit to get approved. If you don’t have good credit, an online lender is usually a better option.

Should You Apply for a Personal Loan?

If you need funds to cover a large expense or want to consolidate existing debt, then you might consider applying for a personal loan. Personal loans are commonly used by people who need funding for a big expenditure, like paying for a wedding, covering emergency expenses, or making home improvements or repairs. Loan funds can also be used to consolidate higher-rate debt into a lower-cost fixed-rate loan.

Personal loans can be a good option for those who need immediate funding and can afford the monthly payments. However, you’ll pay interest on the loan, so it’s more costly to use loan funds than to cover the same expenses using cash. Even so, the APRs on personal loans are usually lower than the rates you’ll pay on credit card debt. So, if you need to choose between using credit cards or personal loans, the latter is often the better choice.

One of the other benefits of an unsecured personal loan is that you don’t have to pledge any collateral, like your home or car, to get the loan. This can save you money because you don’t have to pay for costs associated with the collateral, such as appraisal fees. Plus, you may be able to get the funds more quickly because there’s no collateral involved. So, if you need funds to make home improvements, like repairing your roof, building a new office, or adding solar, a personal loan can be the way to go.

Comparing Personal Loan Lenders

The most important things to consider when selecting a personal loan lender include the costs and terms of the loan, what it takes to apply, and how quickly you can get approved and funded. As you’re comparing personal loan lenders, pay close attention to these factors:

  • APR and fees: Personal loan rates and fees are the primary factors to consider before choosing a lender. Rates and fees are factored into the loan’s APR, which measures the annual cost of the loan. The better your credit, the lower the rate you’ll get.
  • Repayment terms: Shorter repayment terms result in higher payments and usually carry lower interest rates. This means you may reduce your overall borrowing costs by choosing the shortest possible repayment term. However, just make sure you can afford the monthly payments before applying.
  • Application process: It’s also important to consider the lender’s application process. You might want to get a loan at your local bank or credit union, which can be a great option. However, keep in mind that certain small lenders may not offer automated systems or online applications, making the application process more time-consuming. If you’d prefer to avoid applying in person, choose a lender that offers an online application. 
  • Approval and funding speed: The loan’s funding speed is often closely linked to the application process. Lenders that have online applications and automated processes are often able to get you funded more quickly. However, many of these lenders only approve borrowers with good credit. If you have blemishes on your credit, choose a lender with less stringent credit score requirements, like an online lender or a local bank or credit union that can make individual decisions based on your unique circumstances.

How to Get a Personal Loan

Once you’ve decided to get a personal loan, it’s time to get your paperwork in order and ensure your credit is in the best possible shape. Many lenders will start with a pre-qualification process, which involves pulling a soft credit check on you. To pre-qualify, you’ll need to provide some personally identifiable information (such as your Social Security Number and date of birth), income details, the reason you need the funds, the amount you want to borrow, and how long you need to repay the loan.

While pre-qualifying doesn’t guarantee you’ll be approved for a loan, it does let you see the rate you may receive. If you’re quoted for a high rate, you can work on repairing your credit before submitting a full application. Generally, the better your credit, the better the rate you’ll get. 

If the rate is acceptable and you decide to move forward, you’ll then complete a full application. This will involve providing the lender with additional information, such as proof of income and details on your monthly debts. You’ll also undergo a hard credit check as part of the application process.

If you’re approved for the loan, the lender will provide you with details about the loan terms, including the rates, fees, and repayment terms. Pay close attention to this information to understand the details before accepting the loan. If you don’t understand the loan details, speak with a representative to get clarification before proceeding.

As soon as you’ve accepted the loan, the lender will send you the loan funds in the way you specified in your application. This can include directly depositing the funds into your bank account, sending the money to your creditors to pay off existing debt, or even writing you a check. 

You’ll also learn how to manage your loan, such as by logging into an online portal or using a mobile app. This can be helpful, as you’ll understand how to make your monthly payments and where to go if you need help in the future.

Alternatives to Personal Loans

  • Crowdfunding: Sites like GoFundMe and Meal Train allow you to raise funds or get support from your online social group, especially if you have a compelling, share-worthy story about why you need help.
  • Cash advance loans: Unlike expensive credit card cash advances, new cash advance apps like Earnin and SoLo are becoming increasingly popular and are essentially just small, easy-to-get personal loans. 
  • 0% APR credit cards: Some credit cards charge zero interest on new purchases for several months or even a year or more. If you time a large purchase right and pay it off diligently before the 0% APR period ends, you’re essentially getting a free loan. 
  • Balance transfer credit cards: Similar to a 0% APR card, a balance transfer card allows you to transfer over existing debt to take advantage of a months-long interest-free period, during which time you can make big progress in paying it down.
  • Home equity loan or HELOC: If you own at least 80% of the equity in your home, you may be able to use it as collateral for a loan or line of credit. Rates for these loans tend to be the lowest of all, but be careful because you could lose your home if you default.

Common Personal Loan Terms

  • Unsecured loan: A loan that’s not backed by any collateral, making it difficult for the lender to collect funds if you default on the loan. They generally carry higher interest rates than secured loans and can be tougher to qualify for. 
  • Collateral: Something of known value that you agree to let your lender repossess if you fail to repay your loan, such as a car, savings account balance, or a home. Loans backed by collateral offer lower rates and may be easier to qualify for.
  • Secured loan: A loan that’s backed by collateral. Common examples include mortgages and auto loans, but personal loans may also be backed by collateral in some cases. Not all lenders accept collateral; if they do, you may need to carry extra insurance on it. Browse our picks for the best secured loans to check your rates.
  • Annual percentage rate (APR): The total cost of the loan with all fees and interest included, expressed as a percentage of your loan balance each year. It’s a better way to compare loans than just looking at the interest rate alone.
  • Loan term: The length of time you’ll be repaying your loan. Three and five years are the most common term lengths for personal loans, but you can find shorter or longer terms with some lenders. Generally, you can always repay your loan sooner too, if you like. 
  • Loan amount: The amount of money you’re borrowing. Check with your lender to see if it pulls any origination fees from your loan amount, meaning you’ll see a smaller deposit in your bank account than you requested.
  • Principal: The amount of money you still owe on your loan. Each month, your principal balance will go down as you pay off your loan. 
  • Installment payments: Regular payments made on your loan, which are generally split up into an interest payment that goes to your lender, and a principal payment that lowers the balance on your loan. Most personal loans have equal monthly installment payments. 
  • Autopay: A program that most lenders offer that lets you set up automatic monthly payments via an ACH transfer from your bank account. Experts strongly recommend this so that you don’t miss any payments, which can be costly and can damage your credit.
  • Credit score: A number score that measures how well you’ve paid off debt in the past, similar to the grades on your report card when you were a kid. Most lenders use the FICO credit score to help decide whether to approve you and what rates to charge.
  • Credit report: A list of your past and present credit accounts, along with records of the activity of those accounts, as reported by your lenders. It’s similar to your schoolteacher’s grade book which listed your score for each activity you did, and it’s used to calculate your credit score. The three major credit bureaus—Experian, Equifax, and TransUnion—each publish their own credit reports.
  • Credit inquiry: A record of a lender checking your credit report. Most lenders use a “soft” credit inquiry when you check your rates, which doesn’t impact your credit score. Lenders generally do a “hard” credit inquiry when you apply for a loan, which does affect your credit score.
  • Pre-qualification: A process most lenders offer where you can check your rate and see if you’re likely to be approved for the loan you want without completing a full loan application.  
  • Joint application: A loan application with two people on it, such as when you apply with a co-signer. 
  • Co-signer: Someone with better loan qualifications who can help you qualify for a loan with better rates; the co-signer agrees to repay the loan in case you default. Not all lenders accept co-signers, but they can make the difference between being approved and denied. See the best personal loans with a co-signer to check your options.
  • Co-borrower: Co-borrowers are legally responsible for making loan payments along with you right from the start. Co-borrowers may also share legal rights to the things you buy with the loan.
  • Origination fee: A fee some lenders charge in order to process and disburse your loan if you’re approved. Some personal loan lenders do not charge origination fees.
  • Debt consolidation: A personal loan that you borrow to repay other debt. Depending on the term length and interest rate you receive, you may be able to get lower rates, make your monthly payments more affordable, and pay off the debt sooner. 

Frequently Asked Questions

  • What Is a Personal Loan?

    A personal loan is a predetermined amount of money given to an individual by a bank or private lender. It is usually unsecured and carries a fixed interest rate. The borrower must agree to the loan rate and terms and make on-time monthly payments until it is fully repaid. A personal loan can be used for several things, including paying off or consolidating debt, covering medical expenses, or making a large purchase.

  • How Do Personal Loans Work?

    Personal loans work by lending a borrower money if they meet certain qualifications set by the lender. The money is paid back over time with interest. The borrower usually makes set monthly payments of principal and interest to repay the loan. A personal loan is often a more affordable option than a credit card because the interest rate is usually lower.

  • What's the Lowest Credit Needed for a Loan?

    There are a wide variety of personal loan lenders; some only work with borrowers who have good or better credit, while others work with borrowers of all credit profiles. In general, the worse your credit, the more you'll pay to borrow money (in interest and other fees). Applying with a co-signer can improve your chances of qualifying with good terms. See our picks for the best bad credit loans for a selection of lenders that work with a wide range of borrowers.

  • How Much Do Personal Loans Cost?

    Some of the fees associated with personal loans are origination fees, prepayment penalties, late fees, and administrative fees. However, not all lenders charge the same fees. It’s important to check with the lender before getting a personal loan. Despite what fees the lender charges, the largest cost is going to be what you’re paying in interest. The average interest rate for a personal loan is 11.48%.

  • What Is APR?

    A loan’s Annual Percentage Rate, or APR, measures how much you’ll pay for the loan, expressed as a percentage of your loan balance for each year you have the loan. It rolls together all of the fees and interest you’ll pay and expresses it as one number. This makes it easier to compare different loans when you’re shopping around, rather than just relying on the interest rate alone—which doesn’t include any loan fees. If you have great credit, you may qualify for loans with the lowest APRs available.

  • What’s the Difference Between a Secured Loan and an Unsecured Loan?

    A secured loan is backed by some sort of collateral that you, the borrower, agree to let the lender repossess if you don’t repay the loan. For example, auto loans generally use the car you’re buying as collateral for the loan. Unsecured loans aren’t backed by any collateral and can be more difficult to qualify for, and more expensive as well. 

  • Where Can I Apply for a Personal Loan?

    Personal loans are available from most lenders, including banks, credit unions, and online lenders

  • What Documents Are Required for Personal Loans?

    Most lenders require the same kinds of documents to apply for a personal loan. You’ll need some sort of proof of ID, such as a copy of your driver’s license. You’ll also need documents to show your financial situation, such as copies of your most recent bank statements, pay stubs, W-2s, and/or tax returns.

  • What Can You Use a Personal Loan For?

    Personal loans can be used for just about anything. Some lenders prohibit using them for illegal activities, post-secondary education, gambling, or investing. Most people use them to pay for emergency expenses, home repairs and upgrades, medical or veterinary bills, or debt consolidation.

  • How Much Can You Borrow With a Personal Loan?

    It depends on your income and other loan qualifications, and the lender. Some lenders, such as LightStream, offer personal loans up to $100,000. Some lenders offer loans as low as a few hundred to a few thousand dollars; see the best small personal loans here.

  • What Is a Loan Term?

    The loan term is the length of time it’ll take to pay off the loan if you only make the minimum payments. Most personal loans range from three to five years, although you can find lenders who will offer shorter or longer-term loans. 

  • How Long Does It Take to Get a Personal Loan?

    Personal loans are relatively quick to get since there’s no lengthy underwriting process, especially for unsecured loans. Some lenders even offer same-day funding if you’re approved before a certain time in the day. 

  • How Are APRs Determined for Personal Loans?

    Lenders set your APR based on many factors, including your credit score, your income, how much you’re looking to borrow, your other debts and debt payments, and your loan term length.

  • What Fees Should I Look Out for With Personal Loans?

    Many personal loans charge origination fees which are sometimes taken out of your loan proceeds directly. Although rare, some lenders also charge prepayment penalties if you pay your loan off early, although these are more common with other loan types. 

  • How Many Personal Loans Can You Have at Once?

    The number of personal loans you can have at once depends on the lender and your qualifications. Some lenders limit you to just one or two loans at once with them. Others don’t have a set limit and it just depends on how well the lender thinks you’d be able to manage an additional loan on top of the ones you already have.

  • Can You Refinance a Personal Loan?

    Yes, you can refinance a personal loan. Most personal loan lenders allow you to use the funds for anything you want outside of a few excluded uses. That means you’re generally free to take out a new personal loan to pay off your old one if you can find a lender who will approve your loan. Try our selections for the best debt consolidation loans to see if you could save money.

  • How Do You Calculate Your Debt-to-Income Ratio?

    Your debt-to-income ratio (or DTI ratio, for short) is the ratio between your total monthly income and your total monthly debt payments. In other words, it’s how much of your monthly income goes towards debt payments. If you earn $2,000 per month, for example, and have a $100 credit card payment and a $400 student loan payment, your debt-to-income ratio would be 25%: ($100 + $400) / $2,000.


Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders. To rate providers, we collected hundreds of data points across more than 40 lenders, including interest rates, fees, loan amounts, and repayment terms, to ensure that our reviews help users make informed decisions for their borrowing needs.


Getty Images / sakchai vongsasiripat

Article Sources
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