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Whether you're looking for a secured or an unsecured loan, you deserve to know that you have access to the best loans. It's these best personal loans that offer a low interest rate, no origination fee, and great customer service.
But finding the right loan can be intimidating. Fortunately, if you're considering a new loan in 2021, you're in the right place. We've scoured hundreds of options to bring you the best loans today. Read on to discover what to look for in a loan, how to get one, and when it's the right choice for you.
The Ascent's Best Personal Loans
- Reducing high interest debt: Upstart
- Borrowers with good credit: LightStream
- Low overall APR: Marcus
- Low APR for borrowers with high income: SoFi
- Reducing high-interest credit card debt: Payoff
- Borrowers with poor credit scores: Avant
- Diverse offerings: FreedomPlus
- Debt consolidation: Discover Personal Loan
As of Jul. 07, 2021
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. The availability of a loan offer and the terms of your actual offer will vary due to a number of factors, including your loan purpose and our evaluation of your creditworthiness. 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.
Best for: Reducing high interest debt
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Upstart
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Upstart was started by some former Google employees in 2012 and it immediately became a personal lending industry unicorn. Upstart's unique underwriting process takes things like education and career history into account, as well as other factors unrelated to credit score. As such, Upstart is ideal for younger borrowers with little credit history (but plenty of earning potential). Read our Upstart review.
Minimum credit score: 580
Best for: Borrowers with good credit
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
LightStream
Rating image, 5.0 out of 5 stars.
5.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
LightStream's interest rates are among the best many borrowers can find. As we whittled down personal loan companies, this fact alone was enough to inspire us to include LightStream. Not only does LightStream offer a wide range of terms, but they also promise no fees or prepayment penalties. Read our full LightStream review.
Minimum credit score: 660
Best for: Low overall APR
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Marcus
Rating image, 5.0 out of 5 stars.
5.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Marcus (a division of Goldman Sachs) prides itself on its flexible terms and lack of fees, plus it offers one of the lowest interest rates on the market. It targets customers with good credit scores and a solid credit history, and you won't pay prepayment, origination, or late fees. For borrowers with excellent credit, the interest rate can beat many lenders. Read our full Marcus by Goldman Sachs review.
Minimum credit score: 660 FICO score
Best for: Low APR for borrowers with high income
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
SoFi
Rating image, 5.0 out of 5 stars.
5.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
SoFi's interest rates are most competitive for those with excellent credit. Qualified borrowers will enjoy SoFi's personal loan perks, such as unemployment protection and its no-fee policy. If SoFi sounds like your kind of lender, read our full SoFi review.
Minimum credit score: 680
Best for: Reducing high-interest credit card debt
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Payoff
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Payoff may be the perfect choice for borrowers saddled with high-interest debt who want to consolidate or refinance. With low interest rates, Payoff is ideal for those looking to create a workable debt consolidation plan and get out of debt. This peer-to-peer lender offers a personalized service to help you figure out how much you need to borrow (up to $40,000) and the loan term that works best (from two to five years). Read the full Payoff review.
Minimum credit score: 640
Best for: Borrowers with poor credit scores
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Avant
Rating image, 4.0 out of 5 stars.
4.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Avant is designed for borrowers who may have trouble securing a personal loan through other lenders. Not only is the minimum credit score relatively low, but Avant offers a fast loan approval time. Read the full Avant review.
Minimum credit score: 580
Best for: Diverse offerings
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
FreedomPlus
Rating image, 4.0 out of 5 stars.
4.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
FreedomPlus prides itself on its quick funding and lack of hidden fees. With loans up to $40,000 and competitive interest rates for highly-qualified borrowers, FreedomPlus is a good option for customers looking to consolidate debt or finish a project around the house. Read our full FreedomPlus review.
Minimum credit score: 640
Best for: Debt consolidation
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Discover Personal Loan
Rating image, 5.0 out of 5 stars.
5.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
A Discover personal loan gives borrowers with high-interest debt up to seven years to pay it off through debt consolidation. The downside to repaying a loan over a long period is that you will pay more in interest overall. However, this loan may be the perfect solution for a borrower who wants to keep their monthly payments low. Read our full Discover personal loan review.
Minimum credit score: 660
What is a personal loan?
A personal loan is money borrowed from a bank, credit union, or online lender in a lump sum. You'll normally make set monthly payments until you've paid off the debt.
Some loan types are used to pay for specific purchases, like a home or vehicle. But the best unsecured personal loans can be used for almost any reason. For example, you can use personal loans to finance home renovations or emergency home repairs. You can also use them to cover the cost of an engagement ring, or pay for medical expenses.
You'll pay a small fee -- the "interest rate" -- for the loan. If your credit isn't in the best shape, you can probably still qualify for a personal loan with bad credit. However, you'll likely pay a higher interest rate than other borrowers.
When is a personal loan a good option?
Personal loans are a good idea when you have a clear purpose in mind. For example, the top personal loans can provide you with the funds you need to repair or remodel your home, cover an emergency expense, or consolidate debt. As with any debt, personal loans are not a good option if you're not sure how you'll pay the money back or you're borrowing for something you don't actually need.
If you need the money from your personal loan quickly, look for a loan with "streamlined approval." This means you won't need to wait very long to receive the loan funds. Because some loans are funded same-day, if you run into a financial roadblock, a personal loan can help you overcome it -- even when you need the cash fast.
You might qualify for a coronavirus hardship loan
If your income was cut due to the coronavirus pandemic, you might qualify for a coronavirus hardship loan. These small, low-interest loans are designed to help people make ends meet. They can be used to pay rent, buy food, pay off medical bills, or cover other expenses during the pandemic. To find one, reach out to one of the lenders on this list, or call your bank or credit union and ask about their loan options.
What should I look for in a personal loan?
There's a wide range of personal loan options available. That's why it's so important to know how to identify the best loans. Whether you enjoy excellent credit or are specifically looking for a loan for borrowers with bad credit, the best personal loans have three things in common:
Low interest rate
The "interest rate" is a fee you pay to borrow money. It's calculated as a percent of the total you borrow. The lower the interest rate, the more money you save in total.
Let's say you need to borrow $20,000 to replace the roof of your house, and you're planning on getting a loan with a five-year term. You're considering two options: Lender A and Lender B.
Below, we've summarized these two imaginary lenders and how their interest rates would impact the cost of your loan. As you can see, even a small percentage change can result in significant savings. Which of these options looks like the best loan?
Lender A
- Interest rate: 5.5%
- Monthly payment: $382
- Total interest paid over the life of the loan: $2,921
Lender B
- Interest rate: 6.9%
- Monthly payment: $395
- Total interest paid over the life of the loan: $3,705
The higher interest rate will only cost you an extra $13 per month, but that small difference amounts to $780 over the life of the loan. For more information on finding the best loans with low interest, check out our guide to good interest rates for personal loans.
If you have bad credit, you might need to pay a higher interest rate for a loan. If this is your situation, you have two options. The first is waiting until your credit score is higher. The second option is to get a loan now, then refinance your personal loan later (when your credit score is higher and you can get a better rate).
Loan terms that work for you
A loan term is the period of time you have to repay the loan. The longer the loan term, the lower your monthly payment -- but the more you'll pay in interest overall. Look for your personal loan term sweet spot, which is the shortest term with the most affordable payment. After all, the best loans fit your budget and timeline.
Low fees
The lowest personal loan interest rate means little if it's coupled with expensive fees. The best personal loan lenders won't charge an origination fee and work to keep other expenses -- like prepayment and late fees -- to a minimum.
For example, many lenders charge origination fees to cover the cost of processing and distributing your loan. Origination fees range from 1% to 8% of the amount you borrow. Using the scenario above, if you borrow $20,000 to replace a roof, that means you could pay between $200 and $1,600 in origination fees alone.
How to get a personal loan
Applying for a personal loan is much like applying for other loan types. The process is the same with a personal loan lender online, at a credit union, or at a traditional bank. Here are the steps to take:
Gather documents
No matter where you apply, the lender is likely to ask for the same documents. Having them together before you rate shop can streamline the process. Here's what you need:
- Proof of identification
- Proof of address
- Proof of income
- List of monthly expenses
- Evidence of how much your collateral is worth (if you're applying for a secured personal loan)
Whether it's a secured personal loan or an unsecured personal loan, the lender may ask about the purpose for the funds.
Shop lenders
Take your time to shop for the best lender. Lenders make a loan decision based on a "soft" credit check, which has no impact on your credit score. This soft credit check gives the personal loan lender a sense of your credit history, including credit card debt and other debt (like an outstanding installment loan). If your credit score is not quite perfect, look for lenders that specialize in personal loans for fair credit or personal loans for bad credit.
As long as you fill out the entire application and provide the lender with the requested documents, it shouldn't take long to hear back. Some of the best lenders can tell you within minutes if you qualify for a personal loan.
Prequalifying for a personal loan
Personal loan prequalification or pre-approval allows you to get a sense of what loan terms are available. Most prequalification processes use a soft credit check, which won't impact your credit score. If you qualify, lenders will let you know how much you can borrow, the interest rate you will be charged, and how long you'll have to repay the loan. You can use this information to compare personal loans. If you do not qualify, you can learn what you need to do to improve your odds of getting a personal loan.
Compare loan offers
Once you've applied with multiple lenders, study your loan offers side by side. If you have applied for unsecured loans, compare it only to other unsecured loan offers. And if you've applied for secured loans, compare it only to other secured loan offers. Here's what to look for:
- The lowest annual percentage rate
- Repayment term that fits your budget
- Loan amounts that match your borrowing needs
- Lowest loan fees (ideally, you'll find a loan with no origination fee or prepayment penalty)
- Perks, like loan deferment when you're unemployed
Commit to a lender
It's only when you decide to proceed with a loan that the lender runs a "hard" credit check. A hard credit check is a deeper dive into your credit history and is a way for the personal loan provider to make sure a borrower meets their minimum credit score requirement and has paid bills on time. Although the hard credit check may decrease your credit score a bit, it's typically by less than five points. After a few months of regular payments, your score should rebound to its pre-loan level.
Note: If you don't receive a loan offer that works for you due to a low credit score, taking some time to improve your credit score can save you money in the long run. Small changes like reducing your credit utilization, paying bills on time, and only applying for credit when needed can all help raise your FICO® Score.
Sign loan documents
Whether you're working with an online lender or a brick-and-mortar financial institution, most lenders allow you to sign documents electronically.
Wait for loan funding
Funds usually hit your bank account one to 14 days from the time of loan approval. If you need the money quickly, ask lenders about their fund distribution times as you shop for the loan.
What are the alternatives to personal loans?
The best personal loan lenders can provide a great way to borrow money affordably, but they are not the right choice for everybody. Depending on your circumstances -- for example, if you need money to fund a project or pay an unexpected expense -- you may want to look at other options. Here are two alternatives to personal loans:
Credit cards
A credit card can provide fast cash in an urgent situation. If you qualify for a 0% APR credit card, you have months (sometimes between 12 and 18) to pay the debt off with no interest. Avoid using a credit card with a 0% transfer offer if you're not confident you can pay it off in full before the promotional rate expires. At the end of the promotional period, the interest rate will shoot up to its standard rate.
Secured line of credit
A secured line of credit can help you snag the best rates for personal loans. When you take out a secured line of credit or secured personal loan, you will typically pay a lower interest rate because you put something of value up as collateral. It may be anything of value, such as your car, home, boat, or jewelry. A line of credit offers greater flexibility. You can borrow up to your credit limit, depending on what you need, and you'll only pay interest on the amount you borrow.
If you decide on a secured line of credit, you probably need to work with a brick-and-mortar financial institution -- online personal loan companies rarely offer anything other than an unsecured personal loan.
Other personal loans to compare
We recognize that our best personal loans picks might not be right for everyone. It may be important to also consider quality picks that didn't land a spot on this list. Here are three more picks that may better suit your needs:
- LendingPoint: Good for people with low credit scores
- Upgrade: Good for debt consolidation and people with fair credit
- Wells Fargo Personal Loans: Good for low APRs for Wells Fargo customers
All financial decisions -- including whether to take out a personal loan -- can have serious implications. Take time to decide if a new loan fits comfortably within your budget before rate shopping the best personal loan for you.
To recap, here are the best personal loans of October 2021
| Lending Partner | Min. Credit Score | Loan Amounts | APR Range | Best For |
|---|---|---|---|---|
| Upstart | 580 | $1,000 - $50,000 | 6.95% - 35.99% | Reducing high interest debt |
| LightStream | 660 | $5,000 - $100,000 | 2.49% - 19.99% (w/AutoPay*) | Borrowers with good credit |
| Marcus | 660 FICO score | $3,500 - $40,000 | 6.99% - 19.99% | Low overall APR |
| SoFi | 680 | $5,000 - $100,000 | Fixed: 5.99% - 19.63% APR (w/ AutoPay)* | Low APR for borrowers with high income |
| Payoff | 640 | $5,000 - $40,000 | 5.99% - 24.99% | Reducing high-interest credit card debt |
| Avant | 580 | $2,000 - $35,000 | 9.95% - 35.99% | Borrowers with poor credit scores |
| FreedomPlus | 640 | $7,500 - $40,000 | 7.99% - 29.99% | Diverse offerings |
| Discover Personal Loan | 660 | $2,500 - $35,000 | 6.99%-24.99% | Debt consolidation |
FAQs
-
A personal loan is money you borrow in a lump sum and pay back in regular installments. Unlike an auto loan or a mortgage, a personal loan can be used to pay for a variety of things, such as an engagement ring, home improvements, or a vacation.
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The ideal personal loan combines a low interest personal loan rate, reasonable repayment terms, and low fees.
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The best rates are offered to the most qualified borrowers. Lenders will take your credit score, income, and existing debt into account when determining whether you qualify for a personal loan. Be prepared to provide supporting documentation like your ID and proof of income. Know how much you need to borrow and where you want the funds deposited.
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Yes, depending on your situation. If you're struggling to make ends meet because of the pandemic, you might qualify for a coronavirus hardship loan.
About the Author
Dana has been writing about personal finance for more than 20 years, specializing in loans, debt management, investments, and business. Her work has appeared on San Jose Mercury News, The Detroit News, Oakland Tribune, and Dun & Bradstreet. After moving around the globe, she's thrilled to be living in her hometown of Kansas City.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.
*Personal Loan Disclaimer
Fixed rates from 5.99% APR to 19.63% APR (with AutoPay). SoFi rate ranges are current as of July 30, 2021 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. Lowest rates reserved for the most creditworthy borrowers. 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, income, and other factors. See APR examples and terms. 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.
Marcus by Goldman Sachs Disclaimer
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. The availability of a loan offer and the terms of your actual offer will vary due to a number of factors, including your loan purpose and our evaluation of your creditworthiness. 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. Receive an APR reduction when you enroll in AutoPay. This reduction will not be applied if AutoPay is not in effect. When enrolled, a larger portion of your monthly payment will be applied to your principal loan amount and less interest will accrue on your loan, which may result in a smaller final payment. See loan agreement for details.
LightStream Disclaimer
* Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.
© 2021 Truist Financial Corporation. SunTrust, Truist, LightStream, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.
