Personal loans can be used to finance home improvement projects, wedding expenses, vacations, and much more.
Debt consolidation is also one of the most popular uses because many consumers with credit card debt can find a better interest rate with a personal loan.
Personal loans are typically reserved for expensive items that are difficult, if not impossible, to pay for all at once even if you have a beefed-up savings account.
They can make it easy to finance big-ticket items without draining your savings all at once. And while banks and credit unions have historically been the place to go for personal loans, online lenders now offer easy access to financing, often with lower interest rates.
8 Best Personal Loans
Without further ado, we present the best personal loans of 2023. We’ve included lenders focusing on different types of borrowers, so we encourage you to read through the list to find the best fit for you.
Compare the Best Personal Loan Lenders
Compare offers from multiple lenders to make sure you’re getting the best personal loan rates. Look at the interest rate and origination fees (plus any other applicable fees) because that will tell you how much your total loan will cost.
Each lender’s annual percentage rate (APR) helps you compare these numbers as a single percentage. Furthermore, make sure you can afford the monthly payments and that you’re comfortable with the length of the repayment period.
Types of Personal Loans
Unsecured Personal Loans – Borrowing Without Collateral
Unsecured personal loans do not require collateral, such as a car or house, to secure the loan. This means that the lender is taking on more risk. As a result, unsecured loans are generally reserved for those with higher credit scores.
People with lower credit scores may have higher interest rates and stricter eligibility requirements. However, they can be a viable option for those who do not have assets to use as collateral or who do not want to put their assets at risk.
Secured Personal Loans – Borrowing With Collateral
Secured personal loans require collateral to secure the loan. This means that the lender can seize the collateral if the borrower fails to make their loan payments.
Because the lender is taking on less risk, secured loans may have lower interest rates and more flexible eligibility requirements. However, the potential consequences of using collateral means you could lose the asset if you default on the loan.
Peer-to-Peer Loans – Borrowing From Individuals
Peer-to-peer (P2P) loans are personal loans that are funded by individual investors rather than traditional financial institutions. P2P lending platforms match borrowers with investors who are willing to fund their loans.
P2P loans may have competitive interest rates and flexible repayment terms. However, they may also be harder to qualify for and have more fees than other types of personal loans.
Cosign loans – Borrowing With a Cosigner
Cosign loans, also known as cosigned loans, require a co-signer to guarantee the loan in addition to the borrower. A cosigner is responsible for the loan if the borrower is unable to make the payments.
Cosign loans can help individuals who have a low credit score or limited credit history qualify for a personal loan. However, they come with the risk of damaging the cosigner’s credit if the loan is not repaid. The borrower and co-signer should fully understand their responsibilities before entering into a cosigned loan agreement.
Factors to Consider When Choosing a Personal Loan
When considering a personal loan, you should carefully evaluate a variety of factors to ensure that you are choosing the best loan for your needs. Some key factors to consider include the interest rate, repayment terms, fees and charges, credit score requirements, and lender reputation.
- Annual percentage rates: The annual percentage rate (APR) on a personal loan is the cost of borrowing money, expressed as a percentage of the loan amount. Choosing a loan with a competitive APR can help minimize the overall cost of the loan.
- Repayment terms: Personal loan repayment terms refer to the length of time that you have to pay back the loan, as well as the frequency and number of payments. Consider whether the repayment terms of a loan are manageable and fit your financial situation.
- Fees and charges: Personal loans may come with various fees and charges, such as origination fees, prepayment penalties, and late fees. Carefully review the fees associated with a loan and factor them into the overall cost of borrowing.
- Credit score requirements: Personal loan companies often have credit score requirements that borrowers must meet to qualify for a loan. Understand the credit score requirements of a lender and working on improving your credit score if necessary.
- Lender reputation: Choosing a personal loan lender that is reputable and known for offering fair and transparent loans is advisable. Research the lender’s reputation by reading customer reviews, checking their ratings with the Better Business Bureau.
How We Picked the Best Personal Loans
We reviewed countless personal loan lenders to come up with the best places to find a personal loan online.
To make it to our list, each lender had to meet the following five criteria:
- Diversity in loan options
- Wide borrower approval rate
- Dependability & Customer Service (or strong reputation and reviews from borrowers)
- Competitive loan rates — because regardless of what you’re using the personal loan for, you want it to cost as little as possible
- Special features, since many online lenders provide convenient benefits and services for borrowers.
Note: Geographic availability was also an important factor we considered.
Because each state has different regulations, many lenders only focus on a few select locations when they first open. Then, as they gain traction, they move into more and more states. We know our readers live all over the country, so we focused on lenders with a large geographic footprint.
Personal Loans FAQs
What is a personal loan?
A personal loan is a type of loan that is typically used for personal expenses, such as consolidating debt, paying for a wedding, or financing a home improvement project. Personal loans are typically unsecured, which means they do not require collateral.
How do personal loans work?
Personal loans work by lending you a specific amount of money that you agree to pay back over a set period of time, with interest. You typically make fixed monthly payments until the loan is fully paid off.
How do I qualify for a personal loan?
To qualify for a personal loan, you will typically need to have good to excellent credit, a stable income, and a low debt-to-income ratio. Some lenders may also require a co-signer or collateral.
Where can I get a personal loan?
Personal loans can be obtained from banks, credit unions, online lenders, and peer-to-peer lending platforms. It’s wise to shop around and compare rates and terms from multiple lenders before choosing a loan.
What is a good credit score for a personal loan?
A good credit score for a personal loan is typically above 680. The higher your credit score, the more likely you are to qualify for a loan and get a lower interest rate. However, some lenders specialize in bad credit loans.
What is the average interest rate on a personal loan?
The average interest rate on a personal loan varies depending on your credit score, income, and other factors. At the time of this writing, the average interest rate is 10-11%.
Can I get a personal loan with bad credit?
It may be possible to get a personal loan with bad credit, but it will likely come with a higher interest rate and stricter eligibility requirements. You may also need to provide collateral or a co-signer.
How long does it take to get a personal loan?
The amount of time it takes to get a personal loan can vary. However, it typically takes a few days to a week. The process may be faster if you apply online and have all of your documentation ready.
Is it better to get a personal loan or a credit card?
Whether a personal loan or a credit card is better for you depends on your financial situation and goals. Personal loans typically have fixed interest rates and repayment terms, which can make them a suitable option for larger expenses or consolidating debt. Credit cards may have higher interest rates and more flexibility, but they also have the potential to lead to more debt if not used responsibly.
Can I use a personal loan to buy a car?
Yes, you can use a personal loan to buy a car. However, it may be a better option to get an auto loan, which is specifically designed for financing car purchases and may have lower interest rates.
Can I use a personal loan for home improvement?
Yes, you can use a personal loan for home improvement projects. Personal loans can be a viable option for financing smaller home improvement projects or for those who do not have equity in their home to use for a home equity loan.
Can I use a personal loan to pay off debt?
Yes, you can use a personal loan to pay off debt, such as credit card debt or student loans. This is called debt consolidation. By consolidating your debt into a single personal loan, you may be able to secure a lower interest rate and make payments more manageable.
Can I get a personal loan with no credit?
It may be possible to get a personal loan with no credit. However, it may be more difficult and come with higher interest rates. Some lenders may require a co-signer or collateral in this case.
Learn More about Personal Loans
- What Is an Installment Loan? – Learn about installment loans, how they work, and whether they’re the right choice for you.
- Best Personal Loans for Low-Income Earners – If you’re a low-income earner, you may think that personal loans are out of reach. But there are options available! Find out more here.
- Best Personal Loans for Good Credit – Looking for the best personal loan options for good credit? Find out which lenders offer the best rates and terms for your needs.
- Emergency Loans for Bad Credit – Bad credit doesn’t have to mean you’re out of options for emergency loans. Find out which lenders may be willing to work with you.
- Loans for People with Bad Credit or No Bank Account – Need a loan but have bad credit and no bank account? Our expert guide compares options from top lenders for borrowers in this situation.