The Best Personal Loans Rates of 2023
The Best Personal Loans Rates of 2023
A personal loan is usually your best bet when borrowing money for a significant expense. Personal loan interest rates are typically lower than credit cards, whether you’re consolidating high-interest debt, funding home repairs and improvement, or facing an unexpected expense.
See which lenders offer the lowest interest rates and fees, compare terms and available amounts, and find the best personal loan for your needs.
Which Lenders Have the Best Personal Loan Rates?
Finding the right lender could help you save hundreds or even thousands of dollars. The rate you receive on your personal loan depends on many factors, including your credit score and income. The smartest way to know if you’re getting the best loan rate is to compare offers from competing lenders.
Compare Personal Loan Rates: Editorial Reviews
The best personal loan for you may not be the best personal loan for your best friend or neighbor.
Our editors test-drove a big selection of personal loan providers, identifying their strengths and weaknesses and the type of borrower they serve.
Use this information to help you find the best-suited lenders to meet your needs and compare what they offer.
Note that reviews are a snapshot, and actual lender guidelines and offerings are subject to change.
Best Egg is a peer-to-peer (P2P) lender. P2P lenders do not lend their own money; instead, they introduce borrowers to individuals who wish to lend.
Aside from the low credit-score threshold of 640 or better, your credit score won’t be harmed when you request a quote. But, as with every lender, your score is going to take a small hit later in the process, providing you decide to go ahead with your Best Egg application.
To get a Citi personal loan, you must have a yearly income of at least $10,500. Borrowers must also have a Citi deposit account for at least 12 months prior to applying for a personal loan.
Citi also allows customers to have up to two personal loans at the same time, as long as the first loan has been open for at least six months.
By setting up your payments to be made automatically when you get your loan, you may qualify for an interest rate discount.
Fifth Third Bank
If you want a personal loan from a large bank, Fifth Third Bank may be right for you if you’re in the right state or already have an eligible account:
Fifth Third Bank has 1,124 branches in 10 states (Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, and West Virginia).
You may be able to borrow elsewhere, but only if you are an existing customer with an eligible Fifth Third Bank checking or savings account in good standing.
Personal loans from KeyBank are only available in 15 states, though these are spread across the country. (There are about 1,000 branches in Alaska, Colorado, Connecticut, Idaho, Indiana, Maine, Massachusetts, Michigan, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont, and Washington.)
You have to make a full application, which means your credit score will take a small hit. Repayment terms are as long as seven years, but you may need a better credit score for a longer term.
Lending Club (aka LendingClub) is a pioneer in the peer-to-peer (P2P) lending field. So they’re a very experienced company.
There is no hit on your credit score when you ask for a quote. This lender initially makes what are called “soft” inquiries, which don’t affect your score.
You’re able to make a joint application with someone else as well as one on your own.
Not many lenders let you do that. And it can get you a better deal if you owe a lot in other debts but your co-applicant doesn’t.
If you’re consolidating other debts, LendingClub can send payments directly to as many as 12 of your creditors. That’s an option, or you can receive the whole amount you’re borrowing and pay down other loans and balances yourself if you prefer.
LightStream’s customer satisfaction ranking is a real achievement and an indication of good practices and policies.
You can make joint applications (co-signers are welcome). In addition, long terms are available. This can help you keep your payment low if your loan amount is larger.
Payoff specializes in credit card consolidation loans in amounts ranging from $5,000 to $35,000.
You won’t harm your credit score when you ask for an initial quote. Payoff starts the process with a “soft” inquiry, which doesn’t affect your score.
There should be a single “hard” inquiry if you complete the process, but that’s inevitable regardless of your lender.
Payoff is very clear on its website about its underwriting guidelines, so you know if you qualify before you apply.
Payoff also has continuing telephone access to U.S.-based advisers who can help with debt issues, plus plenty of online advice.
Prosper is a personal loan provider offering loans of up to $40,000 for applicants with fair credit or better.
You can make a joint application with a cosigner if your own finances are somewhat shaky. There’s also no effect on your credit score when you request a quote.
SoFi offers personal loans of up to $100,000 for applicants with good to excellent credit.
You can borrow for up to seven years. This means you can use a longer term to lower your payment or a shorter one to reduce your total cost.
There’s also unemployment protection, which may prove lifesaving in a financial downturn. Read its terms and conditions before you rely on it, though.
If you want a personal loan from a large bank on the East Coast, TD Bank may be right for you. Loans are only available in 15 states (Connecticut, Delaware, Florida, Massachusetts, Maryland, Maine, North Carolina, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, Virginia, and Vermont).
No pre-qualifying: You can only apply, which requires a hard credit check that will give your credit score a small hit.
Upgrade doesn’t make it hard for people with difficult financial circumstances. It accepts joint applications, so you can apply with a more creditworthy cosigner. You can ask Upgrade to pay your creditors directly and it has a hardship program which is helpful if you have trouble making payments.
U.S. Bank is one of the few large banks that offer personal loans.
Personal loans are available only to existing U.S. Bank customers with accounts open for at least four months; however, there are no origination fees. Many lenders charge these for setting up the loan.
Joint applications are allowed, so you can bring a cosigner on board.
Is Wells Fargo a good fit for your personal loan requirements?
Wells Fargo has some good features in its offer, such as special discounts for existing Wells Fargo customers and that you can add a cosigner to get a better deal.
What Is a Personal Loan?
Personal loans are unsecured installment loans. “Unsecured” means you don’t pledge any property (collateral) that the lender can take if you fail to repay your loan. “Installment loans,” on the other hand, provide a lump sum that you repay with regular installments over a predetermined term (typically one to 12 years) until the balance is zero.
Personal loans are fairly simple products. You can use them for any legal purpose. Personal loans usually have no surprises. You know up front…
- … how much you’ll pay each month
- … when the loan will be paid off.
Qualifying for a Personal Loan
Personal loan applications are also pretty straightforward. Lenders want to make sure that you are able to repay your loan, so they require proof of income.
And they check your credit to see how you have managed your accounts in the past.
Because personal loans are unsecured by anything except your promise to repay them, your credit rating is more important than it is for a secured loan like a mortgage or auto financing.
Types of borrowers
Personal loan providers don’t all finance the same type of borrower. Some prefer only applicants with high credit scores, while others work with credit-challenged borrowers.
Other lenders may specialize in loans for certain uses, such as home improvement.
What Credit Score is Needed for a Personal Loan?
Personal loan providers tend to specialize in certain groups of borrowers. Some might only want applicants with excellent credit, while others work with fair-credit borrowers or make “second chance” loans.
Why pay attention to “credit score needed”
You won’t want to apply with prime credit lenders if your credit score is low because you probably won’t get approved, but you will acquire an inquiry on your credit report.
You don’t want to apply with poor credit lenders if you have excellent credit, either, because their loans are more expensive.
The minimum acceptable credit score for mainstream personal loans ranges from 600 to over 700, depending on the lender. The higher your score, the more choice you have in loans.
How Much Do You Have to Make to Get a Personal Loan?
Lenders want to know your income when you apply for a personal loan because they need to make sure that you can afford it.
You’ll probably be asked for pay stubs showing year-to-date income or tax returns if you are not a typical wage earner.
In addition to your income, personal loan lenders want to know what your debts are – the amount owed and your monthly payments.
Debt-to-Income Ratio (DTI)
The relationship between your income and debts is important to lenders. It’s called a debt-to-income ratio, or DTI.
To calculate a DTI, the loan underwriter adds up your monthly debts, including your housing cost and payments for your accounts like credit cards, auto financing, and student loans (not living expenses like utilities or food).
Then, he or she adds up all sources of your gross (before tax) monthly income. Finally, the underwriter divides your expenses by your income to get your DTI.
If an applicant earns $5,000 per month and pays $1,000 a month for rent, $100 a month minimum credit card payments, and a $400 a month car payment ($1,500 total expenses), the DTI is $1,500 / $5,000, or 30%. If this person applies for and gets a personal loan with a $250 per month payment, the DTI would be $1,750 / $5,000, or 35%.
Lenders set their maximum acceptable DTI between a conservative 28% and a generous 50%, with most settling in the 36% to 43% range.
What Information Do You Need to Apply for a Personal Loan?
When you apply for a personal loan, lenders want to know that you are able to repay it (as evidenced by your income) and are willing to repay it (as shown by your credit rating).
It’s pretty straightforward unless you have unusual sources of income, expenses that need explaining, or a credit report with blemishes or inaccuracies.
Income documents include:
- Recent pay stub showing year-to-date income
- W-2s if you have had multiple jobs in the last two years
- Tax returns if you’re self-employed, work on commission, or have income from investments
- Award letters for social security or pension income or bank statements showing automatic deposits
- Offer letter for a new job when you have not yet started
- Court documents for alimony or child support if using that income to qualify
- Proof that you receive alimony or child support – canceled checks, copies of deposits, or statements showing automatic deposits
Normally, the lender gets most or all of your account payments and balances from your credit report.
You’ll add any accounts not on your credit report to your loan application.
Don’t omit these because the payments probably show up on your checking account statement, and you usually have to provide that with your application too.
If your credit report is inaccurate, you may have to provide documentation so the lender can discount errors on your report.
It’s a good idea to check your own credit before applying for a personal loan to see if there is anything you’ll need to explain or fix.
Other documents to supply:
- Statements from savings, checking, investment, and retirement accounts
- Business license and business filings if you’re self-employed
- Divorce decree if your credit report contains accounts your former spouse pays
You’ll have to authorize a credit report.
You may also be asked to authorize verifications of your bank accounts, your employment, your rent history, or other expenses.
You may sign an IRS Form 4506-T, which allows the lender to request a transcript of your tax return.