Maybe it was an unexpected dental procedure, or a tax bill you didn’t plan for, or a car repair that came out of nowhere.
Whatever the reason, if you need money quickly, a personal loan can deliver it.
As you shop for a personal loan to solve your short-term problem, look for loan terms that won’t hurt your long-term financial life.
Best Personal Loan Choices
Online lending has opened a new world of personal loan options.
Not that long ago we had just a couple of legitimate choices:
- Your Local Bank or Credit Union: You can usually borrow money at a decent fixed interest rate at your neighborhood bank or credit union. The downside: You’d need to make an appointment or at least spend an hour or two on the phone.
- A Credit Card: It’s hard to beat the convenience of a credit card, but the interest rates, late fees, and over-the-limit charges can make this option too volatile.
We still have these two options, and sometimes they can get the job done. But we also have scores of online lenders that compete to give you installment loans with more competitive interest rates.
Quick Nav: Best Personal Loans
You can also finalize loans and receive money more quickly online. Here are some of the best personal loan choices:
Credible Personal Loans
I’m starting here because Credible isn’t a lender. It’s a way to connect with and compare a variety of lenders, including several from lower on this list. To start the process, you’ll submit Credible’s initial application which generates up to six loan offers.
This initial process will run a soft check of your credit score which shouldn’t hurt your score the way a hard check can. If you like one of the offers, you can complete the next steps to apply for the loan which will, of course, result in a hard credit check.
Credible Pros:
- An efficient way to compare loan offers
- Fast and easy application process
- Many quality participating lenders
Credible Cons:
- Not for people with credit scores below 640
- Could result in unwanted phone calls from lenders
LendingClub Personal Loans
I was an early fan of LendingClub back in 2007, and I still recommend this trailblazer in the peer-to-peer (P2P) lending market.
Rather than using bank funds, P2P lenders finance your loan with money from investors. You’ll still have to go through an application process, but LendingClub has opened new doors to people who don’t want to borrow from a bank.
- Loan Amount: LendingClub’s maximum loan amount is $40,000. You can repay the money in terms ranging from three to five years.
- Costs: Interest rates typically range from 7 to 36 percent depending on your qualifications. The higher your qualifications, the lower your rate.
LendingClub continues to evolve. It now has debt consolidation loans and allows for co-signers which lets more people borrow.
LendingClub Pros:
- Credit scores of 600 can get approval
- New co-sign option lets more people borrow
- Debt consolidation loans available
- No prepayment fee
LendingClub Cons:
- Loan origination fees (1% of loan)
- Check processing fee ($7)
Payoff Personal Loans
As the name indicates, Payoff Personal Loans specializes in debt consolidation, helping you pay off other debts. You can potentially save money by having fewer loans and paying a lower interest rate.
The payoff isn’t a good option for people with shaky credit, though.
You’d need a score of 650 to 660 — and a few years of credit history on your report — to get approval at a decent interest rate. So don’t wait until you’ve already fallen behind on your other debts to consolidate with Payoff.
- Loan Amounts: Eligible borrowers can get up to $35,000 to pay off other lenders such as credit cards, auto loans, or other personal loans.
- Interest Rates: Loans range from about 6 to 25 percent depending on your borrowing credentials.
Payoff Personal Loans Pros:
- No late or check processing fees
- No prepayment penalty
- See interest rate without a hard credit check
Payoff Personal Loans Cons:
- Not for people with shaky credit
- A loan origination fee of 2% to 5%
PersonalLoans.com
Applicants with rocky credit histories appreciate PersonalLoans.com because the site lends to people with credit scores as low as 580.
- Loan Amount: You could borrow up to $35,000 on a six-year (72-month) payback plan through PersonalLoans.com. Spreading money across six years can lead to lower monthly payments.
- Interest Rates: This sounds like a friendly situation, but remember you’ll pay higher interest — up to 36 percent — if you have a lower credit score, and the interest can increase your monthly loan payment significantly.
PersonalLoans.com Pros:
- Available to credit scores 580+
- Easy-to-use online application
- Up to 72-month term loans
- Access money within a day
PersonalLoans.com Cons:
- Wide range of interest rates (5.9%-35.99%)
- Uses a third-party lender
Prosper Personal Loans
Many borrowers like the way Prosper Personal Loans gives them a platform to share why they need to borrow money. This opportunity comes during the application process to this P2P lender. You can use this platform to appeal directly to the investors who would be funding your loan.
Of course, the numbers will tell their story, too: You’d need at least a 640 credit score to get funding, and Prosper’s rates range from 6.9 to 35.99 percent APR.
- Loan Amount: If you qualify, you could borrow up to $40,000 with payments spread over three to five years.
- Interest Rates: Prosper also offers a wide range of rates, from 6.9 to 35.99 percent.
Prosper Personal Loans Pros:
- Soft credit check to see terms
- No prepayment penalties
- Fast and efficient service
Prosper Personal Loans Cons:
- Higher interest for lower credit scores
- Origination fee can reach 5%
- Late fee is steep ($15 or 5% of payment, whichever is higher)
SoFi Personal Loans
SoFi has become a standard in student loan consolidation, but the lender also has personal, unsecured loans for non-academic borrowing.
SoFi stands out because the lender does not focus exclusively on an applicant’s credit score. This can be misleading because you’d still need a 680 or higher to get a loan.
But SoFi will not deny a loan if you have a short credit history as many lenders do. Instead, this P2P lender will consider your career and earning potential. In this way, SoFi can be a good fit for young professionals starting new careers.
SoFi calls its borrowers “members” and hosts social gatherings in major cities for members which can lead to networking opportunities.
- Loan Amounts: SoFi will lend up to $100,000 which is significantly higher than most online lenders.
- Interest Rates: SoFi’s rates range from 5.75 to about 17 percent.
SoFi Pros:
- Larger loan amounts (up to $100,000)
- Good for someone with a short or thin credit history
- Flexibility to change due dates
- No loan origination fee
SoFiCons:
- Funding can take up to 7 business days
- 680 or higher credit score required
LendingTree Personal Loans
I started this list with Credible, an aggregator, and I’ll conclude it with a nod to another aggregator. LendingTree helped establish one-stop shopping for loans back in 1998, and the service has continued to lead the industry.
Like Credible, LendingTree turns one application into loan offers from a variety of lenders. You’ll still need to assess each offer on its own merits, but LendingTree can save you a lot of legwork.
LendingTree Pros:
- Efficient way to shop
- Trusted leader in the field
LendingTree Cons:
- Can send too many loan solicitations
Other Personal Loan Options to Consider
My list of best personal loan providers above includes most well-known lenders. You’ve probably heard of most of them already.
Below I’m including a list of lesser-known options that have gotten my attention for various reasons. Most of these are loan matching services with P2P funding sources.
AmOne
AmOne has been around 20 years and has about a million customers. I like the company’s versatility. It can handle all sorts of borrowing needs, including personal loans.
- Amounts: Loans range from $1,000 to $100,000.
- Interest rates: You’ll find a wide range, but highly qualified borrowers should get competitive rates.
Fiona
Fiona provides another loan-matching service similar to Credible or LendingTree. The service hasn’t been around long, but it’s growing quickly by partnering with a lot of the lenders on this list.
Fiona works quickly — many applicants have funds within a business day.
Monevo
Yet another loan shopping service, Monevo stands out because of its speed and its high loan amounts. You could borrow $100,000 through the site.
I like the site’s simplicity and its large volume of partnering lenders which means a wider variety of borrowers can benefit.
Federal Trust
Federal Trust partners with Fiona, which I listed above, to match loan shoppers with potential lenders.
You could borrow up to $100,000, and with such a wide variety of lenders in their network, Federal Trust can find competitive rates for eligible borrowers.
I also like Federal Trust’s option of a seven-year installment loan for someone who needs to keep loan payments as low as possible.
Bottom Line: Protect Yourself When You Borrow
Yes, personal loans can help get you out of a tough financial spot. But they’ll also cost you money for months or years, depending on how long you need to pay back the loan.
It goes without saying: You should always look for the lowest, fixed interest rates when borrowing.
Here are some other ways to save money when you borrow:
- Look for Shorter-Term Loans: Monthly payments will be higher with shorter-term loans, but you’ll pay less money over the life of the loan. If you can afford the higher payments, go with a shorter-term loan.
- Avoid Fees: Even if you’re getting a lower interest rate, be sure the lender isn’t compensating by charging high origination fees or punitive late fees that could eclipse your savings on interest.
- Pay it Off Early: Look for a loan with no prepayment penalty, but even if you would incur a prepayment fee, consider whether this fee would exceed the interest you’d be paying over the life of your loan.
- Avoid Borrowing: Maybe this isn’t the time or place, but as a financial advisor I have to say it: If you can save up an emergency fund, you may be able to avoid borrowing in the first place. I recommend having at least three months of income in reserve. Then you can borrow from yourself in an emergency. Maybe it’s too late to save for the current emergency, but this is something to think about when life gets back under control.
Wherever you borrow — online or at a neighborhood bank — try to look out for your future as well as your present financial situation.
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