Best Personal Loans for 2018

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If you need to borrow money for any reason, it makes sense to consider a personal loan. These loans are unsecured, meaning you don’t have to put down collateral to qualify. Personal loans also come with fixed interest rates and fixed monthly payments that make budgeting for your monthly expenses a much easier task.

Depending on your credit score, you may also qualify for competitive interest rates that are lower than rates you would get with a credit card.  With a rate that’s especially low, these loans are a good option when it comes to consolidating high interest debt. Many personal loan companies also let you borrow up to $35,000 provided you qualify.

Before you apply for a personal loan, however, it makes sense to do some research to find out which companies are offering the best loans in the business. This list of the best personal loans for 2018 compares several lenders to see how they stack up.

Compare Loan Companies and Apply Online
Use the loan comparison tool below to view multiple loan options with no obligation.
Simply enter the purpose of the loan, the amount you need, your estimated credit score, and the state you reside in to instantly view loan companies available to accept your application online right now.

The Simple Dollar’s Best Personal Loan Picks for 2018

If you want to get started on your search right now, here are a few lenders that stood out as I looked for the best personal loans:

In recent years, the personal loan space has continued to grow and improve. Online lenders have reached a point where they can challenge credit card companies and traditional banks. As a result, streamlined lending processes involving more transparency on lending criteria and interest rates have become the norm.

In fact, some brick-and-mortar banks are only recently returning to this kind of lending after the subprime mortgage crisis. So if you’re in the market for an unsecured personal loan, you’ll have plenty of options, especially if you have good credit.

As you read on, I’ll discuss unsecured personal loans in greater detail, why they’re difficult to obtain with bad credit, and strategies you can use while shopping to make sure you find a loan that’s right for you.

If you’re looking for another type of loan, the following reviews can help:

When and When Not to Use a Personal Loan

It’s easy to think that unsecured personal loans are the best option, especially when you don’t have to put up collateral. However, they might not always get you the best rates. For example, a home equity loan might get you better terms since it’s less risky for the lender. Also, some lenders have tailored loans for people with bad credit, which may or may not require collateral.

It’s not a wise idea to use a personal loan for a discretionary purchase because of potentially high interest rates. However, personal loans have their place. For instance, you may be a small business owner who needs to cover your quarterly taxes until a major supplier pays their invoice. Or perhaps you want to consolidate high-interest debt and can better manage a single payment.

Best Personal Loans Overall

The companies below are among the biggest names in personal lending, targeting borrowers who have solid credit (and better). They’re worth considering for anyone who needs an unsecured personal loan. However, if your credit is top-notch — or not so hot — make sure you keep reading for some lenders that target excellent- and average-credit borrowers.

LendingClub

Key takeaways:

        • APR: 6.95% to 35.89%
        • Loan term: 30 – 60 months
        • Max loan: $40,000

Why it’s a solid bet:

        • Competitive interest rates, wide availability, and transparency.
        • Applying for a loan generates soft inquiry which won’t impact your credit score.

LendingClub is one of the biggest peer-to-peer lenders. They offer loans up to $40,000 and are comparatively more lenient when it comes to credit scores. In fact, you may only require a minimum of 600. Rates from 6.95% to 35.89% APR are available to borrowers with the best rates for those with excellent credit.

LendingClub does business in 49 states (right now, you’re out of luck in Iowa). LendingClub also charges a loan origination fee from 1% to 6% and charges a $7 processing fee for each monthly payment made by check. Terms are three or five years.

Disclaimer: All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105. †Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com

Wells Fargo

Key takeaways:

        • APR: 7.24 – 24.24%
        • Loan term: 12 – 60 months
        • Max loan: $100,000

Why it’s a solid bet:

        • Huge branch network (6,000+ locations nationwide) for face-to-face business.
        • Flexible personal line of credit.
        • Option to secure loan with a savings account or CD.

For those with good credit who want a brick-and-mortar approach, Wells Fargo could be a good choice. They advertise APRs of 7.24% to 24.24% and loans from $3,000 to $100,000.

Repayment terms can range from 12 to 60 months and there are no prepayment or origination fees. The main downside here is convenience: You can’t apply online unless you’re an existing Wells Fargo customer, so you’ll need to be near one of their branches. Wells Fargo also doesn’t fare as well as many competitors in customer service ratings, and they aren’t as transparent about lending criteria as many online competitors.

      • APR: 6.95 – 35.99%
      • Loan term: 36 – 60 months
      • Max loan: $40,000

Why it’s a solid bet:

        • Prosper stands among LendingClub as a leading name in peer-to-peer lending.
        • Impressively transparent with wider availability to borrowers.

Prosper is slightly more liberal with its lending criteria than major competitors. It requires a minimum credit score of 640, but Prosper will look at several other factors to give you a shot at a better interest rate. Loan terms are three years and five years. You can borrow from $2,000 to $40,000 at APRs ranging from 6.95% to 35.99% for first-time borrowers.

Interest rates and fees are easy to find and evaluate, and Prosper can make loans in 48 states (loans aren’t available in Iowa and West Virginia). You could be waiting seven business days for your loan to be funded, however.

Best Personal Loans for Excellent Credit

If you have great credit, good news: You may qualify for personal loans with impressively low interest rates. However, keep in mind that lenders who offer these low rates will also want to see other markers of financial health, such as steady employment and a low debt-to-income ratio.

LightStream

Key takeaways:

        • APR: 3.09 – 14.24% (APR with AutoPay)
        • Loan term: 24 – 144 months depending on loan purpose
        • Max loan: $100,000

Why it’s a solid bet:

        • Flexible terms with high borrowing limits.
        • Ideal for borrowers who want a hefty amount and a longer repayment period.

LightStream offers excellent rates from 3.09% to 14.24%* (rates as of June 2018) for non-home and auto-related personal loans. There are also no prepayment or origination fees to worry about.

The main downside here is the high threshold you’ll have to meet to qualify. Your credit score will have to be good and you can potentially have your money in as little as a day, but you’ll also need to prove “stable and sufficient” income and assets as well as a solid savings history, among other requirements.

*Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. If your application is approved, your credit profile will determine whether your loan will be unsecured or secured. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment Example: Monthly payment for a $10,000 loan at 9.84% APR with a term of three years would result in 36 monthly payments of $321.92.

SoFi

Key takeaways:

        • Fixed APR: 6.990% – 14.865% (with AutoPay)
        • Loan term: 36 – 84 months
        • Max loan: $99,999

Why it’s a solid bet:

        • SoFi offers some of the lowest rates around.
        • Option to suspend loan payments through unemployment protection program.

SoFi has been a valuable resource when it comes to student loan refinancing. Additionally, they offer extremely competitive personal loans from $5,000 to a whopping $99,999. Fixed rate loans range from 6.990% – 14.865% APR with autopay. You also won’t pay any loan origination fees.

Choose from three- to six-year repayment terms. You’ll need to meet a high threshold to qualify, with a favorable debt-to-income ratio, dependable employment, and a high credit score. SoFi holds consumer lending licenses in 22 states and Washington, D.C.

Disclaimer:Fixed rates from 6.990% APR to 14.865% APR (with AutoPay). Variable rates from 6.255% APR to 12.555% APR (with AutoPay). SoFi rate ranges are current as of September 1, 2018 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. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. 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, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.255% APR assumes current index rate derived from the 1-month LIBOR of 2.08% plus 4.425% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. 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. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull. See Consumer Licenses.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636.

Earnest

Key takeaways:

        • APR: 5.25%
        • Loan term: 12 – 36 months
        • Max loan: $75,000

Why it’s a solid bet:

        • One of the best personal loans for younger borrowers with little to no credit history.
        • Still require proof of healthy savings and income (blemish-free history).

Earnest, a relatively recent startup, bills itself as “low-cost loans for the financially responsible.” Indeed, this online lender offers fixed rates starting at 5.25% APR on loans up to $75,000. It also looks beyond your credit score to evaluate other criteria including education, career, and savings.

On the downside, Earnest only offers one-, two-, and three-year loans, but the company will work with you to match repayment terms to your budget. Loans are available in 45 states and Washington, D.C.

Best Unsecured Loans for Average Credit

It can be hard to find a personal loan with a reasonable interest rate if your credit isn’t top-notch. The lenders below will still consider you if you have less-than-sterling credit, with rates that are much better and practices that are much more reputable than payday lenders and the like.

PersonalLoans.com

Key takeaways:

        • APR: 5.99 – 35.99%
        • Loan term: 90 days – 72 months
        • Max loan: $35,000

Why it’s a solid bet:

        • Offers quick turnaround on their loan.
        • Fast, three-step loan request process. Loan approval decision in minutes.
        • As a referral resource, they can find you an offer.

PersonalLoans.com works with a large lender network that offers several types of loans, peer-to-peer loans, and installment loans. If you’re looking for the best personal loans, it’s a great place to start. This service is available in all 50 states and loan amounts go up to $35,000 with APRs ranging from from 5.99% to 35.99%.

Keep in mind, PersonalLoans.com is only a referral site and not a direct lender. This makes it hard to know in advance of any critical information that might be easier to understand with a direct lender such as which fees will be attached to your loan or which APR rates will be offered.

Peerform

Key takeaways:

        • APR: 5.99 – 29.99%
        • Loan term: 36 – 60 months
        • Max loan: $25,000

Why it’s a solid bet:

        • Some of the best rates you’ll find with average credit.
        • Transparent, easy-to-follow site experience.
        • No option to choose repayment terms – all loans are three-year term.

While most peer-to-peer lenders focus on borrowers with good or excellent credit, Peerform is an option for borrowers with credit scores as low as 600. Its APRs are competitive (5.99% to 29.99%), and its fees are clearly disclosed.

However, this lender is only available in 42 states, and you may need to wait up to two weeks to get your money as investors decide whether to fund your loan. Peerform also charges several fees, including up to 5% for loan origination, a Late Payment Fee and a Check Processing Fee.

Avant

Key takeaways:

        • APR: 9.95- 35.99%
        • Loan term: 24 – 60 months
        • Max loan: $35,000

Through Avant, you could borrow from $2,000 to $35,000* with rates ranging from 9.95% to 35.99%, depending on your credit history, income, and other factors. There’s also an administration fee of up to 4.75%**. Avant is available in 46 states and the District of Columbia.

* The actual loan amount, term, and APR amount of loan that a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state.

**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

Avant branded credit products are issued by WebBank, member FDIC.

Best Personal Loans: Summed Up

Our top picks Max loan
1 LendingClub $40,000
2 Wells Fargo $100,000
3 Prosper $40,000
4 LightStream $100,000
5 SoFi $99,999
6 Earnest $75,000
7 PersonalLoans.com $35,000
8 Peerform $25,000
9 Avant $35,000

How I Picked the Best Personal Loans

You’ll want a competitive rate from your unsecured loan, but you’ll also want the flexibility to pick a term that works for you, low or no extra fees, and a lender with whom you’re comfortable doing business. Here are the factors I considered when picking the best unsecured loans:

        • Low APRs: The lender’s advertised interest rates are in line with or better than those advertised by the competition.
        • Low or no fees: Some lenders don’t charge fees other than interest; others may charge origination fees, late payment fees, or prepayment fees. If fees are present, they must not be significantly higher than its competitors’.
        • Higher loan limits: Though you want to be careful not to borrow more than you can afford, the best lenders won’t cap their loans at low amounts, letting you borrow what you need.
        • Flexible terms: Some lenders only allow you to pick from a couple of terms, such as three or five years. Lenders earned points for flexibility for allowing shorter or longer terms to accommodate a wider range of needs.
        • Serves most of the country: While most major banks have national reach (or close to it), online lenders may only be able to do business in a limited number of states. Bonus points went to lenders with a wider reach.
        • Transparent, informative website: The best lenders are transparent about APRs, loan limits, terms, fees, and other crucial information. It should be clear where to get these details, and you shouldn’t have to give your personal information in order to see it.
        • Reputation: I considered each lender’s longevity, online reviews, and status with the Better Business Bureau. BBB accreditation is a plus, not a necessity, especially for newer companies. I gave individual reviews less weight, as many negative reviews are from prospective borrowers unhappy about being denied.

Of course, before you decide to take out any loan, it’s always wise to educate yourself. Keep reading to make sure you know exactly what you’re getting with an unsecured loan and how to score the best deal.

Who Offers the Best Personal Loans?

Everyone. Depending on who you talk to, everyone will claim to offer the best personal loans, rates, and terms. That being said, some rank higher than others and that’s why we took the time to compare the year’s best. Ultimately, though, it’s going to come down to which one offers the interest, terms, and amounts that appeal to you most.

What Is a Personal Loan?

An unsecured personal loan is simply a fixed-rate loan that you can receive without collateral to guarantee it. With secured loans, you’re allowing the lender to use one of your assets — for instance, your car or house — to recoup their losses if you fall behind on payments. When your loan is unsecured, the lender has no such recourse if you don’t pay up.

Of course, that doesn’t mean there are no consequences if you default on an unsecured loan. Your credit will take a nosedive, and your lender could sue or send its very unpleasant collections department after you. However, the lack of collateral ultimately means unsecured loans are riskier for the lender.

Unsecured personal loans are available at certain banks and credit unions, as well as online through startups including peer-to-peer lenders. Though the lender may ask why you’re borrowing, you can generally use these loans for any purpose: debt consolidation, home improvement, business expenses, new cars, a budget-busting wedding, or even a trip around the world. Credit cards and student loans are also unsecured loans, though with more specific purposes.

Do I Need Good Credit to Get a Personal Loan?

For the most part, yes. It’s possible that you’ll find a willing lender even with poor credit, but you’ll likely be paying an astronomical interest rate in order to lessen that lender’s risk.

Major peer-to-peer lenders typically won’t lend to borrowers with credit scores lower than roughly 640-660, and if your score is that low, your APR will be well into the double digits. For instance, peer-to-peer lender Prosper offers APRs as low as 5.99% for borrowers with the best credit. Borrowers with the lowest scores could be paying 35.97%.

If your credit isn’t great, experts advise starting with your existing bank, which may have a better idea of your finances. You may also want to try a credit union, which may be more flexible with its lending criteria. But a secured loan will almost certainly get you a better APR if you’re willing to put up the collateral. So will a co-signer with better credit, but that person will be on the hook for repayment if you default — a tremendous financial risk that could certainly ruin your relationship.

A word of caution: You may run across lenders who say they’ll give you an unsecured personal loan without even checking your credit. This is a common proclamation among payday lenders, who only require proof of income to make you a small, short-term loan. But the APR could be in the triple digits, and you may end up rolling over the loan from one month to the next when you have no real ability to repay. As a rule, be wary of any no-credit-check loan.

If you’re searching for a loan with bad credit, be sure to check out my post on the best bad-credit loans for some more reputable options.

What Are the Best Personal Loans for People with Bad Credit?

The aptly-named BadCreditLoans.com lets you borrow up to $1,000 even with the most abysmal credit! Another good one to try is OneMain Financial, where the ideal borrower can have a score lower than 600. Of course, those aren’t the only choices and you can learn more with our breakdown of the best bad credit loans.

Can I Convert a Secured Loan to an Unsecured Loan?

Unfortunately, it’s much easier the other way around: to turn unsecured loans into secured loans.

It is possible to convert a secured loan to an unsecured loan. However, if you’re considering a conversion because you’re unable to make payments, you may not have much luck.

        • Consider refinancing
        • Consider a consolidation loan
        • Declare bankruptcy as last resort

Consider refinancing: If you’re able to make payments consistently on your initial secured loan, your lender may be open to refinancing. It especially helps if your credit score has improved since you took out the loan.

If, for whatever reason, your original lender isn’t willing to work with you, then there is another step:

Consider a consolidation loan: The main reason people take out unsecured personal loans is for debt consolidation. And that doesn’t just refer to credit card debt. If you can find a lender who’s willing to work with you, then a consolidation loan might be a step in the right direction.

You’ll likely get less favorable rates when you consolidate. But you’ll be exchanging a lower rate for an unsecured loan. You have to decide which matters more to you.

If you can’t find any independent lenders willing to work with you, there is one more possibility:

Declare bankruptcy as a last resort: Declaring Chapter 7 bankruptcy will put a lien on certain secured debts — or they’ll be written off altogether. A lien is treated differently than a secured debt. There is the possibility of keeping your collateral, but there is also still the possibility of having to surrender your collateral.

Declaring bankruptcy is a life-altering event. Be sure that it’s the absolute best option for you, and do your homework before moving forward.

Personal loans vs. Credit Cards

Multiple studies show that millennials increasingly prefer personal loans over credit cards. While credit cards have strengths that personal loans don’t, they’re not the ideal choice for every type of purchase.

You might be considering whether to use a personal loan or a credit card to finance expenses. Here’s how both stack up:

Type of: Personal Loan Credit Card
Loan: Unsecured, secured Unsecured, secured
Debt: Installment Revolving
Interest: Fixed APR

In short, personal loans are best for financing larger purchases or long-term expenses, while credit cards are better for smaller, everyday debts.

Secured vs. Unsecured Debt

Borrowers can find unsecured and secured options with both personal lenders and credit card issuers.

Banks, credit unions, and other private lenders offer both unsecured and secured personal loan options. The main difference involves whether or not the borrower is required to put up collateral.

Credit card issuers also offer secured credit card options – but these cards require security deposits. In other words, borrowers put down money as collateral, not personal property such as cars or homes.

Secured loans come with lower interest rates. Since the lender has the right to repossess collateral in case of default, they take on less risk.

Type of Debt

Personal loans are installment debt. Installment debt is simple: Borrowers repay their loan with fixed monthly payments over a prearrange period of time. Unsecured installment personal loans last on average 2-5 years.

Credit cards are revolving debt. Cardholders are able to borrow for a predetermined period of time. Once that period concludes and cardholders pay off their bill, they’re able to borrow again for the next month. Unlike with installment debt, revolving debt does not come with fixed monthly payments.

Type of Interest

Personal loans offer fixed interest. Like installment debt, fixed interest is simple: Borrowers will pay a set amount of interest every month. Lenders determine the amount of interest borrowers pay via a number of factors, including credit score, type of loan, and national interest rates.

One of the ways that credit card companies determine interest charges for a billing cycle involves the average daily balance. The formula uses the sum of balances at the end of each day, divided by the number of days in that billing cycle. That number is then multiplied by the card’s APR (annual percentage rate).

Issuers will only charge average daily balance if cardholders fail to pay off their card in full at the end of the month. So if you miss a payment, or if you just make the minimum payment, you might be paying more than you expect.

What Is an Unsecured Guarantor Loan?

An unsecured guarantor loan is essentially the same as an unsecured loan with a cosigner attached. The guarantor, like a cosigner, is an individual responsible for paying the loan if you default.

There is one key difference: A cosigner is an explicit co-owner of an asset. A guarantor does not own the asset but simply guarantees payment.

Typical guarantors tend to have more credit history, and a higher credit score. That makes an unsecured guarantor loan an ideal option for someone who has bad credit, or little to no credit history. Students often require guarantors for various loans, as do small businesses that are just beginning operation.

There are two types of guarantors: limited and unlimited. Limited guarantors will only secure a specified portion of the loan. They are only responsible for repaying their part should you default. Unlimited guarantors will be responsible for the entirety of the loan, including interest and fees, should you default.

If you do decide to take out an unsecured loan with a guarantor, be sure to choose someone who:

        • You know and trust
        • Is financially stable
        • Has a higher credit score or longer credit history
        • You can approach should payment become more difficult

Four Shopping Tips for Personal Loans

#1: Compare Several Offers

Never sign on the dotted line the first place you look for a personal loan. Each lender will have a slightly different formula when considering your application, which means your interest rate will vary — perhaps significantly — from one lender to the next.

One convenient way to search for an unsecured loan online is by using the loan search tool below which can help match you with the best personal loan for your needs.

Compare Loan Companies and Apply Online
Use the loan comparison tool below to view multiple loan options with no obligation.
Simply enter the purpose of the loan, the amount you need, your estimated credit score, and the state you reside in to instantly view loan companies available to accept your application online right now.

If your credit is great and you’re able to pay off a loan quickly, you might want to consider treating a credit card with a 0% (or otherwise very low) introductory APR as a personal loan. Of course, you’ll need to make sure the credit limit is high enough for your needs.

You’ll also need to have the discipline not to add to your balance, and to pay it off before your low interest rate expires, typically in 15 to 18 months. If you think you can swing this, be sure to check out our post on the Best Balance Transfer Credit Cards for some great 0% introductory APR credit cards.

#2: Watch Out for Fees

Make sure you know whether there are fees other than the interest you’ll pay associated with your personal loan. Common fees include an origination fee (typically a percentage of the amount you’re borrowing, which can vary from under 1% to as much as 5%). Also note whether there are fees for late payments ($15 or 5% of your outstanding balance is typical). Other fees may include charges for unsuccessful payments or payments made by check.

Also be on the lookout for prepayment fees. These are fees lenders charge if you pay off your entire loan early (which means the lender won’t be getting the full amount of interest it would have if you had made payments as scheduled for the full loan term). Most lenders I researched won’t hit you with a prepayment penalty for unsecured personal loans, but it’s definitely worth double-checking.

#3: Choose the Right Term

You’ll want to see how flexible your lender is on loan terms. Some online lenders may only let you choose between three- and five-year terms, for instance. Term is important because it affects how much you ultimately pay over the life of the loan. A longer term can help keep your payments manageable, but it means you’ll be paying more in the end. On the flip side, a shorter term will mean higher payments, but you’ll shell out less overall.

For a more concrete example, let’s say I take out a $10,000 unsecured personal loan at 12% interest. According to this Bankrate calculator, I would pay $11,957 over a three-year term, but $13,347 over a five-year term. If I can afford the higher monthly payment ($332 a month for three years instead of $222 a month for five years), the shorter term means significant savings.

#4: Watch Out for Scams

There are several unscrupulous lenders who want to scam potential borrowers. Here are a few tips that will help you avoid scams and make sure you’re dealing with a legitimate company:

        • Don’t pay upfront fees. Remember that you should never pay anything simply to apply for a loan. If a potential lender demands payment to evaluate your credit and other financial information, run the other way.
        • You should contact them — not the other way around. If a lender is badgering you, whether through phone calls, mailings, or online, consider that a big red flag. Legitimate lenders simply don’t need to be this aggressive to attract borrowers.
        • Guarantees are bogus. No legitimate lender can promise that they’ll approve your loan application before evaluating your finances. Even payday lenders need proof of income before they’ll make a loan.
        • Verify, verify, verify. Make sure you double-check the lender’s physical address, which should be readily available. Also consider looking them up with the Better Business Bureau or your state banking regulators.
        • You should feel in control. Take your business elsewhere if a lender threatens you in any way, tries to dissuade you from considering competitors’ offers, or tries to get you to borrow more than you owe.

Finding the Best Personal Loans

Compare Loan Companies and Apply Online
Use the loan comparison tool below to view multiple loan options with no obligation.
Simply enter the purpose of the loan, the amount you need, your estimated credit score, and the state you reside in to instantly view loan companies available to accept your application online right now.

Don’t limit your search to either brick-and-mortar or online lenders when you’re searching for the best unsecured personal loans. Online lenders are convenient, but banks and credit unions may offer competitive APRs and more personal service if your credit is good.

On the flip side, you may be able to find an online lender who can offer a better rate if you fit their preferred borrowing profile. Remember to consider potential terms and fees before you sign up for a loan, too — little fees and extra interest can add up in a big way.