Personal Loan Reviews
Investopedia offers objective and comprehensive personal loan reviews and recommendations to help you find the right personal loan.
Investopedia's Best Personal Loans
Investopedia’s experts put more than 70 lenders through a rigorous evaluation process to identify the best loans for you and your needs. We also asked hundreds of current and former personal loan borrowers to tell us about their experience and used that information to help us develop our ratings methodology, which focused on loan costs, loan terms, borrowing requirements, and additional features.
Winners
● Best Overall: SoFi
● Best for Debt Consolidation: Discover Personal Loans
● Best for Emergency/Quick Funding: Upgrade
● Best for Bad Credit: Upstart
● Best for Excellent Credit: PenFed Credit Union
● Best With No Credit Check: OppLoans
● Best Big Bank: U.S. Bank
● Best for Small Loans: FirstTech Federal Credit Union
● Best for Military Members: Navy Federal Credit Union
● Best Credit Union: Patelco Credit Union
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A personal loan is a fixed amount of money an individual can borrow and repay over a set period of time. Like all loans, you'll have to pay interest on the amount you borrow. Unlike some types of loans, you don't need collateral to take out a personal loan. You might take out a personal loan for a new appliance, a medical bill, debt consolidation, or moving expenses.
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First, you'll first want to determine how much you want to borrow. You'll have to pay interest on this loan, so there's no reason to pay interest on more money than you actually need.
Next, check your credit score to make sure you qualify. Checking your own credit score won't affect it. But when you apply, a hard inquiry will impact your credit score, so it's important to know before you apply.
Once you know how much you'll borrow and where your credit score stands, choose a lender. You'll want to get familiar with the annual percentage rate (APR), loan terms, minimum credit score requirements, and whether there's a prepayment penalty.
Now you'll apply for your loan. If you want to apply with multiple lenders, make sure you do this within a 14- to 30-day period. That way, these inquiries will only count as one, thereby reducing the impact to your credit score.
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Unlike credit cards, personal loans are repaid over a short period. If you only make the minimum payment on your credit card, you'll likely never pay it off. Also, interest rates on personal loans are fixed, so they never change. Finally, personal loans typically have lower APRs than credit cards.
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Typically, you can take out a personal loan for between $1,000 and $50,000, even though some lenders we reviewed will offer loans up to $100,000.
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Unlike a loan for a car, boat, motorcycle, or house, a personal loan can be used for just about anything. You can use a personal loan for moving expenses, medical bills, moving expenses, wedding expenses, home renovations or repairs, vacation costs, or unexpected expenses.
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Key Terms
- Personal Loan
A personal loan allows you to borrow money for personal expenses and repay that amount over a specified time period.
- Secured Loan
A secured loan is debt that is backed by collateral to reduce the risk associated with lending.
- Collateral
Collateral is an asset that a lender accepts as security for a loan in the event the borrower cannot repay the debt.
- Debt Consolidation
Debt consolidation refers to taking out a new loan or credit card to pay off other existing loans or credit cards. By combining multiple debts into a single, larger loan, you may also be able to obtain more favorable payoff terms, such as a lower interest rate, lower monthly payments, or both.
- Credit Score
A credit score is a number between 300 and 850 that depicts a potential borrower's creditworthiness. The higher a borrower's credit score, the better a borrower looks to a lender, because that borrower has a history of repaying debt and being fiscally responsible.
- Debt-to-Income Ratio
Debt-to-income ratio is the percentage of your gross monthly income that goes towards paying for debt. It's a factor used by lenders to determine a prospective borrower's risk.