Type "personal loan" into a search engine and you’ll likely get more than a billion results. Even if just half a percent of those results are actual lenders, that’s a staggering amount of information to wade through in pursuit of a personal loan.
Whether you want a personal loan for debt consolidation or to stretch the cost of a big-ticket purchase over several months, choosing the right lender is critical — and challenging. Different lenders offer varying interest rates and terms, which can add up to hundreds or even thousands of dollars of difference in the total cost of a loan.
Let’s look at some of the best places to get a personal loan, and what you should know about each option.
Where can I get a personal loan?
Personal loans come from four main categories of financial institutions:
- Banks: Not all banks offer personal loans, but there are a few that do.
- Credit unions: You’ll need to be a member of one of these not-for-profit institutions to get a personal loan from them.
- Online lenders: It may be easier to qualify for a loan through one of these virtual, non-bank organizations.
- Peer-to-peer lenders: Through an online platform, individual investors loan money directly to borrowers.
Each lender will have its own requirements for qualifying for a personal loan, and it may be difficult to tell from a lender’s website what your approval chances are. You can compare your pre-qualified rates from multiple personal loan lenders through Credible.
Personal loans from banks: May need good credit
If you need to borrow a large amount or want a longer repayment period, a bank might be a good option for getting a personal loan for your needs. For example, Wells Fargo offers personal loans with a maximum loan amount of $100,000 and up to 84 months for repayment.
That said, some major banks no longer offer personal loans. Or, they may limit personal loans to small amounts for current account holders. Others that do offer personal loans generally will require you to have a good or even excellent credit score to qualify for a favorable interest rate and terms.
Funding is typically fast, which means you may be able to get funds in as little as one business day.
Pros of personal loans from a bank
- May offer larger loan amounts than other types of lenders
- Sometimes allow longer repayment terms
- May provide current customers with loyalty or autopay discounts
- May waive common fees, such as origination or closing fees
Cons of personal loans from a bank
- You may need a good credit score to qualify for a personal loan from a bank
- Interest rates can be higher than from other types of lenders
- May require collateral in order to qualify or to qualify for preferred rates and terms
- You might need to open an account with the bank, or be a current account holder
Personal loans from credit unions: Flexible credit requirements, but members only
Because credit unions are not-for-profit organizations, they’re often able to offer their members lower-cost products than for-profit financial institutions can.
You may find lower interest rates on loan products, including personal loans, at a credit union. And, it may be easier for members to qualify for a personal loan with less-than-perfect credit.
Pros of personal loans from a credit union
- Some credit unions offer loans for small amounts — as little as $250.
- You may be able to qualify for a loan with a lower credit score (although you may get a higher interest rate)
- May offer payday alternative loans for as little as $100
Cons of personal loans from a credit union
- Must be a member in order to apply for and qualify for a loan
- Will need to meet membership qualifications in order to join
- May charge fees, such as origination fees
Personal loans from online lenders: Fast decisions and funding
If your credit score is lower, you have some blemishes on your credit history, or you need money fast, you might choose to apply for a personal loan from an online lender. Many online lenders are available for personal loans, and there are numerous options for people with credit issues.
Approval decisions from an online lender tend to be quick, and funding is sometimes the same day if you’re approved, depending on the lender. However, the trade-off for better approval chances and fast funding is often higher interest rates.
Pros of personal loans from online lenders
- Many options available for people with lower credit scores
- Application and approval process are typically fully online
- Funding is often quick – typically less than five business days but sometimes as soon as the same or next business day
Cons of personal loans from online lenders
- Highest rates can be very high
- May be difficult to find an online loan if you need a large amount
- The lender may charge origination, application, or other fees
It can be difficult to know what rate you might qualify for on a personal loan just from the information on a lender’s website. With Credible, you can compare personal loan rates in just two minutes.
Watch out for personal loan pretenders
If you need a small amount of money right away and want guaranteed approval, you may be tempted to consider a payday loan or title loan. Payday and title lenders usually don’t require a minimum credit score or even perform a credit check.
Generally, you borrow a small amount of money — typically $500 or less — and repay the full amount, plus a flat fee, when you get your next paycheck in two weeks.
The Consumer Financial Protection Bureau notes that the effective annual percentage rate (APR) on a typical payday loan that charges a flat $15 fee for every $100 borrowed is 400%. And, if you can’t repay the full loan on your next payday, the payday lender may be able to roll the loan over into a new one.
Title loans work similarly to payday loans, but the lender will hold the title of your vehicle as collateral. You generally have 30 days to repay the small loan, but if you’re not able to pay it off on time the lender can take your vehicle.
If you’re in a financial bind and need money right away to cover expenses, try other options, such as borrowing from a family member or friend, seeking a personal loan from a reputable lender, or even using your credit card.
What to know about personal loans
As you’re exploring the best places to get a personal loan, keep some important information in mind.
Interest rates and fees
Interest rates can vary widely from personal loan lender to lender, and even from the same lender depending on factors such as the loan amount and your credit score. Generally, the better your credit score, the more likely you’ll be able to qualify for the best personal loan rates.
Also note that personal loan lenders can charge a variety of fees as well, including:
- Origination fees to cover the cost of processing your loan application
- An application fee to accept your loan application
- Prepayment penalties if you pay off the loan early
- Late payment fees if you’re late with or miss a payment once the repayment period begins
Be sure to read the lender’s disclosure so you understand what, if any, fees they’ll charge for your loan.
The length of time you have to repay the loan can also vary greatly based on how much you borrow, the lender you choose, and other factors. Some lenders offer loan terms as short as 12 months — 36- and 60-month terms are also common.
When choosing a loan term, remember that a longer term may mean a lower monthly payment, but it also means you’ll likely pay more interest over the life of the loan than if you took a shorter term.
How to prequalify for a personal loan
With so many personal loan options available, you may be tempted to apply with multiple lenders, but too many hard inquiries in a short amount of time could affect your credit score.
Getting prequalified for a personal loan can help you better understand your approval chances before you actually apply for a loan. During the application process, the lender will almost certainly check your credit, which can affect your credit score.
But prequalification usually doesn’t affect your credit because it doesn’t involve a hard credit inquiry. You can see your prequalified rates from multiple personal lenders through Credible, which is free to use — all without impacting your credit.