As of 2024, more than 24 million Americans have taken out a personal loan. These loans can be used for almost anything—debt consolidation, medical bills, home improvements, auto financing, and more. You get a fixed amount of money, which you can later repay in regular installments over a set period. For most personal loans, this period ranges from 3 to 10 years.
You can get personal loans online through lenders, or from banks and credit unions. The loans are unsecure, meaning you don’t need to put up any collateral. So, you won’t be risking anything. The loan is based on your income, credit score, and DTI (debt-to-income ratio).
Application process is quick too, especially if you have a great credit score. For those with medium scores, borrowing online personal loans is the better way to go. The approvals are fast, and funds are often sent on the same day. However, it is always best to shop around a bit to find the best interest rates, affordable fees, and good terms.
How to apply for personal loans online?
Here’s how you can apply for fast online personal loans:
- Check your eligibility: Your annual income must be at least $25,000. And, you need a valid Social Security Number (SSN). You must be above 18 to be eligible for the loan.
- Choose a lender: Pick a lender according to your needs—loan amount, interest, fees, repayment, etc. We’ve mentioned some of the most popular lenders below. You may skip to that section or continue reading.
- Gather required documents: Keep bank statements/pay stubs, utility bills/rental agreement, driving license/passport, SSN, and other required documents ready.
- Fill out the application: Most lenders give you the option to apply online. Go to their website and submit details in an online application form. It usually takes a few minutes.
- Review loan offer: Once you have submitted the application, wait for an approval. The lender will contact you and tell you about the terms you’re qualifying for. Understand it carefully. A “fine print” has details about the APR, monthly payment, and finance charges.
- Sign agreement: If you wish to continue borrowing the loan, sign the agreement the lender has provided to you. Some lenders will ask you to verify your income via a phone call.
- Receive funds: When you sign the loan agreement, lenders send the funds to your bank account directly. You can get the money as early as the next business day.
- Manage your loan: Finally, make sure to pay back on time for maintaining your credit score.
How safe are online personal loans?
Generally, getting an unsecured personal loan online is safe until you borrow from trustworthy sources. Lenders use extensive measures to protect your privacy, financial data, and personal information. Often, their websites also use high-level encryption to prevent data theft. So, everything you share with them stays secure. Nobody else can access it.
When a lender in your state is licensed, you can trust them. You can also read reviews or dig into comments from past customers to get an idea about their lending practices. Such information is available online easily. That said, scammers do exist and if a lender tries to charge you really high interest rates, has a sketchy website with no contact information, or pressurizes you—it’s a red flag.
What are the interest rates for online loans?
When you’re taking out an online instant personal loan, you can expect lenders to charge anywhere around 12.37%. Though it can fall into the range of 6-36% depending on your credit score. The lenders who don’t perform credit checks may charge you higher in interest.
In addition to the interest rate, you must also consider other fees like origination fees or finance charges. These increase the overall cost of your loan. Usually, lenders are allowed to charge you up to 12% of your loan amount in fees. Both interest rate and fees are combined into APR.
What is Annual Percentage Rate?
Annual Percentage Rate (APR) is the total cost you pay for borrowing the loan over a year. This means, it includes the interest rates plus all the fees that are charged on your loan. It is advised that you look at this number rather than just the interest.
For example, a lender is charging low interest around 10% but the fees are high, let’s say, 25%. So, overall, you’re paying 35% more than what you borrowed or owe, within a year. Whereas, if a lender is charging 15% in interest, but the fees are only 5%, that makes the total cost for your loan just 20% of what you’re borrowing. Thus, always look at the APR when comparing offers.
Best Rate Check - Avoid bad lenders, compare online
What if we told you that you don’t need to go all Stephen Hawking in order to get a loan (for those who didn’t get it: you don’t need to research too much). There are platforms online that help you shortlist personal loan lenders. One such website is Best Rate Check.
You can easily get pre-approved with multiple lenders without having to apply through each of them individually. All in a single, short loan application. The only details required are your email (for contacting you) and the loan amount you need. That’s all!
All the bad lenders who charge higher interest rates or fees are automatically filtered out. The best part is, your data remains completely safe, since the website uses the highest possible level of encryption. No spam emails, no unnecessary phone calls—just get the best personal loan offers.
What are the best personal loans for good credit?
Here’s a list of lenders who offer personal loans online with same day deposit of funds:
| Lender | APR Range | Repayment Terms |
| SoFi | 7.99% - 20.99% | 3 to 7 years |
| LightStream | 7.99% - 18.99% | 2 to 7 years |
| LendingClub | 6.99% - 35.89% | 3 to 5 years |
| Best Egg | 7.99% - 35.99% | 3 to 5 years |
| Upgrade | 7.99% - 35.99% | 24 to 84 months |
| Upstart | 7.99% - 35.99% | 3 to 7 years |
| Discover | 6.99% - 24.99% | 3 to 7 years |
| Prosper | 7.99% - 35.99% | 3 to 5 years |
| LendingPoint | 9.99% - 35.99% | 2 to 5 years |
| Universal Credit | 11.69% - 35.99% | 36 to 60 months |
Are online personal loans good for people with bad credit?
Compared to other loan options like payday loans, taking a personal loan online is much safer. You’ll get lower interest rates and favourable terms. However, you still need to consider the loan amount you’re borrowing and the repayment terms. This should be done with any loan you get.
You’ll at least need a credit score of 580 to secure APRs between 7.99 and 35.99 percent. Some lenders specifically cater to the needs of individuals with a lower credit score. So these lenders may charge lower interest rates and fees while still allowing no credit checks.
As a thumb rule, you should compare all possible lenders to find the best rates. Even with bad credit, people have gotten the money they need at good rates.
Are personal loans better than payday loans?
Should you take payday loans online or stick to taking out a personal loan? Well, it depends. Both of them have their own features. But it is generally best to consider a personal loan—because it’s safer. We’ve compared both of these loans so you can understand the difference:
| Feature | Personal Loans | Payday Loans |
| Interest Rate | 6%–36% APR | APR more than 300% |
| Repayment | Fixed installments | Lump sum repayment |
| Eligibility | Credit check (600+ score required) | No credit check |
| Credit Impact | Boosts your score | No positive impact |
| Risk/Cost | Lower interest rates and fees; hence low risk | Expensive interest rates and fees |
Using personal loans to consolidate credit card debt
Let’s say, for some reason, you haven’t paid off the outstanding balance on one or more of your credit cards. The interest rate for cards keeps compounding. So, not only are you paying interest on the amount you owe, but also on the interest charged for that amount!
Over time, the interest starts accumulating to a point where the balance becomes too large. It is best to use a personal loan to pay off your credit card debt faster. You’ll potentially get lower interest rates too, as compared to your current debts combined.
This way, you’re simplifying the payments, making them more predictable, and reducing the interest you pay over time. Doing this is actually a smart financial move. Just make sure that you take out a loan with lower interest rate than what you were paying before, and also that you don’t take up new debt while repaying. Understand your finances and then make a choice.
Pros & cons of personal loans
Now that you know how personal loans work, the ins and outs, here’s a summary to help you decide if you should borrow personal loans online:
| Pros | Cons |
| Lower interest rates | Some lenders require good credit |
| Borrow as low as $1,000 | Late fees on missing payments |
| No origination fees or prepayment penalties | _ |
| Fast funding (few hours to 2 days) | _ |
| Autopay discounts possible | _ |
| Can be used for any purpose | _ |
Helpful resources: Government loans
People apply for personal loans frequently. That’s because these loans are flexible enough to be used for anything—debt consolidation, wedding expenses, medical bills, etc.
There is no formal limit to how many personal loans you can take out in a year. However, individual lenders may limit the number of times you can borrow a loan from them.
Yes, banks do check your credit history for approving small personal loans. This is done as a risk assessment in order to verify your creditworthiness, and past repayment of loans.
Some of the best lenders to get personal loans from include:
SoFi, Light Stream, Upgrade, Best Egg, PenFed Credit Union, Avant, Happy Money, U.S. Bank, Axos Bank, First Tech Federal Credit Union, Lending Club, and Wells Fargo.
To find reputable private lenders for personal loans, apply through the Best Rate Check. Here, you’ll be able to filter out bad lenders while getting pre-approved for many loans.
Lenders who give loans online often have lower operational costs than banks—they don’t have to maintain physical branches. So, they give out loans at a lower interest rate.
Personal loans let you borrow in a lump sum and repay in monthly installments. Once you repay, the loan is over. With lines of credit, you’re given a limit until which you may borrow. You can borrow, repay, and borrow again until the line of credit is active.
Most unsecured personal loans send funds to your bank account within hours of approval. However, it is not uncommon for lenders to take 1-3 business days to send the funds.
