Personal loans are a godsend whenever life hurls one of those unexpected expenses at you, or you need to consolidate debt. But how to choose the best among them? This comprehensive guide takes you through the top personal loan lenders, explaining what makes them stand out and guiding you toward the perfect match according to your financial needs.
We’ll be covering everything from interest rates and loan terms to eligibility requirements and customer service. By the end of this article, you’ll be suitably informed to make an effective decision about which personal loan lender will best suit your needs.
Understanding Personal Loans
For those that may not know, prior to diving into the top lenders, let’s just quickly run through what a personal loan is and how it works:
Personal loans are unsecured loans taken for almost any purpose. Unlike mortgages or auto loans, there is no collateral required to be put against the loan. The lenders mainly depend on your creditworthiness, income, and debt-to-income ratio to make a decision.
These loans come with fixed interest rates and fixed repayment terms, thus are predictable and, therefore, easy to budget. You get the money all at once and repay it in regular installments over fixed periods .
Above, we discussed all the details related to personal loans. Now, let’s discuss a few important lenders in the market.
- SoFi: Best for High-Income Borrowers
SoFi stands for Social Finance and has managed to carve a niche for itself in the personal loan space among high-income borrowers and those with excellent credit scores.
Key Features:
- Loan amounts: $5,000 to $100,000
- APR range: 7.99% – 23.43% with autopay
- Loan terms: 2 to 7 years
- No origination fees charged; no prepayment penalties
Why SoFi Stands Out:
SoFi offers competitive rates and high loan limits, making it a great option if you need a larger loan. Other unique benefits include unemployment protection and career coaching services.
Who It’s Best For:
SoFi is ideal for applicants with very good credit scores-usually 680 or above-and high incomes. It is a fantastic option for young professionals looking to refinance their student loans or make large purchases.
- LightStream: Best for Excellent Credit
LightStream is a part of Truist Bank and offers the most competitive rates and the best terms for the highest possible credit quality.
Key characteristics:
- Loan amount: $5,000-$100,000
- APR: 7.99%-23.99% with autopay
- Loan term: 2-7 years or up to 12 years for home improvement loans
- No fees
Why LightStream outshines:
LightStream offers a very unique “Rate Beat” program, in which they’ll beat any qualifying competitor’s rate by 0.1 percentage points. They also offer same-day funding in many cases.
Who It’s Best For:
LightStream is best for borrowers who can demonstrate excellent credit-in the neighborhood of 660 or above-and are seeking low rates and flexible terms. It’s great for those needing quick funding.
- Upstart: Best for Fair Credit
Unlike other platforms, Upstart will take into account more than just your credit score, and their lending approach is unique. This is an excellent option for customers with fair credit or limited credit history.
Key Features:
- Loan amount: $1,000 to $50,000
- APR range: 6.70% to 35.99%
- Loan terms: 3 or 5 years
- Origination fee: 0% to 10%
Why Upstart Stands Out:
Upstart uses artificial intelligence and machine learning to vet borrowers, factoring in education and job history, in concert with traditional credit metrics.
Best For: With Upstart, the ideal candidate would be a borrower with credit scores that tend to be on the lower side, usually above 600, or those with thin credit but with good earning potential.
- Marcus by Goldman Sachs: Best for Debt Consolidation
Personal loans from Marcus by Goldman Sachs are relatively straightforward. It focuses on debt consolidation.
Key Features:
- Loan amounts: $3,500 to $40,000
- APR range: 6.99% to 24.99%
- Loan terms: 3 to 6 years
- No fees
Why Marcus Stands Out:
Marcus offers an “on-time payment reward” unusual in the industry, which rewards one free month of interest after 12 payments on time.
Who It’s Best For:
Marcus is ideal for borrowers with good to excellent credit looking to refinance high-interest debt or finance a large purchase. This lender prides itself on simplicity and doesn’t charge fees.
- Discover: Best for Flexible Repayment Options
Though the company is perhaps better known for its credit cards, Discover offers personal loans with a few features that are hard to find elsewhere.
Key Features:
- Loan amounts: $2,500 to $35,000
- APR range: 7.99% to 24.99%
- Loan terms: 3 to 7 years
- No origination fees
Why Discover Stands Out:
Discover has flexible repayment options, including being able to adjust your payment due date. They have a 30-day money-back guarantee as well if you choose to return the loan funds.
Who It’s Best For:
Discover is ideal for those who want flexibility in regards to their loan terms and how they can repay them. It is also good for anyone undecided about taking out the loan because of the 30-day guarantee.
- Prosper: Best Peer-to-Peer Lender
Prosper was one of the pioneers of peer-to-peer lending and ensures that borrowers are matched against individual and institutional investors.
Key Features:
Loan Amount: $2,000 – $40,000
APR: 7.95% – 35.99%
Loan Terms: 3 or 5 Years
Origination Fee: 2.41% – 5%
Why Prosper Stands Out:
Its peer-to-peer model sometimes results in better rates in Prosper, especially for those with fair credit. They also boast a very quick, easy online application process.
Who It’s Best For:
Prosper is ideal for borrowers who have fair to good credit, with no issue over the peer-to-peer lending model, and who therefore have no issue paying an origination fee in exchange for possibly lower interest rates.
- Payoff: The Best for Credit Card Debt Consolidation
Payoff focuses on personal loans but places a particular emphasis on credit card debt consolidation.
Key Features:
- Loan Amounts: $5,000 to $40,000
- APR: 5.99% – 24.99%
- Loan Terms: 2 to 5 years
Origination fee: 0% to 5%
Why Payoff Stands Out:
Payoff offers no cost FICO score updates and personal “member advocates” that guide borrowers through the entire loan process-from application to payoff. They also have a variety of resources and tools available to help improve financial health.
Who It’s Best For:
Payoff is ideal for borrowers looking to pay off high-interest credit card debt for an improved all-round financial health.
- Best Egg: Best for Quick Funding
Best Egg has a very smooth application process and fast funding, making it ideal for people who need cash in a hurry.
Key Features:
- Loan amounts: $2,000 to $50,000
- APR range: 8.99% to 35.99%
- Loan terms: 3 to 5 years
- Origination fee: 0.99% to 8.99%
Why Best Egg Stands Out: Best Egg is known for its fast and easy online application process, and most of its customers receive their money within one business day of approval.
Who It’s Best For:
The best option for those with fair to good credit seeking fast access to cash and who won’t mind paying an origination fee to get this speed is Best Egg.
What to Consider When Choosing a Personal Loan Lender
Having gone through a number of top personal loan lenders, let’s discuss what you should actually factor in when making your choice:
- Interest Rates
The key determinant factors of the lender involve the rate of interest. Even a very slight difference in rates can amount to big savings over the life of the loan. Always compare APRs Annual Percentage Rates rather than just interest rates, since APRs are inclusive; they include fees and give a more complete picture of how much you’ll pay for the loan. - Loan Terms
Consider how long you will take to repay the loan. Longer terms usually mean lower monthly payments but more interest paid overall. Shorter terms mean higher monthly payments but less total interest. - Fees
Watch for origination fees, late payment fees, and prepayment penalties. Some lenders do not charge any type of fee, while other lenders will charge a significant origination fee. - Loan Amounts
Make sure that the lender provides loans within the amount you need. Some lenders only give small loans, while others can give larger amounts. - Eligibility Criteria
Each lender has his own set of parameters for approving a loan. Keep in mind your credit score, your income, and your debt-to-income ratio when considering the lenders. - Speed of Funding
If you are in urgent need of money, then you must look into those lenders which can provide you with quick approval and funding. - Customer Service and Resources
Look for the level of customer support provided and any additional resources or tools to help manage your loan and further improve your financial health. - Prequalification Options
Most lenders allow for prequalification with a soft credit check, thereby allowing you to see possible rates without affecting your credit score.
Tips for Getting the Best Personal Loan
- Check Your Credit Score
First, have your credit score and report in hand before applying; that will give you an idea of what you might qualify for, and it helps identify any errors that could be hurting your credit score. - Shop Around
Don’t take one offer and run. Compare rates and terms from a number of lenders to be certain you get the best deal. - Consider Your Purpose
Some lenders have better rates for specific loan purposes, such as debt consolidation or home improvement. Be clear about what your loan is for when you are comparing different options. - Improve Your Credit
The farther in advance you can before needing the money, the more you should be improving your credit score. Pay down the debt you currently have and make payments on time to raise your score to qualify for even better interest rates. - Choose the Best Loan Term
While longer terms mean lower monthly payments, they will also provide you with paying more in interest over time. You have to choose a term that could balance affordable monthly payments with the minimal amount of interest overall. - Watch Out for Scams
Be wary of those lenders with claims to approve loans without checking your credit or those asking for an upfront fee before your loan gets approved. - Read the Fine Print
Be aware of any and all terms and conditions during the acceptance of a loan offer. Pay great attention to fees, prepayment penalties, and any clauses referring to rate change.
Conclusion
The right personal loan lender can save you money and give you peace of mind while working toward your financial goals. Whether you are consolidating debt, financing a big purchase, or covering unexpected expenses, there’s a lender out there that fits your needs.
Remember, it is not all about the interest rate. You have to investigate fees, loan terms, and customer service too. You should take time comparing different offers with a fine-tooth comb.
By being cognizant of your financial scenario, researching options, and keeping in mind the parameters discussed, you will be better equipped to make an optimal decision for yourself by selecting a suitable personal loan lender in respect of your needs.
Keep in mind that a personal loan is a serious financial obligation; always borrow responsibly and have a good plan to repay it. In the right frame of mind and with the right lender, a personal loan can be one of the best tools in your financial toolbox to enhance your goals toward building a stronger future.