Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
Updated on Friday, October 12, 2018
Personal loans allow borrowers to have access to a fixed amount of money at a fixed interest rate, with a fixed monthly payment and you know when you’ll have completely paid off the loan. They are a great resource for someone looking to refinance debt and can’t use a balance transfer. If you need cash, personal loans are usually the best way to borrow. Personal loans tend to be much cheaper and simpler than a credit card.
How to get a personal loan?
Step 1: Check and see if you can get a loan with an Internet-only lender.
Ideally, you should start your shopping with a site like LendingTree, which lets you shop at dozens of lenders with just one simple online form (described below).
Step 2: Go to your local credit union and see if they can match or beat your P2P loan
Step 3: Take the loan with the lower interest rate
If you aren’t eligible for a P2P loan from an Internet-only lender then try your local credit union.
The rise of technology allowed a new wave of lenders to offer an alternative to traditional bank loans. Peer-to-Peer lending (or P2P for short) allows borrowers to receive loans from “peers” often in the form of individual investors or hedge funds, endowments and pension funds.
Peer-to-peer loans are interesting because they were developed specifically for the digital environment. This makes them accessible with a few clicks on a computer and a relatively simple application process. Companies like Prosper, LendingClub and Upstart facilitate matching borrowers with investors. There is no need to visit a bank branch. The aim of P2P lending is to give a borrower lower interest rates while giving investors higher returns.
Interestingly, some big banks have acquired or built their own online lenders which are offering consumers even better rates. SunTrust has done that with the acquisition of LightStream, and Goldman Sachs Bank USA has recently invested in building Marcus.
Step 1: Shop Online for a Personal Loan (without hurting your score)
At LendingTree, you can shop for a loan at dozens of lenders with just one online form (that takes less than 5 minutes to complete). LendingTree will perform a soft credit pull (with no impact to your score), and you can get real offers – including how much you may be able to borrow and an approximate interest rate from up to five different lenders. We think this is one of your best places to start your personal loan shopping journey.
As low as 3.49%
Minimum 500 FICO®
24 to 60
LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender. Terms Apply. NMLS #1136.
As of 17-May-19, LendingTree Personal Loan consumers were seeing match rates as low as 3.49% (3.49% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected). Terms Apply. NMLS #1136
- Opploans doesn’t just take into account your credit score when reviewing your loan application, allowing for people with lower scores to possibly be considered if they otherwise demonstrate financial responsibility.
- There are no prepayment penalties.
- Applying for a loan through Opploans will not affect your FICO credit score
- No collateral is needed to get a loan and your on-time payments can help to build your credit score.
- Opploans’s personal loans have an APR that ranges from 99.00% to 199.00%, which is much higher than many other lenders.
- The maximum loan amount is $4,000.
- Opploans doesn’t operate in every state and is not available to active duty service members or dependents of members of the military.
- Their interest rates are most likely lower than other loans with an APR range of 10.68% to 35.89%.
- You can find out your interest rate without a hard inquiry on your credit score. Prosper uses a “soft pull” so there will be no point reductions on your credit score, nor an inquiry left on your report for finding out the interest rate.
- There is no pre-payment penalty (fine if you pay off the loan early), but they won’t refund your loan fee.
- You must have a high credit score (0 or higher) to be eligible to get a personal loan from LendingClub.
- You probably won’t be accepted if you have a history of missed payments.
- There is an upfront fee, but your APR will include the fee. Be sure to compare the APR and not just the interest rate when you’re shopping around.
36 or 60
2.00% - 6.00%
LendingClub is a great tool for borrowers that can offer competitive interest rates.... Read More
People with minimal credit history can turn to Upstart for an opportunity to be eligible for a personal loan.
Upstart evaluates where you went to school, your area of study, your grades and employment history to determine your eligibility for a loan and your interest rate.
Minimum Credit Score
36 or 60
Up to 8.00%
Upstart is an online lender created by ex-Googlers.... Read More
Step 2: Credit Unions
Credit unions are not-for-profit organizations that offer alternatives to traditional banks. They have more of an emphasis on serving their community than worrying about a corporation’s bottom line. Unlike banks, credit union members own the credit unions.
Credit unions do offer loans, but first you must become a member of the credit union. Some credit unions are closed. But others (like PenFed) will let you join if you make a $15 donation to a charity.
- Loans from a credit union usually have lower interest rates than a bank, and possibly the lowest you can find.
- You will need to join a credit union, and may not qualify for a loan so you could be out the cost to join.
PenFed offers an APR starting at 6.49% with no upfront fee for a term of 6 to 60 months. However, you will need to have a 0+ credit score to be competitive for this personal loan.
OneMain Financial is a non-bank lender owned by Citigroup. You will have to physically visit a branch to get approved. But, the process usually takes less than 30 minutes. Borrowers with high credit scores should first explore the P2P space and credit unions before turning to OneMain, because it will be a more expensive form of borrowing.
- If having face-to-face contact is important to you, then you can visit physical branches.
- OneMain may approve people with credit scores as low as 550, so it is possible to get a loan when others deny you. Although expensive, OneMain will be much less expensive than payday loans or title loans.
- You have to visit a branch, even if you’re preapproved online. If you don’t have a branch near you, this could be a serious hassle.
- There will be a hard inquiry on your credit report
- Likely higher interests rates (APRs) than a loan from P2P lenders like Prosper or LendingClub
- A few complex terms and conditions
- Don’t bother with the insurance products they’ll try to sell you.
24 to 60
1.00% - 10.00%
OneMain Financial offers quick turnaround times and you may get your money the same day... Read More
Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. Depending on the state where you open your loan, the origination fee may be either a flat amount or a percentage of your loan amount. Flat fee amounts vary by state, ranging from $25 to $400. Percentage-based fees vary by state ranging from 1% to 10% of your loan amount subject to certain state limits on the fee amount. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.
Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.
Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $14,000. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.
Step 3: Take the Lowest Interest Rate
Personal loans can be valuable tools to help pay down debt, reduce interest rates and save you hundreds to thousands of dollars. But remember; don’t rush into a personal loan just because it seems like a good deal. Take the time to do your research, shop around and ensure you’re getting your absolute best interest rate. Even the difference of .01 can make a difference in the long run.
Read where to find the best personal loan rates online here.