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Personal Loans

The Ultimate Guide to Personal Loans

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

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Part I: Personal Loans 101

Personal loans are among the easiest financial tools to understand. When you take out a personal loan, a bank lends you money for a fixed interest rate and a fixed period of time.

This means you’ll be expected to make a fixed monthly payment for the life of the loan, but it also means you’ll face less uncertainty than with a credit card. With a personal loan, you’ll know exactly how much you borrowed, how much you’ll pay every month and when your debt will be paid in full.

This isn’t to suggest that personal loans are perfect. Like anything else in life, they come with risks and drawbacks. Most of the downsides depend on how responsible you are with credit and what interest rate you’ll pay.

Keep reading to learn more about how personal loans work, which pitfalls to avoid and how to get the most out of the loan you choose.

How personal loans work

As we mentioned, a personal loan is easy to grasp. You borrow money at a fixed interest rate, over a fixed amount of time, then you pay a fixed monthly payment until your loan is paid off.

While the terms of your personal loan can depend on an array of factors, these loans are typically offered in amounts up to $35,000. You may be able to borrow this amount for any length of time from 12 months to 20 years.

In addition to the interest rate you’ll pay, personal loans may also come with an origination fee which can range from 1 percent to as high as 8 percent at some lenders, according to a review of personal loan terms on MagnifyMoney.com. On the bright side, it’s a competitive business and many lenders charge no origination fee or any other fees upfront.The real costs to worry about with personal loans involve the APR. Interest rates charged through personal loans can vary quite a bit, and they are typically higher than you see with secured loans such as home equity or auto loans. That’s because personal loans are unsecured debts. Whereas a secured loan — think home or auto loan — is secured by an underlying investment (in these cases, a home or car), unsecured loans aren’t secured by an investment. The banks are taking on a greater risk lending without any collateral, so they charge higher fees and APRs as a result.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

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.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% 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).

How to qualify for one

If you’re considering a personal loan, here’s what you’ll need to qualify:

  • Good or excellent creditSome personal loan companies will approve you with a credit score as low as 580, according to MagnifyMoney’s parent company, LendingTree. But having very good credit (a FICO score over 740) will put you in a position to qualify for a personal loan with the best interest rate and terms.
  • Proof of ability to repay – You need to be able to show your ability to repay your loan, usually with pay stubs or other evidence of employment.
  • Low debt-to-income ratio – Lenders may be hesitant to lend you money if your debt-to-income ratio is high. This ratio is determined by taking your total monthly recurring debt and dividing it by your monthly income. Discover Personal Loans notes that borrowers with a debt-to-income ratio below 36 percent may qualify for the best terms and rates on loans and mortgages.
  • Co-signer – If your credit score is poor, you may need a co-signer with good credit to help you qualify for a personal loan.

How to pick the best personal loan

When it comes to personal loans, there is no one-size-fits-all option. The best loan for your needs depends on factors such as how much you need to borrow and whether you have good credit scores.

Here are some tips that can help you identify a loan that fits your goals:

  • Shop around with different lenders. Thanks to the internet, it’s easier than ever to shop around and compare rates and loan terms. Our parent company, LendingTree, is an excellent place to start because you can easily explore options from different lenders in one place. Start by filling out an online form.
  • Read the fine print. Make sure you understand each loan’s terms, conditions and interest rate, along with your monthly payment.
  • Look for a low-cost loan. Ideally, you should look for a personal loan with the lowest rate and fees (or no fees) you can find.
  • Read reviews. The internet is a treasure trove for reviews of various lenders. Reading product reviews can help you gauge the quality of each lender and what your experience might be like.

Part II: Common Uses for a Personal Loan

While borrowing money and paying it back slowly can be ideal no matter what your goals might be, you might be surprised to find out just how many uses personal loans can have.

“I’ve found that personal loans can be helpful when looking to consolidate higher interest debt, pay for a major expense or quickly get funds when needed for an emergency,” says Jeff Rose, founder of Good Financial Cents and partner of Discover Personal Loans.

Rose also pointed to a new survey from Discover Personal Loans, which showed that 26 percent of respondents cited a major medical expense as the most popular potential use for a personal loan, followed by 22 percent saying debt consolidation, and 13 percent using it to fund a small business.

Take note: That doesn’t mean personal loans are ideal for all uses. Here are some potential uses for personal loans, along with some pros and cons to consider:

Debt consolidation

If you have several types of debt and you’re struggling to keep up, debt consolidation can be a smart way to tackle the problem. When you consolidate debt, you take out a new loan, use it to pay off your existing debts and are left with just one loan to repay.

The real benefit of using a personal loan for debt consolidation is knowing exactly how much you pay each month and precisely how long you have until you’re debt-free.

“You don’t get that with a credit card,” says Gerri Detweiler, a writer, educator and authority on credit and loans.

You’ll have to decide when a personal loan makes sense as a debt consolidation tool over other options — such as a balance transfer credit card. It will likely come down to your credit score and which option will cost you the least over time. For example, a debt consolidation loan may have a higher interest rate than a balance transfer credit card, many of which come with a 0 percent APR for 12 to 21 months.

You can find 0% balance transfer offers at CompareCards.com, another LendingTree-owned site.

Medical expenses

Taking a personal loan to cover medical expenses “can be very helpful, especially if it keeps you out of collections,” Detweiler says.

Before you take this step, however, you should speak to your provider to see if it offers a payment plan. If so, you may be able to make payments on your outstanding medical debts without paying interest.

Car purchase

You can take out a personal loan to buy a car, but should you? Detweiler says it depends on the type of car you’re buying and how much it costs.

“You would probably get a better interest rate through a car dealership since personal loans are unsecured but car loans use the car as collateral,” she says.

On the flip side, a personal loan might work better if you’re buying an older used car from an individual instead of a dealership.

Home improvement

Detweiler notes that, while a lot of people use a home equity loan or HELOC, or home equity line of credit, to remodel their home, not everyone has enough equity to qualify. A personal loan could be ideal since you may qualify no matter how much equity you have in your home.

Not only that, but you won’t lose your home if you fall behind on payments with a personal loan. A home equity loan uses your home as collateral.

Moving expenses

Moving can be expensive, but you should try to save up the cash before your move, if you can. If you’re short on funds, a personal loan or a credit card can work well. The best option for your needs depends on the interest rate you qualify for and how long repayment might take you.

Starting a business

Detweiler says she’s a big fan of trying to separate personal and business credit, but there are still times when using a personal loan to finance a business could be beneficial.

If you’re a startup that’s not yet earning money, for example, you might not yet qualify for a business loan.

“In that case, a personal loan could help you get your business off the ground,” she says.

Boosting your credit

“A personal loan can help you improve your credit mix, and that can boost your score,” says Detweiler. “But you shouldn’t get into debt just to build credit.”

If you want to build credit without getting into debt, signing up for a secured credit card and using it regularly can also help. Read more about how secured cards work.

Emergencies

When it comes to the unexpected, personal loans can be a better option than some other types of borrowing, like payday loans. Not only are interest rates typically low, but you can figure out an exact payment plan to pay the debt off before you sign up.

But first, you should “really think about whether you need to borrow or whether you could come up with the money another way,” says Detweiler.

When to avoid using a personal loan

While a personal loan can be a valuable financial tool, there are plenty of times where you might be better off borrowing money a different way – or not borrowing at all.

Joseph Toms, president of the nonbank consumer lender Freedom Financial Asset Management, says these instances really depend on individuals and their situation, although there are many telltale signs a personal loan is not for you.s

One of the biggest signs, he says, is when you can’t afford to keep up with the monthly payments for the loan you plan to take out.

“Not being able to keep up with the monthly payments means you won’t pay your loan on time,” he says. “If you pay your bills late or not at all, your credit will take a hit. That can lead to higher interest rates and cause your debt to spiral out of control.”

Before you take out a personal loan, you should write out a budget and make sure you can truly afford the monthly payments, he says.

Another time you shouldn’t take out a personal loan is when you don’t truly need what you’re borrowing for – or if you should probably live without it.

“A personal loan can be like a candy store,” says Toms.

The temptation of being able to borrow money can be too much for some people. It can inspire crazy actions, like financing purchases that can leave the borrower in financial peril, Toms says.

Another instance where you may not want to get a personal loan? “If you’re going to buy a house in the near future, you should think twice about taking out a personal loan,” Detweiler says.

This is because the amount you owe can affect how much you can borrow for a home.

Lastly, you should probably avoid a personal loan if you’re on shaky financial ground, says Detweiler.

“If you aren’t in a very stable financial situation, a personal loan could make your problems worse,” she says. “It’s risky because if you don’t make the payments, you could wind up hurting your credit and could end up in default or collections.”

Using personal loans for a vacation might be tempting, but it’s not the wisest choice. However, the truth is, some people do this anyway. In a recent survey, we found that 16 percent of people who said they are going into debt for vacation are using personal loans.

“Don’t borrow money and go into debt for a vacation,” Detweiler urges. “You’ll come back from vacation in debt. Save the money instead, or have a staycation.”

Like vacations, a wedding financed with debt is rarely a good idea.

“Don’t start your marriage in debt,” says Detweiler. If you have to use a personal loan for your wedding, make sure you shop around for a loan with the lowest interest rate and best terms.

If you believe you could pay the balance off in a short amount of time, you may also be better off with a 0 percent APR credit card.

The risks of using a personal loan

Taking out a personal loan can help you borrow the money you need to achieve any goal, but that doesn’t mean these loans are without risk. Some of the perils you’ll face when taking out any loan include:

  • Overspending – A personal loan can be the answer to your prayers, but some experts say they’re almost too easy. “No one is going to question what you’re spending the money on, so you might use this loan to justify things you shouldn’t really buy,” says Detweiler. “If you go overboard, you can end up with debt that takes years to pay off and a lifetime of regret.”
  • Damage to your credit if you don’t repay the loan – Obviously, your personal loan may go off without a hitch if you don’t borrow too much and can always afford your payments. “But if you can’t afford your payments due to job loss or another issue, your credit will see damage,” Detweiler explains. That damage can ruin your credit, or even lead to collections or bankruptcy.
  • Bad financial habits – Getting into the habit of constantly borrowing money can make your life more difficult, she adds. While personal loans can be easy to get, relying on credit over and over can leave you short on cash to reach other financial goals.

And the benefits?

There are times to avoid a personal loan, without doubt, but these loans aren’t all bad. In the real world, there are plenty of instances where a personal loan can help you get what you want or even improve your financial life.

If you take out a personal loan – and do it in a financially responsible way – there are plenty of benefits to look forward to. These loans can:

  • Simplify your financial life – “A personal loan can be a great tool for people looking to simplify and save by consolidating higher interest debt into one fixed monthly payment,” says Rose, of Discover Personal Loans. “If you have multiple credit cards or store card bills, and are having difficulty keeping track of them all, a personal loan can be a smart tool to streamline your payments and potentially save thousands of dollars on interest.”
  • Help with emergencies – If you are hit with an unexpected expense you can’t cover, “personal loans can provide the funds fairly quickly to help manage through the situation,” says Rose. In that sense, a personal loan could actually save you from financial peril.
  • Offer you predictable payments and interest – Because of the way personal loans are set up, you’ll never wonder how much you’ll pay each month or how much interest you owe. “Compared to higher-interest financial tools, having a fixed interest rate and monthly payment could save you money in the long run,” Rose explains.

Part III: Personal Loan Traps and Scams to Avoid

While there are plenty of reputable lenders in the personal loan space, that doesn’t mean it’s scam-free. Like most other areas of personal finance, there are plenty of fraudsters who will use personal loans to extract money from you or perpetrate fraud in some other way.

As you explore the world of personal loans, here are some traps to be aware of:

Advance loan fees

Occasionally, a fraudulent loan company will offer outrageous loans and loan terms with a catch: You have to pay the first few months of payments to qualify.

“They usually ask for these funds via Western Union or Moneygram,” says Detweiler. “But it’s a complete scam.”

No reputable lender would ask you to pay money upfront. “Do not pay money upfront for a personal loan under any circumstances,” she says.

Loan insurance

Another one from Detweiler: the fraudulent lender who will offer you a personal loan, only to say you need to buy “insurance” to cover the loan in case you default.

This is also a scam because personal loans are unsecured – and because no reputable lender would require you to buy insurance to insure your own loan.

‘No credit check’ loans

According to the Consumer Financial Protection Bureau (CFPB), a lender who isn’t interested in checking your credit should set off alarms.

Ads that say: “Bad credit? No problem” or “We don’t care about your past” should be particularly worrisome, notes the CFPB. These slogans are usually suggestive of a scam.

Pre-compute interest

Some personal loans might come with the caveat of pre-compute interest, interest that is stacked so you pay the bulk of it near the beginning of your loan term.

This is a bad deal, since you’ll wind up paying extra interest – even if you pay your loan off early. Before you take out a personal loan, make sure you know how interest is accrued and how it will impact the total costs of your loan.

Prepayment penalties

Some personal loans will tack on a prepayment penalty if you pay your loan off early. Since this fee isn’t that common and is totally unnecessary, you should avoid loans that charge this fee altogether.

Make sure you read through your loans terms to check for a prepayment penalty. If you find one, look for another lender and loan.

Part IV: Alternatives to a Personal Loan

A personal loan might be ideal for helping you reach your financial goals, but it’s also possible a different financial product might work better. As you consider the prospect of a personal loan, don’t forget to explore your other options.

Here are some alternatives to consider, along with some instances where they may represent a better deal:

Personal loans versus credit cards

According to Paul Gentile, president of Cooperative Credit Union Association, there are definitely times where a credit card may be better than a personal loan.

“A credit card can be used to purchase something, so that can offer more flexibility,” he says. Credit cards can also be a great deal if you pay them off monthly, he notes, since you have the potential to earn rewards. Lastly, credit cards can be beneficial for certain short-term purchases since many offer 0 percent APR for 12 to 21 months.

On the flip side, “a personal loan may be better for someone who wants to make a large, intentional purchase that they planned for.”

Personal loans also offer the benefit of a fixed payment and payoff date, whereas credit cards can literally tether you to payments indefinitely if you keep using them for purchases.

Personal loans versus HELOCs

As Gentile notes, HELOCs come with the advantage of interest deductions (similar to how you deduct mortgage interest) if you itemize your taxes. In contrast, interest paid on your personal loan is not tax-deductible. Rates on HELOCs may also be lower than those on personal loans, he notes.

A possible downside with HELOCs is the fact that some only require you to pay interest for years. “This means you may not be paying anything toward the principal,” Gentile says.

Some HELOCs also come with balloon payments at the end, and those big payments may be hard to handle. On the other hand, personal loans come with predictable, fixed monthly payments and no surprises.

Personal loans versus peer-to-peer loans

Gentile notes that peer-to-peer lending is really similar to a personal loan. Both things allow you to borrow a fixed rate of cash and repay it over a predetermined length of time.

But since peer-to-peer lending isn’t regulated as heavily, this could be worrisome, says Gentile.

Before you choose among personal loans and peer-to-peer loans, make sure you compare all related fees, all total costs and interest rates.

Personal Loans versus cash-out refinancing

Gentile believes that opting for a cash-out refinance is the best option for people committed to their properties in the long term, whereas personal loans are better for short-term financial needs.

There are risks to getting cash out of your home as well, he notes. “If home prices drop, you could end up underwater.”

On the other hand, refinancing your home to get access to your home equity could help you qualify for a lower interest rate than a personal loan. “You also get to write off your mortgage interest, so you get a tax deduction,” notes Gentile.

Check out this cash-out refi calculator from MagnifyMoney’s parent company, LendingTree.

Frequently Asked Questions

According to the CFPB, lenders and loan brokers are required to be registered in all states where they conduct business. To check registration, they suggest calling your state attorney general’s office, or your state’s Department of Banking or Financial Regulation.

Yes, if you use it to consolidate high interest debts from credit cards or other loans. To get out of debt faster, make sure your new personal loan comes with a lower interest rate than you’re already paying, along with no or few fees. Paying more than your minimum payment is another great way to pay down debt faster.

Your interest rate will be determined based on the type of loan you apply for, how much you want to borrow and the quality of your credit. Getting the best loan terms and the best interest rate typically requires a credit score of 740 or more, or very good or exceptional credit.

If you were denied a personal loan due to poor credit, the best thing you can do is take a few simple steps to improve your credit rating over time. Pay all of your bills on time, pay off debt to reduce your credit utilization, and avoid opening or closing too many accounts.

Thanks to the internet, you can apply for a personal loan online and from the comfort of your own home. You can also compare lenders, fees, and interest rates by visiting this page.

Because personal loans are unsecured, you don’t need collateral. What you do need is the ability to illustrate how you’ll repay your loan, along with a good credit score.

You can absolutely pay your loan off early; very few loans will charge a prepayment penalty. Before you take out a personal loan, you should make sure you won’t be charged a prepayment penalty if you’re able to repay your loan early.

While applying for a personal loan will result in a hard inquiry being placed on your credit report, any negative hit your score takes will be short-lived. Borrowing too much in relation to your credit limits can hurt your utilization, however, and yes, that could hurt your credit score.

On the other hand, repaying your personal loan on time, and ultimately in full, can actually help your score in the long run.

Depending on your lender, you may receive funds from your new personal loan as early as the next business day. However, it could take up to seven business days (or longer) if you apply for a loan on a weekend, have errors in your application, or your loan takes longer to process for any reason.

The best part about personal loans is that you can use the funds however you want. You can use the cash to pay off high interest debt, remodel your kitchen or buy a newer car, for example.

Just keep in mind that borrowing is never free. In addition to the interest you pay on your loan, you may also incur additional costs, such as origination or application fees.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

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.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% 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).

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Holly Johnson
Holly Johnson |

Holly Johnson is a writer at MagnifyMoney. You can email Holly here

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Personal Loans

American Express Personal Loan Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

American Express
APR

6.98%
To
18.99%

Credit Req.

Fair to excellent

Minimum Credit Score

Terms

12 to 48

months

Origination Fee

None

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on American Express’s secure website

American Express personal loan details
 

Fees and penalties

  • Term lengths: 12 to 48 months
  • APR range: 6.98% to 18.99%
  • Loan amounts: $3,500 to $40,000
  • Time to funding: Typically 3 to 5 business days after you sign the loan agreement
  • Credit check: Soft Pull
  • Origination fee: None
  • Prepayment fee: None
  • Late payment fee: $39

American Express product details

Personal loans do not come with the perks often attached to American Express card products, like Membership Rewards, cash back or insurance benefits. However, the only fee associated with personal loans is a late fee — $39 if your payment is late or not made in full, which can result in major savings. To help you avoid late payments, the company offers an autopay feature.

If you’re using a personal loan for debt consolidation, American Express makes the process easy by sending your funds directly to the issuer. Payments can be disbursed to up to four personal credit card accounts held by most major credit card issuers. You’ll find out if your credit card account is eligible during the application process.

Eligibility requirements

  • Minimum credit score: Fair to excellent
  • Minimum credit history: Not specified
  • Maximum debt-to-income ratio: Not specified

To be preapproved for an American Express personal loan, you must meet the lender’s minimum eligibility requirements. This includes being:

  • A U.S. citizen or resident of the U.S. or its territories
  • At least 18 years old
  • A basic card member with an eligible consumer American Express card with at least nine months of account history that is in good standing at the time of application submission

Applying for a personal loan from American Express

Only preapproved American Express card members are eligible to apply for a personal loan. During the preapproval process, you’ll be asked to provide basic information, like the amount of money you’d like to borrow, desired repayment period, loan purpose, contact information and income. Keep in mind, however, that some card members may only be preapproved to use their personal loan for credit card debt consolidation.

All personal loan applications must be submitted online. You’ll need an American Express online account and valid email address, and you must agree to receive electronic communications and other online documents. Do note, however, that preapproval is not a guarantee that you’ll be granted a loan — but if your application is approved, you’ll have up to three days to review and accept the terms.

If your personal loan was approved to pay down credit card debt, the funds will be sent directly to the accounts designated on your application. Otherwise, the money will be sent to an eligible bank account on file with American Express. If you don’t have an eligible bank account on file, you have three days from the date you sign your loan agreement to add a personal checking account in your name or your loan agreement will be deemed void and unenforceable.

Pros and cons of an American Express personal loan

Pros:

Cons:

  • Minimal-to-no fees. The sole fee associated with an American Express personal loan is a $39 late fee, assessed only on late payments and those not made in full.
  • Wide range on loan amounts. American Express personal loans are available in increments from $3,500 to $40,000. The amount granted is based on creditworthiness and other factors.
  • Multiple repayment periods. Applicants will have the option to choose among several repayment periods (thereby allowing you to secure a monthly payment that doesn’t put a strain on your budget). Approved borrowers may receive offers ranging from 12 to 48 months.
  • Soft credit pulls. Applying for an American Express personal loan will not impact your credit score. But if you’re approved, loan details will be sent to credit reporting agencies, which could affect your credit score.
  • American Express credit card required. Only preapproved American Express card members are eligible to apply for a personal loan through the company, and you must have had that account for at least nine months.
  • No perks. Personal loans do not come with perks offered on American Express cards, such as Membership Rewards, cash back or insurance benefits.
  • Not for bad-credit borrowers. Only cardholders with fair to excellent credit are encouraged to apply. American Express recommends that applicants with a credit score of 659 or less improve their credit before submitting an application.

Who’s the best fit for an American Express personal loan?

An American Express personal loan can be a great choice for cardholders who don’t want to pay fees. Since the only fee associated with the loan is a $39 late fee — assessed only on late payments and those not made in full — you won’t pay any fees if you satisfy your monthly financial obligation.

Having several repayment periods available can also be a helpful option. This gives you the opportunity to choose a monthly payment that works best with your budget.

Considering the loan amount ranges from $3,500 to $40,000, this product is geared toward borrowers who need a higher loan amount. It’s also a better choice for cardholders with higher credit scores, as loan offers — including APR and maximum borrowing power — are based on creditworthiness and other factors.

Before moving forward with an application, it’s a good idea to check out reviews from other consumers and get a feel for the lender’s general reputation.

American Express consumer reviews

American Express has an A+ rating from the Better Business Bureau. The lender does not yet have reviews on LendingTree, our parent company.

To learn more about American Express, we recommend contacting the lender for a firsthand experience at its customer service and to get answers to any outstanding questions. You may also check the lender’s social media pages to see its activity and how consumers are responding. This may help you make a more informed decision before moving forward.

American Express FAQ

No. According to the site, “your credit score will not be impacted when you apply,” but the loan will be reported to the credit bureaus once you’re approved and agree to the terms.

You won’t be able to take out that loan, but your credit score won’t be impacted either. That’s especially helpful if you intend to look elsewhere for personal loans. Either way, keep in mind that not all borrowers are approved for the highest loan amount.

These loans can be used for personal, household or family purposes. For example, paying for household renovations or a life event, like the birth of a child. However, some applicants may only be approved for credit card consolidation.

If you use your loan to pay down credit card balances directly, you cannot put that money towards an American Express card. However, those who receive their funds directly may choose to use some of their funds to do so. But keep in mind that not all applicants will be approved for that disbursement option.

Most major credit card banks are eligible for direct payments via this loan. You would find out if your credit card is eligible during the application process.

Your payments are fixed for the term of your loan and will depend on how much you borrowed, your interest rate and the length of your term.

No, that’s set by the lender and cannot be changed.

You’ll have to pay a $39 late fee, and American Express may inform the credit bureaus, which would negatively impact your credit score.

You can only apply for a business loan if you have an American Express business card, and those funds can only be used for business purposes.

Alternative personal loan options

LightStream

APR

3.99%
To
16.99%

Credit Req.

660

Minimum Credit Score

Terms

24 to 144

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

LightStream is an online lending division of SunTrust Bank. It offers personal loans for between $5,000 and $100,000 with rates as low as 3.99% with autopay; however, note that lender rates vary based on the loan purpose. Still, LightStream doesn’t charge origination fees, plus it offers loans with terms from 24 to 144 months, so it could be a low-cost and flexible option for borrowers.

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®
APR

5.99%
To
28.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. ... Read More


Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. For New York residents, rates range from 5.99% to 24.99% APR.

With no origination or late fees, Marcus by Goldman Sachs may be an affordable option for a personal loan. The lender offers loans for up to $40,000 with rates as low as 5.99%. Further, you can see rates with a soft pull.

LendingClub

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores as low as 600.... Read More

LendingClub may be a great option for borrowers with less-than-stellar credit. It has a minimum credit score requirement of 600. Its personal loans come with rates as low as 6.95% and as high as 35.89%. You can expect an origination fee between 1.00% - 6.00%.

Devon Delfino contributed to the reporting for this article.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Laura Woods
Laura Woods |

Laura Woods is a writer at MagnifyMoney. You can email Laura here

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Won’t impact your credit score

Advertiser Disclosure

Personal Loans

LightStream Personal Loan Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

APR

3.99%
To
16.99%

Credit Req.

660

Minimum Credit Score

Terms

24 to 144

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

LightStream personal loan details
 

Fees and penalties

  • Terms: LightStream loan terms range from 24 to 144 months.
  • APR range: The APR for this loan is 3.99% to 16.99% APR. The lowest interest rates include a 0.50% rate discount for using autopay.
  • Loan amounts: You can borrow from $5,000 to $100,000.
  • Time to funding: You can get funding the same business day you apply if you’re approved by 2:30 p.m. EST. Otherwise, you have to schedule funding of your loan within 30 days of getting approval.
  • Hard pull/soft pull: Applying for a LightStream loan will trigger a Hard Pull. LightStream pulls your Experian and Equifax credit reports. LightStream does not offer soft pull preapprovals.
  • Origination fee: None.
  • Prepayment fee: None.
  • Late payment fee: None.
  • Other fees: None.

LightStream has no fees across the board and offers highly competitive interest rates. These two variables add up to an affordable loan, if you qualify. According to LightStream, you can borrow money for “practically anything.” Here are some examples of things you can finance with a LightStream loan:

  • Adoption
  • Auto
  • Debt consolidation
  • Dental work
  • Home improvements
  • IVF/fertility treatments
  • Pre-K-12 education
  • Medical bills
  • Recreation
    • Boats
    • RVs
    • Timeshares
  • Tiny homes
  • Weddings

The list of ways you can use a LightStream loan is exhaustive. However, there are a few instances where you can’t use a LightStream loan. You can’t use one to finance a college or post-secondary education or a vehicle registered under a business name. LightStream does not offer financing to businesses either; you are only able to apply for a loan as an individual.

‘The Rate Beat’ program

Here’s an incentive to shop around and compare rates: LightStream will beat competitor rates by 0.10% APR. You must show that you’ve been approved by a lender for a lower rate and meet other eligibility criteria before LightStream will beat the competitor rate.

Here are the terms and conditions for the Rate Beat program:

  • The lower interest rate you find with another lender can’t be from an employee discount or other special that’s not available to all customers.
  • The lower rate can’t be through any rate-subsidized programs.
  • The lower rate you get from a competing lender must be for a loan that has the same amount, loan term loan purpose and payment method (such as auto-pay).
  • The offer expires at 2 p.m. EST on the business day before your loan is funded.

Consider shopping for other loans before going to LightStream so that if you do receive a lower offer, you can try to take advantage of the Rate Beat program.

‘Loan Experience Guarantee’

The next benefit that LightStream offers borrowers is the Loan Experience Guarantee. If you’re not satisfied with the loan process, LightStream will give you $100 for completing a questionnaire within 30 days of receiving your loan.

Eligibility requirements

  • Minimum credit score: LightStream seeks candidates with “good credit.”
  • Minimum credit history: LightStream looks for borrowers who have several years of credit history, a mix of accounts, stable income, few (if any) delinquencies and a proven ability to save money.
  • Maximum debt-to-income ratio: Not specified

LightStream is clear about offering loans to borrowers with good credit, although a specific credit score minimum isn’t specified. What constitutes good or excellent credit is subjective: A credit score of 670 or above is generally considered good, while a score of 740 or above is generally considered very good or excellent.

Despite not specifying a minimum credit score or maximum debt-to-income ratio, LightStream does outline some key characteristics of borrowers who tend to qualify for a Lightstream loan.

  • Borrowers with good credit have several years of credit history (excellent borrowers tend to have five years or more of credit history).
  • Borrowers have a credit history that includes many different types of accounts, such as credit cards, installment loans and mortgages.
  • Borrowers show evidence of being able to save through liquid assets, retirement savings, etc.
  • Borrowers have few late payments (excellent borrowers tend to have credit reports with no deliquences at all).

Applying for a personal loan from LightStream

The LightStream application process is straightforward. You apply online which requires a hard pull. There is no preapproval with a soft pull available. LightStream first asks why you want the loan, how much you want to borrow and which loan term length you need. The next step is to tell LightStream your personal information.

You should receive a response quickly if you apply during business hours. After an approval, you can e-sign your loan documents and set up funding. You can get money as soon as the same day if your application is approved and all required steps are completed before 2:30 p.m. EST on a business day.

Pros and cons of a LightStream personal loan

Pros:

Cons:

  • Low rates. LightStream has highly competitive rates to offer borrowers who qualify.
  • ‘Rate Beat’ and other guarantees. LightStream will beat other rates if you can prove that another lender will give you a more affordable loan. LightStreamalso takes pride in the ease of the application process — if you have complaints about it, you can reach out to LightStream and they’ll give you $100 for your trouble. Terms apply.
  • Large and small loans. You can borrow from $5,000 to $100,000.
  • Long loan terms. Loan terms are available from 24 to 144 months.
  • Credit requirements. While LightStream does not specify a minimum credit score for borrowers, it generally looks for people with “good” credit. This typically means a score of at least 670, potentially putting borrowers with lower scores out of the running.
  • There’s a hard pull. There’s no preapproval process to check rates with a soft pull, so you won’t be able to see if your credit is strong enough to qualify without taking the hard hit. Check out our personal loan comparison tool, which includes loans that don’t require a hard pull.

Who’s the best fit for a LightStream personal loan?

People with good credit tend to get the most competitive interest rates on loans, for good reason — in the eyes of lenders, they are less likely to default on a loan, thus making them a lower risk.

In this case, LightStream is clear that it focuses on rewarding borrowers who have good credit with loans that have no fees and low interest rates because they’ve demonstrated an ability to manage debt responsibly. The LightStream loan is one that you should consider putting at the top of your shopping list if you have good credit or better, because of its perks and price.

Besides the cost, another plus is that LightStream lets you borrow high amounts of cash for almost any reason, as long as it’s not for college tuition or a vehicle registered to a business. It also offers long loan terms that allow you to stretch out your payments. Keep in mind, however, that the lowest interest rates are available for loans of $5,000 to $100,000 with loan terms of 24 to 144 months. You can borrow a higher amount for a longer period, but it may cost you more money.

What stands out as a potential downside of this loan is that a hard pull on your credit is necessary to check rates. But don’t let a fear of hard inquiries prevent you from shopping around for the best deals. A hard pull will typically cost you 5 to 10 points on your credit score — a trade-off that might ultimately be worth it when you consider the savings you could gain from qualifying with a low-cost lender like LightStream. We have discussed the impact of credit inquiries in this post — the effect on your credit may be minimal considering the potential benefit.

If you meet the conditions of what’s considered good or excellent credit, you may find that a LightStream loan is one of the better personal loans that you may find for your situation online. Check out other personal loan options here to compare products. This roundup includes many loans that allow you to check rates with a soft pull.

LightStream consumer reviews

One of the best ways to assess an offer is to read about other customers’ experiences with the lender. The Better Business Bureau has given LightStream an A+ rating, and it’s also earned 4.1 out of 5 stars from reviewers on LendingTree, the parent company of MagnifyMoney.

Customers who reviewed LightStream on LendingTree — which owns MagnifyMoney — are, by and large, satisfied with the interest rates, fees and closing costs, customer service and responsiveness. Borrowers praise LightStream for having a “straightforward, simple, delightful loan process,” “great rates and fast response” and “lightning fast closing.” Many customers were also pleased that LightStream funded their loans the same day they were approved.

While there is far more praise than criticism of LightStream on LendingTree, some customers said they were denied for loans even though they had a high credit score and income and they were unable to connect with the company by phone. Overall, though, borrowers seem generally happy with their experience with LightStream.

LightStream FAQ

LightStream does not specify a minimum credit score for borrowers. Instead, the company looks for individuals with at least “good” credit, which typically means the borrower has several years of credit history, multiple types of accounts, a decent history of on-time payments, evidence of an ability to save and a “stable and sufficient income.”

While you can apply for a LightStream loan for educational expenses related to pre-K through grade 12, the company does not offer funding for college or post-secondary education. The company does not offer refinancing for student loans.

LightStream borrowers do not incur any fees from the company.

LightStream says customers will receive a response “shortly” after applying online, if done during business hours.

LightStream loans can be used for a wide variety of purposes, including dental bills, home improvements, adoption expenses, horses and jewelry. The company requires that you use the money from the loan for the purpose you indicated in your application. You are not allowed to use the loan to refinance an existing LightStream loan, pay for college tuition or post-secondary education, buy stocks and bonds or purchase a vehicle that will be registered under a business name.

LightStream does not offer pre-approvals for loans. Potential borrowers must fill out the online application to see if they’re approved.

LightStream uses its “easy, fast and virtually paperless loan process” as a selling point to potential borrowers. If you’re not happy with your experience, the company will offer you $100 for filling out a questionnaire within 30 days of receiving funding for your loan.

LightStream is considered SunTrust Bank’s online lending division. Borrowers do not have to be account holders at SunTrust Bank to qualify for a loan from LightStream.

Alternative personal loan options

SoFi

SoFi
APR

5.74%
To
16.24%

Credit Req.

680

Minimum Credit Score

Terms

24 to 84

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

SoFi offers some of the best rates and terms on the market. ... Read More


Fixed rates from 5.990% APR to 16.240% APR (with AutoPay). Variable rates from 5.75% APR to 14.60% APR (with AutoPay). SoFi rate ranges are current as of March 18, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.75% APR assumes current 1-month LIBOR rate of 2.50% plus 4.28% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

All rates, terms, and figures are subject to change by the lender without notice. For the most up-to-date information, visit the lender's website directly. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.

See Consumer Licenses.

SoFi Personal Loans are not available to residents of MS. Minimum loan requirements might be higher than $5,000 in specific states due to legal requirements. Fixed and variable-rate caps may be lower in some states due to legal requirements and may impact your eligibility to qualify for a SoFi loan.

If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

SoFi is another lender that offers no-fee personal loans with competitive, fixed interest rates that you can use for a variety of reasons. You can borrow large amounts with SoFi — $5,000 to $100,000. Perks offered by SoFi include access to financial advisors and unemployment protection for borrowers. You can check rates with a soft pull.

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®
APR

5.99%
To
28.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. ... Read More


Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. For New York residents, rates range from 5.99% to 24.99% APR.

Marcus by Goldman Sachs® is another personal loan that has absolutely no fees. You can borrow up to $40,000, get approval within five minutes and receive your funds in about one to four business days after verifying your bank account. Plus, checking rates doesn’t require a hard inquiry. Interest rates are typically higher for the longer term loans, and borrowers with excellent credit will get the lowest rates.

Upgrade

Upgrade
APR

7.99%
To
35.89%

Credit Req.

620

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.50% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

Upgrade is an online lender that offers fairly priced personal loans for a term of either 36 or 60 months.... Read More .

Upgrade is the only lender included in this review that charges an origination fee. This lender may be an option for people with less than stellar credit, as the credit score minimum is just 620. You can borrow up to $50,000 from Upgrade, and check your rate without a hard inquiry. Upgrade can send money to your bank account in as little as one business day after your personal information is verified.

Joni Sweet contributed to the reporting for this article.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score