Personal Loan Provider Rating Methodology

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If you need quick cash for an unexpected expense or emergency, to pay for a vacation or wedding, or even to repair or renovate your home, a personal loan could be a great way to cover your costs. There are many personal loan options available, and you can usually get funded in a matter of days. Plus, this type of financing is accessible to people with varying financial situations, including those with excellent credit and less-than-perfect credit. 

Given the many options available, figuring out which personal loan is right for you can be a time-consuming process. We reviewed and rated more than thirty providers to help you narrow down your options. The companies on our list were put through a rigorous evaluation process, and this guide covers the criteria we used to rate each provider.

Our Review Process

To develop an objective method of rating personal loan providers, we evaluated factors related to each lender’s offerings. This included evaluating the types of loans you can get, how much the loan will cost, what repayment terms you can get, how quickly you can get funded, how much you can borrow, what it takes to qualify, and other additional features (e.g., discounts, co-signers). 

We performed a detailed evaluation of every personal loan provider on our list and considered four primary categories:

  1. Loan cost
  2. Loan details
  3. Eligibility
  4. Additional features

For each category, the providers were scored using a zero-to-one rating scale. A score of zero for a category was the worst possible score. In contrast, a score of one was the best possible score for each category. Once we assigned the scores to each category, we tabulated them to arrive at the overall star rating for each personal loan provider. 

Each provider could receive a one-to-five star rating, with one star representing the lowest (worst) score and five stars representing the highest (best) score. Personal loan providers with the highest overall scores were those meeting most (or all) of the criteria for our categories. Conversely, personal loan providers with the lowest overall scores didn’t meet as many of our categories' criteria. 

Data Collection

The data collection process was an essential part of rating each personal loan provider we reviewed. The first step of our data collection process was to carefully evaluate publicly available information on each company’s website. If the information we needed could not be found on the company’s website, we then contacted the company’s customer service team or other representatives to collect the data.

Our criteria ratings were designed to capture situations where data were not disclosed by the providers, serving as a proxy for the company’s level of transparency.

Loan Cost

During our evaluation of personal loan providers, we researched loan costs. We evaluated these aspects of this category and scored the companies on a 0-1 scale and weighted each factor based on importance:

  • Average fixed APR (15%)
  • Average origination fee (10%)
  • Maximum late payment fee (5%)

We also collected data on prepayment fees, but none of the loan providers on our list charge these fees, so prepayment fees do not factor into our weighting process.

Average Fixed APR

The primary cost of a personal loan is the fixed APR (annual percentage rate). The APR you’ll be charged includes the annual interest rate you’ll pay and the fees required to get the loan. Keep in mind; the lowest possible rates are typically offered to people with the best credit. So, one of the best things you can do to lower your borrowing costs is to work on improving your credit score. 

In our assessment process, we evaluated the lowest and highest possible rates you can get from each personal loan provider. The average fixed APR makes up 15% of the total weighted score in our evaluation.

Average Origination Fee

Many personal loan providers charge an origination fee when they issue your loan. This fee is generally around 0.5% to 1.5% of the total loan amount, and you can either pay this fee with cash or the lender might take it out of your loan proceeds. In certain cases, this fee may be included in the APR calculation. 

Some of the best personal loan providers don’t charge any fees at all. So, in addition to the fixed APR, we also considered if lenders charge an origination fee as part of our evaluation process. The average origination fee makes up 10% of the total weighted score in our evaluation.

Maximum Late Payment Fee

Another common fee personal loan providers charge is a late payment fee. This fee is often a fixed dollar amount (e.g., $15 to $39) or a percentage of your loan balance (e.g., 5%). However, not all lenders charge this type of fee. As we evaluated providers, we took into consideration all the common fees charged by lenders, including late payment fees. The max late payment fee makes up 5% of the total weighted score in our evaluation.

Loan Details

For each personal loan provider we evaluated, we researched loan details such as the available repayment terms, loan amounts, and funding speed. We specifically evaluated these aspects of this category and scored the companies on a 0-1 scale and weighted each factor based on importance:

  • Time to receive a loan (2.5%)
  • Loan amount (9%)
  • Repayment term (5%)

Time to Receive a Loan

How quickly you can receive the funds from your loan can vary widely, so this was one of the key loan details we considered in each company rating. Some lenders can get your personal loan approved and funded as soon as the day you apply. Other personal loan providers may take up to three to five days to fund your loan. Time to receive a loan makes up 2.5% of the weighted score in our evaluation.

Loan Amount

We also considered how much money you can borrow from each lender in our rating process. Not only did we evaluate the maximum amount you can receive, but we also looked at the minimum loan amount. This was an important loan detail to evaluate because every person’s financial situation is different. 

Some people only need to borrow a very small amount of money (e.g., $250), so it’s important to know if lenders offer small loan amounts. Conversely, if you need to borrow a large amount (e.g., $100,000), it’s equally important to know if the lender you’re considering can lend the amount you need. The minimum loan amount accounts for 4.5% of the total weighted score in our evaluation, and the maximum loan amount accounts for 4.5% as well.   

Repayment Term

Three key inputs that determine your loan payment are the interest rate, loan amount, and repayment term. The repayment term is how long you have to repay the loan (e.g., 36 or 60 months). During our evaluation process, we considered the repayment terms offered by the personal loan providers. Max repayment term length accounts for 5% of the total weighted score in our evaluation.

Eligibility

As part of our evaluation process, we also collected data on eligibility requirements. We evaluated these aspects of this category and scored the companies on a 0-1 scale and weighted each factor based on importance:

  • Allows joint applications (2.5%)
  • Allows co-signers (2.5%)
  • Credit score requirement (7.5%)
  • States available (6%)
  • Membership requirement (15%)

Allows Joint Applications

Many personal loan providers only allow one person to apply for a loan. However, some lenders will allow you to apply jointly with another person. In the case of joint applications, the financial information from both borrowers is used to determine if you qualify for the loan, and if approved, you can both use the loan proceeds. This can be helpful if you want to use the funds with someone else, like your spouse or significant other. So, we evaluated if joint applications were allowed. This factor accounted for 2.5% of our total weighted score.

Allows Co-signers

A co-signer is different from a joint applicant in that the co-signer doesn’t get to use any of the loan proceeds but is fully responsible for the loan if you don’t repay it as agreed. If you have bad credit and can’t qualify for a personal loan by yourself, having a co-signer with better credit may increase the likelihood that you’ll be approved for a loan. If you want to use a co-signer, you’ll need to find a lender offering this relatively uncommon option. We considered if co-signers are allowed in each of our ratings. This feature makes up 2.5% of the total weighted score in our evaluation.

Credit Score Requirement

Many lenders don’t disclose the minimum credit score required to qualify for a loan. However, some lenders are transparent about their minimums. We evaluated whether each personal loan provider disclosed its minimum credit score and, if disclosed, the score you’ll need to qualify. The minimum credit score requirement accounts for 7.5% of the total weighted score in our evaluation.

States Available

Before you consider applying for a personal loan, it’s important to know if the provider offers loans in your geographic area. For this reason, we considered in which states each personal loan was available in our evaluation process. This accounts for 6% of the total weighted score in our evaluation.

Membership Requirements

It’s important to understand if there are any membership requirements before applying for a personal loan. For example, many credit unions require you to become a member to apply for a loan. So, we considered membership requirements when evaluating personal loan providers. This factor accounts for 15% of the total weighted score in our evaluation.

Additional Features

Besides the other criteria, we also researched other features during our data collection process. We specifically evaluated these aspects of this category and scored the companies on a 0-1 scale and weighted each factor based on importance:

  • Offers pre-qualification (10%)
  • Available for any expense (10%)

Offers Pre-qualification

Lenders offering a pre-qualification option will allow you to see if you qualify for a personal loan with no impact on your credit score. This feature is commonly offered and is useful for prospective borrowers interested in comparing rates. An available pre-qualification option accounts for 10% of the total weighted score in our evaluation. 

Available for Any Expense

Certain loan providers may place restrictions on what loan proceeds can be used for. We considered this factor in our assessment of providers, and it accounts for 10% of the total weighted score in our evaluation. 

In addition to the features listed above, we also considered the following for each personal loan provider we evaluated, though these features do not factor into our weighting process:

  • Discounts: The most common discount many lenders offer is a rate reduction when you enroll in autopay. However, you may also be able to get other discounts, like a discount for signing up online or for using loan proceeds to pay off some of your existing debt.
  • Pay your creditors option: Many lenders make it easy for you to use your personal loan to consolidate existing debt. When this feature is offered, the lender will send your loan proceeds directly to your existing creditors, making consolidating debt easy.
  • Rate matching option: Rate matching is an uncommon feature sometimes offered by providers, where the lender will match the rates offered to you by other personal loan providers.
  • Decreasing rate if credit score increases: With this feature, you might be able to get a lower APR if your credit score improves. Although it’s not commonly offered, it can be a great option if you’re actively working to improve your credit score.
  • Flexible due date: Most lenders don’t allow you to change your payment due date. However, if you need this kind of flexibility, some personal loan providers offer this feature. Usually, you’ll only be able to do this on occasion (e.g., once a year). 
  • Refinancing option: A lot of the lenders we evaluated do not allow you to refinance your personal loan once you get it. However, a refinancing option can be a helpful feature. When this feature is available, you can usually only refinance your loan once or twice.
  • Loan protections (unemployment, natural disaster protection): A final feature we evaluated was whether the lender offered any loan protections. Although this feature is relatively uncommon, the best protections we saw covered such things as unexpected job loss and loss of income resulting from a natural disaster. 

Choosing the Right Personal Loan for You

Many factors go into finding the personal loan that’s right for you. After carefully considering consumer needs, we evaluated and rated more than thirty personal loan providers. In each of our provider reviews, we addressed some of the most important questions you need to ask to make an informed borrowing decision. 

Ultimately, choosing the best personal loan for you is an individual decision. As you’re evaluating the options, make sure to consider how much the loan is going to cost, how much you can borrow, when the loan has to be repaid, how quickly you’ll get the funds, what it takes to qualify, and if the lender offers any helpful additional features (e.g., discounts). Make sure to thoughtfully consider your options to decide which option is best for you. 

All of our reviews were written using publicly available information. That said, personal loan providers frequently revise their loan costs, terms, features, and strategies. Our reviews are provided only for informational purposes and should not be used as financial or legal advice or in place of consultation with a professional.  

Our Team

Megan Hanna
Forensic Accounting & Fraud Examination Program Chair and Accounting Instructor
Megan Hanna

Dr. Megan Hanna has extensive experience in finance, banking, and accounting. The majority of her professional career was spent in commercial banking, where she served as an underwriter, commercial banker, credit risk policy manager, chief credit officer, and more. During her banking career, Dr. Hanna not only analyzed many different types of business and personal loans but also wrote and monitored policies regarding how these loans originated and were managed.

Due to her banking track record, Dr. Hanna was chosen by her bank CEO to attend Pacific Coast Banking School at the University of Washington, where she earned a graduate-level certificate in banking. She also holds a Doctor of Business Administration (DBA) with an emphasis in data analytics from Grand Canyon University, where her research focused on the commercial banking industry. She’s passionate about all things related to finance and accounting, including microfinance in developing countries. 

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Hannah Kang
Research Associate, Performance Marketing
Hannah Kang

Hannah has been conducting research for over a decade, with a recent focus on providing data-driven recommendations from synthesizing quantitative data with qualitative data on services and products across finance, health, and lifestyle. 

Prior to joining the Performance Marketing team as a Research Associate, Hannah conducted research for Fortune 500 companies and multinational biotech companies including Pfizer, Johnson & Johnson, and Takeda. Her experience leading rigorous studies for FDA reviews shaped her standard of research integrity which guides her work at Performance Marketing.

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Jessica Ullrich
Associate Finance Editor, Performance Marketing at Investopedia and The Balance
Jessica Ullrich

Jessica is an Associate Finance Editor on the Performance Marketing team at Investopedia and The Balance. She's been editing financial and business content for over a decade. 

Prior to joining the Performance Marketing team, Jess was an editor at FinanceBuzz where she helped build out the site’s investing, cryptocurrency, credit card, and insurance verticals. She also spent nearly five years in an editorial role at a blockchain media agency where she worked on content campaigns for brands like State Street Global Advisors and Mint.

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Jana Lynch
Senior Finance Editor, Performance Marketing
Jana Lynch

Jana has been a personal finance writer and editor for over 10 years, working on a variety of topics including debt, budgeting, and more. She’s also an advocate for those recovering from financial abuse, having written and spoken extensively on the topic. 

After a decade-long career in social services, Jana started working as a freelance writer and editor for a variety of finance and non-finance sites. Prior to joining Dotdash Meredith, Jana worked as a full-time editor at DollarSprout, a personal finance site focusing on side hustles and money management, as well a freelance book editor, working on Amazon bestsellers, smaller eBooks, and the occasional fiction novel.

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