- The best personal loans are from LightStream, SoFi, PenFed, Discover, Upstart, U.S. Bank, Upgrade and Wells Fargo. They all have low interest rates, flexible loan terms and notable customer service.
- The best personal loan lenders don’t charge origination fees and offer discounts for automatic payments.
- When you’re shopping, get prequalified with a few different lenders and look for the offer with the lowest APR and fewest fees.
Best Personal Loan Lenders
LightStream
Our Top Pick
SoFi
Best Customer Experience
PenFed Credit Union
Best for Small Loans
Discover
Best for Low Rates
Upstart
Best for Bad Credit
U.S. Bank
Best for Loyal Customers
Upgrade
Best Discounts
Wells Fargo
Best for In-Person Service
In the News: Personal Loans
The Federal Reserve announced on July 31 that interest rates will remain at a 23-year high. Many industry insiders expect the first rate cut of the year to come at the conclusion of the next Fed meeting on September 17-18.
Borrowers hoping personal loan rates would come down soon may have to wait a little longer, as the market often follows the Fed’s lead in increasing or decreasing rates.
“Banks and other lending institutions will hang on as long as possible to high APRs on personal loans, mortgages, and business loans,” said Stephen Kates, a certified financial planner and principal financial analyst for Annuity.org. “This will continue until a firm cut is made.”
|
Interest Rate (APR)
6.99% to 25.49%
What Stands Out
Will beat competitor offers by 0.10%
Loan Size Offered
$5K to $100K
Minimum Credit Score
N/A
|
|
Interest Rate (APR)
8.99% to 29.49%
What Stands Out
Pays off creditors directly up to $100K
Loan Size Offered
$5K to $100K
Minimum Credit Score
680
|
|
Interest Rate (APR)
8.99% to 17.99%
What Stands Out
No origination fees
Loan Size Offered
$600 to $50K
Minimum Credit Score
550
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|
Interest Rate (APR)
7.99% to 24.99%
What Stands Out
Fully U.S.-based customer service
Loan Size Offered
$2.5K to $40K
Minimum Credit Score
660
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|
Interest Rate (APR)
7.80% to 35.99%
What Stands Out
Offers for low- or no-credit borrowers
Loan Size Offered
$1K to $50K
Minimum Credit Score
300
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Best Personal Loan Interest Rates
Interest rate is a primary factor to consider when choosing a personal loan. This is the amount of money you’ll have to pay the lender in addition to the amount you borrow. The lower the interest rate, the less money you’re paying to borrow from the lender.
Personal loans typically have higher interest rates than other types of loans because they are usually unsecured. In other words, there’s no collateral backing the loan, which makes loaning money riskier for the lender.
Personal loan interest rates edged higher in 2023 as a result of Federal Reserve interest rate hikes driven by inflation. The Fed raises rates during periods of high inflation in an attempt to slow borrowing and spending, thus bringing prices down.
Our table lays out the average personal loan interest rates based on data we obtained from Credible. Your unique rate will be determined by the lender, and your credit score is only one of the factors taken into consideration for loan approval.
| Credit Score | 3-Year Fixed | 5-Year Fixed |
|---|---|---|
| <599 | 27.88% | 32.07% |
| 600 to 639 | 28.02% | 31.59% |
| 640 to 679 | 26.88% | 29.41% |
| 680 to 719 | 22.26% | 24.26% |
| 720 to 779 | 16.17% | 20.70% |
| >780 | 13.42% | 16.57% |
“I don’t think anyone should expect lower personal loan rates anytime soon. It’s looking less and less likely that the Fed will lower rates in either of the next few meetings. Meanwhile, lenders keep tightening personal loan requirements, and with inflation remaining stubborn, debt rising and delinquencies continuing to grow, that doesn’t seem likely to change either. Add it all up, and borrowers should expect interest rates to remain at or around their current levels for at least the next few months.”
“Most personal loans will have terms of 24 to 60 months, with strict payment schedules. This helps make sure you actually pay off the debt, versus keep making minimum payments like you could on a credit card.”
“Because it accounts for all costs associated with a loan, not just the interest charged on the balance, APR is a better way to compare two loans.”
How to Apply for a Personal Loan
Personal loan applications are relatively simple, but it’s good to be prepared on what to expect and how to increase your odds of approval. It’s best to check your eligibility and gather personal documents before comparing offers across lenders.
You can check your eligibility for a personal loan by getting your credit report and score and prequalifying on lender websites. For more details on personal loan requirements, check out our guide here.
Once you’ve checked your eligibility, it’s time to gather the necessary documents for your application. The documents you need for a personal loan application will often vary by lender, but proof of income, identity and address are standard.
While a loan’s interest rate is an important factor, it’s not the only one. It’s also wise to consider repayment terms, fees and the lender’s reputation.
Personal Loan Calculator
Our personal loan calculator helps estimate your monthly payment and interest rate. Using the tool can be a helpful way to gauge whether you can comfortably afford to take out a new loan.
Pros and Cons of Personal Loans
Speed: Many personal loans can often be applied for and acquired quickly.
Usage: They can usually be used for just about anything from medical emergencies to home improvement projects. Be careful as some lenders have limitations on what the money may be used for.
Fixed rates: Personal loans are usually predictable, offering fixed interest rates and monthly payments.
Credit crunch: If you have poor credit, personal loans can come with higher interest rates, increasing the overall repayment.
Fees: Personal loans often come with other charges, like prepayment penalties, which can add up.
Temptation to overspend: Once you take out a personal loan, you can use the money however you wish. You’ll need discipline to avoid spending unwisely, or to avoid racking up more credit card debt after you use a personal loan to pay off your accounts.
Alternatives to Personal Loans
If you’re wary about the higher APR of an unsecured personal loan, you might consider a secured personal loan or one of the following options.
If you own your home, consider a home equity line of credit (HELOC) or a home equity loan. While the application process is similar for both, a HELOC has a variable interest rate that changes with the market and allows you to borrow against your credit as you need, like with a credit card, and then pay it back over time. A home equity loan comes with a fixed interest rate and a lump-sum payout with a set repayment period, so you’ll pay the same amount back each month and your interest rate won’t change. While interest rates for these loans tend to be better than personal loans, the downside is that because the repayment period is so long, you’ll pay more in interest. In both cases, you use your home as collateral, so there is a risk of foreclosure if you cannot keep up with your payments.
If you need money to buy a specific item, like a new stove or a dining room table, consider a store credit card. Sometimes, these cards will have special financing offers that allow you to pay off the item at 0% APR for a set amount of time. Be careful, though: interest will accrue from the start of your repayment period and if you don’t pay the entire amount in the promotional window, you’ll be charged the entire amount of accrued interest. Calculate exactly how much you need to pay back each month to pay off your principal before the special financing period ends; often, once this period ends, the interest rate will be extremely high.
While credit card interest rates are generally higher than personal loan rates, they frequently offer teaser rates that could get you through a pinch. If you anticipate being able to pay off the principal you borrowed before the 0% introductory period ends, usually within 12 to 18 months, a credit card might be a better option. You need good to excellent credit to qualify for these cards. Again, calculate carefully to make sure you’ll pay off your credit card debt before the 0% interest rate ends.
Kyle Enright, Personal Loans expert at Achieve Lending, recommends talking to a lender who can evaluate your personal financial situation and will make the best recommendation for you, even if that’s not a personal loan. He recommends independent lenders, especially if you have a unique financial situation. “It can be very helpful to find a lender who will discuss fees openly, and work with a borrower to calculate overall interest savings,” Enright said. “Plus, independent lenders can use different criteria than a traditional bank or credit union in their decisions.”
What Are Personal Loans Used For?
Personal loans are typically unrestricted, meaning borrowers can use them for most any legal purpose, however, some uses are more common than others. Two of the most popular personal loan uses are debt consolidation and home improvements.
In a 2023 survey by the MarketWatch Guides team, we found that more than two in five individuals said their primary reason for taking out a personal loan was for one of those two reasons. Our average loan amount for survey respondents with good credit (670 to 739) was roughly $17,000, which would be a monthly payment of $581.02 with a 36-month repayment term and 14% APR.
Key Considerations When Choosing a Lender
APR is the total amount of interest you pay on a balance. It’s the interest rate plus fees. Our recommended lenders offer an APR of 7.49% to 35.99%. Generally, the higher your credit score, the better rate you’ll qualify for.
For an unsecured personal loan (a loan where you don’t put up collateral), you generally need at least a 640 credit score and less than a 50% DTI ratio. You need to show a government ID, proof of residence and your last paystub.
Usually, you’re not able to defer your loans if you lose your job. However, your lender may be willing to work with you if you’re likely to be able to get a new job quickly. SoFi even has a program specifically to help people who lose their jobs, offering to pause your payments and help you find new employment.
Some lenders charge you origination fees. These fees are taken out of the money you borrow, reducing the total sum you get. The most competitive lenders don’t charge origination fees.
Our recommended lenders have repayment terms of up to 12 years. Most lenders offer repayments from one year to seven years, but how each lender decides what terms are available are unique to each. You usually can choose from a range of repayment terms.
Many lenders on our list do offer discounts for autopay. These typically range from 0.25% to 0.50%. LightStream, SoFi, Upgrade, Wells Fargo, U.S. Bank and Universal Credit all offer autopay discounts.
The Bottom Line on Personal Loans
By comparing multiple lenders, you’re more likely to find the best personal loan for your unique needs and financial situation. Gather quotes from at least three lenders and look for ones that provide a rate range without requiring a full credit check.
Common Questions About Personal Loans
To qualify for a personal loan with most lenders, you should have a credit score in the 600 or higher range. But if you want the lowest possible interest rates, you’ll need a score of 670 or higher. Also, having a steady employment history and income source may be considered along with your credit score in determining your rate.
Most big banks, whether online-only or traditional brick-and-mortar, have an easy process to apply for and receive a personal loan. If you are already with a certain financial institution, you may receive discounts for also getting a loan through them. As with any personal finance decision, researching your options is crucial to picking the best one for you. On our list above, there is a mix of both traditional and online-only lenders.
If you have a good to excellent credit score and a solid DTI ratio, it should not be difficult to secure a personal loan. If you have poor credit, it can be more difficult, and your rates will be higher, but it is not impossible. It’s best to shop around for options that best fit your circumstances.
Our Methodology for Ranking the Best Personal Loans
Our team put together a comprehensive 100-point rating system to evaluate personal loan companies. We gathered data points from 28 of the most prominent lenders in the US and analyzed disclosures, licensing documents, sample loan agreements, marketing materials and websites. Our rating system takes into account four broad categories.
- Affordability (35%): How expensive each company’s loans are to pay back.
- Loan features (35%): The breadth of loan terms and features available to prospective customers.
- Customer experience (20%): Ease of application, prequalification and customer service interactions.
- Company reputation (10%): An exploration of lenders’ Better Business Bureau files, customer reviews and outstanding regulatory actions.
Our top-rated lenders may not be the best fit for all borrowers. To learn more, read our full personal loans methodology.
If you have feedback or questions about this article, please email the MarketWatch Guides team at editors@marketwatchguides.