A Complete Beginners Guide to Finding the Best Personal Loans Online

Last Updated on November 5, 2020

This page provides detailed information on finding the Best Personal Loans online for debt consolidation, small business, home repairs and many more. Here, you will be guided through what Personal Loan is, where you can get a personal loan, what is the interest rate on a personal loan, benefits of getting a personal loan, best personal loans online, requirements to access loans, and all other important information you may need to know. Please, stay tuned.

What Is a Personal Loan?

A personal loan is money you borrow from a bank, credit union, or online lender that you pay back in fixed monthly payments or in installments, usually over two to seven years. Lender rates can vary from 6% to 36% APR (Annual Percentage Rate).

With a personal loan, you can borrow money to cover the cost of home improvements, pay off medical bills or consolidate high-interest debt. In many cases, it’s possible to get a personal loan online for just about anything you want.

Types of Personal Loans?

There are basically two main types of personal loans:

1. Secured Personal Loans

This type of personal loan requires some type of collateral. If you get a loan from your bank, you might have to put a certain amount in a CD as security. Or, you might secure a personal loan with your car or some other asset. If you don’t make payments, the lender can take your collateral to offset what you owe.

2. Unsecured Personal Loans

One of the biggest benefits of getting an unsecured personal loan is that you aren’t risking an asset. If you can’t pay, the lender has little recourse beyond sending your account to collections or suing you to try to collect what it owes. You haven’t tied the debt to an asset, so there’s a little less risk to you.

However, because of this, lenders may require charger a higher interest rate or require a better credit score. Just remember, when you miss payments, it is reported to the credit bureau and can cause your credit score to decrease.

However, there are many lenders willing to provide unsecured personal loans at reasonable rates. Carefully consider which type is likely to best fit your needs.

“Before making a choice, you should compare rates from several lenders. The loan with the lowest annual interest rate is the least expensive and therefore usually the best option”.

Benefits of Getting a Personal Loan?

There are several personal loan benefits to consider when deciding if getting one is the right way for you. Flexibility is one of the great benefits of getting a personal loan, but there are other benefits as well.

1. Personal loans can be used for multiple purposes.

When you get a personal loan, it can be used for almost any personal expense. There are a few exceptions, but, for the most part, you can use the money how you want. Some of the ways you can use personal loans include, Debt consolidation, unexpected expenses, making a big purchase, paying for a wedding, going on vacation, buying a car, etc.

2. Personal loans tend to have lower rates and higher borrowing limits.

In many cases, it’s possible to get a personal loan for a larger amount than you might have available on your credit cards. Additionally, many personal loans can have rates that are lower than credit card rates, though this is not always the case.

3. A personal loan can help to improve your credit score.

Another benefit of getting a personal loan is the fact that it can improve your credit score. When you make your payments on time and pay the full amount required, you build your credit history.

4. Personal loans follow a predictable payment schedule.

The set payment schedule offered by personal loans can let you see exactly when you’ll be done paying off your debt, and it also allows you to see exactly how much interest you’ll pay.

Best Interest Rate on a Personal Loan?

The average personal loan rate is 9.82%.

Generally, a good interest rate for a personal loan is one that’s lower than the national average. When you shop around for the best personal loan rate, you can save. Compare personal loan offers with national average personal loan trends to know whether you’ve found a competitive interest rate.

Your credit score, debt-to-income ratio and other factors all dictate what interest rate offers you can expect to receive.

Where to Get a Personal Loan?

Personal loans are available everywhere from brick-and-mortar banks and credit unions to online lenders. Review the pros and cons of each type of lender.

A bank or credit union could offer personal service, especially if a location is nearby. But online lenders sometimes offer more convenience, especially if you prefer to apply, close and manage your personal loan online.

Ensure to obtain preapprovals from a variety of lenders so you can compare rates, terms and other factors for different types of personal loans.

How to Choose the Best Personal Loans Online?

Before you apply for a personal loan online, make sure you understand what you want in a personal loan as well as how much you really need because each lender has distinct terms and conditions.

“Consumers can choose the best personal loan by doing their research, shopping around between multiple lenders, reading the fine print and only selecting a loan that they know they can afford to repay,” says Jared Kaplan, CEO of OppLoans, an online lender for bad credit loans.

An easy place to begin is to check that a lender is licensed in your state. Make sure each lender can offer personal loans where you live.

READ ALSO: A Complete Beginners Guide to Finding the Best Personal Loans

How to Compare Personal Loans Online?

Try to compare loan rates from at least two personal lenders before you apply for a loan. Consider interest rates, credit requirements, loan amounts, repayment terms and other factors to choose the best personal loan for your financial situation. Take a look at this example comparing these two personal loan companies:


Personal loan interest rate: 6.99% to 24.99%

Minimum FICO score: 660

Loan amounts: $2,500 to $35,000

Term length: 36 to 84 months

Best feature: charges minimal fees


Personal loan interest rate: 5.99% to 18.64%

Minimum FICO score: 680

Loan amounts: $5,000 to $100,000

Term length: 24 to 84 months

Best feature: accepts co-borrowers

When you’re comparing personal loan options, think about what works best for your needs. For example, if you need a large personal loan and have good credit, SoFi could offer a lower rate and larger loan amount than Discover. But if you need a smaller loan and have fair credit, Discover may be a better choice.

Of course, you shouldn’t choose a personal loan company based on interest rate alone. You’ll need to get rate quotes to estimate your personal loan rate because it depends on your credit and other factors.

Best Personal Loans Online

LightStream: Best Online Personal Loan

LightStream is the online lending division of Truist Bank (a merger between SunTrust and BB&T). According to LightStream, its goal is to offer a simple online loan experience and excellent interest rates to consumers with good credit.

Low rates and no fees make LightStream stand out among the competition. Its interest rates start as low as 3.99% on certain types of personal loans, and it offers loan amounts as high as $100,000 to well-qualified borrowers.

Other important information:

  1. Minimum/maximum amount you can borrow – $5,000 to $100,000
  2. Fees – Zero fees (though Florida residents are subject to a documentary stamp tax of 0.35%)
  3. Repayment terms – 24 to 144 months depending on loan purpose
  4. Time to receive funds – Potentially as soon as the same business day.

SoFi: Best Online Loan for Good Credit

The SoFi platform offers a variety of online financing options, including personal loans, student loans, and mortgages. SoFi personal loans may work well for borrowers with good credit ratings.

Interest rates on SoFi personal loans start at 5.99%. Applicants with good credit and sufficient income who can satisfy SoFi’s conditions may be able to borrow as much as $100,000.

Other important information:

  1. Minimum/maximum amount you can borrow – $5,000 to $100,000
  2. APR range – 5.99% to 18.53%
  3. Fees – No origination fees or late payment fees and no prepayment penalties
  4. Repayment terms – Two to seven years

Upstart: Best Online Loan for Fair Credit

Upstart is an online lending platform that works with several different lending partners. The platform uses artificial intelligence and alternative data to help find affordable personal loans for borrowers with fair or better credit ratings.

In addition to your credit score, your education, area of study, and job history might help you land a lower interest rate on your loan—possibly as low as 7.98%. According to Upstart, its rates are 16% lower than traditional lenders. Qualified applicants may be able to borrow up to $50,000.

Other important information:

  1. Typical APR range – 7.98% to 35.99%, based on credit, income, and other information considered in your loan application. Your education, area of study, and job history might help you qualify for a better rate.
  2. Fees – In addition to the above-noted potential origination fees between 0% to 8% (depending on the lending partner), late fees are $15 or 5% of the monthly past-due amount, and returned check fees (or ACH return fees) cost $15. Lending partners, however, do not charge prepayment penalties.
  3. Recommended minimum credit score – 600
  4. Repayment terms – Three- and five-year terms available

Avant: Best Online Loan for Bad Credit

Getting a personal loan, online or otherwise, may not be easy when you have bad credit. Nevertheless, you have options. One of the most competitive online lenders for bad credit is Avant.

Founded in 2012, Avant offers online loans to borrowers with credit scores as low as 600. Qualified applicants may receive up to $35,000 in funding, with interest rates starting at 9.95%.

Other important information:

  1. Minimum/maximum amount you can borrow – $2,000 to $35,000
  2. Fees – In addition to the above-noted possible administrative fee of up to 4.75%, Avant also charges late fees and dishonored payment fees, though the amount of these fees isn’t available online.
  3. Recommended minimum credit score – 600
  4. Repayment terms – 24 to 60 months

Payoff: Best Online Debt Consolidation Loan

Payoff is an online loan platform that helps people who are looking to pay off high-interest debt. The platform matches applicants with lending partners that offer interest rates as low as 5.99%.

Compared with an average credit card interest rate of 15.78% (as of May 2020, according to the Federal Reserve), well-qualified borrowers may be able to save a bundle.1

Other important information:

  1. Minimum/maximum amount you can borrow – $5,000 to $35,000
  2. APR range – 5.99% to 24.99%
  3. Fees – Payoff lenders may charge a 0% to 5% origination fee, but most other fees, such as late fees and early payment fees, don’t apply.
  4. Recommended minimum credit score – In addition to the above-noted 640 FICO score, you must have no current delinquencies on your credit report.
  5. Repayment terms – Two to five years

How to Get a Personal Loan Online?

If you want to borrow money and are confident that you can afford the new debt, it’s time to start searching for the right loan. Thankfully, comparing online loans tends to be a quicker, easier process than comparing loans from traditional financial institutions.  

Before you apply for any type of loan, it’s important to check and review your credit reports and scores with all three credit bureaus. Next, search for lenders that offer loans to people with your credit rating (excellent, good, fair, bad, etc.).

You should make sure the lenders you’re considering offer the type of online loan you need (consolidation loan, home improvement loan, medical loan, etc.). Finally, compare available rates and fees and choose your top three lenders as you prepare to begin the application process.

How to Apply for a Personal Loan Online?

  1. Submit a prequalification request (if available) to at least three lenders.
  2. Choose the lender that offers you the best overall deal and fill out your official loan application.
  3. Promptly send any additional documentation the lender requests and e-sign your loan agreement.
  4. Wait to receive your funds.

There are many reasons why you might prefer to search for a personal loan online rather than traditional banks and credit unions. Online lenders can approve borrowers with a wide variety of credit scores. Some may offer flexible loan amounts, large and small, depending on your borrowing needs. Online lenders can often offer quick financing solutions when you need quick access to cash.

Finding a personal loan online can often make it easier to find rates. You can easily consider multiple loan offers side by side from the comfort of your own home. Best of all, many online lenders often offer a prequalification process, helping you do loan comparisons without risking damage to your credit score.

Do Personal Loans Hurt your Credit?

The process of applying for a personal loan may initially hurt your credit score. However, a personal loan can actually help improve your credit score over time.

When you apply for a personal loan, lenders will assess your credit score and history to determine your credit risk, or your creditworthiness. To do this, they’ll run a hard credit check. When they run this check, they’re looking for indicators of financial health, like low credit balances and a good debt-to-income ratio. Whether or not you’re in good financial standing, you’ll likely see a few points knocked off your credit score as a result of the hard check.

If you’re applying for a personal loan, you likely won’t be able to avoid a hard credit check. However, the long-term investment of a personal loan can be worth it in comparison to the few points you may lose.

If you are approved for a personal loan, the new loan can drop the average age of your credit history. Although the length of your credit history accounts for only 15% of your FICO credit score, it is still an important factor for lenders and can affect your chances of getting a loan.

Payment history is the most important factor in your FICO score at 35%, which means that you must pay your personal loan on time. If you stop making payments on a personal loan, you risk defaulting on the loan and damaging your credit.

“If you’re taking out an unsecured personal loan, you don’t have to risk losing your home or your car, but that doesn’t mean they’re risk-free,” Kaplan says. “Failing to pay the loan back, also known as defaulting, could do some pretty serious damage to your FICO score. That will make it harder and more expensive to borrow money in the future.”

Making sure that your monthly payment fits in your budget will help you pay on time. Get an idea of how much you can afford before you look at loans.

“A loan with a longer repayment term might cost a little more overall, but that longer term will also lower the monthly payment amount,” Kaplan points out. “And if those payments are a much better fit for a person’s budget, then that loan is probably the best one for them.”

A 36-month personal loan, for instance, will allow you to pay off your loan faster and with less interest than a 48-month loan. But the latter could give you more wiggle room in your monthly budget.

What Is the Interest Rate on a Personal Loan?

Personal loan APR ((Annual Percentage Rate)) ranges are typically from about 6% to 36%, depending on creditworthiness and other factors. Generally, the higher your credit score, the better your personal loan interest rate.

Also, the higher your credit score, the greater choice of personal loans you’ll have with favorable terms. Companies want to work with people who have good or excellent credit scores and are more likely to offer personal loans with better terms to these consumers.

“Frankly, you probably need a credit score of 680 to 700 or higher” to qualify for a personal loan, says Joseph A. Carbone Jr., certified financial planner and founder of financial planning firm Focus Planning Group. “If you are in a range of 620 to 680, you might need a co-signer to secure the line.”

But your credit score is not the only factor that determines either approval for a personal loan or where interest rates start. Companies will request information about your job, your minimum annual income, how stable your income is, your savings and more. Your answers can determine your eligibility.


Before applying for a loan, make sure you understand what you are spending your money on and how much you really need. Try not to borrow more than you can repay, and make sure you can handle monthly payments along with your other obligations.

Remember to compare lenders to find the best personal loan for you. Look at several lenders and compare interest rates, origination fees, and other terms. Take a close look at the situation so you can choose the loan that will work best for you.

Do you have any queries on finding the Best Personal Loans online? Please feel free to let us know so we can assist you with any information you will need.

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