Investopedia is committed to rigorous editorial standards to provide our readers with the best advice and recommendations. We may receive compensation when you click on links to products we reviewed.

To find the best personal loan it's important to understand that there are many reasons you might need to borrow money. Whether you want to consolidate your debt, take care of an unexpected expense, or finance a home improvement project, a personal loan could be a good fit to help you access the money you need. 

Best Personal Loans

  • SoFi: Best Overall
  • LightStream: Best for Good Credit
  • Marcus by Goldman Sachs: Best for Debt Consolidation
  • Upstart: Best for Fair Credit
  • Avant: Best for Bad Credit

But before you sign on the dotted line, it’s smart to do a little research. Comparing loan options in advance could potentially save you money and protect your credit from unnecessary hard inquiries, which can lower your credit score. It’s not uncommon for companies that offer personal loans to do what are known as soft pulls, which don’t ding your credit, so you can see if you qualify before filling out an application.

Of course, there’s no such thing as a one-size-fits-all personal loan. The federal reserve reported the 24-month average personal loan interest rate at 10.63% in Q2 2019 but interest rates on personal loans can range from around 4% to 36%, based on your credit. Plus, some lenders may not let you borrow as much money as you need. 

We’ve researched more than two dozen personal loan options and compared their interest rates, fees, qualification requirements, and other features. Below you’ll find a list of our top picks for a number of categories. One overall positive: None of them charge a prepayment penalty if you happen to pay off your loan early. Depending upon your situation and why you need to borrow money, one of these personal loans might be a good fit for you.

Best Overall: SoFi

SoFi personal loans combine attractive interest rates with impressive benefits, like the ability to temporarily pause your payments if you lose your job. Interest rates start as low as 5.99%. Qualified borrowers may receive up to $100,000 in funding, making SoFi a solid all-around choice.

Pros

  • Low interest rates available for well-qualified borrowers

  • Unemployment protection available if you lose your job

  • High loan amounts available to borrowers with sufficient income and credit to qualify

Cons

  • Better interest rates available with other lenders for borrowers with excellent credit

  • Funding may take a few days, which is longer than some lenders take

  • Good credit required to qualify for a personal loan with SoFi

Other important information:

  • Minimum/maximum amount you can borrow: $5,000 to $100,000
  • APR range: 5.99% – 17.88% (with AutoPay discount)
  • Fees: None
  • Minimum credit requirement: Reported to be 680 (Not confirmed on SoFi’s website)
  • Other qualification requirements: Besides your credit score, SoFi will also consider your credit history, income, employment, and other factors when reviewing your loan application. 
  • Repayment terms: Choose 2- to 7-year repayment options 
  • Time to receive funds: It may take several days between the time of your application and when funds are deposited into your account
  • Restrictions: To be approved you need to be 18 or older and a U.S. citizen (or permanent resident or visa holder). You must also live in one of SoFi’s eligible states.

Best for Debt Consolidation: Marcus by Goldman Sachs

Marcus by Goldman Sachs offers personal loans that may work well for debt consolidation, due in part to long repayment terms of up to 72 months. If you have excellent credit, you may qualify for an interest rate as low as 6.99% with zero fees attached. Loan amounts are available up to $40,000 for qualified applicants. Together, these features might save you money if you can consolidate your expensive credit card debt for a lower rate. 

Pros

  • Longer repayment terms might lower your monthly payment when you consolidate debt

  • No fees are charged by the lender

  • Customize your payment due date so it works best for your budget

Cons

  • Higher rates are generally charged on loans with longer repayment terms. 

  • Good credit needed to qualify 

  • No co-signers are accepted

Other important information:

  • Minimum/maximum amount you can borrow: $3,500 to $40,000
  • APR range: 6.99% – 28.99% (For New York residents, rates range from 6.99% – 24.99%)
  • Fees: None
  • Minimum credit requirement: Good credit required. Specific score not disclosed. 
  • Other qualification requirements: You’ll need to be 18 or older (in most states) plus have a valid bank account and Social Security or Individual Tax I.D. Number to apply. 
  • Repayment terms: Loan terms between 36 and 72 months are available.
  • Time to receive funds: Allow one to four business days to receive your funds once approved. 
  • Restrictions: You can’t use a personal loan from Marcus to refinance student loan debt.

Best for Good Credit: LightStream

LightStream, an online division of SunTrust Bank, offers low interest rates to borrowers with good credit, starting as low as 4.99% for certain types of personal loans. Well-qualified borrowers may be able to take out a personal loan from LightStream for up to $100,000. Between the stellar interest rates and high maximum loan amounts, LightStream may be a great fit for applicants with solid credit ratings.

Pros

  • Rates as low as 4.99% on unsecured loans for certain home improvements (5.95% and up for other unsecured loans, like debt consolidation)

  • Rate Beat Program that offers to beat competitors’ rates by at least .10 percentage points (restrictions apply)

  • Loan Experience Guarantee offers $100 if you’re unhappy with the loan process

Cons

  • Hard to qualify if you don’t have a good-to-excellent credit rating

  • No preapproval process[DRB1]  means a hard credit inquiry on your Experian and Equifax credit reports to see if you qualify

  • Online[DRB1]  applications only — Face-to-face and phone applications aren’t available

Other important information:

  • Minimum/maximum amount you can borrow: $5,000 to $100,000
  • APR range: 3.99% – 16.79% (with AutoPay discount)
  • Fees: LightStream doesn’t charge origination fees, prepayment penalties, late fees, or any other type of fees. (Loans issued in Florida are subject to a documentary stamp tax.)
  • Minimum credit requirement: Reported to be 660 (Not confirmed on LightStream’s website)
  • Other qualification requirements: You’ll have a better chance of approval if your credit reports show several years of credit history, a good mixture of account types (e.g. credit cards, installment loans, etc.), and few to no late payments. You should also be able to prove stable, adequate income to repay a new loan and evidence of savings (e.g. bank deposits, bonds, stocks, etc.). 
  • Repayment terms: LightStream may offer you repayment terms between 24 and 144 months. 
  • Time to receive funds: Once approved, you may be able to access your funds as soon as the same day.
  • Restrictions: You cannot use a loan from LightStream to pay for college, refinance a student loan, or fund a business.

Best for Fair Credit: Upstart

Upstart is an online lending platform founded by a group of former Google employees. Because the platform uses artificial intelligence to consider alternative data, you may be more likely to qualify for a loan even if your credit is less than perfect, making Upstart a solid option for borrowers with a fair credit rating. 

By using alternative data in its applications, Upstart has been able to approve 27% more loans since late 2017. Rates on Upstart personal loans start as low as 5.67%. Qualified applicants can borrow as much as $50,000.

Pros

  • No prepayment penalty charged when you pay your loan off early

  • Alternative data considered (like savings, education, etc.) when you apply, not just your credit score

  • Soft credit pull used to get your initial rate quote

Cons

  • A high average interest rate of 21% is charged by lenders using Upstart’s platform

  • Loan origination fees can go as high as 8%

  • Online applications only—phone and in-person applications aren’t available 

Other important information:

  • Minimum/maximum amount you can borrow: $1,000 to $50,000
  • APR range: Interest rates range from 5.67% to 35.99%, based on credit, income, and other information considered in your loan application. Your education, area of study, and job history might help you qualify for a better rate.
  • Fees:  Origination fees can cost up to 8% of your loan amount. Late fees are either $15 or 5% of the past due amount—whichever is greater. Returned check fees (or ACH return fees) are $15. You’ll also be charged $10 if you switch from paperless monthly statements to mailed copies. 
  • Minimum credit requirement:  620 FICO or VantageScore
  • Other qualification requirements: You can’t qualify with a bankruptcy or public record on your credit report. Debt-to-income ratio will also be considered. You can’t have more than five inquiries on your credit report in the past six months (except for multiple student loan, auto loan, or mortgage inquiries). 
  • Repayment terms: 3- and 5-year payment terms offered
  • Time to receive funds: You could access funds as soon as the next day, once you accept the terms of your loan.
  • Restrictions: Residents of Iowa and West Virginia are not eligible for Upstart personal loans. 

*The lowest advertised rate of 3.99% only applies to secured auto loans.

Best for Bad Credit: Avant

A personal loan from Avant may be a solution to consider if you need to borrow money but you have challenged credit. Qualified borrowers may receive up to $35,000 in funding and Interest rates start as low as 9.95%. While that might not be the lowest rate you can find on a personal loan, it’s considerably lower than the starting point for many alternative personal loans for bad credit.

Pros

  • Competitive interest rates when compared with other personal loans for bad credit

  • Fast access to funds—often available as soon as the next business day

  • Soft credit pull occurs when you check your loan options online

Cons

  • Interest rates may be high compared to the APR you might receive elsewhere with better credit

  • Maximum loan amount of $35,000 is low compared with other personal loan providers 

  • An administrative fee may be charged on top of interest costs

Other important information:

  • Minimum/maximum amount you can borrow: $2,000 to $35,000
  • APR range: 9.95% – 35.99%
  • Fees: Avant may charge an administration fee up to 4.75%, deducted directly from your loan amount. Late fees may be charged as well, if your payment becomes past due. 
  • Minimum credit requirement: 580 minimum credit score (600 – 700 is the average credit score range of most approved applicants)
  • Other qualification requirements: In addition to your credit score, Avant will also review your income to see if you qualify and for what loan amount. 
  • Repayment terms: Loan repayment terms can range between 24 and 60 months (2-5 years). 
  • Time to receive funds: Loan funds are usually deposited in your account by the next business day. 

What is a personal loan?

A personal loan is a type of installment account. It’s a fixed amount of money you borrow one time from a lender. When your loan application is approved, the lender issues your full loan amount in a single lump sum.

Personal loans generally feature fixed interest rates as well. Plus, you repay the loan in set monthly payments over a fixed number of months. 

How do personal loans work?

Personal loans are typically unsecured. With unsecured debts, you don’t have to put up collateral, like your home or car, to back the loan. This means less potential risk for you, but more for the lender.

Instead of considering the value of your collateral, a lender approves or denies your personal loan application based on the strength of your credit profile and other factors, like your income. Because lenders take on more risk with unsecured personal loans, you’ll generally be charged higher interest rates than you would for secured loans, like mortgages.

Reasons to get a personal loan

Deciding whether or not to apply for a personal loan is unsurprisingly a very personal decision. It’s a decision you shouldn’t make without considering the costs, risks, and how the loan may impact your life. Here are some reasons a personal loan might be a good fit.

  • A personal loan might save you money if you qualify for a low APR and use the funds to pay off high-rate debts.
  • You need to pay a tax obligation, and a personal loan is a more affordable option than setting up payments with the IRS or your state.
  • A major, unexpected expense arises, and you don’t have the savings to cover the cost.

Personal loan interest rates can range from around 4% to 36%, based on your credit. Other factors, like debt-to-income ratio and the length of your loan, may also come into play.

Lenders who issue personal loans rely on credit scores to predict the risk of doing business with you. FICO Scores, for example, predict the likelihood that you’ll pay any of your credit obligations 90 days or more late within the next 24 months.

A good credit score tells lenders you’re a less risky borrower. This may improve your chances of loan approval, and perhaps help you secure a lower interest rate and better terms.

According to the Federal Reserve, the average interest rate paid on a 24-month personal loan is 10.63% at the time of this writing.

Personal loan vs. credit card

If you’re interested in improving or maintaining your credit scores, a personal loan has its advantages.

Personal Loans vs. Credit Cards
Personal Loans Credit Cards
Installment account Revolving account
Fixed loan amount Borrow over and over again, up to a credit limit
Fixed monthly payment Monthly payment can vary
Interest rate typically fixed Interest rate is variable and can change 
Average interest rate is 10.63% Average interest rate is 17.14% (on accounts with assessed interest)
High account balance generally has little impact on your credit scores High balance-to-limit ratio (aka credit utilization) could damage credit scores
Larger monthly payments may help you pay off your debt quicker (assuming you don’t pay late) Only a small minimum payment (often 2%-3% of your balance) is required, potentially keeping you in debt longer

How to apply for a personal loan

  1. Check your credit reports and scores. You should review all three reports from Equifax, TransUnion, and Experian. Dispute any errors you find with the credit reporting agencies. Once you know the condition of your credit, you’ll have a better idea which lenders are more likely to approve your loan application.
  2. Shop for the best deal. Take your time to review rates, fees, and terms from several lenders before you apply for your preferred personal loan. It’s fine to see if you’re pre-approved by multiple lenders that only require a soft inquiry initially. However, it’s best to reserve hard credit inquiries for when you’re relatively sure you’ve found the lender you want to use. 
  3. Submit your application. Once you’ve chosen the personal loan offer you believe works best for you, it’s time to apply. Submitting an official application will generally result in a hard credit inquiry. Depending on the lender, you may also need to provide additional documentation, like a copy of your driver’s license or ID and verification of income and employment. 

The Bottom Line

If you use a personal loan the right way, it may help you to pay off other high-interest debts or cover essential, unplanned expenses. Make sure to carefully assess your ability to pay back the loan because taking on debt is a serious decision and should not be taken lightly.

Compare to Similar Robo Advisors
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation.

Methodology

Investopedia’s mission is to provide our readers with unbiased, comprehensive financial product reviews they can trust. We’ve researched dozens of personal loan options and compared interest rates, fees, qualification requirements, and other features so we can share some of the best offers currently available with you. Our goal is to provide you with the knowledge you need to make well-informed decisions when you’re ready to borrow.