What Is a Personal Loan?
A personal loan is a consumer debt product offered by banks, credit unions, and other online lenders. These lending institutions issue personal loans of differing sizes, ranging from a few hundred to thousands of dollars. Your objective should be to get access to the best personal loans for your financial situation.
Personal loan terms like annual percentage rate (APR), loan length, and payment terms, will depend on your credit score and credit report. Personal loans are incredibly flexible financing tools, and the capital you receive can be used for a variety of items, including:
- Financing a Wedding
- Debt Consolidation
- Renovating Your Home
- Paying Medical Bills
- Funding a Tax Bill
Each lender will have critical metrics they analyze when reviewing your loan application. You must research various personal loan providers and choose the best one that suits your financial situation. You can get approved for an online personal loan in minutes and get the cash you need quickly. Check out our recommendations below.
Our Picks for Best Personal Loans
On Upgrade’s Website
Upgrade Personal Loan
Smart Money Rating: 5/5
Best For: Fast Funding
Loans From: Up to $50,000 (Terms Apply)
on Upstart Website
Upstart Personal Loans
Smart Money Rating: 5/5
Best For: Fast Online Loans
Loans From: $1,000 – $50,000 (Terms Apply)
Bonus Offer: Checking Interest Rate Won’t Affect Your Credit Score
on Spotlight Loan’s Website
Spotlight Loans
Smart Money Rating: 4.8/5
Best For: Quick Personal Loans
Loans From: Up to $5,000 (Terms Apply)
on Viva Finance’s Website
Viva Finance
Smart Money Rating: 4.7/5
Best For: Debt Consolidation, Credit Card Refinancing, and Unexpected Expenses
Loans From: Up to $10,000 (Terms Apply)
on PersonalLoan’s Website
Personal Loans
Smart Money Rating: 4.5/5
Best For: Fast Personal Loans
Loans From: $250 – $35,000 (Terms Apply)
on BadCreditLoan’s Website
BadCreditLoans
Smart Money Rating: 4.5/5
Best For: Loans for Bad Credit
Loans From: $500 – $10,000 (Terms Apply)
How to Apply for a Personal Loan
Before you apply for a personal loan, it is a smart money move to get your finances tidy. Reviewing and understanding the process will help you secure the best loan possible. Here are the steps to apply for a personal loan:
1. Review Your Credit Report
It is a smart money move to review your credit report or credit score before applying for a personal loan. Lenders will determine your interest rate and loan terms based on your credit score (e.g., FICO or VantageScore).
Reviewing your credit report will allow you to flag any changes. Read how to access your free credit report to ensure it is up-to-date and accurate.
2. Pre-Qualify With the Best Lenders
Part of your due diligence is analyzing and comparing the interest rates and terms you receive from different lenders. You can understand this by pre-qualifying to search for the lowest APR and best overall terms. Remember to ensure your monthly interest and principal payments fit your budget.
3. Formally Apply
Like many loan applications, you must fill out the formal loan application documents. Many online providers allow you to do this through their website or app. You will likely have to provide personal information like your name, address, income, and social security number and answer questions about the intended use of the funds.
4. Get Your Approval
Depending on your personal loan provider and whether you have a high credit score, you could be approved in minutes. However, some financial institutions might take a couple of business days.
5. Receive Your Funds
After your formal application is approved, the next step is to receive your loan funds. This usually takes place as a direct deposit into your online checking account.
6. Begin the Repayment Process
Once your loan funds are deposited into your account, your repayment schedule commences. You will likely have a set monthly installment payment to your bank or online loan providers. Consider automating your finances to ensure you make online payments.
Frequently Asked Questions
If you apply for a personal loan, you will be quoted a specific interest rate based on your credit history, loan term, and other factors. Simply choosing the loan with the lowest APY might not be your best answer. For example, placing a premium on getting the funds quickly might take precedence over a lower interest rate (maybe you are trying to take advantage of an expiring discount).
Personal loans vary in term, usually from one to seven years. You should look for a term that matches your ability to make monthly payments, while balancing not paying too much interest.
Personal loan lenders know that potential customers have a wide range of credit scores. Some lenders only focus on lending to people with high credit scores, while others service customers who are building or repairing their credit scores.
