Grab the money and go! That’s how seduction looks like. And that’s what the best personal loans offer. Is it risky? It may be risky to lenders, so they check your creditworthiness before giving you money. Is it another credit trap for you to fall into? Definitely not. You can discuss interest rates with your lender, and once that’s settled, your APR and monthly payments remain fixed for the entire repayment period.

Personal loans are really that easy as it sounds. Just make sure you have done your shopping-for-a-loan homework. We’ve written down the assignment for you.

How you can get the best personal loan possible

A personal loan is the easiest way to finance your urgent expenses. You can normally get from $1,000 to $50,000 for up to five years within as little as one to five business days after submitting your loan application. The trick here is how to get a personal loan with the best conditions possible — the required amount at the lowest rate and for the term you need to repay your loan in comfort. So make sure you have done your shopping homework before applying for a particular personal loan.

Find out your credit score

Free and firsthand credit score

The greatest thing about loans is that you may negotiate on their terms. But at first, you should figure out how good your chances are — look at the situation from the viewpoint of your potential lender. Your credit score shows how risky or vice versa worth of credit you are. There are two ways to find out your credit score free of charge:

  • You may request a copy of your credit report from one of the three main credit bureaus — Equifax, TransUnion, or Experian. Each of them can send you one copy per year for free (upon your request), so this way you can check your credit score three times. Please note that requesting your score from the credit bureaus producing it is the only way to get it firsthand — to check its most precise value.
  • Additionally you can use any online tool generating your credit score value based on the information you enter. This allows you to get your credit score within a few minutes but its value will not be very accurate. Still, this helps you estimate your creditworthiness at least approximately.

Your creditworthiness

Once you’ve got your score, you can understand your own value for lenders and their desire to give you money with low interest rates.

  • With a credit score 720+, there is no need to worry how to get approved for a personal loan. You can get the entire amount you need and the best rates available on the market. Lenders view such consumers as no risk at all. Please go to our excellent credit personal loans review section to see our top picks for your credit score.
  • If your credit score is 680-719, you still look pretty good for lenders. They may want to consider some other information about your financial situation, but it will go quite easy for you. Please go to our good credit personal loans review section to see our top picks for your credit score. Bear in mind that with a 630 to 679 credit score, you still have chances to get decent terms for your loan but they are considerably lower.
  • If your credit score is under 629, you still can get a personal loan from lenders that consider not only your score but also some other factors. But interest rates will definitely be very high since you seem to be a risky borrower. Please go to our bad credit personal loans review section to see our top picks for your credit score.

If your credit score is not sufficient for a good loan, try to find at least a couple of months to improve the situation around your credit.

For example, credit card holders may ease up on their credit line (use up to a third of it) and make all the minimum payments on time. Also you may check your credit report for errors and inaccuracies and dispute them. This is a good practice giving an almost immediate effect.

>>  READ: Easiest Ways to Improve Your Credit Score

improve your credit score

Shop for the best personal loan rates available to you

Pre-qualification form

Now, when you know how attractive you look to lenders, it’s time to check options available to you on the marketplace. The best way is to use online personal loan services where you can enter some data and get pre-qualified for a loan offer.

At this point you may feel quite vulnerable, since you will be asked to provide personal and financial information. It may be your social security number, address, employer, income, debt obligations, and some other details. Such services may also request your credit score from credit bureaus. But don’t worry, online services, unlike banks, make only a soft pull and don’t hurt your credit score.

personal loan application form

An application form for online personal loans

Once you’ve filled out a pre-qualification form, online services filter loan offers and show you the options that meet your needs. And here you can see your real chances for a low rate personal loan. Take some time and check closely all the available options. Pay attention to interest rates, available amounts and monthly payments (or the term of a loan).

>> READ: How to Compare Personal Loans

Personal loan calculator

Please use the personal loan calculator below to estimate loan offers. You may specify the APR you want to get from a particular lender, or simply enter your credit score and use average APR available to such score. You can enter and later change values in all the fields available. Check for example what your monthly payments will be based on the term of your loan and its APR. Or how long it may take to repay the loan if you cannot afford to make large monthly repayments.

Alternative options

If there are no unsecured personal loan offers available to you, you still can apply for a loan. Consider the following options:

  1. Secured personal loans may help you get attractive rates even with a very modest credit score. But you need to have a savings account or a car to use them as a collateral for your loan. Alternatively, if you own a house, you may apply for a home equity line of credit or home equity loan.
  2. Co-signed personal loans may be the only solution for those with a bad credit score and no cars, houses, or savings accounts. In this case, a potential lender will consider the income and credit score of your co-signer as well, not only those of yours. The difficulty is to find a person ready to become your co-signer since this person has to take a part of responsibility for your loan.

>> READ: Cosigning – Worst Case Scenarios

Define your personal loan purpose

While online lenders normally offer personal loans to finance any of your needs, banks limit the range of purposes you can use their money for. And that makes sense.

What to finance with personal loans

Personal loans have a great seductive power — since you may get easy cash almost instantly. But it’s always important to remember about your purposes, what exactly you want to finance with a personal loan. Please consider the following list of expenses that are perfect to be covered with different types of personal loans:

  • Home renovation,
  • Car purchase,
  • Debt consolidation,
  • Child adoption,
  • Wedding,
  • Medical bills,
  • Emergencies.

In short, personal loans are good to pay for costly medical services, emergencies and really expensive purchases, such as cars. In this case you get the entire amount fast, with lower APR than similar credit cards and with a simple repayment plan, since rates are fixed and all monthly payments are the same. Thus, using a personal loan saves you both time and money.

Note that most of major banks offer their personal loans only for the mentioned purposes:

  • Discover personal loans are geared for debt consolidation and major life events (dream vacation included);
  • Wells Fargo personal loans are made for debt consolidation, home renovation, and any large one-time expenses;
  • Citibank personal loans are offered for debt consolidation, home improvement, and large one-time expenses;
  • Capital One personal loans are rather auto loans and home renovation loans;
  • American Express personal loans are offered for debt consolidation, home improvement, significant life events, and to finance expensive one-time needs.

What to finance with other credit products

However, remember that personal loans are not the only credit product on the marketplace. If you need extra funds to pay for your travel or dining, gas or groceries, pick the best rewards credit card available to you. This will earn you rewards and let you to save on similar expenses in the future. Additionally, you may receive heaps of travel benefits and avoid many standard fees (or significantly reduce them).

Credit cards are equally good to finance big-ticket purchases, such as electronic, furniture, appliances, etc. Paying for such items with a credit card gives you access to absolutely amazing shopping programs: Price Protection, Purchase Protection, Extended Warranty, Return Extension and other. They may save you a lot of money if prices go down soon after your purchase or your brandy-new device got stolen, broken or lost.

Additionally, if you have a high credit score, you may be eligible for a credit card with zero APR for the introductory period (sometimes it may be up to 24 months). Personal loans don’t provide you with all these benefits.

>> READ: Personal Loans vs. Credit Cards

Use personal loans to ease your financial life

Personal loans may not only finance your needs but serve as a credit repairing tool:

  • Getting a personal loan to pay off a credit card is one of the options to consider. Doing so, you consolidate your small credit card debts into one. This allows you to create a simple repayment plan with fixed monthly payments. Since on average, personal loan rates are lower than credit card rates for consumers with a similar credit score, you may significantly save on interest payments. This is especially important if you failed to make your credit card monthly payments on time and was charged with a huge penalty APR;
  • Using a personal loan for debt consolidation also helps boost your credit. This happens since your revolving debt turns into installment debt, and the credit utilization rate goes down.
  • Additionally, you may use small personal loans to build credit — simply focus on ontime repayment. But of course this is not the option if you cannot get money at a low rate. In this case it’s better to use secured loans or secured credit cards to establish or rebuild credit.

By the way, many of major banks offer personal loans only for refinancing or consolidating your existing debt.

Alternatively, you can consolidate your debt with balance transfer credit card, check if it’s your option.

>> READ: Best Balance Transfer Credit Cards

Compare loans from different kinds of lenders

Major banks

There are not so many large banks that offer large or small personal loans: Wells Fargo, Citibank, Discover, American Express, and Marcus.

We have prepared a table with offerings from the best banks for personal loans. Compare their terms below.

Bank

Amount

Interest rates

Repayment period

American Express

From $3,500 and up to $25,000

From 6.90% to 19.97% APR

For 12, 24, or 36 months

Citibank

From $2,000 and up to $50,000

From 7.99% to 17.99% APR

For 12, 24, 36, 48, or 60 months

Discover

Up to $35,000

From 6.99% to 24.99% APR

From 36 to 84 months

Marcus

From $3,500 and up to $30,000

From 6.99% to 23.99% APR

From 36 to 72 months

Wells Fargo

From $3,000 and up to $100,000

From 6.74% to 19.74% APR

From 12 to 60 months

Chase

There is always a question whether Chase personal loans exist. The answer is that basically, yes. But you need to visit your local branch and talk to a representative to find out the terms available and apply for a personal loan.

Bank of America

Bank of America offer various personal loans but you have to visit a local branch to find out the details. Note that local departments are the best places for personal loans since they approach borrowers in a much more flexible way.

Please note that the largest amounts, longest terms and lowest APRs are available only to consumers with a good to excellent credit score.

Local banks

If you want lower rates, you should better check loan offers from your local banks and maybe even credit unions. The best thing about local banks for personal loans is that you may discuss loan terms with your lender. This is how even with a modest credit score, you may rise personal loans at rather low APR. However, bear in mind that local banks may be more tolerant to the financial needs of their existing clients (that may include no income verification personal loans). And credit unions are really flexible and open but may lend you not that large amounts — up to $2,500.   

Online lenders

You can also get personal loans online from various lenders. Some of them are ready to give money even to consumers with bad credit score and recent bankruptcies, but only because they charge interest rates outweighing the risk of losses. However, a high credit score may open you even more opportunities with online lending companies for personal loans. Have a look at our best online personal loans for various credit score.

Excellent credit personal loans

Lender

Credit score

Fees

Amount

APR

Repayment period

LightStream

660 and higher

None

From $5,000 and up to $100,000

From 2.29% to 17.99%. Autopay matters

From 24 to 84 months

SoFi

660 and higher. But typically, it’s 700 and higher

Late fee: 4% of payment or $5 whichever is greater

From $5,000 and up to $100,000

From 5% to 15%. Both fixed and variable rates are available

For 36, 60, and 84 months

Marcus

660 and higher

None

From $3,500 and up to $35,000

From 6.99% to 23.99%

From 36 to 72 months

These are three best personal loan companies among online lenders. They let you check their rates without hurting your credit score with a hard pull.

Good credit personal loans

Lender

Credit score

Fees

Amount

APR

Repayment period

LendingClub

600 and higher. But on average, consumers get approved with a credit score of 699

Origination fee from 1% to 6% of loan amount; late fees, unsuccessful payment fees, and fees for personal check use

From $1,000 and up to $40,000

From 4.99% to 35.89%

For 36 or 60 months

Prosper

640 and higher

Origination fee from 1% to 5% of loan amount; late fees and unsuccessful payment fees

From $2,000 and up to $35,000

From 5.99% to 36.00%

For 36 or 60 months

RocketLoans

640 and higher

Origination fee from 1 to 6% of loan amount; late fee, fee for personal check processing, and fee for returned payment

From $2,000 and up to $35,000

From 5.9% to 28.99%

For 36 or 60 months

LendingClub and Prosper are peer-to-peer online lenders. They help match borrowers with investors. RocketLoans is a speedy newcomer (by the way, it’s Quicken Loans’ sister company).

Bad credit personal loans

The easiest way to get cash to consumers with a bad credit score is payday loans. They are not like personal loans — no credit check required. But don’t rush into this trap without considering some secured and unsecured personal loan options below.

Lender

Credit score

Fees

Amount

APR

Type

OneMain Financial

Under 600

Upon request

Typically from $1,500 and up to $10,000

May vary from 25% to 36%

Offers mostly secured personal loans but unsecured options are also available

Avant

580 and higher

Origination fee from 1.50% to 4.75%

From $2,000 and up to $35,000

May vary from 9.95% to 35.99%

Unsecured personal loans only

As you can see, you can get various amount of money with a very decent for bad credit APR. Remember that secured loans may have lower APR than unsecured offers from the same lender. Thus, if in trouble, look for the best personal loans online.

Plan repayment of your loan

A personal loan is not only easy to get but also easy to pay off — interest rates remain fixed for the entire repayment period, and therefore monthly payments remain the same as well. However, the amount of principal and the amount of interest change in each payment. The less principal remains to be paid on the loan, the less interest is accrued.

Look how your amortisation schedule may look if you borrow $3,300 for 12 months at 16% APR.

Depending on the amount you need and the APR you’ve managed to get, you can decide what monthly payment you can afford and after that what repayment period you want.

Of course, the longer it takes to pay off the debt, the more interest you accrue. However, it’s better to agree on affordable monthly payments than to fail the entire repayment plan.

And below you can find how total interest you pay depends on the loan term and APR. You may borrow the same $15,000, but in one situation it may cost you less than $700 for the entire period and in other circumstances it may become a real credit trap for you — costs may reach $9,000.

Note that the lower your credit score is, the higher APR you get. For example, 10% is available to consumers with a good to excellent credit score, 15% — to consumers with a fair credit score, and 20% is the option for consumers with a poor credit score).

Consider different terms available to you to understand what monthly payments you can afford or even whether you can afford to take a personal loan at all at the moment.

>> READ: Personal Loan Rates: Affect on Credit Score When You Shop for Them

Go through the fine print of your loan

And the last but not least thing you should keep in mind while applying for a personal loan is its terms. Actually, that’s equally fair for any other credit product as well — do read the fine print. In particular, personal loans may have the following pitfalls, you can avoid:

  • Make sure you know the total costs of the loan you’re applying for. It may include origination fees and sometimes interest rate surprises;
  • If your lender accepts only automatic payments from your checking account, set up a low balance alert. Otherwise, you may be charged with overdraft fees from your bank;
  • Before making plans on paying off your personal loan early, make sure that you lender will not charge you with a so called exit fee.

>> READ: Easy Ways to Avoid Predatory Lender

Borrowers are reading the fine print to take a personal loan

Borrowers are reading the fine print to take a personal loan

Well, now your shopping-for-money homework is done. You know all you need about personal loans. Apply for the most suitable one and get the best rates possible in your situation. However, remember that looking for a personal loan means coping with financial difficulties. Do your best to keep this situation under control:

  • Shop for your personal loan thoroughly;
  • Don’t borrow more than you really need;
  • Make all payments on time.

Good luck!

Pros and Cons of personal loans

  • There are many ways to find a personal loan with attractive interest rates. The main key to best rates is an excellent credit score. But you also can use personal loans with collaterals or co-signers to obtain an affordable APR. When you apply for a personal loan at a local bank, you can negotiate any loan terms before signing your agreement;
  • Once the agreement is signed, APR remains fixed for the whole period of debt repayment. Since the APR doesn’t fluctuate, your monthly payments are also fixed for the entire period of loan repayment. That makes it so much easier to stick to your repayment plan;
  • For consumers with a similar credit score, personal loans normally offer better interest rates than credit cards;
  • With personal loans, you may get much more funds, than with credit cards’ credit lines;
  • Getting a personal loans takes very little time — up to five days after application;
  • Personal loans are a cost-effective solution for debt consolidation and fast credit score repairment;
  • You don’t have to secure your personal loan with any of your assets;
  • Using personal loans, you can finance home improvement, pay off unexpected medical bills, buy a new car, etc.
  • In some cases processing a personal loan may charge origination fees on you;
  • Only consumers with a high credit score may get a personal loan with a low APR;
  • Consumers with a low credit score may be not eligible for most of the personal loan options;
  • Unlike credit cards, personal loans don’t allow you to earn rewards and use shopping and travel benefits while you use your loan.

The bottom line

Personal loans are the easiest way to finance a wide variety of expenses. Additionally, they may serve as a debt consolidation tool or a credit score improvement tool. Consumers with a high credit score may expect getting large amounts with really low interest rates.

However, a bad credit score does limit personal loan options to those with huge APRs, small amounts and many fees. And the other significant disadvantage is that using a personal loan for your expenses doesn’t allow you to earn any rewards and enjoy other standard benefits offered by credit cards.

Chose the right credit product for your needs!