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Online personal loans can be convenient for borrowers who need cash fast. Many online lenders offer quick funding and allow you to prequalify online to preview rates you might receive if approved. However, some drawbacks exist, like potentially high maximum rates. Below we cover how to find a legitimate lender, the pros and cons of online personal loans, and how to choose one. We also provide a list of some of the best options to consider.
Are Online Personal Loans Safe?
Online personal loans are safe — provided you're applying with a legitimate lender. To assess whether a lender is legitimate, read customer reviews from review websites, such as Trust Pilot and the Better Business Bureau. If you can't find any reviews or come across suspect reviews, it could be a sign that the lender isn’t a legitimate company.
Another way you can tell if a personal loan lender is legitimate is to check with your state's attorney general's office to see if they're registered to do business in your state.
Related Article
How to Prequalify for a Personal Loan, and Why It Can Be a Good Idea
Best Online Personal Loans
When choosing an online personal loan company, consumers have plenty of options. Below is our list of some of the best online personal loans to consider as you shop around:
- Best for Large Loan Amounts: SoFi
- Best for Minimal Credit History: Upstart
- Best for Bad Credit: Upgrade
- Best for Fair Credit: Avant
- Best for Competitive Rates: Discover
- Best for Same-Day Funding Option: LightStream
Best for Large Loan Amounts: SoFi
Borrowers who need a large amount of money may find SoFi a good fit, as its maximum loan amount is $100,000, and it offers unemployment protection as a perk.
SoFi Personal Loans
- Loan Amounts$5,000 – $100,000
- Loan Terms24 – 84 months
- APR Range8.99% – 24.18%
- Minimum
Credit Score680 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
SoFi's personal loan offering comes with no fees required and a high loan maximum that may be a good fit for those seeking large loans.
Overview
SoFi offers a competitive personal loan product that boasts no origination fees, no late fees, and a high maximum loan amount of $100,000. SoFi is one of only a handful of lenders offering loans as large as $100,000. If you need a substantial loan to cover a considerable expense, like a home renovation, SoFi’s high maximum can be a strong option. One standout feature of SoFi is that it offers unemployment protection, which might allow you to pause payments if you lose your job. Same-day funding is also available for qualified borrowers
Pros
- No origination fees, no prepayment penalties and no late fees
- Loans up to $100,000
- Unemployment protection available
- Autopay rate discounts
- Co-borrower allowed
- Same-day funding available
Cons
- No physical branches
- High minimum loan amount
- Good credit likely required
Best for Minimal Credit History: Upstart
Borrowers with minimal or no credit history may find Upstart accessible since it considers factors beyond credit scores like work history, income, and educational background.
Upstart
- Loan Amounts$1,000 – $50,000
- Loan Terms36 or 60 months
- APR Range4.60% - 35.99%
- Minimum
Credit Score300 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
Using artificial intelligence to help evaluate borrowers, Upstart is a unique lending platform that looks beyond your credit score for personal loan approval.
Overview
Upstart is a first-of-its-kind online lending platform that uses artificial intelligence to help make smarter lending decisions. This means the company considers factors beyond a borrower’s credit score to help determine creditworthiness. Upstart indicates its model has resulted in 43% lower rates for borrowers than traditional credit score models.
Beyond your credit score, Upstart will also look at your employment history, income and level of education when deciding whether to approve you for a loan. The company states that borrowers with credit scores as low as 300 might be able to get approved for a personal loan, though that loan may come with a relatively high APR.
Upstart’s rates are fairly competitive and loan funds are disbursed as soon as one business day after approval. This lender charges origination fees, so it’s important to read the fine print before applying.
Pros
- Considers factors beyond your credit score in lending decisions
- Loans up to $50,000
- Fast funding time
- Check rate without affecting credit score
- Low minimum credit score requirement
Cons
- No physical locations
- Limited repayment terms
- Has origination fees
- High maximum APR
- Not available in Iowa or West Virginia
Best for Bad Credit: Upgrade
Upgrade personal loans can be a good option for applicants with bad credit. It also has a fast approval process and borrowers can receive funds as soon as the next business day.
Upgrade
- Loan Amounts$1,000 – $50,000
- Loan Terms24 – 84 months
- APR Range8.49% – 35.99%
- Minimum
Credit Score560 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
Borrowers with less-than-stellar credit profiles may find Upgrade personal loans accessible, and its quick funding and flexible payment due dates convenient.
Overview
Upgrade offers personal loans that are accessible to those with not-so-ideal credit scores. The low loan minimum of $1,000 also makes it an easy choice for those with small financing needs. However, borrowers in certain states will be subject to higher minimum loan amounts. With this lender, you can expect to pay an origination fee. Borrowers can view their rate before applying without impacting their credit score. Overall, Upgrade is worth considering if you’re looking for a lender that is willing to work with lower credit scores and offers loans with competitive rates and flexible terms.
Pros
- Accessible to borrowers with bad credit
- Flexible loan terms
- Joint applications allowed
- Secured loan options
- Direct payment to creditors
Cons
- Has origination fees
- No physical branches
- Higher APRs than some competitors
Best for Fair Credit: Avant
Avant's low minimum credit score can make it easier for fair-credit borrowers to qualify. Funding is also relatively quick; once approved, borrowers can receive funds as soon as one business day.
Avant
- Loan Amounts$2,000 – $35,000
- Loan Terms12 – 60 months
- APR Range9.95% – 35.99%
- Minimum
Credit Score580 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
Avant offers small personal loans that are accessible to borrowers with fair credit, with funding available as soon as the next day.
Overview
Avant is known for its personal loans that can be used for a wide range of purposes and are accessible for those with fair credit. Funding can be completed as soon as the next business day once approved. The minimum APRs tend to be higher than competitors, but the maximum APR is comparable to other online lenders. A unique feature offered by Avant is their flexible payment due date, which allows a 10-day grace period without incurring a late fee.
Pros
- Loan terms up to 60 months
- Low minimum credit score requirement
- Flexible payment due date
- Next day funding available
Cons
- No physical locations
- Origination fee of up to 4.75%
- Relatively low maximum loan amount ($35,000)
- High minimum APR
- No joint applicant or co-signer
Best for Flexible Repayment Terms: Discover
Discover might be a good fit for borrowers looking for flexible repayment terms; it offers three- to seven-year terms and has a competitive rate range.
Discover Personal Loans
- Loan Amounts$2,500 - $40,000
- Loan Terms36 - 84 months
- APR Range7.99% - 24.99%
- Minimum
Credit Score660 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
Discover offers personal loans up to $40,000 and no origination fees or prepayment penalties.
Overview
Best known for its credit cards, Discover also offers a range of banking and lending products, including personal loans. Its maximum loan amount is just $40,000, which is relatively low compared to certain competitors. A notable perk of Discover personal loans is that borrowers benefit from no origination fees or prepayment penalties, and an APR range that’s comparable to what other lenders offer.
Discover also provides a credit score range of 660 to 850 on its personal loan page, suggesting its willingness to work with prospective borrowers with fair credit. Many lenders require good or excellent credit, so this accessibility sets Discover apart. Just be aware that if your credit isn’t great, your loan’s interest rate will likely be higher.
Pros
- Competitive APRs
- May be available to fair-credit borrowers
- No origination fees
Cons
- Low maximum loan amount
- No co-borrowers permitted
Best for Same-Day Funding Option: LightStream
LightStream is a top choice for those with strong credit scores. Funding is also lightning quick, with loans disbursed as soon as the same day you're approved for qualified borrowers.
LightStream
- Loan Amounts$5,000 – $100,000
- Loan Terms24 – 144 months
- APR Range7.99% – 25.49% (with autopay)
- Minimum
Credit Score660 or aboveA credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.
LightStream is a solid online lender offering no fees, high loan maximums and low-rate personal loans for several purposes.
Overview
LightStream offers personal loans for several purposes, including debt consolidation, medical expenses, home improvement, weddings, car purchases and more, making this worth considering for those seeking flexibility. The lender offers relatively low rates compared to competitors, including autopay discounts. Its personal loans also have no origination fees or late fees, which can help keep borrowing costs low. However, borrowers will likely need to have good-to-excellent credit in order to be approved for a LightStream personal loan. Overall, it’s a good lender to add to your shortlist if you’re looking for flexible funding, no fees and a low APR. Lightstream may also disburse loans as soon as the same day you’re approved, making this lender a worthy choice if you need fast funding.
Pros
- Low minimum APR
- No origination fees, no late fees
- High loan maximum of $100,000
- Autopay discount
- Joint applications allowed
Cons
- Rates and terms vary by loan purpose
- No soft pull prequalification
- Must have good-to-excellent credit
- No physical branches
Pros and Cons of Online Personal Loans
Before you take out an online personal loan, it’s a good idea to weigh the pros against the cons. Here are some typical pros and cons to consider.
Pros
- Fast funding
- Convenient online application
- Fixed monthly payments
- Flexibile loan spending
Cons
- Potentially high-interest rates
- Fees
- No in-person service
- Potential scams
Pros
- Fast funding. Once approved, some lenders can deposit funds into your account as soon as the same business day.
- Convenience. Applicants can apply from anywhere, provided they have an internet connection.
- Fixed monthly payments. Your monthly payment amount remains the same during the life of the loan.
- Flexibility. You can use an online personal loan for a variety of purposes, including medical expenses, home improvements, vacations, moving expenses and debt consolidation.
Cons
- Potentially high-interest rates. If you don't have good credit, you may be stuck with extremely high rates or offered the maximum annual percentage rate.
- Fees. Some online lenders charge origination fees, application fees and late fees that can substantially add to your borrowing costs.
- No in-person service. Most online lenders don’t have physical locations, which can be a major drawback if you prefer speaking to a loan representative face-to-face.
- Potential scams. Some online organizations may pose as legitimate companies when they aren’t. Lenders that don’t require credit checks tend to charge high fees.
How to Choose an Online Personal Loan
While shopping for an online personal loan, here are some factors to keep in mind:
- Annual Percentage Rates (APRs). A loan's APR measures how expensive a loan is; it takes into account the interest rate and any fees a lender charges.
- Fees. Personal loan fees, such as origination, application, and late fees, can make a loan more expensive. To save money, try to choose a lender that offers minimal fees.
- Funding Speed. If you need funds fast, select a lender that advertises quick funding. Some lenders can disburse funds within several days after approval, and some can even do same-day funding.
- Loan Amounts. Personal loan amounts vary by lender, with some lenders capping loans at $35,000 while others have high maximums of $100,000. Select a lender that offers the range or amount you need.
- Repayment Terms. Repayment terms also vary by lender. Choosing the shortest loan term possible can help you save interest. Conversely, selecting the longest loan term can lower your monthly payments, but you'll pay more interest over the life of the loan.
- Co-borrower or Co-signer loans. If you want to apply with another person, choose a lender that allows co-borrowers or co-signers. Applying with someone who has good credit can maximize your chances of approval or get you better borrowing terms.
Alternatives to an Online Personal Loan
If you don’t think a personal loan from an online lender is right, alternative financing options exist. Below are a few to consider.
- 0% Intro APR Credit Card. Several credit card issuers offer credit cards with promotional 0% APR periods to borrowers with good to excellent credit. If you qualify for one of these cards, you can avoid paying interest if you pay off your balance in full before the introductory period ends. However, once the promotional period ends, the card’s high APR kicks in, and you’ll have to pay interest on any outstanding balance.
- Home Equity Loan or Home Equity Line of Credit (HELOC). Homeowners with enough home equity may borrow against it with a home equity loan or HELOC. But a significant downside is that if you default on these loans, a lender can take your home.
- Family or Friend Loan. A family member or friend may agree to offer you a loan with minimal or no interest. If you find someone willing to do this, put the terms of the loan agreement in writing and repay them as promised to avoid harming your relationship.
- Money Loan Apps. For a quick and small loan, some money loan apps such as Cash App Borrow can provide cash to help you until the next payday. The fees vary by the app, and the maximum amount you can borrow is usually quite low.
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Is an Online Personal Loan Right for Me?
The answer: it depends on your unique financial situation. Before doing anything, it's wise to review your budget to see if you can afford to repay the loan. Taking out an online personal loan could be a good move if you can afford it and qualify for a good rate. But if you can't afford to repay a loan, it's likely a better idea to explore alternative financing options first since defaulting on a loan can destroy your credit.
Frequently Asked Questions
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Online lenders generally have less-strict credit requirements than traditional banks. Online lenders may also offer faster funding than banks requiring you to complete the application in person. That said, it's a good idea to compare your personal loan options from banks and online lenders to determine which one might be the best fit for you.
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Many online lenders offer personal loans to borrowers with less-than-perfect credit scores. But if a lender approves you with bad credit, it’ll likely charge you more interest than someone approved with good credit. If you don't need funds immediately, consider taking steps to improve your credit score before applying. Doing so could boost your chances of securing a better rate.
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Some lenders, such as payday lenders, may offer no-credit-check loans. But the downside is that these loans generally come with sky-high interest rates and fees. As a result, it’s a good idea to steer clear of them when possible.
In addition, some online lenders may offer personal loans without requiring a hard credit check. However, these loans also typically come with high-interest rates and fees.
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While online lenders only offer personal loans online, some banks and credit unions also allow borrowers to apply online.
Jerry Brown
Jerry Brown is a personal finance writer and owner of the Peerless Money Mentor blog. He's written for major publications, such as Forbes Advisor, Fox Business, Business Insider, and Rocket Mortgage. Financial products he enjoys covering include credit cards, personal loans, and mortgages.
Awards & Distinctions
Jerry was nominated for the 2020 Plutus Award for Best Social Media for personal finance, where he was also a presenter.
