Welcome to Bank Insider’s 2020 Best Personal Loans Guide – the only personal loans guide and personal lender reviews researched and written by a team with direct experience working in the banking industry — including at some of the
lenders reviewed on this site. We started Bank Insider so that normal people can benefit from our first-hand experience working in finance.
This does not impact our advice or recommendations, which are editorially independent and grounded in our years of experience in financial services and independent research.
Top Personal Lenders 2020
Best for: borrowers with lower credit scores looking for an easy online application
Loan amount: $2,000 – $35,000
Loan terms: 24 – 60 months
APRs: 9.95% – 35.99%
Pros: Accepts lower credit scores, easy online application
Cons: Origination & late fees, higher APRs
Best for: borrowers with a strong credit history looking to consolidate debt
Loan amount: $2,500 – $35,000
Loan terms: 36 – 84 months
APRs: 6.99% – 24.99%
Pros: No origination fee, can pay creditors directly
Cons: Higher credit requirements, late fees
Best for: borrowers with fair to good credit or those looking for smaller loan amounts
Loan amount: $1,000 – $40,000
Loan terms: 36 or 60 months
APRs: 10.68% – 35.89%
Pros: Lower credit score requirements, optional co-borrower
Cons: Higher starting APR, origination fee
Best for: borrowers with bad credit
Loan amount: $2,000 – $25,000
Loan terms: 24 – 48months
APRs: 9.99% – 35.99%
Pros: Accepts borrowers with lower credit scores, prequalify with no credit score impact
Cons: Higher APRs, origination fee
Best for: borrowers with excellent credit looking for the lowest rate
Loan amount: $5,000 – $100,000
Loan terms: 24 – 144 months
APRs: 3.99% – 20.49%
Pros: Lowest starting APRs, 0.50% discount for autopay
Cons: No prequalification, clunky website/application
Marcus by Goldman Sachs
Best for: borrowers with good credit looking for a no fee loan
Loan amount: $3,500 – $40,000
Loan terms: 36 – 72 months
APRs: 6.99% – 28.99%
Pros: No fees, 0.25% discount for autopay
Cons: Stronger credit history required, can’t apply with co-borrower
Best for: borrowers with poor credit scores who need funds quickly
Loan amount: $1,500 – $20,000
Loan terms: 24 – 48 months
APRs: 18% – 35.99%
Pros: Can approve borrowers with bad credit, can fund loan same day
Cons: High fees, high APRs, requires in-person visit to branch
Best for: borrowers looking to consolidate credit card debt
Loan amount: $5,000 – $35,000
Loan terms: 24 – 60 months
APRs: 5.99% – 24.99%
Pros: Simple product with streamlined application, no late fees
Cons: Origination fee, can’t send funds directly to creditors
Best for: borrowers looking for a smaller loan or applying with a co-borrower
Loan amount: $2,000 – $40,000
Loan terms: 36 or 60 months
APRs: 7.95% – 35.99%
Pros: Joint applicant (co-borrower) option, lower minimum loan amount
Cons: Origination fee, late & returned payment fees
Best for: borrowers with a solid credit history looking for higher loan amounts
Loan amount: $5,000 – $100,000
Loan terms: 24 – 84 months
APRs: 6.24% – 21.45%
Pros: Loan amounts up to $100k, loan terms up to 7 years
Cons: High credit score/high income required, higher minimum loan amount
Best for: borrowers looking for smaller loan amounts
Loan amount: $1,000 – $35,000
Loan terms: 36 or 60 months
APRs: 7.99% – 35.97%
Pros: Lower minimum loan amount, line of credit option
Cons: up to 8% origination fee, only 3- or 5-year terms
Best for: borrowers who have a limited credit history but stable employment/income
Loan amount: $5,000 – $30,000
Loan terms: 36 or 60 months
APRs: 6.18% – 35.99%
Pros: Takes education & employment into consideration, may accept borrowers with limited credit history
Cons: Less transparent than other lenders, late & returned payment fees
Coronavirus (COVID-19) and Personal Loans
With the unprecedented economic turmoil caused by coronavirus, many people are looking for personal loans for emergency expenses. Whether you’re looking for a personal loan because of the impact of coronavirus or not, the crisis is impacting how personal lenders are operating.
How applying for a personal loan during the coronavirus crisis may be different:
You may be less likely to be approved. Because of the dramatic increase in unemployment, lenders have become more cautious about who they lend to and have tightened their credit policies.
You may qualify for a smaller loan amount. Every time a lender makes a loan, they have to set aside money in case that borrower doesn’t pay them back (this is called a provision for loan losses). With the impact of coronavirus, many lenders have increases this reserve. To limit risk, lenders may approve you for less than they normally would.
Your interest rate / APR may be higher. Even though the Federal Reserve has lowered interest rates, if approved, the APR you pay may be higher. Why? For the same reasons discussed above — because risk of non-payment has increased, many lenders may charge higher rates, to make up for borrowers who don’t pay back.
How to Compare Personal Loans?
With the number of personal lenders out there, it’s easy to get overwhelmed. And while loan comparison sites can help you see what you qualify for, they don’t always tell the full story. Here are the top things you should look at when comparing personal loans:
Interest Rate and APR
The #1 thing you should care about is the APR (annual percentage rate). The APR of a personal loan represents the ‘total cost’ of a loan (the interest rate plus origination fee, if applicable), expressed as an annualized percentage rate. Personal lenders are legally required to calculate and express APR in a consistent way, so that you can accurately compare the cost of loans from different companies.
Money is the ultimate commodity — the money you receive from Lender A is exactly identical to the money you receive from Lender B — so your top consideration should be the ‘price’ (APR) of your personal loan. Other considerations (speed to fund, brand loyalty, ease of application) can also be taken into account, but APR is king.
Note that some review sites may use the terms “interest” and “APR” interchangeably, but a legitimate lender should express this calculation in terms of APR, and is legally required to provide this calculation before you sign a loan agreement.
Your APR will vary by credit score, and could look approximately like this, according to BankRate:
|Credit score rating||Credit score range||Typical APR Range|
|Excellent||720-850||10.3% - 12.5%|
|Good||690-719||13.5% - 15.5%|
|Fair||630-689||17.8% - 19.9%|
|Poor||629 and below||28.5% - 35.9%|
Closely related to the APR you’ll be charged is a lender’s approval criteria. While you may think about this in terms of a credit score, lenders also have other rules as part of their “credit policy” — so that even if you meet their credit score minimum, you still may not qualify for a loan. Examples of additional criteria include not having a bankruptcy within the past five years and not having more than two “hard inquiries” for credit in the past six months.
While lender’s obviously don’t publish their specific approval criteria, Bank Insider’s guide and reviews provides guidance and minimum credit/income requirements where we can.
Origination fee: for personal loans, the fee to pay the most attention to is if your lender charges an origination fee. Whether or not a lender charges an origination fee is tied to their underlying business and funding models, but what it means to you is that the amount of money you receive may be less than your loan amount, because the origination fee is deducted from your loan proceeds before being transferred to you.
The origination fee IS included in the APR calculation, so your APR price comparison will take this into account.
Prepayment fee: a prepayment fee is a charge to pay off your loan in full early. No personal lender we reviewed actually charges a prepayment fee. Keep an eye out for personal lenders that DO charge a prepayment fee, as it is unusual.
Late fees: the personal lenders we reviewed vary here. Some don’t charge late fees at all (though interest would continue to accrue), while others do charge late fees, typically around $15 after a 10 or 15 day grace period. Check your lender’s website and read your loan agreement carefully.
Returned payment fee: if a lender attempts to debit your account but is unable to, either because there are insufficient funds or the account has been closed, they may assess a returned payment fee — typically $15-30, but some lenders did charge more, depending on state. Read your loan agreement carefully before signing to understand what fees your lender may charge.
If you’re looking for an especially small or large loan amount, this may be a consideration. Some lenders reviewed do not make loans smaller than $5,000 or larger than $30,000. Note that the minimum and maximum amounts available may vary by state. If you’re looking for a personal loan smaller than $5,000 or larger than $30,000, compare lenders and check what is offered in your state.
Permitted Loan Purposes
Generally, personal loans can be used for pretty much anything. Some lenders prohibit using their loans for education expenses (eg, tuition), so keep an eye out for that. If you’re using a personal loan for debt consolidation, shop around, as some lenders may offer lower rates if you use the loan to pay off creditors directly (instead of depositing the loan in your own account).
Ability to Pre-qualify
Most personal lenders we reviewed allowed you to check what rates you qualified for with a “soft inquiry”, which doesn’t impact your credit score. Some lenders don’t offer this feature so if you are comparison shopping and are worried about the impact on your credit report, keep an eye out for this.
Time to Fund Your Loan
Most all online lenders use similar processes to underwrite borrowers and verify the information you’ve given them. In many cases, these are fully automated — meaning, if approved, you can receive the money as soon as the next business day. However, in some cases, a lender may not be able to automatically verify information you’ve supplied, and may ask you to upload documentation, like a driver’s license, pay stub, or W-2 tax form, to confirm your identity, employment, or income information. This may increase how long it takes to fund your loan.
This is a less common feature, but has increased in popularity in the last few years. For applicants with less than perfect credit, applying with a co-borrower may allow them to be approved for a loan they otherwise would not get or qualify for better terms. Note that the co-borrower is equally liable for the loan and, should you not be able to make payments, the co-borrower will need to.
There are a handful of other features or considerations you can take into account. For instance, some lenders offer a 0.25%-0.50% discount on the APR if you enroll in autopay. This increases the likelihood you will pay back you loan, so the lender is willing to offer a discount for this.
Some lenders also offer a free credit score or credit report information. While this is helpful, it isn’t anything you can’t get for free from popular sites like CreditKarma.
Frequently Asked Questions about Personal Loans
What is a personal loan?
Personal loans are a type of installment loan, typically between $3,000-$40,000, that you can use for almost any purpose. A personal loan is almost always a “non-recourse” or “unsecured” loan, meaning that if you default, the lender has no collateral or asset to collect against. This doesn’t mean they won’t attempt to collect the money owed — they will — either with their own debt collectors or by employing a third party debt collection firm.
Why would you get a personal loan?
The most popular reason people use personal loans is for debt consolidation. Because they are term loans (meaning they have a set length and payment schedule) and the APRs are often lower than credit cards, it is popular to use the proceeds of a personal loan to pay off higher APR credit cards.
People also use personal loans for home improvements (though, if you qualify, a home equity line of credit, or HELOC, is probably a cheaper choice for this), major purchases, weddings, vacations, educational expenses — pretty much anything.
Will getting a personal loan impact my credit score?
How a personal loan impacts your credit score depends on how you use it. Applying for the loan will generate a hard inquiry, which will probably lower your score 5-10 points (depends on whether you’re looking at VantageScore or FICO, if you’ve had other recent hard inquiries, and other factors).
If you’re using the personal loan for debt consolidation, and pay down balances on credit cards, your credit score will likely improve. That’s because utilization (the balance across all credit cards vs. total credit available) is a major factor in your credit score, and it will improve if you use the proceeds of a personal loan to pay off card balances.
If you’re using the personal loan for something else, your score may decline, as your overall indebtedness has increased, your “average age” of credit will decrease, and the hard inquiry mentioned earlier.
How much can you get approved for?
The personal loan amount you can be approved for has more to do with your income and expenses than your credit score itself. Your credit score is composed of your payment history on past obligations, like a mortgage, credit cards, or auto loans. It would also include public records, like a tax lien or bankruptcy, or collections accounts – like an unpaid cell phone or cable bill. But your credit report doesn’t include your income.
When determining what personal loan amount you qualify for, a lender will calculate your “ability to pay”. Basically, this is roughly calculating how much you have leftover each month after paying your other expenses. The lender will calculate your income (which they’ll ask on the application, and may ask to verify), less any monthly payments you have for things like a mortgage, car loan, credit cards, and typical living expenses. Based on the monthly amount left over (and the loan terms available), the lender will calculate how much it can approve you for.
What loan term should I take?
The loan term (or length of loan) determines your monthly payment (longer term = lower monthly payment) and cost of the loan (longer term = higher finance charge, even if the APR is the same). Loans of longer terms often have higher APRs as well, as the risk to the lender is higher.
Should I use a personal loan price comparison site?
Overall, we like personal loan price comparison sites. These like you fill out a single application and get pre-qualified offers from multiple lenders with no impact to your credit score. It is a quick and effective way to check what rate you qualify for from multiple lenders. The one caveat is that because those lenders must pay the comparison site to be included, you may not see the best available rate on a loan comparison site.
Why do lenders charge origination fees?
Not all lenders offering personal loans have the same business model. Some lenders keep the loans and collect the interest payments for themselves. Other lenders sell these loans to a third party, which will then get the interest payments. The lenders that sell the loans they originate are usually the ones that collect an origination fee.
Can I pay back my loan early without penalties?
Yes. No personal lender we reviewed charges a prepayment penalty.
What is the difference between fixed-rate and variable-rate personal loans?
A fixed-rate loan has the same APR for the life of the loan, which is set when you apply. A variable-rate loan has an APR that can vary over the life of the loan; the rate is typically tied to a benchmark like the “prime” rate or LIBOR. None of the personal lenders we reviewed offer a variable-rate personal loan.