Key takeaways

  • The average interest rate on a personal loan is above 12 percent.
  • Common fees include origination fees, prepayment penalties and late fees.
  • Some lenders allow co-borrowers and co-signers on your loan.
  • Evaluate total cost alongside other services and customer reviews.

To find the best personal loan lender for you, you’ll need to shop around and compare options. Personal loans come with a variety of terms, interest rates, fees and customer support options, so knowing what you need from the start will help narrow down your options.

In many cases, you can borrow $1,000 to $50,000 with a repayment period of up to seven years. Typically, APRs range from 8 to 36 percent, depending on your credit score and other factors.

How to compare personal loans

Each personal loan lender has something unique to offer. Before applying for a loan, make sure you compare at least three lenders based on the criteria listed below to determine which can offer you the best loan for your situation.

Approval requirements

Each lender has its own criteria for approving borrowers. Most lenders will look at factors like your credit score and income to determine your eligibility for a loan.

However, others may take your educational background and job history into account as well. Researching the eligibility requirements prior to applying will help you narrow down your choices to those that offer loans within your credit profile.

Interest rates

Personal loans currently have an average interest rate above 12 percent. However, rates fluctuate from roughly 8 percent to 36 percent. The interest rate you’ll get will be based on your credit score and loan term.

Lenders advertise low interest rates to entice customers. However, the lowest personal loan rates are typically reserved for customers with excellent credit — generally 720 or higher — although a good credit score could also get you competitive rates.


If you have less-than-perfect credit, you can expect to pay more interest. Search for lenders that allow you to apply using a co-borrower or a co-signer, as this could improve your approval odds as well as the interest rate you’ll get. Not all lenders offer this option, so you’ll need to do some research before applying.

If, after getting a co-signer, you still end up with a high interest rate, you may want to work on your credit score before applying. A high interest rate can mean paying thousands of dollars more over the life of your loan.


Make sure you take a look at any fees, such as application fees, prepayment penalties or origination fees, as these could increase the overall cost of the loan, even if you secure a competitive rate.

Loans for bad credit are more likely to have origination fees. Some lenders charge up to 10 percent of the loan amount, although it varies widely. Just be sure you account for the origination fee — which is deducted from the amount you receive — when you request a loan.

Loan amounts

Lenders often offer personal loans for $1,000 to $50,000 — although some lenders have personal loans up to $100,000. For many people, this should cover almost any big expense. Larger loans are geared toward borrowers with strong income and high credit scores and often have a higher minimum amount — usually $5,000.

Check your lender’s cutoff when you apply since some may limit their borrowers to just $20,000. While this can be as much as you need, consider this factor when you compare lenders, especially if the lender charges a high origination fee.

Repayment options

The time you take to pay back your loan has a huge influence on how much your lender earns in interest. A two-year term may have high monthly payments, but it will mean saving hundreds, or even thousands, over the life of your loan.

A long loan term does the opposite. If your lender offers six- or seven-year terms, you may be able to keep your monthly payment low. However, you will also pay significantly more in interest. Ideally, you should have as high of a monthly payment as you can afford to cut down on the interest you pay.

Unique features

Many lenders offer additional perks to sweeten the deal for customers. For example, some lenders may offer free credit score monitoring, credit reports or online privacy protection services in addition to autopay discounts and unemployment protection.

Customer service and experience

Some lenders only have email forms to submit questions, while others have phone and chat options. If you are looking for a personal loan from a bank or credit union, you may also be able to get in-person attention at a local branch.

Besides looking at contact options, look up the lenders’ track record on consumer review websites, such as Trustpilot and the Better Business Bureau (BBB), to determine whether it’s a good idea to do business with them.

Types of loans offered

Personal loans are either secured or unsecured with variable or fixed rates. Many are marketed for a specific purpose, including:

  • Bad credit loans are offered by lenders to customers with past credit challenges.
  • Debt consolidation loans let you pay off multiple debts with a new loan, typically with a lower interest rate, and streamline the repayment process by making a single monthly payment.
  • Emergency loans are designed to cover unexpected expenses and last-minute financial emergencies.
  • Home renovation loans are used to make costly upgrades to your home without tapping into the equity you’ve built up.

How to choose a loan

There is no one-size-fits-all approach to personal loans. The best personal loan for you will depend entirely on your finances and the type of loan you qualify for.

  1. Narrow down your choices based on your eligibility and the factors that are most important to you. Interest rates, loan amount and fees are all worth considering.
  2. Apply for prequalification with each lender. This allows you to see your rates without harming your credit and makes it easier to compare your choices.
  3. Review the lender’s terms. One lender may beat another as far as interest rates go, but it could have a prepayment penalty that makes it harder to repay your loan ahead of schedule.
  4. Complete a full application to confirm that you qualify. If you do, the lender will have you sign final paperwork before disbursing the loan.

Before you apply for a loan, run the numbers to ensure you’re making an informed decision. Origination fees or higher rates don’t mean the lender isn’t worth considering. A personal loan from a lender that isn’t reputable or provides underwhelming customer service could prove to be even more costly.

Why it is important to shop around for lenders

Ultimately, the best personal loan comes down to the lender’s reputation and the loan terms it’s offering. Although your credit score and overall financial history will determine if you qualify for a loan, get quotes from several lenders to evaluate rates and fees. With research and time, you can find a lender that is the best for your financial situation.

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