Best Personal Loans of 2023

A personal loan is a type of installment loan in which money is borrowed in a lump sum and repaid over time in fixed monthly payments.

Borrowers commonly use personal loans to consolidate debt, because a single loan can replace multiple monthly payments and potentially give you a lower interest rate than you pay on high-interest debts like credit cards.

Other than a couple of restrictions, including buying a home or paying for education costs, you can get pretty creative with how you use a personal loan. It could give you a leg up to start a business if you can’t get approved for a dedicated business loan. Plus, a personal loan can give you a lifeline if your financial situation changes unexpectedly or help you shoulder big expenses without the high interest of credit cards.

Personal loans offered by online lenders and traditional financial institutions share a lot of standard features. They tend to come in amounts between $5,000 to $40,000, with interest rates between 5% and 36%, and repayment periods between two and seven years (though there are outliers for all of these parameters). Most lenders offer a discounted interest rate if you sign up for automatic payments, typically 0.25 or 0.5 percentage points.

Typically, you need good to excellent credit — a score of at least 670 — but you can find lenders, especially through online platforms, that cater to borrowers with lower scores. A few lenders offer perks, like repayment benefits or a free FICO score, that could make one more attractive for you than another.

But the biggest selling point will likely be the cost of your loan — check your prequalified rates with lenders (it doesn’t affect your credit score) to find the loan with the best interest rate, monthly payment and repayment period for your situation.

Credible

Best Loan Marketplace

Key Features

• Compare rates from top lenders
• Loans for poor credit available
• Loan amounts as low as $600

Use Credible’s search engine to find personal loans for as little as $600. Unlike other marketplaces, Credible only gets paid when you accept a loan offer, so it doesn’t sell your information to lenders to pester you. You’ll see prequalified offers and compare lenders side by side, then click through from your Credible dashboard to a lender’s site to apply.

Credible

APR

5.40% – 35.99%

Loan amounts

$600 – $100,000

Minimum credit score

640

Upstart

Best for Borrowers Without a Traditional Credit History

Key Features

• AI-powered lending for partner banks
• Considers more than your credit history
• Potential for one-day funding

Upstart isn’t technically a lender, but it’s not a marketplace, either. You’ll see prequalified rates from partner lenders and apply right through its platform. Upstart’s proprietary AI uses more than the traditional credit score to assess a borrower’s creditworthiness, so you might have a higher chance of approval on the platform if you have no credit score but other positive factors, like education and income.

Upstart

APR

6.50% – 35.99%

Loan amounts

$1,000 – $50,000

Minimum credit score

300

SoFi

Best for Same-Day Funding

Key Features

• No fees
• Unemployment protection
• Potential for same-day funding

SoFi is a tech platform-turned bank that offers a range of financial services from the convenience of an app. Its personal loans come with no origination fees, prepayment penalties or other hidden fees. Funding is usually available the same day as approval, and SoFi includes unemployment protection: If you lose your job, SoFi works with you to modify your payments temporarily.

SoFi

APR

7.99% – 23.43%

Loan amounts

$5,000 – $100,000

Minimum credit score

650

PenFed

Best Credit Union for Personal Loans

Key Features

• No hidden fees
• Loan amounts as low as $600
• Flexible terms

PenFed Credit Union is the best credit union for personal loans. Terms are flexible (12 to 60 months), and you can get a loan for as low as $600. Don’t sweat the fees (because there aren’t any); you won’t pay an origination fee, and there’s no early payoff penalty. The only downside? You have to be a member of the credit union to apply.

PenFed

APR

7.74% – 17.99%

Loan amounts

$600 – $50,000

Minimum credit score

650

Upgrade

Best for Raising your Credit Score

Key Features

• Checking, credit and loans in one platform
• No prepayment penalties
• Next day funding

Upgrade is a financial tech company that offers rewards checking, an innovative-payment credit card, credit monitoring and personal loans. The platform is an all-in-one debt payoff and management solution — its personal loans and credit cards are designed with quick repayment in mind, you get free credit monitoring, and you may be able to qualify for a loan with a fair or poor credit score.

Upgrade

APR

7.96% – 35.97%

Loan amounts

$1,000 – $50,000

Minimum credit score

560

Rocket Loans

Best for Transparent Process

Key Features

• Same day funding
• No prepayment penalties
• All-online application

Apply online for a personal loan from Rocket Loans to see prequalified offers in less than a minute. You can complete your application entirely online, including income and identity verification, so no phone calls or snail mail from lenders. Funding could come within a couple of business days — if not the same day. A major pitfall? The 7% origination fee

Rocket Loans

APR

8.416% – 29.99%

Loan amounts

$2,000 – $45,000

Minimum credit score

640

Happy Money

Best for Debt Consolidation

Key Features

• Specially designed for credit card payoff
• Borrow from community-based lenders
• Origination fee between 0% and 5%

Happy Money is a financial tech company that works with community based lenders — credit unions and mission-driven institutions — to provide The Payoff Loan, a personal loan designed for credit card debt consolidation. See loan offers and choose among the lowest monthly payment, lowest interest rate or quickest payoff date to align with your financial goals.

Happy Money

APR

8.99% – 29.99%

Loan amounts

$5,000 – $40,000

Minimum credit requirement

600

Discover

Best for Flexible Repayment Options

Key Features

• No fees (except late fees)
• Repayment assistance options
• Free FICO credit score

Discover personal loans are straightforward, fee-free loans up to $35,000 with a minimum credit score of 660. Discover offers flexible terms and a 30-day guarantee in case you change your mind. The lack of fees, including origination and prepayment, is a huge selling point for Discover — as is the low potential APR.

Discover

APR

6.99% – 24.99%

Loan amounts

$2,500 – $35,000

Minimum credit score

660

Marcus

Best for On-Time Payment Rewards

Key Features

• No fees
• Skip-a-payment reward for on-time repayment
• Customize your monthly payment

Marcus is the personal banking arm of Goldman Sachs, offering individual savings, investing, credit cards and loans. Its personal loans are available to borrowers with good credit for up to $40,000, with no fees — not even late fees. And it rewards you for on-time payment: Make your monthly payment on time for 12 months in a row, and you can defer payment for a month with no additional interest accrued.

Marcus

APR

8.99% – 24.74%

Loan amounts

$3,500 – $40,000

Minimum credit score

660

LendingClub

Best for Joint Loans

Key Features

• Borrow up to $40,000
• Funding within 48 hours
• No prepayment penalty

LendingClub is an online marketplace bank offering checking accounts and personal loans for consumers. Take out personal loans up to $40,000 for terms of three to five years — you can even do joint loans. (You might know the platform for peer-to-peer lending, which is how it started, but as of 2020, LendingClub only offers traditional personal loans.)

LendingClub

APR

8.05% – 36.00%

Loan amounts

$1,000 – $40,000

Minimum credit score

600

Prosper

Best for Peer-to-Peer Borrowing

Key Features

• Peer-to-peer lending
• Next-day funding
• No prepayment penalty

Prosper is an online peer-to-peer lending company that lets individuals and institutions invest in personal loans to support borrowers and earn returns through debt securities. Prosper handles the loan application, origination and management, so you don’t work directly with funders, but you can rest assured that the interest you pay goes back to real people, not just banks.

Prosper

APR

6.99% – 35.99%

Loan amounts

$2,000 – $50,000

Minimum credit score

600

Avant

Best for Fair Credit Loans

Key Features

• Next-day funding
• Low minimum credit score
• Easy-to-use app

Avant offers personal loans up to $35,000 as soon as the next business day after you’re approved. Most Avant borrowers have FICO credit scores between 600 and 700, but Avant sometimes awards loans to borrowers whose score is as low as 580. If you have fair credit, Avant is worth a shot.

Avant

APR

9.95% – 35.95%

Loan amounts

$2,000 – $35,000

Minimum credit score

580

LendingPoint

Best for Fair Credit Borrowers

Key Features

• Next-day funding
• No co-sign loans
• AI technology that considers more than just cred

LendingPoint uses proprietary algorithms to assess creditworthiness using factors that go beyond the traditional FICO score. It offers unsecured personal loans as well as e-commerce and point-of-sale financing. With a minimum credit score of 600, this could be a good option for borrowers with fair credit scores, though it doesn’t offer co-signed loans, which can be useful for low-credit borrowers.

LendingPoint

APR

7.99% – 35.99%

Loan amounts

$2,000 – $36,500

Minimum credit score

600

Types of Personal Loans

“Personal loan” is a broad category of lending that you can apply to almost any financial need. Lenders often advertise things like home improvement loans, wedding loans, timeshare loans or adoption loans — but these are all technically just personal loans, structured the same way.

A few key differences to look out for are:

• Debt consolidation loans: Many people use personal loans for credit card debt consolidation or refinancing — replacing one or many debts with another. It can simplify  repayment and reduce your interest rate. When you take out a personal loan for this purpose, the lender usually sends the money directly to your other creditors, instead of to you.

• Secured loan: A secured loan of any kind is one backed by collateral — that’s an asset you put on the line to turn over to the lender in case you can’t repay the loan. For mortgages, the collateral is your home; for auto loans, it’s the vehicle. Secured personal loans are also available, and you could put up anything of value as collateral, like a boat, jewelry, fine art or investment funds.

• Unsecured loan: Unsecured loans are those without any collateral backing them. This increases the risk for the lender, so you usually have to have excellent credit and income to qualify.

Personal Loan Costs to Consider

When you evaluate personal loan offers, you’ll probably focus on the interest rate, because that has a significant impact on the long-term cost of the loan. But there are other costs to consider.

Before accepting any loan offer or signing the agreement, make sure you know how much you’ll pay (if anything) in these common costs:

• APR: Annual percentage rate is what’s often referred to as your interest rate and usually the most prominently advertised feature of your loan. Personal loan interest rates tend to fall between 5% and 36%. A higher credit score and shorter repayment period can lower the interest rate, while a lower credit score and longer repayment period can increase it.

• Origination fee: Many lenders take a bite out of your loan upfront, so you won’t receive 100% of the loan amount. Origination fees are usually around 2% or 3% of your loan amount, and lenders subtract them from the original loan amount you receive.

• Late fee: Your loan agreement will likely come with a fee for late payments, usually a percentage of the payment due or sometimes a flat fee. Those fees are added to your loan balance when you’re late making a monthly payment.

• Prepayment penalties: They’re becoming less common, but some lenders still include prepayment fees in loan agreements. If you pay off part or all of the loan early, usually within a determined period after receiving it, the lender could charge you an additional fee. The prepayment fee is usually a percentage of the total loan balance at the time you pay it off.

The other thing that’ll help you determine whether a loan offer is right for you are the repayment terms. Along with any additional costs, look for the basics, including how long you have to repay and how much your monthly payments will be.

Who Can Take out a Personal Loan?

Any individual can apply for a personal loan for just about any purpose.

Many lenders advertise loans for specific purposes, like vacation, weddings or home improvements — but those are usually marketing details. You can use personal loan funds almost any way you want, except for some uses that are restricted to dedicated types of loans, including buying a home and paying for education.

Unsecured personal loans tend to be tougher to qualify for than those dedicated loans, because they aren’t attached to any collateral or government backing.

A few companies look into alternative factors to forecast your ability to repay a loan, but most are looking for traditional creditworthiness, including:

• Credit score and credit history: Lenders usually want to see a credit score of at least 720 for personal loans, though some “bad credit loans” might be accessible for borrowers with scores as low as 600.

• Debt-to-income ratio: Your debt-to-income ratio (DTI) is the difference between how much you make each month and how much you owe in mortgage and other debt payments, like credit card debt and existing loans. Lenders typically want to see a DTI no higher than 43%, but the lower the better.

• Income: Lenders typically require you to prove a regular source of income that shows your likely ability to make monthly payments. You can show this through pay stubs if you’re employed, or a recent tax return if you’re self-employed. If you don’t have either of those (or they don’t accurately reflect your expected income), contact a lender before submitting your application to make sure you can work out an alternative way to prove your income.

Where to Get a Personal Loan

You can find personal loans through several types of platforms, including:

• Banks and credit unions, where you could keep all of your banking, credit cards, investing and insurance under one financial institution.

• Online lenders, meaning companies that only offer loans, but not other banking or financial services.

• Marketplaces, like Fiona, AmOne or OppLoans, which aggregate offers from multiple lenders and let you see pre-approved rates with a soft credit check. Some marketplaces also let you handle the entire loan application and origination process through their platform, while others simply connect you with lenders to complete the process on their site or over the phone.

How to Get a Personal Loan

Follow these steps to get a personal loan:

1.Consider your financial options. Is a personal loan the best way to meet your needs? You might have alternatives, like delaying a purchase and saving the money.

2. Review your finances. Figure out a monthly payment you can comfortably fit into your life for the next few years, and use that as a guide when reviewing loan offers.

3. Check your credit score. Personal loan lenders generally look for borrowers with good or excellent credit scores — about 700 or higher. Even those that accept borrowers with lower scores use your credit history to determine your repayment terms and interest rate. Know where you stand before applying by checking your credit score.

4. Compare lenders. You’re off to a good start! Checking reviews like this and comparing loan offers through marketplaces can help you see lenders side by side easily. Check lender requirements and options for loan terms before applying and dinging your credit history.

5. Get pre-qualified. Either through a marketplace or directly on a lender’s site, you can give a little information to go through a soft credit check (that won’t affect your credit score) and get pre-qualified for a loan. You’ll see an interest rate and repayment terms a lender could offer you based on the credit check, so you can decide whether it’s worth putting in a full application.

6. Review the loan details. Look over offers carefully to make sure the terms, including the monthly payment, repayment period and any fees, fit with your financial plan.

7. Complete an application. Choose a loan you want, and fill out an application with the lender. You’ll go through a hard credit check (which shows up on your credit report as a request for credit and could lower your score temporarily), and likely be officially approved for the loan.

8. Receive the funds. Personal loan funds typically go straight into your bank account (unless you’re using them for debt consolidation), and many online lenders fund loans within the same day or the next day after you’re approved.

9. Set up a payment plan. Most lenders offer better interest rates if you set up automatic payments, which you can do through the lender’s website if you’re comfortable with it. If you’re paying back other debts at the same time, use a repayment method like the debt snowball or avalanche to determine where to direct your money whenever you’ve got extra to put toward your financial goals.

Frequently Asked Questions (FAQs) About Personal Loans

There are a lot of questions about how to acquire personal loans and which ones are the best. We’ve rounded up the answers to the most commonly asked questions.

Contributor Timothy Moore has written about personal finance with specialities in banking and insurance since 2012. His work has appeared in publications such as Debt.com, Ladders, WDW Magazine, Glassdoor and The News Wheel. The Penny Hoarder staff contributed to this report.