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If you need money to refinance your credit cards, improve your home, or take a vacation (though be careful before you do so), a personal loan could be a good option for you. You borrow a certain amount of money with a personal loan. Then, the lender will show which offers you qualify for based on financial factors such as your credit score, debt-to-income ratio, and ability to repay the loan.
Some lenders have minimum credit score requirements that might make you ineligible for a loan with them. Other lenders may allow you to get a loan with a poor credit score, but could saddle you with high interest rates as a result.
Be sure you’ve exhausted other options before choosing to take out a personal loan, such as borrowing money from a friend or family member, taking out a home equity loan, or in some cases, a credit card. These options may offer better interest rates than a personal loan.
If you want to turn to an online personal loan provider, here are a few of the best places to start your search.
If you’re looking to borrow a large sum of money, Lightstream’s maximum loan amount of $100,000 is significantly higher than most of the other lenders on our list. Its minimum APR is the lowest of all the lenders on our list of top picks, reducing the overall cost of your loan.
On the customer relations side, Lightstream topped J.D. Power’s 2020 rankings for personal lender satisfaction and has an A+ rating from the Better Business Bureau.
APR:
Read Insider’s full review of Lightstream.
Even if your credit history isn’t immaculate and you aren’t eligible for SoFi’s lowest rate, the company’s maximum APR is the lowest on our list. SoFi offers a higher maximum loan amount than most other lenders, allowing you to take out up to $100,000. SoFi also came in fourth in J.D. Power’s 2020 rankings for personal lender satisfaction.
Additionally, the company charges no origination fees and has no late payment penalty, lowering the overall cost of your loan. If you lose your job through no fault of your own, SoFi also has an unemployment protection program. If approved for the program, SoFi will put your loans into forbearance, suspending your monthly payments. It’s worth noting that interest will continue to accrue on your loan when it is in forbearance.
APR:
Read Insider’s full review of SoFi.
If you are looking for a smaller loan, Avant’s $2,000 minimum is lower than most comparable lenders. Avant funds loans quickly — if the company approves your loan by 4:30 p.m. CT Monday through Friday, funds are often put into your account by the next business day.
Avant also has excellent customer service hours, with its phone line open at least 13 hours every day of the week. The lender also has a strong mobile app, which is something not all lenders offer.
APR:
Read Insider’s full review of Avant.
Payoff personal loans are specifically designed to help borrowers eliminate high-interest credit card debt. This means you are limited in what you can use your loan for — you should choose a different lender if you aren’t aiming to consolidate credit card debt.
The company doesn’t charge any prepayment fees or late fees, but may charge an origination fee between 0% to 5%. Payoff also has one of the slowest money transfer times of any personal loan company, as it takes between two to five business days to have money deposited in your account.
APR:
Read Insider’s full review of Payoff.
A unique feature of Marcus is that the company offers an “on-time payment reward.” If you pay your loan on time and in full every month for one year, you can forgo a month of payments and interest will not accrue during that period. Your loan will then be extended by one month.
The company’s minimum loan length of three years is higher than most other lenders on this list. If you want to consolidate your payments over fewer years and save on interest, you may consider another lender. However, Marcus doesn’t have any prepayment fees, so if you wanted to pay off your loan before its term expires, you can do that.
Marcus also came in second in J.D. Power’s 2020 rankings for personal lender satisfaction.
APR:
Read Insider’s full review of Marcus.
You may qualify for a loan more easily with
Upstart offers the smallest loan amount of all the lenders on our top picks, so if you just need a little cash to tide you over, this could be the lender for you. Additionally, the company usually funds loans within one business day, which is useful if you need your money fast.
APR:
Read Insider’s full review of Upstart.
Online personal loan credit score requirements
| Lender | Minimum credit score | Learn More |
|
Lighstream |
660 | |
|
SoFi |
680 | |
|
Avant |
600 | |
|
Payoff by Happy Money |
640 | |
|
Marcus |
Unspecified | |
|
Upstart |
600 |
The credit score you’ll need to qualify for a loan will depend on the particular lender, though you’ll likely qualify for a better rate with a higher score.
If you need to access your credit report, you can get it at no cost from any of the three major credit bureaus on annualcreditreport.com weekly through April 20, 2022. This report will give you information about your payment and credit history — though it won’t provide you with your credit score. Looking over your credit report can help you spot errors and find areas for improvement.
You can get your score for free on your credit card statement or online account. You can also buy it from a credit reporting agency.
Credit scores range between 300 and 850. Here’s how scores break down, according to FICO:
- Very poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
Checking your rates with most companies will not impact your credit score because a majority of lenders will only generate a soft credit inquiry when showing you personalized rates. However, if you choose to accept a loan, lenders will likely conduct a hard credit inquiry, which may negatively affect your credit score. A hard inquiry offers a lender a comprehensive look at your credit history.
If you don’t qualify for a loan with your preferred lender or are receiving a higher APR than you can afford with another, here are some tips you may consider to improve your credit score:
- Ask for and review a copy of your credit report. Look for any errors on your report that may be tanking your score. If so, reach out the credit bureau to talk about rectifying the mistake.
- Maintain low credit card balances. Keeping a credit utilization rate — the percentage of your total credit you’re using — of 30% or less will prove to lenders that you can manage your credit appropriately.
- Devise a system for paying bills on time. Your payment history makes up a significant percentage of your credit score, and lenders like to see consistent and reliable payments in the past. Set up calendar reminders or automatic payments so you don’t fall behind.
Other personal loans we considered
- OneMain Financial personal loans. OneMain is a solid option for borrowers with low credit scores, but you can only borrow up to $20,000. The company also doesn’t lend to residents of Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island, or Vermont. Read Insider’s full review of OneMain Financial.
- Upgrade personal loans. Upgrade has relatively low credit score requirements and offers next-day funding to most borrowers, but charges hefty origination fees and doesn’t allow co-signers. Read Insider’s full review of Upgrade.
- PenFed Credit Union personal loans. While PenFed offers relatively low rates and a range of loan terms, you’ll need to become a member to get your loan funded.
- Rocket Loans personal loans. Rocket Loans offers same day funding for some loans. But borrowers can only choose from two repayment term lengths and you’re not able to take out a joint or co-signed loan.
- Best Egg personal loans. Best Egg offers low rates to borrowers with good credit, but if your credit score is lower than 640 you won’t be eligible for a loan with the lender. Read Insider’s full review of Best Egg.
- LendingClub personal loans. LendingClub has a relatively high maximum APR, and you may get your funding more slowly than with another lender. Read Insider’s full review of LendingClub.
- Discover personal loans. Discover’s maximum limit for personal loans is $35,000, which is lower than most other lenders on our list. Read Insider’s full review of Discover.
Which lender is the most trustworthy?
We’ve only selected online personal loan lenders with no public controversies in the last three years. We’ve also compared each institution’s Better Business Bureau score.
The BBB, a non-profit organization focused on consumer protection and trust, measures businesses based on factors like their responsiveness to consumer complaints, truthfulness in advertising, and clarity about business practices. Here is each company’s score:
| Lender | BBB Grade |
|
Lighstream |
A+ |
|
SoFi |
A+ |
|
Avant |
A |
|
Payoff by Happy Money |
A+ |
|
Marcus |
A+ |
|
Upstart |
A+ |
All of our top picks are rated A or higher by the BBB. Keep in mind that a high BBB score does not guarantee a positive relationship with a lender, and that you should continue to do research and talk to others who have used the company to get the most comprehensive information possible.
Frequently asked questions
How did we pick the best online personal loans?
Personal Finance Insider’s mission is to assist smart people in making the best decisions possible with their money. With that in mind, we compared many different online personal loan lenders, digging into the fine print so you don’t have to. We evaluated several factors to determine the best lenders, including:
- Annual percentage rates: The lower the interest rate you have to pay on your loan, the better. So we focused on lenders who have solid rates for people with fair or better credit histories.
- Loan term length: We looked for personal loans with a variety of repayment lengths.
- Loan amount range: We know some people are looking for a small amount of cash, while others are looking to take out a substantial amount. We found lenders with a variety of minimum and maximum loan amounts to best fit your needs.
- Minimum credit score: Depending on your credit score, you may be eligible to take out a loan from some lenders and may not qualify with others. We picked lenders with a range of minimum credit scores so you have options no matter your credit history.
- Trustworthiness: Borrowing from an honest lender is often a top priority for many people. We made sure each lender had an A or above grade from the Better Business Bureau to provide the most transparent lenders possible.
Are online personal loans legitimate?
Yes, online loans with a reputable lender are perfectly safe to take out. Read reviews of the company online, look for additional information about the company, and ignore offers that seem too good to be true. Look for personal loans that are backed by a Member FDIC bank or NCUA accredited credit union.
You can watch out for potential scams by looking out for these telltale signs:
- The lender doesn’t ask about your payment history or credit score.
- The lender’s website is unsecured.
- The lender guarantees approval.
- The lender isn’t transparent about fees.
- The lender coerces you into taking out a loan immediately.
What can I use an online personal loan for?
You can use an online personal loan for a variety of purposes, though the list fluctuates depending on the lender. Some common reasons include:
- Debt consolidation
- Credit card refinancing
- Home improvements
- Moving expenses
- Travel
- Car repair
- Medical bills
This list is not exhaustive, and you should check with your individual lender to see what options they offer.
What’s the difference between an online personal loan and a payday loan?
A payday loan is designed to bridge the gap between paydays, so term lengths are much shorter than personal loans. They also come with incredibly high APRs — the average interest rate on a payday loan is roughly 400% — so if you happen to miss a payment, the high interest rate could trap you in a cycle of debt quickly.
Payday loans also have lower minimums, which generally start around $50. This is much lower than the smallest amount you can borrow with a personal loan, which is $1,000 on our list of top picks.
Payday loans usually have more lax requirements than personal loans. Many payday lenders don’t run a credit check or even ensure you have the ability to repay the loan. Payday loans are also banned in many states due to predatory lending practices, whereas personal loans are generally accessible across the country.
How much will an online personal loan cost?
This depends entirely on how much you’d like to take out, what APR you receive from your lender, and how long it takes you to pay off the loan. The higher the loan amount and APR, the more a loan will cost you. With a longer term length, you will spread out your payments over an extended period so your monthly payments will be smaller, but you will pay more in the long run.
How quickly can I get my money?
Depending on the lender, you can get your money as soon as the same day. Usually, a lender will send the money fairly quickly after the application is approved, but there is often no guarantee on the speed of the process.
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