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What to know first: The best personal loan rates start at 5.96% if you have stellar credit and stable income. However, the typical rate APR range is between 8% and 36%, with an average of 12.44%, according to the most recent Bankrate data. Read our methodology to learn how we select lenders with the most competitive rates and best overall loans.
Our team researched the best personal loan options available so you can compare lenders in one place.
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When you compare personal loan rates, start by assessing what's most important to you in a personal loan. Ask yourself these questions:
Your credit score has the most impact on the personal loan rate you’re offered: The higher your score, the lower your APR will generally be.
If your score is too low, you might not qualify with many of lenders. Checking your score is easy — many credit card issuers provide it in your online account, or you can go directly to a credit bureau’s website. For instance, TransUnion and Experian offer credit scores for free.
One shortcut is to consider a joint personal loan with a co-applicant.
Being realistic about how much personal loan you can afford can save you money and stress down the road. Use a personal loan calculator to get started — it can illustrate how different terms, rates and fees could impact your budget.
Next, create or update your budget to determine how much of your cash-flow you could reasonably afford to put toward loan repayment. Once you know your ideal monthly payment amount, you can aim for a certain APR and term.
Choose lenders that allow you to prequalify for a personal loan so you can compare rates without damaging your credit scores. Since the process doesn’t involve a hard credit check, the terms you see are estimates and might differ from the offer you’ll get when you apply. Still, prequalification gives you a good idea of what you’re working with and allows you to comparison shop.
Additionally, watch for fees — some lenders charge origination fees of more than 10% of the amount you borrow.
Once you’ve picked the lender, complete a full application. Lenders may require pay stubs, tax documents or other additional personal loan documents to prepare your final loan documents. Have those ready to speed up the process. Finally, review the final terms of your loan to make sure the fees and APR match your expectations.
Once you sign the loan agreement, some lenders may be able to fund your loan within one business day. Consider signing up for automatic payments to make repayment easier and take advantage of an APR discount, if your lender offers it.
The best time to get a personal loan is when you have a solid, predictable income and want a definite payoff date for the money you borrow.
“While it helps to borrow in a low-rate environment, focus on what's under your control," says Andrew Pentis, Bankrate’s principal watchdog reporter. "Borrowing when you have improved credit, dependable income and a realistic plan for repayment will put you in the best position to enjoy the upsides of a personal loan without experiencing the downsides.”
The economy can impact the terms you can get, but the right timing has more to do with your personal situation and goals.
The best time to get a personal loan depends more on your individual situation and is less about macroeconomics.Andrew Pentis, principal watchdog report for bankrate
With that in mind, you should base your decision on whether to borrow a personal loan on your own financial goals and needs. Here are a few scenarios when a personal loan makes sense:
Average rates on personal loans are nearly 8 percentage points lower than average credit card rates. That could save you a bundle in interest charges. A bonus: Your credit score could improve because of the drop in your credit utilization ratio. And if your credit is already in great shape, consider a balance transfer card as an alternate option. That way, you can avoid interest entirely by paying off the balance within the 12- to 21-month promotional window.
If you have unexpected expenses that your savings don’t cover, you want to get low-cost financing — and an emergency personal loan is one of the options. Personal loans aren't secured, and approval typically involves little more than proof of a job and address, a qualifying credit score and proof of identity. Some lenders even offer same-day funding.
Or, if you need to bridge a gap until your next paycheck, but want to avoid the 400% APR trap of a traditional payday loan, look into credit union payday alternative loans (PAL), which are offered through federal credit unions. If you’re already a credit union member, a PAL is the safest way to borrow up to $2,000 without a high credit score.
If you’re upgrading your home, a personal loan can give you the funds you need. While it’s a viable option, keep in mind that such projects are notorious for running over the budget. Alternatively, you could dip into your home equity for financing. With a home equity loan, you receive a lump sum with a predictable interest rate and a long repayment term, making it a stable alternative for major expenses. Or you could get a home equity line of credit (HELOC). This revolving line of credit offers lower rates than most personal loans, but it uses your home as collateral, meaning you risk foreclosure if you can’t pay.
“You don't have to guess which product is best for your situation,” Pentis says. “Rate-shop both among banks, credit unions and online lenders without submitting to hard checks on your credit. Then, you can weigh, say, whether a potentially lower rate on a HELOC is worth putting your home up as collateral."
Want to know a little bit more about personal loans before you start shopping? Get the knowledge you need to feel comfortable about your final loan decision.
What is a bad credit personal loan?
Some legitimate lenders specialize in loans for bad credit, but you can expect to pay higher interest rates and fees.
5 ways to pay off a personal loan early
Paying off a personal loan quickly could save big dollars on interest, but could also strain your budget if you're not careful.
How to boost your personal loan approval odds
Learn what you can do to boost your odds of a thumbs up on your personal loan application.
The best way to pay off a personal loan
Find out what happens if you can't repay a personal loan, and what you can do to avoid major credit damage.
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To select the best personal loans, Bankrate’s team of experts evaluated over 40 lenders. The lenders that earned a spot on our best personal loans list offer competitive APRs (many starting below 8%), multiple repayment term options, a wide variety of loan amounts, fast funding and accessible credit criteria. We also considered each lender's track record for customer service, as measured by consumer reviews and independent third-party agencies like the BBB and JD Power. Lenders that offer opportunities for rate discounts, hardship options and unique perks also fared well.
We also assign each lender a Bankrate score based on a meticulous 20-point system, focusing on four main categories:
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