3 Tips for Comparing Personal Loans in 2023

Here's how to narrow down the dozens of personal loan companies.

If you're in the market for a personal loan in 2023, there is certainly no shortage of choices. In addition to the numerous online-based lending platforms, most banks and credit unions offer their own personal loan products.

But how can you narrow down the list of options and decide which is the best personal loan for you? Here are a few tips to help you decide.

Look for lenders with features you want

First and foremost, it's important to realize that not every lender is a good match for every borrower. Some lenders are only interested in making personal loans to borrowers with top-tier credit scores, while others focus on extending loans to customers with less-than-perfect credit.

It's also important to make sure a lender is offering the product you need. Personal lenders generally publish their minimum and maximum loan amounts, so be sure to look at those. For example, if you need to borrow $50,000 for a home improvement project and a particular lender offers loans from $5,000 to $40,000, you can go ahead and cross it off your list.

Other things you might want to consider:

• Funding speed: Some lenders fund loans as soon as the same business day, while others can take a few days.
• Banking relationships: If your bank makes personal loans, that's a good place to start your search. Not only is it convenient to be able to manage your bank accounts and loan in the same app, but many offer interest rate discounts for existing customers.

There are other potentially valuable features you may want to look for. As an example, some lenders can send your loan proceeds directly to your credit card companies if you're taking out the loan to consolidate debt.

In addition to starting with your own bank, take a look at our updated list of top personal lenders and read some of our reviews to get a sense of which lenders offer which features.

Look at the true cost of borrowing

Some lenders don't charge any origination, prepayment, or other fees, while others do. And some only charge fees to certain borrowers.

There are personal lenders that charge origination fees of as much as 5% of the loan amount, so this should certainly be taken into consideration. And if your hope is to pay back your loan faster than the agreed-upon term, be sure you won't get charged for it.  

Shop around for offers

One of the best features of the personal lending industry as a whole is that virtually all of the top companies allow borrowers to check their rates and loan term offers with no impact on their credit score. You can get your actual loan offers from as many companies as you want, and there's no downside to doing so (other than spending the time).

To be as clear as possible, it is extremely important to get quotes from several different personal lenders. I just checked my loan offers from two lenders and the cheaper one would save me more than $500 in interest over the term of a 60-month loan. You might be surprised how loan terms can differ from one lender to another, so once you've narrowed down your list a bit using the other guidelines discussed here, take some time and get personalized loan quotes from as many as you can.

A few hours can save you a lot of money

The bottom line is that there have never been more options available when it comes to personal loans, so it can be quite a process to shop around and compare all of your options. But it can be well worth your time -- it's not uncommon for the total cost of a personal loan to differ by several hundred (or even thousands) of dollars between lenders, so it can certainly justify spending a couple of hours on research.