While personal loans are a handy way to finance just about any legal personal expense, they do come at a cost. However, finding the best personal loan can be the difference between hundreds or thousands of dollars in interest.
Use this personal loan finder to compare the best options and find a loan that supports your needs.
Average Personal Loans Rates
A good interest rate on a personal loan is one that is lower than the national average. Current personal loan rates range from around 8% to 36%, with the average personal loan rate hovering around 15%. That said, available APRs vary by lender, and only the most qualified borrowers can access the lowest rates.
Types of Personal Loans
There are two main types of personal loans: secured and unsecured.
Secured Personal Loans
Secured personal loans require collateral, which is something of value that the lender can repossess if you default. Secured loans tend to have flexible qualification requirements and lower interest rates since the collateral reduces the financial risk to lenders.
Secured personal loans are most commonly found through traditional banks and credit unions. However, a select few online lenders may offer them.
Unsecured Personal Loans
Unsecured personal loans require no collateral, meaning you don’t have to pledge a personal asset to secure the loan. However, this means that lenders typically charge higher interest rates and enforce more stringent qualification requirements.
Unsecured loans may be best for borrowers who don’t have collateral to pledge for a secure loan, and those with excellent credit who can qualify for the lowest rates on unsecured loans.
You can find unsecured loans through banks, credit unions and online lenders.
How To Compare Personal Loans
Consider these factors when comparing personal loans:
- Permitted loan uses. While you can generally use personal loans for any legal personal expense, some lenders place restrictions. For example, you typically can’t use personal loan funds for business purposes or higher education.
- Qualification requirements. Lenders consider your credit score, income, debt-to-income (DTI) ratio and overall credit history when determining your eligibility. Be sure to confirm a lender’s minimum qualification requirements before applying to understand your chances of approval.
- Loan amounts. Loan amounts vary by lender. When comparing lenders, make sure your preferred lender offers loan amounts that cover your needs.
- Repayment terms. Much like loan amounts, different lenders also offer different repayment periods. Shorter terms can help you repay your debt faster and save money on interest; longer terms make for more affordable monthly payments but you’ll pay more in interest over time.
- Interest rates. The interest rate you receive determines the overall cost of your loan. Some lenders offer a prequalification process, which lets you see what rates and terms you may be eligible for without impacting your credit score. The best personal loan rates are typically reserved for those with the highest credit scores.
- Loan fees. In addition to interest rates, check if your preferred lender charges any other fees, including origination fees, administrative fees or prepayment penalties.
- Time to fund. Some lenders offer fast personal loans with funding as quick as the same day while others may take up to a few business days to disburse your funds. Consider how immediately you need the money when applying for a loan.
- Customer support options. Review the lender’s customer service resources and read reviews from past and current borrowers to make sure it’s a good fit.
How To Find a Personal Loan
While you can get personal loans through traditional institutions like banks and credit unions, online lenders typically offer the best personal loans. Online lenders often offer more flexible qualification requirements than traditional banks and may disburse funds within 24 to 48 hours. You can expect to find loan amounts between $1,000 to $100,000 and terms between one and seven years.
What’s more, some online lenders tailor loans to applicants with scores below 670 and sometimes scores as low as 560. These are also referred to as fair credit personal loans and bad credit personal loans, respectively.
Your credit score, income and desired loan amount can help determine which lender and loan is best for you.
*Prequalified rates are based on the information you provide and a soft credit inquiry. Receiving prequalified rates does not guarantee that the Lender will extend you an offer of credit. You are not yet approved for a loan or a specific rate. Lenders will conduct a hard credit pull when you submit your application. Hard credit pulls will have an impact on your credit score. Lowest rate advertised is not available for all loan sizes, types, or purposes, and assumes a very well qualified borrower with an excellent credit profile.
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Frequently Asked Questions (FAQs)
What is the easiest loan to get approved for?
The easiest loan to get approved for is typically one from a lender that caters to bad-credit borrowers. For example, some personal loan lenders allow for credit scores as low as 560. However, borrowers with scores that low typically receive high interest rates.
Is there a limit on a personal loan?
Personal loans come in various amounts, generally ranging from $1,000 to $100,000. The loan amount you receive depends on your creditworthiness and what your preferred lender offers.
Can I get a personal loan with bad credit?
Yes, you can get a personal loan with bad credit. However, this typically comes at the cost of higher interest rates and potentially lower loan amounts.
What is a personal loan origination fee?
Some lenders charge an upfront personal loan origination fee between 1% and 8% of your loan amount, which covers the cost of processing your loan. This is typically taken out of your loan amount, so be sure to take that into account when applying for a loan.
For example, if you qualify for a loan of $10,000 and your lender charges an origination fee of 3%, $300 would be subtracted from your debt, leaving you with $9,700.
