Personal loans can be used for any number of reasons from debt consolidation to a home renovation. And unlike secured loans like a mortgage or car loan, you can access funds without putting up your property or savings as collateral. There are all kinds of lenders offering unsecured personal loans these days.
Some are traditional banks with brick and mortar branches, while others are solely located online. Lenders also sometimes differentiate their services based on credit type or what purpose borrowers plan to use the money for.
Regardless of what kind of unsecured personal loan you’re looking for, it’s entirely possible to find a lender to work with. Here are our top picks across a broad range of service types so you can find the best match for your needs.
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SoFi is unique in that it doesn’t charge an origination fee, whereas most other lenders charge anywhere between 1% and 6% of the total loan amount. It’s also a great option if you need a higher amount of money because personal loans can range anywhere from $5,000 to $100,000.
You also get a 0.25% discount on your interest rate if you sign up for monthly autopay. However, you can’t apply with a co-signer or joint applicant, so your credit and financials will need to be strong enough to stand alone during the application process.
LightStream is an online lender that is actually a part of SunTrust Bank. The application requirements are quite strict and include good credit, a stable income, and a history of savings. But if you make the cut, you get to take advantage of some pretty strong benefits.
Interest rates start as low as 2.19% APR and there are no origination fees or any other hidden fees. You can also potentially get funds the same day you apply. If you decide to take some time after submitting your application, your loan offer is valid for a full 30 days after submission.
Upstart offers personal loans for any number of purposes but boasts major savings if you want to consolidate debt or pay off your credit cards. In fact, they say that their borrowers save 26% on interest rates compared to their credit cards. That can equal major savings over time. Like many alternative lenders, Upstart uses data beyond your credit score to review your application.
They also look at your education, area of study, and your job history. You can see what rate you qualify for in under two minutes and get funded the next business day. Loan amounts are between $1,000 and $50,000.
Rather than serving as a direct lender, PersonalLoans.com pairs your loan application with a network of lenders who can review your request and decide whether or not to send you an offer. You can then choose which one you like best. When you sign the loan agreement, you’re actually signing it with the lender, not with PersonalLoans.com.
Since there are many different lenders in the network, interest rates can range anywhere between 5% and 36%. You can borrow up to $35,000 and repayment terms last anywhere between 6 and 72 months.
Prosper focuses on borrowers with good credit. Unlike a traditional direct lender, it’s a peer-to-peer marketplace which may give their rates a competitive edge. The process entails entering in your application information and receiving loan rates and terms. Investors must then commit their funds to your specific loan request before you can receive any funds.
Eligible loan amounts range between $2,000 and $35,000 and you never need collateral for any of Prosper’s loans. You won’t be charged any fees until you receive your funds, at which point an origination fee will be deducted. This typically costs between 1% and 5% of your loan amount and depends on your credit rating.
Another peer-to-peer lender, Lending Club has helped over 1.5 million customers borrow over $26 billion in loans. You can use a personal loan to pay off your credit cards, consolidate debt, improve your home, or cover other major expenses. You may borrow as much as $40,000 and you can receive funds as soon as seven days from the time you complete your application.
A major bonus is that you can check your rate without having a hard check performed on your credit report. Borrowers who took out a loan to pay off credit cards or consolidate other debt on average reduced their interest rate by 24%.
If your credit is less than perfect, consider Avant for your unsecured personal loan. You’ll notice higher interest rates, ranging between 9.95% and 35.99% APR but their approval guidelines are less strict. Loan terms can last anywhere from 24 months to 60 months so you can get a shorter repayment plan compared to some other lenders.
Like many other online platforms, Avant offers a quick and easy application process. Once you sign your contract, you can get your funds on the very next business day. Loans can be used for a variety of purposes, including debt consolidation, home improvement, and unexpected expenses.
Earnest offers unsecured personal loans that are fee-free, with APRs starting at 5.25% when you sign up for autopay. One of the unique features of Earnest is that you can customize your repayment plan by choosing your own monthly payment amount.
Your term and interest rate are then calculated to match that number and you can increase your payment amount whenever you’d like. In addition to your credit history, Earnest reviews your education, earning potential, and saving habits as part of the application process.
As its name implies, Peerform is another peer-to-peer marketplace that allows individual investors to fund personal loan requests. You can get a loan for as little as $1,000 or as much as $25,000 and fixed interest rates start at 5.99% and go up to 29.99% APR.
Included in the APR is an origination fee, which is charged as a percentage of your loan amount when the funds are disbursed. Peerform is a good option if you have fair credit, with a minimum credit score of just 600.
Should you get an unsecured personal loan to consolidate debt?
You probably noticed that many of the lenders talked about major savings realized by their borrowers when they used a personal loan to pay off credit cards or consolidate other loans. When thinking about following the same path, there are a few major points to consider. First, make sure you’re actually going to save money when you consolidate your debt.
This means that the APR (which includes origination and other fees) should be less than what you currently pay. Also, compare the length of your repayment period. Credit cards are open-ended, but other loans have a term length.
Even if you get a cheaper rate, how does the new repayment term stack up to the old one? Will you actually save money if you’re paying on the new loan for several years? The answer to that last question should be yes.
It’s also important to make sure you can afford your new monthly payments, especially if you’re switching from lower minimum payments on your credit card to a new loan. The last thing you want to do is rack up heavy late fees and hurt your credit because your debt consolidation was too tight on your budget. Setting aside an emergency fund can help prevent this from happening.
If you’re short on cash one month because of something unexpected, you have a buffer to keep up with all of your financial obligations. Still, switching from credit card payments to a personal loan can be helpful.
It looks better on your credit report because it’s considered an installment loan rather than revolving credit that is open-ended. You might even see a slight rise in your credit score if you pay off credit card debt with a personal loan.
What do you need to apply for a personal loan?
Each lender has its own specific requirements when it comes time to apply for a personal loan. But you should be ready with some of the basics. If you’re applying in person at a bank branch, you can simply make copies of everything. When applying for a personal loan online, you’ll need to scan your documents and upload them to the application platform.
Start by gathering your ID (like your driver’s license), social security number, one or two months of bank statements, last year’s tax returns, and proof of income (like a recent pay stub).
There might be other requirements; for example, most lenders have a minimum age of either 18 or 21. You’ll probably need to have had a steady income for the last two years, though some lenders may be more flexible on this requirement.
Additionally, you’ll probably need a valid email address, especially when applying online. You’re also likely to need a bank account so that the lender can wire funds to you once you’ve been approved. Finally, just about every lender will pull your credit score.
If you have poor credit or no credit at all, it’s in your best interest to work on building your score before applying. That way you’ll save money on interest and be able to borrow a larger amount of funds if you need to. If you’re in a time sensitive situation for getting an unsecured personal loan, there are still lenders available willing to work with below-average credit.
Next Steps to Get Your Personal Loan
Once you’ve found a few lenders that seem like good matches, fill out their forms for their pre-approval process. Remember, this only results in a soft pull on your credit history, so you don’t have to worry about multiple inquiries affecting your credit. After getting three or four offers, compare loan terms, including fees, APR, and term length.
Use an online calculator to determine how much each loan will cost you over time. Also, consider how the new loan payment will affect your monthly budget and whether or not you can actually receive the funds by the time you need them.
These few steps should help you realize which option is the best one. At that point, you can complete the full application for the best fit and hopefully get your new funds soon!