Best Personal Loans for July 2024

When you search for the best personal loans online, you'll find dozens of options. While some lenders stand out for offering low rates, quick funding, flexible repayment terms, and a strong reputation for customer service, the best personal loan for you will depend on your financial situation and funding needs. 

If you prequalify before applying, you can get a sense of rates that may be available to you without hurting your credit. Just note that you'll need to formally apply to see final rates and terms, which could impact your credit.

Compare personal loan rates

Best personal loans

1. SoFi: Best overall
2. Upgrade: Best for fair credit
3. Discover: Best for no origination fees and low rates
4. Splash Financial: Best quick loans for good credit
5. Universal Credit: Best debt consolidation loans for bad credit
6. LightStream: Best for home improvement loans and low rates
7. Best Egg: High approval rates if prequalified
8. BHG Financial: Best for large personal loans
9. OneMain Financial: Best bad-credit personal loans
10. Upstart: Best fast personal loans (for all credit types)
11. LendingClub: Best online experience

Best personal loan lenders

The best personal loans of 2024 package competitive rates with high-value features like low or no fees, fast funding, easy prequalification, high customer satisfaction ratings, a wide range of loan amounts and repayment terms available, discounts, and easily accessible customer service. Or, they represent personal loans for fair-credit and poor-credit customers that are only available from specific lenders.

SoFi: Best overall

Upgrade: Best for fair credit

Discover: Best for no origination fees and low rates

Splash Financial: Best quick loans for good credit

Universal Credit: Best debt consolidation loans for bad credit

LightStream: Best for home improvement loans and low rates

Best Egg: High approval rates if prequalified

BHG Financial: Best for large personal loans

OneMain Financial: Best bad credit personal loans

Upstart: Best fast personal loans (for all credit types)

LendingClub: Best online experience

Methodology

Credible evaluated the best personal loans based on customer experience, interest rates and origination fees, loan amounts, funding times, loan terms, discounts, the availability of secured loans, whether cosigners are accepted, and more. Credible's team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Learn more about how Credible rates lenders by exploring our Personal Loans Lender Rating Methodology.

When will interest rates go down?

Interest rates for personal loans are impacted by multiple factors. One of which on a macro level is the federal funds rate, which is the benchmark rate set by the Federal Reserve that determines how much it costs for banks to lend money to one another overnight.

The federal funds rate

The Fed left its benchmark rate unchanged at its June policy meeting, but signaled it would cut rates by 25 basis points (0.25 percentage points) this year. A few months ago, three cuts were expected by the end of the year for a total rate reduction of ¾ of a percentage point, but rising inflation put those (or any) cuts into question - which makes the Fed's most recent remarks welcome news.

The target range for the fed funds rate is currently 5.25% to 5.50%.

Market conditions

Lower interest rates typically make it more affordable to borrow, but other market conditions may not provide the relief aspiring borrowers are looking for. Consumer debt is at an all-time high, and credit card and auto loan delinquency rates are on the rise. Plus, the unemployment rate is at its highest level since January 2022. In spite of lower interest rates, more consumers may have a harder time qualifying for low rates, or at all. This is borne out by internal Credible marketplace data as well - about three times as many borrowers were able to prequalify for a personal loan a year ago compared to now.

That said, borrowers who've maintained good credit and have sufficient income are most likely to benefit from lower rates - once the Fed starts making the cuts it expects to.

How to compare personal loans and lenders

• Check eligibility requirements: Some lenders have minimum income or credit score requirements, prohibit certain loan purposes, or may not be available in some states. Narrow down your options to lenders you can qualify with.
• Consider loan amounts and funding time: Eliminate any lenders that don't offer the amount you need. Loan amounts can range from $500 to $50,000 or more. You shouldn't borrow more than you need just to meet the minimum loan amount. If you need the money fast, pick lenders that offer same-day or next-day funding.
• Evaluate customer experiences with lenders: Look at customer reviews on third-party websites like Trustpilot. While it's common for a few borrowers to be unhappy with their experiences, recurrent complaints about poor customer support should raise a red flag.
• Compare rates and fees: Look at the annual percentage rate (APR), which includes the interest rate and any upfront fees, for each loan option. If the lender offers the opportunity to prequalify with a soft credit check, you can get an estimate of your individual APR without hurting your credit. Prequalification is an estimate and not an official offer of credit. Your rate may change once you formally apply. You can also compare rates all in one place with Credible.
• Consider repayment terms: Check your budget to see what monthly payment you can afford. A longer term will give you lower monthly payments, but you'll pay more in interest over time. You can use a personal loan calculator to see how your loan term impacts your monthly payment and total interest.
• Compare discounts, resources, and perks: If you're still deciding between a few lenders that offer similar rates and terms, check if any offer rate discounts or referral bonuses. Consider whether you can change your due date and make payments via their mobile app. Some lenders even offer free financial resources that may appeal to you.

What are personal loans used for?

You can use your personal loan funds for a wide variety of purposes. Some common ways people use personal loans include:

• Credit card debt consolidation
• Medical bills
• Emergency vehicle repairs
• Home improvement projects
• Large purchases, like a new appliance
• Moving expenses
• Funding a wedding or vacation

You should check your loan agreement for any specific loan use restrictions. For example, lenders may prohibit you from using the funds for:

• Business purposes
• College expenses
• Real estate
• Investments
• Gambling or illegal transactions

While you can often use a personal loan to buy a designer handbag, a motorcycle, or a concert ticket, you should avoid borrowing money for unnecessary expenses. It's always better to save for these purchases in advance.

Pros and cons of personal loans

Pros

• Quick and easy application: You can apply for a personal loan online in just a few minutes.
• Fast funding: Most personal loan lenders transfer the funds directly to your bank account within a few days.
• Predictable payments: You repay a personal loan in fixed monthly installments that are easier to plan for than variable-rate loans.
• Typically unsecured: Most personal loans don't require you to offer collateral, like your home or vehicle. That means you won't risk losing those assets if you miss payments.
• Lower rates than credit cards: The average 2-year personal loan comes with an average interest rate of 12.49%, according to the Federal Reserve. Credit card interest rates are much higher at 21.59%.
• Flexible use of funds: You can use a personal loan for a wide variety of expenses.

Cons

• Higher rates than some other loan types: Personal loans can come with higher average rates than some secured loans, business loans, and 401(k) loans.
• May be tough to qualify for: While some lenders have relatively lenient credit and income requirements, most require at least fair credit (a FICO score between 580 and 669). Some other loan types have fewer requirements, including 401(k) loans and payday alternative loans.
• Possible damage to your credit: Applying for a personal loan typically requires a hard inquiry, which causes a temporary dip in your credit score. Missed or late payments on a personal loan can negatively impact your credit as well.

How to apply for a personal loan

1. Check your credit: You can access your free credit reports on AnnualCreditReport.com. Be sure to check for common errors, like accounts that aren't yours, and dispute them if necessary. Knowing your credit score will help you determine which lenders you may qualify with. Most lenders require a 580 credit score or better.
2. Calculate your income and current debts: Calculate your total gross monthly income from all sources. Then, add up the minimum monthly payments on your existing debts. Divide your monthly debt payments by your gross monthly income and multiply that number by 100 to get your debt-to-income ratio (DTI), which is a percentage. You may have a hard time qualifying for a loan if your DTI is too high. Some lenders may have minimum income requirements as well.
3. Determine how much money you need: You shouldn't borrow any more than you need. You may want to ask family for help or apply for government benefits before taking out a personal loan. Then, calculate how much you still need. You may need to call the auto body shop for an estimate, for example.
4. Determine the monthly payment you can afford: Review your budget to see how much discretionary income you can devote to repaying your personal loan.
5. Compare lenders: Evaluate each option based on the factors in the earlier section of this guide.
6. Prequalify: Go through the prequalification process with a handful of lenders, so you can compare personal loan rates and term options. Lenders use a soft credit check to give you an estimate, so you won't risk damage to your credit.
7. Apply: Choose a loan offer and authorize a hard credit check to continue with the application. You may be asked to provide proof of income and employment.
8. Sign: If you're approved, review the loan agreement carefully before signing. Then, the lender can transfer the funds to your bank account.

What credit score is needed for a personal loan?

Most lenders require at least fair credit, or a FICO score of 580 or above. Some lenders, like Upstart, may use a greater variety of data when considering your application. Upstart only requires a minimum credit score of 300 (and you can even qualify without a credit score), but it has other requirements as well. Excellent-credit borrowers get the best rates on personal loans, and rates increase for lower credit brackets.

These are the average interest rates borrowers prequalified for with the Credible loan marketplace, based on their credit score.

Should I get a personal loan?

If you need financing for more than 30 days or the duration of a 0% APR credit card offer, a personal loan is often a better choice. Here's why.

The average rate on a two-year personal loan is 12.49%, according to Federal Reserve data. That's nearly 10 percentage points lower than the average credit card rate of 21.59%, which can make personal loans a superior financing option compared to credit cards. But like credit cards, personal loans can be used for almost anything, including medical bills, emergencies, car repairs, home improvements, vacations, and more. You can also use a personal loan to refinance credit card debt to lower your monthly payment.

However, if you need to finance an expense for more than seven years or need to borrow more than $100,000, a home equity loan or home equity line of credit could be a better option. Just note that you'll need sufficient home equity to qualify, and if you default on the loan, your home is at risk. 

Personal loans for bad credit

Getting a personal loan with a poor credit score (a FICO score below 580) can be tricky, but it's not entirely impossible. Try these tips if you're having trouble qualifying:

• Look for bad-credit lenders: Some lenders specialize in personal loans for bad-credit borrowers. You can also get an installment loan with no hard credit check through lenders like OppLoans, but these loans typically come with higher APRs.
• Prequalify: Prequalifying helps you estimate which loans you'll be eligible for. It's not a guarantee of approval, though.
• Apply for a lower amount: If you can't qualify for the amount you need due to insufficient income or a high DTI, try asking for less.
• Consider secured options: You may have an easier time qualifying for a personal loan that's secured by an asset, like your home or vehicle.
• Apply with a cosigner or joint applicant: A cosigner is someone with good credit who agrees to be responsible for the loan if you fail to repay. A co-applicant does the same, but also has access to the funds. Either can help you qualify for a personal loan if you have bad credit.

FAQ

What is a personal loan?

A personal loan is a lump sum of cash provided by a lender in exchange for fixed monthly payments over a period of time. You pay for the privilege of borrowing with interest charges and potentially other loan fees.

How do personal loans work?

When you apply for a personal loan, the lender will review financial information, such as your credit score and income. The lender will set the annual percentage rate (APR) you must pay based on those factors. Your APR and term determine your monthly payment, which you'll continue to pay each month until your balance reaches $0.

Where to get personal loans

You can get a personal loan from a bank, credit union, or online lender. Online lenders tend to offer the quickest funding, but your bank or credit union may offer a relationship discount.

What are unsecured personal loans?

Unsecured personal loans don't require you to offer collateral, which is property that you agree to surrender to the lender if you can't make your payments.

How many personal loans can you have at once?

There's no industry-wide limit on the number of outstanding personal loans you can have, but lenders may have their own requirements. Most lenders also consider your debt-to-income ratio when making an approval decision, so having existing personal loans can make it hard to qualify for a new one.

How long does it take to get a personal loan?

Some lenders can fund personal loans as soon as the same business day. While the exact timeline depends on the lender and where you bank, you can usually get your money within a few business days.