Best Personal Loans of 2019
For many Americans, personal loans are the only way to make a major purchase, pay for an emergency expense, or pay off debt. But before you sign on the dotted line, make sure you’re taking out the right kind of loan, from the right lender, at the best possible rate. To help, we’ve compared the best loan types, personal loan companies, and loan rates across the country.
Best Personal Loan Rates
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What Is a Personal Loan?
Personal loans are fixed-amount loans distributed as a lump sum and paid over monthly installments. They’re typically unsecured, which means no collateral is required to acquire the loan, such as a car or home. Unlike a credit card, the borrower pays the loan back over a fixed period of time that doesn’t fluctuate. Every bank has its own limitations for how much you can borrow and over what length of time, depending on your credit score and other factors. People use personal loans for a variety of reasons, but the most common are to consolidate debt, pay off credit cards, and make home improvements.
Should I Take Out a Loan to Consolidate Debt?
It’s easy to become overwhelmed by credit card debt, especially when you have balances to pay off on multiple cards with varying interest rates and due dates. Debt consolidation is one of the most common uses for personal loans because it allows the borrower to combine their outstanding balances and pay for the entirety of their debt over monthly installments. That way, payments are manageable and the borrower doesn’t feel overwhelmed. While a personal loan for debt consolidation may seem like the easy answer to credit card woes, it can be incredibly difficult for someone with bad credit to get approved for a personal loan. Even if you have bad credit and you’re approved, you could end up paying more in interest and other fees over time. The key is finding the best possible rate and calculating your total payments over time to determine whether a consolidation loan will save you money.
Should I Take Out a Loan for Home Improvements?
Looking to remodel your kitchen? Maybe you’ve dreamed about an in-ground swimming pool, or you’re ready to build a new suite for your in-laws. Unless you have tens of thousands in savings, personal loans are definitely an option for home remodeling and renovation. Many people who don’t want a home equity line of credit — which requires you to put up your home as collateral — opt for a personal loan to help finance home improvement projects. A personal loan can help you make changes to increase the value of your home, but it’s important to remember that during a fluctuating economy, loan interest rates will go up and down, so you could end up paying more in loan interest than any increase in property value that your home improvements make. Make sure you identify exactly what your home improvement will entail, don’t ask for more money than you need, and calculate your total costs after interest before applying for a loan.
Should I Take Out a Loan for Moving Expenses?
Moving between states or across the country can cost thousands, and employers don’t always include relocation costs when you start a new job that requires a move. That’s why some people use a personal loan to make ends meet as they move into a new home. The funds can be used to hire movers, purchase moving supplies, storage, lodging, or even to purchase new furniture for your home. Taking out a personal loan for moving expenses can be a great option if you find a good rate and ensure you can afford the monthly payments, especially if you’re moving for a job that offers a higher salary. If you have a low credit score, it’s likely that you’ll only qualify for high-interest loans, which can add thousands of dollars to the overall cost, so make sure to find the best possible rate.
Should I Take Out a Loan for My Wedding?
It’s easy for couples to become overwhelmed with the cost of a wedding, not only because of big-ticket items like a venue, wedding planner, or photographer, but also thanks to smaller expenses like invitations, a wedding cake, and flowers. Many people find it easier to pay for a wedding with a personal loan because they have the flexibility to use it however they want. Some couples even use personal loans to pay for engagement rings. As with any personal loan, it’s important to be strategic: calculate exactly how much you’ll need, don’t borrow more than that, and find a monthly payment you can afford (including interest).
Should I Take Out a Loan for My Vacation?
People do sometimes take out personal loans for travel, particularly newlyweds who use them to pay for a honeymoon. In general, though the best reasons to get a personal loan are when your “investment” will be returned somehow. For instance, investing in college will turn into a higher-paying job, investing in debt consolidation will lead to higher credit scores and lower monthly payments, and investing in a home improvement will raise the price of your home when you sell. Getting a personal loan for a vacation is arguably more of a luxury than an investment, but if you can find a great loan with a great rate, and you’re 100% confident you can afford to pay the entire loan back on time (including interest), there’s nothing stopping you from doing it. In fact, Prosper actually includes vacations as one of the potential reasons to get a loan in its marketing materials.
The Best Personal Loan Companies of 2019
LendingClub is a peer-to-peer lender that essentially acts as a matchmaker between investors and borrowers. Customers who use LendingClub must have a credit score of at least 600, and unsecured personal loans can reach $40,000 between 6.95% and 35.89% APR. One of the benefits to loyal customers who make consistent payments is the ability to open more loans in the future. Eligible customers can have two outstanding loans open for up to $50,000.
LightStream, a division of SunTrust Bank, is a great option for people with good to excellent credit that offers high borrowing amounts with low rates. Its current loan rates are between 3.99% and 16.79% APR, with a maximum loan amount of $100,000. Personal loans through LightStream can be used for many different purposes like auto, home improvement, recreation, family life, and debt consolidation. LightStream will beat competitors’ rates by 0.1% and offers $100 cash back to any borrowers who aren’t satisfied with their experience. For borrowers looking for a lender that’s environmentally friendly, LightStream partners with American Forests by donating a tree for every funded loan, and prides themselves on a virtually paperless loan system.
Marcus by Goldman Sachs is great for borrowers with good to excellent credit and doesn’t require you to have an existing relationship with Goldman Sachs for eligibility. Most Marcus customers use personal loans to consolidate debt and pay for major purchases. You can borrow up to $40,000 at 5.99% to 28.99% APR over a very flexible repayment schedule. Loan terms range between 36 to 72 months, making Marcus an affordable choice for borrowers on a strict budget. Unlike many lenders, Marcus doesn’t charge an origination fee to process your loan.
SoFi is known for its transparent and personalized lending experience. While borrowing with SoFi is a completely online process, you automatically become a SoFi member and gain access to exclusive benefits like career coaching, an advisory board, and “member experiences.” It even has a community benefit in the unfortunate event that a borrower loses their job, where SoFi will temporarily pause payments and help you find a new one. Monthly payments are fixed and fee-free, meaning you only pay interest over the course of the loan. You can borrow up to $100,000 with rates ranging from 5.99% to 17.67% APR.
Prosper was the first of its kind, pioneering the peer-to-peer lending industry. When you borrow money from Prosper, the company acts as a broker that matches you with an investor. The average borrower has a credit score of 710, and loans are paid over a fixed time period, with personal loans ranging up to $40,000 between 6.95% and 35.99% APR.
Avant loans are a great option with people who have lower than average credit. While you may not qualify for its lowest rates, Avant is competitive with other low-credit lenders and can send you funds by the next business day. The online application is quick and transparent, with loans ranging from $2,000 to $35,000 at 9.95% to 35.99% APR. For someone who needs flexibility in payments, Avant will forgive a late payment if you have three consecutive on-time payments.
If you face a financial emergency and you’re looking for a lender who will work with you quickly, Upgrade can send funds to your bank account within a day of clearing necessary verifications. Its one-page application is easy, and you’ll receive an answer without negatively impacting your credit score. You can borrow up to $50,000 and pay it back over the course of 36 to 60 months without rate increases. Current rates are between 7.99% and 35.89% APR, and the minimum credit score to secure a loan with Upgrade is 620, but there is no income requirement.
Founded by former Google employees, Upstart has been featured on Bloomberg, NBC News, Fox Business, and Forbes for its different approach to loan approval. Your education and job history are considered in your application, which could help you secure a lower rate. Borrowers have reported savings of 23% on average compared to their credit card rates, and you can borrow up to $50,000 at 5.59% to 35.99% APR.
Unlike most lenders, OneMain allows multiple borrowers on a single loan. While the average loan size is small compared to other personal loan companies (up to $20,000 at 18% to 35.99% APR) it’s easier for borrowers with a low credit score to qualify. OneMain is ideal for someone who doesn’t qualify for an unsecured loan and doesn’t mind using their car as collateral on a secured loan.
The Impact of a 0.1% Personal Loan Rate Change
When shopping for a personal loan, it’s important to find a lender with a low interest rate that won’t change over the length of the loan. Even slight changes mean more out of your pocket that you didn’t anticipate spending. Let’s say you want to borrow a $10,000 loan with 9.5% interest and make monthly payments. If you pay the loan off in a single year, that means you’ll wind up paying $950 in interest. If you’re interest rate was 0.1% higher, you’d pay $960, which is only $10 more.
But what if you take five years to repay the loan? In that case, a 0.1% increase in your interest rate is the difference between $4,750 and $4,800 in extra payments. If a single tenth of a percent makes that much of a difference, imagine the dramatic difference between a 9.5% APR and, say, a 33.5% APR. Actually, you don’t have to imagine the difference, you can use our loan calculator to compare for yourself.