Personal loans have fixed annual percentage rates, generally between 6% and 36%. The loan with the lowest rate is the least expensive — and usually the best choice. Other features, including no fees, soft credit checks and direct payments to creditors if you’re consolidating debt, set some loans apart.
We always recommend you know your credit score and compare personal loans from multiple lenders before making a choice. Here are our picks for the best personal loans:
LightStream: Best for home improvement loans.
SoFi: Best for good to excellent credit.
Marcus by Goldman Sachs: Best for bank loans.
Upgrade: Best for fair credit.
Upstart: Best for short credit history.
Universal Credit: Best for bad credit.
Happy Money: Best for credit card consolidation.
Discover: Best for debt consolidation.
Best Egg: Best for secured loans.
Best Personal Loans
What is a personal loan?
A personal loan is money borrowed from a bank, credit union or online lender that you repay in equal monthly installments, usually over two to seven years.
Personal loans are typically unsecured, which means they don’t require collateral. Lenders instead consider your credit profile, income and debts during the loan approval process. If you fail to repay the loan, your credit can take a hit.
» MORE: Learn how personal loans work
When should I get a personal loan?
Personal loan funds can be used for almost any purpose, but taking a loan makes most sense when:
It’s the least expensive form of financing.
It’s used for something with the potential to increase your financial standing, like debt consolidation or home improvements.
You can manage the monthly payments without stressing your budget.
In contrast, a personal loan used for discretionary expenses, like a vacation, can be expensive. NerdWallet recommends using savings for nonessentials to avoid finance charges.
If you’re borrowing for emergency or medical expenses, consider less-expensive alternatives first, such as community assistance or payment plans.
Survey: How people use personal loans
A NerdWallet survey published in November 2021 revealed that nearly 3 in 10 Americans (29%) took out a personal loan within the past 12 months, borrowing an estimated $385 billion.
The average loan amount was $5,210, according to the survey, and the three most common uses for a personal loan by those surveyed were:
Debt consolidation. Of the 550 people surveyed, 40% percent used a personal loan to consolidate debt. Debt consolidation combines your debt into one loan, ideally with a lower interest rate that reduces your total debt and helps you pay it off sooner.
Big events. The survey found that 39% of recent personal loan borrowers used a loan to manage the cost of a large event, which might include a wedding or vacation.
Emergency expenses. According to the survey, 35% of respondents used a personal loan to cover an emergency.
Personal loan interest rates and fees
Personal loan interest rates vary by lender, and the rate you receive depends on factors like your credit score, income and debt-to-income ratio.
Borrowers with high credit scores generally receive lower rates, from about 11% to 15%, while those with low credit scores may get an APR around 25%. Here’s what interest rates on personal loans look like, on average:
How’s your credit?
Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace from Jan. 1, 2022, to July 31, 2022. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 FICO — are unlikely to qualify. Information in this table applies only to lenders with APRs below 36%.
Some lenders charge origination fees to cover the cost of processing the loan. Lenders deduct the fee from the loan proceeds or roll it into the balance. This one-time, upfront fee is included in the loan’s annual percentage rate, so consider this when comparing costs between lenders.
Other fees to watch out for include late fees, insufficient funds fees and prepayment fees, which are penalties for paying off your loan early.
Best place to get a personal loan
You can get a personal loan from online lenders, banks and credit unions. The best option depends on where you can get the rate, terms and features that fit your financial situation.
For example, if a fast and convenient loan application is important to you, then consider an online lender. On the other hand, if lower rates and in-person support matter, then a bank loan or credit union loan could be the better option.
» MORE: Where to get a personal loan
Pros and cons of personal loans
Depending on your financial situation and the loan’s purpose, a personal loan can be the right move or one you should sidestep.
Lower starting APRs than credit cards. For consumers with strong credit, personal loans typically have lower APRs than credit cards. While some credit cards offer 0% interest during an introductory period, the rates are generally higher after the period ends.
» MORE: Weigh the options: Personal loan or credit card
Fixed rates and monthly payments. Personal loans have fixed rates and monthly payments over a set term, so you always know what you owe and for how long. Other financing options like home equity lines of credit have variable rates that can mean fluctuating monthly payments.
Flexible loan amounts. Depending on the lender and your creditworthiness, you may have access to personal loan amounts of $1,000 to $100,000. This range meets a wide variety of expenses, from small emergencies to large home improvement projects.
No collateral. Unlike home equity loans that require you to secure the loan with your house, unsecured personal loans don’t require collateral. You risk damaging your credit if you can’t repay, but you won’t lose any assets.
Maximum APRs can be high. If you have a low credit score, APRs on personal loans can be higher than credit card APRs.
Possible fees. Borrowers may have to pay fees — like origination or late fees — along with their loan payments.
Increase in debt. Taking a personal loan adds debt to your budget, so it’s important to factor in the additional obligation and feel comfortable about paying it off.
Summary of personal loan pros and cons
Lower starting APRs than credit cards.
Fixed rates and monthly payments.
Flexible loan amounts.
No collateral is needed.
Maximum APRs can be high.
Fees are possible, depending on the lender.
Increases the debt you owe.
How to choose the best personal loan
Here are things to consider as you shop around and compare personal loans.
Soft credit check. Most online lenders let you check your estimated interest rate by performing a soft check of your credit during pre-qualification. This won’t affect your credit score, so it pays to take the steps to pre-qualify for a loan with multiple lenders and compare rates and loan features.
Annual percentage rates. Because APRs include interest rates and fees, they offer an apples-to-apples cost comparison for borrowers deciding between personal loan offers. Use our personal loan calculator to see estimated rates and payments based on credit scores.
Repayment terms. Having a wide variety of repayment term options gives you the option to get a shorter term and pay less interest or a longer term and have a low monthly payment. Based on your budget, one may make more financial sense than the other.
Loan amount. Depending on how much money you need, one lender could be more attractive than another. Some lenders offer small to midsize loan amounts, like $2,000 to $40,000, while others provide loans up to $100,000. Determining the amount you need ahead of time will help you compare and decide.
Special features. You may benefit from features like autopay rate discounts, unemployment protection or financial coaching. See if the lender you’re considering offers any perks that could help you reach your financial goals.
» MORE: Personal loan features to compare
Next step: Pre-qualify for a personal loan
You can pre-qualify on NerdWallet and see rates from lenders that partner with us. Pre-qualifying triggers a soft credit check, which doesn’t impact your score.
After you compare offers and select a loan with the lowest rate and payments that fit your budget, you’ll formally apply for the loan.
The loan application may require additional personal information, including employment status and education history. You may also need to authorize the lender to pull your credit reports and verify your income.
Your first loan payment is usually due within 30 days of loan approval and funding.
Explore loans and lenders in each of these categories:
Personal loans for good credit.
See your bad-credit loan options.
Personal loans for debt consolidation.
Fast personal loans.
Top banks offering personal loans.
See other uses for personal loans:
Swimming pool loans.
Best Personal Loan Companies of 2022
LENDER LEARN MORE APR MAX. LOAN AMOUNT MIN. CREDIT SCORE
Alliant Credit Union
6.24% to 10.24% $50,000 Not disclosed
PenFed Credit Union
6.74% to 17.99% $50,000 650
5.99% to 24.99% $35,000 660
3.99% to 19.99% $100,000 670
6.99% to 22.23% $100,000 Not disclosed
Marcus by Goldman Sachs
6.99% to 19.99% $40,000 660
Not disclosed $50,000 Not disclosed
5.99% to 24.99% $40,000 600
5.99% to 35.99% $50,000 640
6.99% to 19.49% $50,000 660
See More Lenders