Benefits of a personal loan
When shopping for a personal loan, you should look for the following features:
- No fees: The best personal loan lenders don’t charge any additional fees, meaning there are no application fees, annual fees, or origination fees. If you opt for a lender that does charge fees, you could be paying back extra money unnecessarily. Why add to the cost of your loan when you can get better terms elsewhere?
- Quick loan disbursement: Most personal loan lenders offer you quick access to cash, which is important if you’re facing an emergency car repair or home improvement project. Once your application is approved, some lenders will disburse your funds in as little as two business days.
- Interest rate discounts: Many personal loan lenders offer special interest rate discounts. If you qualify, these discounts could save you serious money over the life of your loan. For example, you could be eligible for a 0.25% rate discount if you sign up for automatic payments with certain lenders.
- Loan terms: Reputable personal loan companies offer several different loan terms, ranging from one year to seven years in length, so you can choose an option that works best for your budget. Opting for a longer loan term means you’ll pay more in interest, but you’ll get a lower monthly payment.
- Rate quotes: When shopping for a loan, it’s a good idea to get quotes from multiple lenders so you can find the best rates. Some lenders offer rate quotes with just a soft credit check, meaning there’s no impact to your credit score.
Who is eligible for a personal loan?
Eligibility criteria for a personal loan can vary from lender to lender. In general, they’re looking for borrowers who have good to excellent credit and stable incomes. When they evaluate your application, they’ll review your credit score to determine whether or not to issue you a loan and to decide what interest rate you’ll receive.
Most lenders will include their minimum eligibility requirements on their websites.
If you can’t qualify for a loan on your own, some personal loan lenders allow you to apply with a cosigner. A cosigner — usually a friend or relative with excellent credit — shares responsibility for the loan and lessens the risk to the lender. With a cosigner, you’re more likely to qualify for a loan and score a low interest rate.
What are the typical rates and fees for a personal loan?
When it comes to personal loans, the following costs may apply:
- Fees: Some personal loan lenders charge fees, such as late fees, application fees, or origination fees. Those added costs can make your loan more expensive, so it’s a good idea to look for lenders that don’t charge them.
- Penalties: Most reputable personal loan lenders don’t charge a pre-payment penalty if you pay off your loan ahead of schedule. If you think you’ll pay off your loan early, make sure there isn’t a penalty for doing do.
- APR: The annual percentage rate (APR) is how much interest you’ll pay on your loan. The higher the interest rate, the more you’ll pay back over the length of your loan. Personal loans can have fixed or variable interest rates. Fixed rate loans have the same interest rate for the entire loan term. Variable rate loans tend to have lower interest rates than fixed rate loans at first, but the interest rate can fluctuate over time. If you prefer a predictable monthly payment, it's a good idea to opt for a fixed rate loan.
How to compare the top personal loan lenders
While it's important to consider rates, fees, and payment terms, it’s a good idea to look beyond just the numbers as well; it’s essential that you choose a reputable and trustworthy lender with a reputation for helping customers.
Named one of the “best banks in America” by Money magazine, Citizens is a consistently solid choice for a personal loan. Even though it’s one of the nation’s oldest and largest financial institutions, Citizens has shown a commitment to being at the cutting edge of technology, offering both convenience and stability to their customers. Plus, Citizens has an excellent record of civic responsibility and engagement. Their staff provides more than 85,000 hours of volunteer time each year to various causes, including teaching financial literacy in the communities they serve. So it’s a bank you can feel good about doing business with.
Key features of a Citizens Bank personal loan:
- Borrow from $5,000 to $50,000.
- Lenders' rates fluctuate all the time based on market conditions, but Citizens has a rock-solid history of offering some of the lowest interest rates available at any given time.
- On top of already low interest rates, you can take advantage of multiple discount opportunities. If you sign up for automatic payments, Citizens Bank will reduce your interest rate by 0.25%. And, if you’re already a Citizens Bank customer, you can qualify for an additional 0.25% loyalty discount.
- Get a fast, easy rate quote that won’t ding your credit. The process takes just two minutes, and it has no impact on your credit score.
- No need to worry about fees. Citizens Bank doesn’t charge application fees, annual fees, or even late fees.
The folks behind SoFi, which stands for “social finance,” feel your pain when it comes to debt. The company was created by a group of Stanford business students who found themselves with a mountain of debt after graduation. Today, they offer a variety of lending products through their online platform.
Key benefits of a SoFi personal loan include:
- Borrow up to $100,000 — a higher maximum loan amount than offered by most other lenders.
- Complete your application online. SoFi is all about making the lending process fast and easy.
- If you’re a highly qualified borrower and you take advantage of available discounts, you could score an interest rate as allow as 5.99%, as of January 2021.
- If you lose your job through no fault of your own, SoFi may allow you to deter payments temporarily until you get back on your feet. (However, it’s important to note that interest will continue to accrue during the non-payment period.)
Marcus is the retail banking arm of finance giant Goldman Sachs. Founded in 2016, Marcus currently focuses on two things: high-interest savings accounts and personal loans. By tightly focusing on these two areas, the company is able to offer highly customized financial products.
Key benefits of a Marcus personal loan include:
- Award-winning customer service. The company was named #1 in customer satisfaction by J.D. Power.
- After 12 consecutive on-time payments, you have the option to defer one monthly payment with no additional interest or fees.
- Personalized loan options based on your desired payment term and monthly payment. Their handy online calculator can help you determine how much you need to borrow, and help you design a payment plan that will set you up for success.
Lighstream is the digital banking arm of SunTrust Bank. It was founded with the vision to simplify the lending process for borrowers with good to excellent credit. If you have a high credit score and a solid income history, Lightstream is definitely worth taking a look at.
Key benefits of a Lightstream personal loan:
- If you have excellent credit, you could qualify for loans up to $100,000. (However, it’s important to note that your online application will involve a hard credit pull, so do a little homework on qualifications before you apply.)
- As part of its Rate Beat program, Lightstream says it will beat any competitor’s interest rate by 0.10% if you can show that you’ve been approved for a loan of identical terms.
- It’s possible to apply, be approved, and receive your money all on the same day.
Laurel Road has small-town roots, but it has grown into a national online lending powerhouse. In fact, it was one of the first lenders to completely digitize the loan process using proprietary technology. Expect a seamless online experience if you decide to take a out a loan from Laurel Road.
Key benefits of a Laurel Road personal loan:
- • Borrow up to $45,000.
- • Apply online and get the money disbursed right into your bank account.
- • Get 0.25% knocked off your interest rate when you sign up for automatic payments.
Best Egg is an online-only lending platform that was conceptualized by veterans from the banking industry who wanted to bring a tech-startup vibe to online lending. The goal: make banking easy for the way that people live today.
Key benefits of a Best Egg personal loan:
- APRs start as low as 5.99% for highly qualified borrowers.
- Borrow from $2,000-$35,000.
- There are no prepayment penalties.
- About half of approved applicants get their money within 24 hours of approval.
- You can get a no-obligation pre-approval online without a hard pull on your credit.
Personal loan FAQ
1. What do I need to apply?
In most cases, you can apply for a personal loan online; the process takes just a few minutes.
To complete the application, you’ll need to provide the following information:
- Name
- Address
- Social Security number
- Phone number
- Email address
- Employer name and contact number
- Monthly rent or mortgage payment
2. Does it cost money to apply for a personal loan?
Most reputable personal loan lenders don’t charge an application fee.
3. Will applying for a personal loan affect my credit?
When you submit a full application for a personal loan, lenders will perform a hard credit inquiry, which does impact your credit.
To shop around and get the lowest rates, it’s a good idea to get rate quotes before you apply. Some lenders will allow you to get an estimate with just a soft credit check, which doesn’t affect your credit.
4. How long does it take to get approved for a personal loan?
Most personal loan companies will make a decision within a few minutes after submitting your application. In some cases, the lender may reach out to you for additional information or documentation, such as copies of your pay stubs.
If approved, you can get your money in as little as two business days.
