Personal loans for good to excellent credit
A personal loan is a sum of money that you borrow from a bank, credit union, or online lender and pay back over a period of two to seven years in equal monthly installments.
Since most personal loans are unsecured, collateral is not needed, Instead, during the loan approval process, lenders take into account your income, debts, and credit profile. Your credit may suffer if you are unable to repay the loan.
How do personal loans work?
After your personal loan application is approved, a lender will deposit the money in full into your bank account within a few days, deducting any origination fees. You can spend the money for almost anything once you have it.
Repayment typically starts 30 days after receiving the money. Some lenders allow you to set up auto-pay from your bank account, or you can choose to pay the fixed monthly amount directly. The monthly payments don’t stop until the loan term is over, or sooner if you pay off your loan in full. After you have fully repaid the personal loan, it is no longer in effect.
When should I get a personal loan?
According to a survey by NerdWallet that was released in October 2020, roughly 29% of Americans took out a personal loan in the previous 12 months, borrowing $6,299 on average.
Getting a personal loan makes the most sense when:
- It’s the least expensive form of financing.
- It’s utilized for things like debt consolidation and home upgrades that could improve your financial situation.
- You can manage the monthly payments without stressing your budget.
Reasons to get a personal loan
Personal loans can be used for almost any purpose. Some common reasons borrowers get a loan include:
It can be costly to use a personal loan for discretionary costs like a vacation or a wedding. NerdWallet recommends using savings for nonessentials to avoid finance charges.
If you’re borrowing money for unexpected or medical costs, think about less expensive options like community service or installment loans.
Personal loan interest rates and fees
Interest rates on personal loans differ from lender to lender and are influenced by a number of variables, including your income, debt-to-income ratio, and credit score. The average interest rate on a personal loan is as follows:
|
Borrower credit rating |
Score range |
Estimated APR |
|
Excellent |
720-850. |
14.21%. |
|
Good |
690-719. |
17.00%. |
|
Fair |
630-689. |
19.95%. |
|
Bad |
300-629. |
22.20%. |
Source: From December to the present, average rates are derived from anonymized offer data collected from users who pre-qualified in NerdWallet’s lender marketplace. 1, 2023, through Dec. 31, 2023. Rates are estimates only and not specific to any lender. The majority of people with credit scores below 500 are unlikely to be eligible. Information in this table is only applicable to lenders whose maximum annual percentage rates are less than 206.36 percent.
Some lenders tack on origination fees to offset the expense of loan processing. The fee is subtracted by lenders from the loan proceeds or added to the outstanding amount. When comparing the costs of different lenders, take this one-time upfront fee into account as it is part of the loan’s annual percentage rate.
Insufficient funds fees, which occur when you don’t have enough money in your bank account to make the loan’s monthly payment, and late fees are additional costs to be aware of.
Pros and cons of personal loans
A personal loan may be the best course of action for you or something you should avoid depending on your financial situation and the loan’s intended use.
Lower starting APRs than credit cards. Personal loans usually have lower annual percentage rates (APRs) than credit cards for borrowers with good credit. Although certain credit cards provide up to 200% interest during the introductory period, the rates usually increase after the period expires.
Fixed rates and monthly payments. Personal loans have predetermined terms and fixed rates, so you always know how much you owe and how long it will take to pay it back. Variable rates on other financing choices, such as home equity lines of credit, may result in varying monthly payments.
Flexible loan amounts. You could be eligible for a personal loan of $1,000 to $100,000, depending on the lender and your creditworthiness. This range covers a broad range of costs, from minor emergencies to significant home renovation projects.
No collateral. In contrast to home equity loans, which need collateral in the form of your property, unsecured personal loans don’t. If you can’t pay back, you run the risk of damaging your credit, but you won’t lose any assets.
Maximum APRs can be high. Personal loan APRs may be greater than credit card APRs if your credit score is low.
Possible fees. In addition to their loan payments, borrowers may be required to pay fees such as origination or late fees.
Increase in debt. Getting a personal loan increases your debt, so you should consider this and make sure you can afford to pay it back.
Summary of personal loan pros and cons
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Pros |
Cons |
|---|---|
|
|
Best place to get a personal loan
Banks, credit unions, and internet lenders are your options for personal loans. Wherever you can find the rate, terms, and features that work for your budget will determine which is the best choice.
For instance, if you value a quick and easy loan application process, think about using an online lender. However, a bank loan or credit union loan can be a better choice if lower rates and in-person support are important.
How to choose the best personal loan
Here are some things to think about when comparing personal loans from different providers.
Soft credit check. During the pre-qualification process, the majority of online lenders allow you to check your estimated interest rate through a soft credit check. It pays to take the time to pre-qualify for a loan with several lenders and compare rates and loan features because this won’t have an impact on your credit score.
Annual percentage rates. APRs provide borrowers choosing between personal loan offers with an apples-to-apples cost comparison because they include interest rates and fees. To view monthly payments and total costs for personal loans, use our personal loan calculator.
Funding time. The type of lender you work with can affect how long it takes to get a personal loan. After you apply, a lot of online lenders will approve it and send you money the same or next day. Banks and credit unions may take up to a week.
Repayment terms. You can choose between a longer term with a lower monthly payment and a shorter term with less interest when you have a large range of repayment term options. One might be more financially sensible than the other depending on your budget.
Loan amount. Depending on your financial needs, a particular lender may be more appealing than another. While some lenders only offer loans up to $100,000, others offer small to midsize loans, such as those between $2,000 and $50,000. Knowing how much you require will enable you to compare and make a decision.
Special features. Check to see if any of the perks offered by the lender you are considering will help you achieve your financial objectives. Features like unemployment insurance, autopay rate reductions, or financial counseling may be advantageous to you.
How to get a personal loan
- Review your credit. The main determinant of your eligibility for a personal loan and the interest rate you pay is your credit score. Correct any mistakes that could be lowering your credit score, and if you can, pay off debt to lower your debt-to-total-income ratio. Get a free credit report with NerdWallet or at AnnualCreditReport. com.
- Pre-qualify with multiple lenders. Pre-qualifying allows you to get an estimate of the terms and rate you can expect. To find the lowest APR and monthly payments that meet your budget, compare pre-qualified offers.
- Apply. Your identity and income must be verified with documents as part of the formal application process. You will normally receive your loan funds within a week of being approved.
Next step: Pre-qualify for a personal loan
On NerdWallet, you can pre-qualify and view rates from lenders who work with us. Pre-qualification results in a soft credit check that has no bearing on your score.
Explore personal loans and lenders in each of these categories:
Through its review process, NerdWallet assesses and ranks personal loan offerings from over 35 financial institutions and tech firms. To verify product details, we gather more than 50 data points from each lender and cross-reference them with corporate websites, earnings reports, and other publicly available documents. We might also follow up with business representatives and go through the pre-qualification process of a lender. Every year, NerdWallet writers and editors perform a thorough fact check and update. In addition, they provide updates as needed throughout the year.
Lenders that provide customer-friendly features, such as soft credit checks for pre-qualification, competitive interest rates without any fees, transparent rates and terms, flexible payment options, quick funding times, reachable customer support, payment reporting to credit bureaus, and financial education, receive points from us based on our star ratings. The lenders who engage in practices that could make a loan difficult to repay on time are penalized less in our ratings. These practices include charging high annual percentage rates (above 2036%), underwriting that fails to adequately assess the consumers’ E2%80%99% ability to repay, and lack of credit-building assistance. Regulatory actions submitted by organizations such as the Consumer Financial Protection Bureau are also taken into account. We evaluate each of these factors to determine which matters most to customers and how much they influence their experiences.
NerdWallet does not receive compensation for our star ratings. Learn more about our editorial policies and personal loan rating methods.
NerdWallet’s Best Personal Loans of February 2024
- LightStream: Best for Home improvement loans
- The best personal loans for good to excellent credit are offered by SoFi Personal Loans.
- Upgrade: Best for Personal loans for bad to fair credit
- Upstart: Best for Personal loans for short credit history
- Happy Money: Best for Personal loans for credit card consolidation
- Discover® Personal Loans: Best for Debt consolidation loans
- Best Egg: Best for Secured loans
- LendingClub: Best for Joint personal loans
- What are the rates for personal loans? The annual percentage rates for personal loans range from 6% to 35%. 99 percent, but your rate is dependent on several factors, such as your credit score. Borrowers who have a good credit score (690 or above) can anticipate an annual percentage rate (APR) of approximately 15% or less. APRs can begin as early as 2020 if your credit score is fair to poor (689 or below). A favorable interest rate on your loan is one that is less expensive than other credit options. Track average personal loan rates.
- How much is a personal loan? You can find out how much your loan will cost by looking at the annual percentage rate. The APR, which is determined by a number of variables including your credit score, the length of your loan, and the lender you select, is the sum of your interest rate and fees. You can view the entire cost of a loan with a personal loan calculator.
- How long does it take to get a personal loan? Your loan application may be approved by some lenders in a matter of minutes, and you may receive funds the same day or the following day. The length of time it takes to get a personal loan depends on several factors.
- What’s a loan term? It’s the amount of time you have to pay back the loan. Lenders of personal loans give borrowers a lump sum of money at the beginning of the loan term, with two to seven years to repay the loan.
- Where can I apply for a personal loan? Online lenders, credit unions, and banks all accept applications for personal loans. While most offer online applications, some banks and credit unions still require you to fill out a paper copy.
- Can someone with bad credit get a personal loan? Different personal loan lenders have different credit score requirements. While some lenders only approve applicants with excellent credit, others will lend to those with poor credit. Learn how to get a loan with bad credit.
Ronita Choudhuri-Wade is a personal loans expert at NerdWallet. Among other publications, Ronita’s work has appeared in the LA Times, MarketWatch, Nasdaq, and Washington Post. Ronita has also appeared on “Mornings With Maria Bartiromo”. She is based in Tulsa, Oklahoma. Read more about the author.
Kim Lowe is the lead personal loans editor at NerdWallet. She previously worked at MSN. com and graduated from the University of Iowa with a degree in journalism and the University of Washington with an MBA. Read more about the author.
FAQ
Which company is best for loan?
S. No. Personal Loan PlansInterest Rates1. HDFC Bank Personal Loan10. 50% p. a. onwards2. ICICI Bank Personal Loan10. 50% p. a. onwards3. Bajaj Finserv Personal Loan13. 00% p. a. onwards4. Fullerton India Personal Loan11. 99% p. a. onwards.
Which loan company is easiest to get?
CompanyForbes Advisor RatingLoan amountsLendingPoint4. 0$2,000 to $36,500Universal Credit3. 5$1,000 to $50,000Upstart3. 5$1,000 to $50,000Avant3. 5$2,000 to $35,000.
Read More :
https://www.nerdwallet.com/best/loans/personal-loans/best-personal-loans
https://www.forbes.com/advisor/personal-loans/best-personal-loans/