4 Best Personal Loans Of 2022
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A personal loan can be a tremendous financial tool. It can help you better manage your debt, pay for necessary expenses like home repairs, and help see you through a tough financial time due to a job loss or an illness.
Today, it’s faster and easier than ever to get a personal loan. You don’t have to walk into a bank armed with reams of financial documents or wait weeks to find out if your loan has been approved.
You can apply for and be approved for a loan in less time than it takes to read this article. But not all personal loans are created equal; these are the best personal loans for your financial needs.
The Best Personal Loans
If you’re looking for a personal loan, these are some of the best options available.
Credible is an online loan marketplace that will show you up to 16 top lender options in just 2 minutes. The advantage for borrowers is the ability to enter their financial information on a single site and see offers from several different lenders.
Loan Amounts: $600 to $100,000
Terms: 12-84 months.
Fees: Credible does not charge a fee to use its service, but the lender you take a loan from may charge fees.
Why We Like It: Credible is so sure that you’ll find the best rates through them that they offer the Best Loan Guarantee. If you find a better rate elsewhere, Credible will give you $200. See terms.
Minimum credit score: At least 620 or higher.
Upstart underwrites the loans it offers. The underwriting model does not solely depend on a borrower’s credit score but looks at additional factors like level of education, job history, and residence to evaluate potential borrowers.
Loan Amounts: $1,000 to $50,000.
Terms: Three years and five years.
Fees: Upstart charges an origination fee of 0% to 8% of the amount of the loan. There is a fee for late payments of $15 or 5% of the amount past due, whichever amount is higher.
Why We Like It: Upstart is excellent for those who don’t have a lot of credit history or don’t have an ideal credit score but do have high earning potential, the kind of borrowers many other lenders reject.
Minimum credit score: At least 620 or higher.
Currently Upstart loans are not offered in: WV and IA.
Payoff loans are for paying off credit card debt. The loans come from Payoff’s partners, including Alliant Credit Union, First Electronic Bank, and Technology Credit Union. Payoff offers exceptional customer support that includes welcome calls and quarterly check-ins during the first year of your loan.
Loan Amounts: $5,000 to $40,000.
Terms: 24 to 60 months.
Fees: No application fee, no prepayment penalty, no late fees, no annual fee. An origination fee of 0% to 5%.
Why We Like It: Payoff is very flexible, it may allow you to defer or skip a payment or change your payment date if you’re having trouble making a payment. For those using the loan to pay off other debts, you can participate in Direct Card Payoff and have Payoff pay their other debts using the borrowed money.
Minimum credit score: At least 640 or higher.
Currently Payoff loans are not offered in: MA, MS, NE, and NV.
Fiona is an online loan marketplace where you can shop different loan offers based on your credit score, how much money you are looking to borrow, the purpose of the loan, and the area you live in.
Loan Amounts: $1,000 to $100,000
Terms: 24-84 months.
Fees: Fiona does not charge a fee to use its service, but the lender you take a loan from may charge fees.
Why We Like It: Fiona has a very easy to use interface. Borrowers can shop for loans based on various factors.
Minimum credit score: At least 620 or higher.
What is a Personal Loan?
A personal loan is money you borrow from an online lender, a bank, or credit union that is paid back in fixed monthly payments — generally over a term of two to seven years. The amount of the loan varies from lender to lender but generally range from $1,500 to $100,000.
Types of Personal Loans
There are several types of personal loans.
- Unsecured: The loan does not require collateral.
- Secured: The loan is backed by collateral.
- Fixed-Rate: The interest rate remains the same throughout the life of the loan, meaning your monthly payment remains the same month to month.
- Variable Rate: The interest rate is based on a benchmark set by banks and fluctuates based on that benchmark. Monthly payments vary with the interest rate.
- Debt Consolidation: This loan rolls multiple debts into a single loan with a lower interest rate to save money.
- Cosigned: A person who cannot qualify for a loan on their own adds another person to the loan who is responsible for paying it back should they default on payments.
- Line of Credit: This is not a lump sum of money but gives you access to a credit line you can borrow against as needed.
What Is the Difference Between an Unsecured Personal Loan and a Secured Loan?
A secured loan requires collateral, a valuable item — such as a home or a car — that the lender can take possession of if the borrower defaults on the loan. A mortgage is an example of a secured loan; the house is collateral.
An unsecured loan does not require collateral. Most personal loans are unsecured.
Personal Loan Interest Rates and Fees
Interest rates will vary according to your credit score, the term of the loan, amount of the loan, and the lender. The better your score, the lower the rate. Generally, rates will range from 10% to 36%.
Not all personal loans come with each of these fees, but they are fees you should be aware of when choosing a lender.
- Origination fee: This is a one-time fee paid when you receive the loan. It’s deducted from the money lent to you and typically ranges from 1% to 8% of the loan amount.
- Late fee: If you make your payment late, you’ll be charged a fee. Sometimes it’s a set amount and sometimes a percentage of your loan balance.
- Prepayment penalty: Lenders don’t want you to pay off a loan early because they lose money in interest when you do. To make up for this loss, you may be charged a penalty for paying your loan off before the term ends. The amount might be calculated based on the loan’s principal or how much interest is remaining at the time you paid off the loan.
Personal Loan Requirements
The requirements to qualify for a personal loan vary by lender, but here are some of most common requirements:
- U.S. citizenship, permanent residency, a Social Security number, or a long-term visa.
- Live in a state where the lender you choose is allowed to operate.
- Be 18 years old or older.
- Meet the credit score requirements of the lender.
- Provide government issues identification.
- Have a permanent address.
- A verified source of steady income.
- Provide any requested documentation.
When Should I Get a Personal Loan?
There are several scenarios in which a personal loan can be a helpful solution:
- Debt consolidation: If you have high-interest debt — such as credit card debt — a personal loan that has a lower interest rate than the rates on the cards can save you a lot of money.
- Home improvement or repairs: If you want to upgrade your home or make necessary repairs but don’t have the cash to pay for them, a personal loan can be a low-cost alternative if you qualify for a low-interest rate.
- Medical or dental expenses: Even if you have insurance, medical and dental expenses can be a financial burden. A personal loan can help you get the care you need.
When Should I Not Get a Personal Loan?
A personal loan comes with certain costs, including an interest rate and any associated fees. Some expenses are not worth taking on those added costs:
- Non-Essential Items: Items like televisions and new furniture are not essentials. They’re nice to have, but you shouldn’t build debt to acquire them. Instead, save up to pay for these kinds of things.
- Vacations: We all love a good holiday, but taking a trip is not a good reason to go into debt.
- Weddings: Starting your married life off thousands of dollars in debt spent on a single day is no way to kick off your new life. There are plenty of ways to have a memorable, enjoyable wedding without spending money you don’t have.
How To Get the Best Personal Loan
Of course, you want to get the best possible rate on your personal loan. Taking these steps can help:
- Check your credit score. Generally, you will qualify for the best interest rates if your credit score is 760 or above. If you aren’t there, you can take steps to improve your score.
- Consider fees as well as interest rates. Fees could make a loan with a slightly lower interest rate cost more than a loan with a higher rate but fewer or lower fees.
- Choose a short-term loan. Shorter-term loans are less risky for lenders, so the best interest rates are often available for these loans than loans with a longer-term.
- Choose a variable rate, short-term loan. Variable-rate loans typically have lower interest rates than fixed-rate loans. If you can pay the loan back quickly, the rates likely won’t be too high.
- Get a cosigner. If your credit score is low or you have no credit history, you can probably get a lower interest rate when you borrow with a cosigner.
Pre-qualify for a Personal Loan
Pre-qualifying for a personal loan gives potential lenders a glimpse into how creditworthy you are and gives you an idea of the loan options you might qualify for. This process doesn’t mean you’ll be approved; lenders will require that you verify the information you’ve provided before making a decision. These are the steps usually involved in the pre-qualification process:
- Fill out a form providing information such as your income, occupation, and amount of current debt.
- The lender will do a soft credit pull; this does not impact your credit score.
- The lender decides if you’re pre-qualified. If so, you’ll see the terms of the loans you might be offered, including the amount you’re eligible for.
- You can choose to go forward and accept the offer. If you do, you’ll officially apply for the loan and will be required to provide and verify additional financial information.
Can I Get a Personal Loan with Bad Credit?
You generally need a credit score of at least 600 to get approval for an unsecured personal loan and the terms may not be great. The interest rate will likely be high. A better option may be to apply for a secured loan using your home, car, or savings as collateral. Be warned that, if you default, your collateral could be repossessed by the lender.
Another option is to ask a close friend or family member to cosign the loan with you. But as discussed earlier, if you default, that person is on the hook for the remaining loan balance.
How Fast Can I Get a Loan?
Getting a personal loan can take just a few minutes or several weeks. Many online and peer-to-peer lenders can approve your loan in only a few minutes and deposit the cash into your account within a business day or two. Traditional banks and credit unions can take much longer — weeks in some cases.
What are the Best Alternatives to Personal Loans?
If a personal loan isn’t an option for you, you may be able to use one of the alternatives.
- Balance transfer credit card: If you want a loan to consolidate credit card debt, you can apply for a balance transfer credit card. The card has an introductory period ranging from 6 to 24 months, during which there is no interest. You can transfer the balance from high-interest cards, and every payment goes to paying down the principal without accruing further interest.
- 0% interest credit card: Similar to a balance transfer credit card, these cards charge no interest on purchases during the introductory period.
Take Advantage of the Best Personal Loans Today
If you could use a personal loan to help improve your financial situation, consider one of the best personal loans we’ve covered here. It’s fast and easy to apply!