Use the table below to shop leading personal loan lenders. The table enables you to easily compare personal loan rates, APR and loan length to find the lender and loan that are right for you. You can also refine your search based on your specific loan amount, loan purpose and other factors. Personal loan terms vary significantly so we recommend that you contact at least five lenders to find the lowest rate and fees. Using the table to shop for a personal loan is free, confidential and does not require a credit check.
Below we review the key points you need to understand about a personal loan so you can select the lender and program that best meet your needs.
A personal loan is an installment loan. This means that you receive all of the loan proceeds upfront when your loan closes and you pay back the loan with monthly installments, or payments, over time. Unlike a line of credit or a credit card, you cannot borrow more funds if you pay down or off a personal loan.
Your interest rate may be fixed or adjustable. Most personal loans have a fixed interest rate which means your rate and monthly payment remain the same over the course of the loan. Some personal loans, however, have an adjustable rate which means your rate and payment may increase. Before you take out a personal loan, be sure to understand if your rate is fixed or adjustable. You should also be aware of loans that have a low initial rate -- known as a teaser rate -- that increases significantly after a certain time period, which can be as short as one month.
A personal loan may be unsecured or secured. Many personal loans are unsecured which means they are not collateralized by property such as a home or car. Depending on the lender and the loan program, some personal loans are secured. The interest rate on an unsecured personal loan is higher than the rate on a secured loan because unsecured loans are riskier for lenders. It is important to understand if your personal loan is secured or unsecured when you select a lender.
You can choose the length of your loan. Personal loans can vary in length from two-to-six years. The shorter the length of your loan -- also known as the loan term -- the higher your monthly payment but the lower your total interest cost over the life of the loan. The longer the loan term, the lower the monthly payment but the higher your total interest cost. Additionally, shorter personal loans usually charge a lower interest rate than loans with a longer term.
You need to prove that you can afford the monthly payment. Although the qualification guidelines for a personal loan are more flexible than for others types of loans such as a mortgage, you still need to demonstrate to the lender that you can repay the loan. Lenders look at your income as well as your other monthly debt expenses to make sure you can afford the personal loan payment.
You can usually use personal loan proceeds however you want. There are typically no restrictions on how you use the funds you receive from a personal loan. Some people use the proceeds to consolidate or pay off high interest credit card debt while others use the funds for a major purchase. In fact, many people use a personal loan instead of a credit card because the interest rate is lower. The flexibility to use the funds for any purpose is one of the main benefits of a personal loan.
Personal loan terms vary significantly. As illustrated by the lender table above, there can be significant differences in the rates and fees charged by personal loan lenders. Loan terms depend on many factors including your credit score, debt-to-income ratio and loan program. This is why it is important to shop multiple personal loan lenders so you can find the best loan terms for your specific situation (more on this below).
It is important to be prepared before you apply for a personal loan. Because your credit score is one of the most important inputs to determine your loan terms, including your interest rate, as a first step we recommend that you review your credit report. Understanding what your credit score is and addressing potential issues on your report may enable you to negotiate better terms. Additionally, you should have information on your current monthly income and debt payments available when you submit your application. Finally, it is helpful to know how you plan to use the proceeds from the loan. For example, if you plan to pay off or down other debt, this may increase the personal loan amount you qualify for.
In short, the best way to save money on a personal loan is to compare terms from multiple lenders. Shopping several lenders enables you to find the best loan terms and lowest monthly payment. Contacting multiple lenders within a relatively short period of time --45 days or less -- minimizes the impact on your credit score. Additionally, if you already know your score and personal financial information, you may be able to obtain a personal loan quote without the lender pulling your credit.
After you have gathered personal loan proposals from multiple lenders, the next step is to find the lender offering the lowest combination of interest rate and fees. The lower your interest rate, the lower your monthly payment. The lower your closing fees, the lower your expenses. The good news is that you can usually finance personal loan fees, which means include them in the loan amount. Additionally, the fees are typically pretty straightforward and only include two-to-three items such as origination or documentation fees. If a lender is charging excessive fees, it is likely a good idea to work with a different lender. Finally, because it can be complicated to evaluate both interest rates and fees, you can compare personal loan APRs, which incorporate both. The lower the APR, the better.
A common pitfall when you shop for a personal loan is to compare loans with different terms. For example, a fixed rate loan has a different interest rate than an adjustable rate loan. Or a two year loan has a different rate and payment than a six year loan. Some personal loans have a very low starter rate that can quickly increase and change over the loan. All of these examples demonstrate the importance of comparing personal loans with similar terms and program features. This approach also enables you to avoid getting enticed by attractive initial loan terms that may change. Finally, be sure to understand if your loan has a prepayment penalty as you may want to avoid this fee.
After you compare proposals from multiple lenders, including key program terms and features, your final step is to select the personal loan program and lender that are right for you. Before your loan closes and funds, we highly recommend that you carefully review your loan documents to make sure that you fully understand all the loan terms. As with all loans, if you are not comfortable with any loan terms, do not sign the loan documents. Rather than signing loan documents with unfavorable terms, you are better off resolving your questions, renegotiating your loan or working with a different lender.
Our easy-to-use lender table empowers you to find the personal loan with the lowest rate and fees
Compare customized personal loan terms based on your specific criteria
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“What is a personal installment loan? ” CFPB. Consumer Financial Protection Bureau, December 2 2021. Web.