Shopping for a personal loan can help you find the most affordable way to borrow money or consolidate existing debt. However, don’t make the mistake of defaulting to comparing advertised rates and features. Advertised APRs, origination fees and loan amounts can be vastly different from the actual personal loan terms that each lender offers you.
Instead, collect and compare personal loan offers. These customized personal loan quotes will highlight the terms each lender is willing to offer you, and point you to the most affordable loan. Shopping around for personal loans this way could save a borrower up to 35% in interest costs over the course of a three-year loan, according to an analysis of personal loan offers from LendingTree, which owns MagnifyMoney.
If you’re interested in netting such savings for yourself, we’ll show you how. Use this guide to start rounding up and comparing your own personal loan offers.
How to get personal loan offers
Many lenders can pre-assess your creditworthiness and provide you with a personal loan rate quote for the loan amount, rates and fees you can expect. Here’s how to go about collecting these personal loan offers.
Identify what you need in a personal loan
Most lenders will require that you provide certain details before they can give you a personal loan quote. So it’s helpful to be clear on what exactly you’ll need in a loan.
Here’s what you’ll need to know before you start shopping for personal loans:
- How you plan to use the personal loan. Some lenders restrict how these funds may be used. They might ask why you’re borrowing to check that your personal loan use meets their lending guidelines. Be ready to answer honestly about the general purpose of your loan, whether it’s for consolidating credit card debt or financing home improvements.
- How much you want to borrow. Lenders will want to see if the amount you want to borrow will be realistically affordable for you to repay. Do some calculations now on the total costs your personal loan will need to cover to get a principal amount.
- Personal details about your identity, income and expenses. Lenders will need to verify your identity to offer you a loan. Some lenders will ask preliminary questions about your income, existing debt and housing costs as well.
- The general terms, rates and fees you’re looking for. It can help to have a specific loan length in mind, whether it’s two years or five. You can also start getting an idea of what kind of personal loan rates and fees would be reasonable.
- What your credit score is. Checking up on your credit score can help you get an idea of how lenders will view your loan application. If you have credit that’s average or on the cusp of being good, for example, that could be a sign to look for lenders that have more flexible credit guidelines to improve your chances of approval.
Use a personal loan shopping tool
Once you’re clear on what you need in a personal loan, you can actually start your search.
A simple way to get offers is to use the LendingTree personal loan shopping tool. It asks a few basic questions about yourself and the loan you’re looking for, similar to the points covered above.
LendingTree’s tool may then use details you provide to match you with up to five different lenders. It uses a soft credit pull to accurately assess your credit profile, without affecting your credit the way a hard credit pull can. You could get as many as five personal loan quotes in just minutes.
These offers are outlined clearly so you can easily compare them and find the offer that provides the best features for what you’re looking for.
Request rates from lenders with soft credit checks
You can also collect offers on your own, too, by searching for personal loan providers that offer general terms that match your needs. Then, visit each lender’s site and look for a button or link to request a rate quote. Typically, this will take you to a form asking for the kind of details outlined above, which you can complete and submit to get a personal loan offer.
One caveat: Before requesting a personal loan rate quote, check to see if the lender uses soft or hard checks to generate these offers. You can request a rate from lenders who use either credit check method but keep an eye on this to make sure you’re aware of how this process could impact your credit.
5 factors to consider when comparing personal loan offers
Whether you use a loan shopping tool, collect offers yourself or do both — you’ll still want to compare the offers to see how they stack up. Here are the important details to double-check as you assess each personal loan option and tease out the best rates and terms.
1. Loan APRs
Each loan offer should quote an APR. The APR, which stands for annual percentage rate, represents the amount you’ll pay each year to borrow with a specific loan. The APR will reflect all costs of the loan, including interest rate, origination fees and even rate discounts.
The APR you’re offered can also vary widely between lenders — a typical borrower might see a difference of 8.79 percentage points between their highest and lowest offered rates, according to LendingTree.
Because offered APRs includes all costs and can differ so much, comparing APRs is a quick and accurate metric to weigh if you’re seeking loans with the lowests costs.
2. Offered loan amounts
Usually, you’ll need to request a certain loan amount when collecting rate quotes and offers. But not every lender may be able or willing to offer you the amount requested.
Additionally, some lenders will charge origination fees that are taken out of the initial loan funds before they are disbursed to you. So if you’re facing a 2.5% origination fee on a $10,000 loan, you’ll actually receive only $9,750 of the funds.
So as you’re comparing your loan offers, keep an eye on offered amounts to be sure you’ll get the full funds you need.
3. Term length
Another important feature is loan lengths, or how long the lender will give you to repay this debt. Your loan term is important because it’s central to both your monthly costs or payments, and the total amount you will repay over the life of the loan.
Choosing a shorter loan term can have benefits, too. Shorter personal loan terms will lower your loan balance faster, which will also decrease the interest you’re charged on these loans. Short-term personal loans often provide lower interest rates as well, providing even more savings. Lastly, a short loan length will get you out of debt faster.
Need lower monthly payments? Look for the loan offer with the longest term, as this will stretch out repayment over more months and keep costs low.
4. Monthly payment
When reviewing loan offers, it’s important to keep an eye on monthly payments. Different loan amounts, lengths and APRs can all affect your monthly personal loan payments.
Choosing a shorter loan term or a higher loan amount could make monthly payments less affordable, however — even on loans that otherwise have lower costs. So check the monthly payments to be sure you can comfortably fit your new personal loan payments into your monthly expenses and budget.
Our personal loan calculator can be useful to compare different loan terms, and how each will affect monthly payments and total loan costs.
5. Other personal loan features and protections
Weighing your own preferences for a personal loan will also be an important part of comparing offers. In addition to reviewing the details of your offer, you can also investigate the lender’s site to see which offer additional features you value.
If you don’t have great credit, for example, you might need to look for personal loan providers that accept cosigners or have lower minimum credit score requirements. Other benefits, such as job loss protection or free credit score updates, could also sway you toward one lender over another.
How to accept a personal loan offer
You have all your personal loan offers in hand and reviewed them. You’ve chosen the personal loan that fits your financing needs and monthly budget.
If you’re ready to move forward, you might be wondering what’s next. Here’s how can you accept a personal loan offer and get approved.
Consider negotiating personal loan offers. If you’re not satisfied with a final offer, reach out to lenders to discuss them. You might find that some personal loan providers are willing to work with you on the terms. If you have a lender you’d prefer to work with, for example, but doesn’t offer the lowest APR, you could see if it’s willing to match the lower rate.
Choose a lender and complete a personal loan application. When you have a loan offer that’s to your liking, you can move forward to completing a full personal loan application. If you used this LendingTree tool and found an offer that’s a good fit, you can simply click on the offer to connect with the lender and start the process.
Many lenders’ sites also allow you to complete and submit a personal loan application online. Look for a place to do so on the webpage of your preferred lender, or see if it offers a customer service hotline to apply by phone.
Get approved and receive a loan agreement. Once you submit a loan application, the lender will process and evaluate it. Specifically, lenders will want to see if you meet its personal loan requirements for credit scores, debt-to-income ratio and income level.
If you’re well-qualified, the lender will approve you for the loan and provide you with a personal loan agreement.
Review and sign your loan agreement. Carefully review this contract, as it will include the full terms and conditions of this debt, including when and how you’ll receive the loan funds. Make sure that the loan agreement reflects the terms, rates and costs you anticipated based on your original offer.
If it does, you can sign and submit the loan agreement. The lender will then process and certify your loan agreement, and fund the loan. Most borrowers can receive their loan funds within days of signing their final agreement.
The process of shopping for and comparing personal loans does take some time and effort. But loan comparison tools can make the process simple, fast and easy.
Even spending a couple of hours collecting and comparing personal loan quotes can pay off big. On a loan balance of just over $10,000, comparison shopping saves as much as $1,700 on average. You can also find the financing you need while paying less in interest and fees when you take the time to research your personal loan options and select the best fit for you.
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