Best Personal Loans of July 2023

Final Verdict

Personal loans are one of the most versatile financial products out there since you can use them for just about anything you want, and you can get one from nearly every lender. SoFi is a good choice for most borrowers with its low costs, helpful customer programs, and lightning-quick funding speed. 

If you prefer working with credit unions, PenFed or First Tech is your best bet unless you’re military, in which case we might recommend Navy Federal. Don’t be afraid to shop with big banks, either, because you might find some surprisingly low-cost options, such as with U.S. Bank.

Personal Loan Calculator

Use our personal loan calculator to zero in on a loan amount and term that fits your credit, your financial history, and your budget. You can see how long it'll take you to pay down your loan—and how much you'll end up spending—with different amounts, rates, and credit levels.

Personal Loan Rates Over Time

Personal Loans: Pros and Cons

Pros

• Quick funding times: Some personal loan lenders offer same-day funding in some cases, although a turnaround time of a few days is more typical. See the best fast personal loans here.
• Easy loan application: It’s usually a quick process to submit an application, and many lenders even offer an automated approval process.
• Offered by many types of lenders: Personal loans are some of the most popular loan types offered through banks, online lenders, and credit unions. 
• Generally cheaper than credit cards: In February 2023, the average credit card interest rate was nearly twice as high as the average personal loan rate.
• Can use funds for just about anything: Most lenders allow you to use the loan proceeds for whatever you want, barring a few exceptions such as illegal activities, gambling, and sometimes secondary education expenses. 

Cons

• Origination fees: Some lenders charge origination fees, which can be financed with your loan or paid out of your loan proceeds, meaning the amount you actually see deposited in your account may be smaller than you requested.
• Can harm your credit: You may see a small dip in your credit score right after you apply for the loan, but this is usually temporary. If you make any late payments, however, it can harm your credit for a longer period of time.
• Can be expensive and difficult: It can be tough to get approved if you don’t have good credit. The lower your credit score, the more you’ll generally pay in interest and fees.
• More expensive than some other options: Personal loans are cheaper than accounts like credit cards, but it’s usually cheaper yet to use things like home equity loans or HELOCs if that’s an option for you—especially if you don’t have good credit. 
  

Guide to Choosing the Best Personal Loans

Best Place to Get a Personal Loan

If you’re looking for a personal loan, some of the best places to get one are banks, credit unions, and online lenders. If you need funds quickly, choose a lender that offers a simple online application and fast funding. Many banks and credit unions allow you to apply online and get funding quickly, but you’ll generally need to have good credit to get approved. If you don’t have good credit, an online lender is usually a better option.

Should You Apply for a Personal Loan?

If you need funds to cover a large expense or want to consolidate existing debt, then you might consider applying for a personal loan. Personal loans are commonly used by people who need funding for a big expenditure, like paying for a wedding, covering emergency expenses, or making home improvements or repairs. Loan funds can also be used to consolidate higher-rate debt into a lower-cost fixed-rate loan.

Personal loans can be a good option for those who need immediate funding and can afford the monthly payments. However, you’ll pay interest on the loan, so it’s more costly to use loan funds than to cover the same expenses using cash. Even so, the APRs on personal loans are usually lower than the rates you’ll pay on credit card debt. So, if you need to choose between using credit cards or personal loans, the latter is often the better choice.

One of the other benefits of an unsecured personal loan is that you don’t have to pledge any collateral, like your home or car, to get the loan. This can save you money because you don’t have to pay for costs associated with the collateral, such as appraisal fees. Plus, you may be able to get the funds more quickly because there’s no collateral involved. So, if you need funds to make home improvements, like repairing your roof, building a new office, or adding solar, a personal loan can be the way to go.

Comparing Personal Loan Lenders

The most important things to consider when selecting a personal loan lender include the costs and terms of the loan, what it takes to apply, and how quickly you can get approved and funded. As you’re comparing personal loan lenders, pay close attention to these factors:

• APR and fees: Personal loan rates and fees are the primary factors to consider before choosing a lender. Rates and fees are factored into the loan’s APR, which measures the annual cost of the loan. The better your credit, the lower the rate you’ll get.
• Repayment terms: Shorter repayment terms result in higher payments and usually carry lower interest rates. This means you may reduce your overall borrowing costs by choosing the shortest possible repayment term. However, just make sure you can afford the monthly payments before applying.
• Application process: It’s also important to consider the lender’s application process. You might want to get a loan at your local bank or credit union, which can be a great option. However, keep in mind that certain small lenders may not offer automated systems or online applications, making the application process more time-consuming. If you’d prefer to avoid applying in person, choose a lender that offers an online application. 
• Approval and funding speed: The loan’s funding speed is often closely linked to the application process. Lenders that have online applications and automated processes are often able to get you funded more quickly. However, many of these lenders only approve borrowers with good credit. If you have blemishes on your credit, choose a lender with less stringent credit score requirements, like an online lender or a local bank or credit union that can make individual decisions based on your unique circumstances.

How to Get a Personal Loan

Once you’ve decided to get a personal loan, it’s time to get your paperwork in order and ensure your credit is in the best possible shape. Many lenders will start with a pre-qualification process, which involves pulling a soft credit check on you. To pre-qualify, you’ll need to provide some personally identifiable information (such as your Social Security Number and date of birth), income details, the reason you need the funds, the amount you want to borrow, and how long you need to repay the loan.

While pre-qualifying doesn’t guarantee you’ll be approved for a loan, it does let you see the rate you may receive. If you’re quoted for a high rate, you can work on repairing your credit before submitting a full application. Generally, the better your credit, the better the rate you’ll get. 

If the rate is acceptable and you decide to move forward, you’ll then complete a full application. This will involve providing the lender with additional information, such as proof of income and details on your monthly debts. You’ll also undergo a hard credit check as part of the application process.

If you’re approved for the loan, the lender will provide you with details about the loan terms, including the rates, fees, and repayment terms. Pay close attention to this information to understand the details before accepting the loan. If you don’t understand the loan details, speak with a representative to get clarification before proceeding.

As soon as you’ve accepted the loan, the lender will send you the loan funds in the way you specified in your application. This can include directly depositing the funds into your bank account, sending the money to your creditors to pay off existing debt, or even writing you a check. 

You’ll also learn how to manage your loan, such as by logging into an online portal or using a mobile app. This can be helpful, as you’ll understand how to make your monthly payments and where to go if you need help in the future.

Alternatives to Personal Loans

• Crowdfunding: Sites like GoFundMe and Meal Train allow you to raise funds or get support from your online social group, especially if you have a compelling, share-worthy story about why you need help.
• Cash advance loans: Unlike expensive credit card cash advances, new cash advance apps like Earnin and SoLo are becoming increasingly popular and are essentially just small, easy-to-get personal loans. 
• 0% APR credit cards: Some credit cards charge zero interest on new purchases for several months or even a year or more. If you time a large purchase right and pay it off diligently before the 0% APR period ends, you’re essentially getting a free loan. 
• Balance transfer credit cards: Similar to a 0% APR card, a balance transfer card allows you to transfer over existing debt to take advantage of a months-long interest-free period, during which time you can make big progress in paying it down.
• Home equity loan or HELOC: If you own at least 80% of the equity in your home, you may be able to use it as collateral for a loan or line of credit. Rates for these loans tend to be the lowest of all, but be careful because you could lose your home if you default.
  

Common Personal Loan Terms

• Unsecured loan: A loan that’s not backed by any collateral, making it difficult for the lender to collect funds if you default on the loan. They generally carry higher interest rates than secured loans and can be tougher to qualify for. 
• Collateral: Something of known value that you agree to let your lender repossess if you fail to repay your loan, such as a car, savings account balance, or a home. Loans backed by collateral offer lower rates and may be easier to qualify for.
• Secured loan: A loan that’s backed by collateral. Common examples include mortgages and auto loans, but personal loans may also be backed by collateral in some cases. Not all lenders accept collateral; if they do, you may need to carry extra insurance on it. Browse our picks for the best secured loans to check your rates.
• Annual percentage rate (APR): The total cost of the loan with all fees and interest included, expressed as a percentage of your loan balance each year. It’s a better way to compare loans than just looking at the interest rate alone.
• Loan term: The length of time you’ll be repaying your loan. Three and five years are the most common term lengths for personal loans, but you can find shorter or longer terms with some lenders. Generally, you can always repay your loan sooner too, if you like. 
• Loan amount: The amount of money you’re borrowing. Check with your lender to see if it pulls any origination fees from your loan amount, meaning you’ll see a smaller deposit in your bank account than you requested.
• Principal: The amount of money you still owe on your loan. Each month, your principal balance will go down as you pay off your loan. 
• Installment payments: Regular payments made on your loan, which are generally split up into an interest payment that goes to your lender, and a principal payment that lowers the balance on your loan. Most personal loans have equal monthly installment payments. 
• Autopay: A program that most lenders offer that lets you set up automatic monthly payments via an ACH transfer from your bank account. Experts strongly recommend this so that you don’t miss any payments, which can be costly and can damage your credit.
• Credit score: A number score that measures how well you’ve paid off debt in the past, similar to the grades on your report card when you were a kid. Most lenders use the FICO credit score to help decide whether to approve you and what rates to charge.
• Credit report: A list of your past and present credit accounts, along with records of the activity of those accounts, as reported by your lenders. It’s similar to your schoolteacher’s grade book which listed your score for each activity you did, and it’s used to calculate your credit score. The three major credit bureaus—Experian, Equifax, and TransUnion—each publish their own credit reports.
• Credit inquiry: A record of a lender checking your credit report. Most lenders use a “soft” credit inquiry when you check your rates, which doesn’t impact your credit score. Lenders generally do a “hard” credit inquiry when you apply for a loan, which does affect your credit score.
• Pre-qualification: A process most lenders offer where you can check your rate and see if you’re likely to be approved for the loan you want without completing a full loan application.  
• Joint application: A loan application with two people on it, such as when you apply with a co-signer. 
• Co-signer: Someone with better loan qualifications who can help you qualify for a loan with better rates; the co-signer agrees to repay the loan in case you default. Not all lenders accept co-signers, but they can make the difference between being approved and denied. See the best personal loans with a co-signer to check your options.
• Co-borrower: Co-borrowers are legally responsible for making loan payments along with you right from the start. Co-borrowers may also share legal rights to the things you buy with the loan.
• Origination fee: A fee some lenders charge in order to process and disburse your loan if you’re approved. Some personal loan lenders do not charge origination fees.
• Debt consolidation: A personal loan that you borrow to repay other debt. Depending on the term length and interest rate you receive, you may be able to get lower rates, make your monthly payments more affordable, and pay off the debt sooner. 
  

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders. To rate providers, we collected hundreds of data points across more than 40 lenders, including interest rates, fees, loan amounts, and repayment terms, to ensure that our reviews help users make informed decisions for their borrowing needs.