Best Personal Loans of 2022

final verdict

SoFi is our top pick for personal loans because of its competitive rates and terms, simple online application process, and no fees. However, if you don’t have good credit, you can get better rates by shopping elsewhere.

Since no one’s financial situation is the same, one lender will not perfectly meet everyone’s needs. Given this, shopping around to find the best lender for you is essential. look at this personal loan calculator to learn more about expected costs with SoFi or other lenders on our list.


Guide to choosing the best personal loans

Best place to get a personal loan

If you’re looking for a personal loan, some of the best places to get one are banks, credit unions, and online lenders. If you need funds fast, choose a lender that offers easy online application and fast funding. Many banks and credit unions allow you to apply online and get funding quickly, but you’ll usually need to have good credit to be approved. If you don’t have good credit, an online lender is usually a better option.

Should I apply for a personal loan?

If you need funds to cover a large expense or want to consolidate existing debt, you may consider applying for a personal loan. Personal loans are commonly used by people who need financing for a major expense, such as paying for a wedding, covering emergency expenses, or making home improvements or repairs. Loan funds can also be used to consolidate higher rate debt into a lower cost fixed rate loan.

Personal loans can be a good option for those who need immediate financing and can afford the monthly payments. However, you will pay interest on the loan, so it is more expensive to use the loan funds than to cover the same expenses in cash. Even so, APRs on personal loans are generally lower than the rates you’ll pay on credit card debt. So if you have to choose between using credit cards or personal loansthe latter is often the best choice.

Another benefit of an unsecured personal loan is that you don’t have to post collateral, like your house or car, to get the loan. This can save you money because you don’t have to pay the costs associated with warranty, such as appraisal fees. Also, you might be able to get the funds faster as there is no collateral involved. So if you need funds to make improvements to your home, like fixing your roof, building a new office, or adding solar power, a personal loan may be the answer.

Comparison of personal lenders

The most important things to consider when selecting a personal lender include loan costs and terms, what it takes to apply, and how quickly you can be approved and funded. When comparing personal lenders, pay close attention to these factors:

  • APR and fees: Personal loan rates and fees are the main factors to consider before choosing a lender. Rates and fees are factored into the loan APR, which measures the annual cost of the loan. The better your credit, the lower the rate you will get.
  • Refund conditions : Shorter repayment terms result in higher payments and generally lead to lower interest rates. This means you can lower your overall borrowing costs by choosing the shortest repayment term possible. However, just make sure you can afford the monthly payments before applying.
  • Application process: It is also important to consider the lender’s application process. You may want to get a loan from your local bank or credit union, which can be a great option. However, keep in mind that some smaller lenders may not offer automated systems or online applications, which makes the application process longer. If you’d rather avoid applying in person, choose a lender that offers an online application.
  • Speed ​​of approval and funding: The speed of loan funding is often closely tied to the application process. Lenders that have online applications and automated processes are often able to get you funded faster. However, many of these lenders only approve borrowers with good credit. If you have blemishes on your credit, choose a lender with less stringent credit score requirements, such as an online lender or a local bank or credit union who can make individual decisions based on your particular situation.

How to get a personal loan

Once you’ve decided to get a personal loan, it’s time to get your paperwork in order and make sure your credit is in the best shape possible. Many lenders will start with a pre-qualification process, which involves drawing a soft credit check on you. To pre-qualify, you will need to provide a few personally identifiable information (such as your social security number and date of birth), details of your income, why you need the funds, how much you want to borrow, and how long you need to repay the loan.

Although pre-qualification does not guarantee that you will be approved for a loan, it does allow you to see the rate you may receive. If you are quoted for a high rate, you can work on repair your credit before submitting a complete application. Generally, the better your credit, the better the rate you will get.

If the rate is acceptable and you decide to move forward, then you will complete a full application. This will involve providing the lender with additional information, such as proof of income and details of your monthly debts. You will also be subject to a credit check as part of the application process.

If you are approved for the loan, the lender will provide you with details of the loan terms, including rates, fees and repayment terms. Pay close attention to this information to understand the details before accepting the loan. If you don’t understand the details of the loan, speak to a representative for clarification before proceeding.

As soon as you have accepted the loan, the lender will send you the loan funds in the manner you indicated in your application. This can include depositing funds directly into your bank account, sending money to your creditors to pay off an existing debt, or even writing a check.

You will also learn how to manage your loan, for example by logging into an online portal or using a mobile app. This can be helpful as you will understand how to make your monthly payments and where to go if you need help in the future.


Frequently Asked Questions

What is a personal loan?

A personal loan is a predetermined sum of money given to an individual by a bank or private lender. It is usually unsecured and carries a fixed interest rate. The borrower must agree to the rate and terms of the loan and make monthly payments on time until it is fully repaid. A personal loan can be used for many things, including paying off or consolidating debt, covering medical expenses, or making a major purchase.

How do personal loans work?

Personal loans work by lending money to a borrower if they meet certain conditions set by the lender. The money is repaid over time with interest. The borrower generally makes monthly installments of principal and interest to repay the loan. A personal loan is often a more affordable option than a credit card because the interest rate is usually lower.

How much do personal loans cost?

Some of the fees associated with personal loans are origination fees, prepayment penalties, late fees, and administrative fees. However, not all lenders charge the same fees. It is important to check with the lender before getting a personal loan. Despite the fees charged by the lender, the highest cost will be what you pay in interest. The average interest rate for a personal loan is 9.09%.

What are the pros and cons of getting a personal loan?

If you’re considering a personal loan, it’s important to consider the pros and cons.

Advantages:

  • Personal loans generally have lower APRs than credit cards.
  • Your personal loan will be fully repaid in a short period of time, unlike credit cards, which may never be repaid if you only make the minimum monthly payments.
  • Interest rates are fixed on personal loans, which means your rate will never change.
  • Unsecured personal loans do not require collateral, making them faster and easier to obtain than secured loans such as home equity loans.

The inconvenients:

  • You will incur interest and fees with a loan, fees that you would not incur if you used cash.
  • Short repayment terms translate to higher monthly payments, so it’s essential to make sure you can afford the monthly payment before you get the loan.
  • If interest rates on loans go down in the future, you’ll be stuck with a higher interest rate until you pay off the loan or refinance it.
  • Since unsecured personal loans do not require collateral, they may have higher APRs than secured loans, loan amounts may be lower, and you will likely need better credit to qualify.


How We Choose The Best Personal Loans

Our team evaluated 38 lenders and collected 1,520 data points before narrowing down our top picks. We weighted more than 20 criteria and gave a higher weight to those having a more significant impact on potential borrowers.

Top picks were selected based on factors such as membership requirements (15% weighted), average fixed APR (15% weighted), and average origination fee (10% weighted).

We also considered flexible repayment terms, useful features such as pre-qualification, and whether co-signer or joint applications are allowed to ensure borrowers have the best possible experience. For more information on our selection criteria and process, our complete methodology is available.