A personal loan can provide a lump sum from under $1,000 to over $100,000, depending on the lender and what you can qualify for. The average annual percentage rate (APR) for a two-year personal loan is 12.49%, according to the Federal Reserve. But APRs range from around 7% to 36%, depending on your credit score and finances.
We break down what a personal loan is as well as the requirements and how to apply.
A personal loan is a type of installment loan. You receive the loan amount upfront and then pay it back in monthly payments over a set period of time, usually between two to seven years.
Good to know
Personal loan rates are expressed as an APR. This accounts for the interest rate and any upfront costs, like origination fees.
Personal loans are offered by traditional banks, credit unions, and online lenders, and are often unsecured loans, meaning they don't require collateral. They generally have the following characteristics:
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| Fixed interest rates between 7% to 36% |
| from 2 to 7 years (up to 12 years or longer for certain loan purposes, like home improvement) |
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| Less than 1% to 12% of the loan amount |
- Interest rate: Personal loans typically have a fixed interest rate, meaning your payment would not change over the course of the loan's term. While personal loan rates vary, they can range anywhere from 7% up to 36%, depending on your credit and the lender.
- Repayment term: Personal loans offer flexible repayment terms, usually ranging from 2 to 7 years. But longer loan terms may be available depending on the lender and the loan's purpose. For instance, some lenders, like LightStream, offer 12-year terms for home improvement loans and boat loans.
- Monthly payment: Personal loans have fixed monthly payments that are based on your loan amount, repayment term, and interest rate.
- Origination fee: Some lenders charge an origination fee, which is deducted from the total loan amount upfront. It may range from less than 1% to 12% of the loan amount, and typically reduces the amount you receive. The lower your credit score, the higher your origination fee is likely to be.
Good to know
The average APR for a credit card was 21.59%, according to the Fed, making personal loans a much more affordable option, especially for large expenses.
Unlike other types of loans, such as student loans and auto loans, personal loans aren't designed for a specific purpose. Instead, they can be used for nearly any legal reason, though permissible purposes vary by lender. Common uses for personal loans include:
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| To reduce monthly payments and get a lower interest rate on existing debt, such as credit card debt |
Home improvement and repairs | To finance repairs and improvements to your home — some lenders offer home improvement loans up to $100,000 or more with extended repayment terms |
| From appliances to vacations, personal loans can be used for a number of large expenses |
| Weddings, adoption fees, or funerals are some of the life events that a personal loan can fund |
| Same-day and next-day loans can be used to fund an emergency vet visit or car repair, plus a myriad of other emergencies |
Tip
Some lenders, like BHG Financial, offer large loan amounts (up to $200,000) with terms as long as 10 years.
Many lenders prohibit you from using a personal loan for things like gambling, business expenses, higher education, and all illegal activities.
To qualify for a personal loan, you'll need to meet lender requirements regarding your credit score, income, and debt. Plus, you may need proof of address, a Social Security number or Taxpayer Identification Number (TIN), and to be a U.S. citizen (though not always).
Exact requirements may vary between lenders, but each will consider the following to determine whether to approve your loan and at what rate:
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| Lenders often use FICO credit scores when approving applications for personal loans. Requirements vary based on lenders, but you’re most likely to get the best rates if you have a score in the good to excellent range (670 or higher). |
| If you have any missed payments or delinquencies you may be less likely to get approved. |
| Most lenders require proof of income in the form of pay stubs, W-2s, or bank statements. You may also be required to earn a certain amount per year depending on the lender. |
Debt-to-income ratio (DTI) | Many lenders prefer you to have a lower DTI around 36%. |
| You may be required to state your reason for wanting a personal loan. Not all lenders approve every use for a loan. |
Your credit score is one of the most important things lenders look at when approving your application for a personal loan. There's no set credit score that you need to get a loan, but you have the best chance with a good or excellent score (a FICO score above 670). However, some lenders offer loans to borrowers with fair credit (between 580 and 669) or poor credit (below 580).
In addition to your credit score, lenders will consider your credit history. If you have missed payments or delinquent debts on your credit report, you may be less likely to qualify for a loan.
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Check your credit reports with AnnualCreditReport.com to make sure they’re error-free. Dispute any errors or inaccuracies with the appropriate bureau immediately.
Most personal loan lenders require that you have a verifiable source of income to get a personal loan. This could be income from a job or from other sources like alimony, Social Security benefits, disability benefits, and more.
Some lenders also have a minimum dollar amount you must earn per year to qualify. For example, Upstart requires you to have a verifiable regular source of income of $12,000 or more annually.
Lenders are less inclined to give you a loan if you already have a lot of debt relative to your income. Your DTI is the percentage of your gross monthly income that goes toward debt. Personal loan lenders prefer a DTI below 36%.
Tip
Calculate your DTI by dividing your minimum monthly debt payments (including rent or mortgage) by your gross monthly income. Personal loan lenders generally prefer a DTI less than 36%.
Though personal loans can be used for a wide range of purposes, not all lenders approve all loan purposes.
Personal loan pros and cons
Pros
- Can be used for almost anything
- High loan amounts
- Long repayment terms
- Fixed interest rates
- No collateral required
- Competitive interest rates
- Fast funding times
- Discounts available
Cons
- Potential for high interest rates
- May require fees
- Will increase your DTI
- Potential credit impact
- Can be used for almost anything: Personal loans offer flexibility in terms of their use. You can use the funds for various purposes like debt consolidation, medical expenses, or emergencies.
- High loan amounts: Personal loans offer the opportunity to borrow a large sum of money - some lenders lend up to $100,000 or more.
- Long repayment terms: While repayment terms vary by lender, personal loan terms can be as long as 7 to 12 years, depending on the lender and the loan's purpose..
- Fixed interest rates: Personal loans generally have fixed interest rates, meaning your payments won't change month-to-month, and you won't be vulnerable to interest rate changes.
- No collateral required: Many personal loans are unsecured, which means they don't require collateral, like your car or home.
- Competitive interest rates: Personal loans can have low interest rates, especially when compared to high-interest debt like credit cards.
- Fast funding times: Personal loans, especially those from online lenders, can be funded within days of approval - some lenders even offer funding the same day you apply.
- Discounts available: Many lenders offer rate discounts for specific purposes, such as if the lender sends the loan funds directly to your creditors in the case of debt consolidation.
- Potential for high interest rates: While many personal loans have competitive interest rates, borrowers with poor credit may be stuck with high rates.
- May require fees: Personal loans often come with fees, including origination fees as high as 12% of the loan amount. Some lenders also charge late fees and insufficient funds fees.
- Will increase your DTI: Taking out a personal loan results in increased debt, which may not be advisable if you expect to apply for another loan, such as a mortgage, before you pay off the personal loan.
- Potential credit impact: Taking out an additional loan can negatively impact your credit score since a hard credit check will be pulled for your application. However, making on-time payments and adding to your credit mix can improve it, though.
- Check your credit: Knowing your credit score and what's on your credit report will tell you if you need to make any improvements before applying for a loan and what lenders you might be eligible for loans from. You can receive free credit reports weekly from AnnualCreditReport.com.
- Decide how much you need: Whether you're consolidating debt or making a large purchase, decide ahead of time how much you need to borrow. This will be key for completing your loan application and determining what your monthly payments will be. It's best practice to only borrow what you need to help maintain your budget.
- Prequalify with multiple lenders: Most personal loan lenders offer prequalification, meaning you can get a sense of personal loan rates you may be approved for, along with how much you'll be approved for, without any impact to your credit score. While prequalification is not an offer of credit, it can be a great way to compare lenders.
- Apply for your loan: Once you've prequalified for several loans, you can choose the one with the best rate and terms and complete the official application. At this point the lender will conduct a hard credit pull that could ding your score temporarily by a few points.
- Receive your loan funds: If your loan is approved, the lender will disburse the funds. A few lenders offer loan funding as soon as the same business day, while many others offer funding up to five business days of approval.
Personal loan interest rates have been on an upward trajectory for the past few years - the average APR for a two-year loan went from 9.38% in 2021 to 12.49% in 2024, according to the Fed. And there's apparently no end in sight, at least not soon.
The three rate cuts on the table at the beginning of the year are much less likely in the face of persistent inflation and a strong labor market. Plus, loans are getting harder to qualify for with lenders tightening standards across all loan types, including personal loans.
If you need a personal loan, you may be better off improving your credit, reducing your DTI, or increasing your income to get the lowest possible rate, as opposed to waiting for rates to drop.
Advertiser DisclosureOverview
Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low — Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Unlike most lenders, Lightstream does not let you prequalify on its site. Nor does it provide a contact phone number next to its customer service hours on its website.
Repayment terms
2 - 12 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the next business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Overview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Eligibility
Available in all 50 states
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Overview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 8%.
Eligibility
Available in all 50 states
Loan uses
Debt consolidation, paying off credit cards
Overview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Fees
Option to pay an origination fee (up to 6%) in exchange for a lower rate
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Overview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 9.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Overview
Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 9.99%, and its top-range interest rates are among the highest of the lenders we reviewed.
Fees
Origination fee, late fee, dishonored payment fee
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, and WV
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
Overview
It’s worth considering a personal loan through Splash if you have good credit (ideally, a FICO score above 700). The platform offers loans from a wide range of lenders, and next-day funding is available. Plus, Splash has a live chat feature so you can get real-time answers without having to wait on hold or for an email. Loans are available up to $100,000 if you apply via Splash’s website.
Rates are competitive, but borrowers with excellent credit may find lower APRs elsewhere. If you need a repayment term longer than five years, you’ll need to look elsewhere as well.
Loan amount
$5,000 - $100,000 (up to $35,000 on Credible)
Eligibility
Available in all states except VT. OH and NM net disbursed amount must be greater than $5,000. MA must be greater than $6,000
Time to get funds
Same day available, typically 1-3 days
Loan uses
Debt consolidation, home improvement, medical expenses, major purchases
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Overview
Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
Eligibility
Available in all states except MA, MS, NV, and OH
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
Overview
BHG Financial stands out for offering the largest loan amounts — up to $200,000 — of any Credible partner lenders. Simply put, if you need an unsecured personal loan over $100,000, there are very few places to look, but BHG is one. You'll have up to 10 years to repay the loan, but you'll need an annual income of at least $100,000 to qualify and a FICO score that's 660 or higher. However, if you have a cosigner that meets these requirements, BHG will consider your application.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 2% and 4%, depending on your financial profile. Loan funds are available within three to 14 days of loan approval. Note that you can't prequalify with BHG.
Fees
Origination fees, late fees
Eligibility
Available in all states except Maryland and Illinois
Loan uses
Debt consolidation, baby (adoption), engagement ring financing, moving (relocation), business, home improvement, special occasion, cosmetic procedures, major purchase, taxes, credit card refinancing, medical expenses, vacation, wedding, other
Overview
Reach is an option if you have fair credit, especially if you need money fast. According to the company, 90% of Reach personal loans are funded within one day of approval.
It's a good choice for debt consolidation and credit card refinancing, but borrowers with excellent credit may not find the lowest rates with Reach. The company also charges more fees than some of its competitors and doesn't offer direct pay or autopay discounts. If you need a 7-year term loan, you'll need to look elsewhere. Reach personal loans are not available in all states.
Fees
Origination Fee, $15 Late Fee, $25 NSF Fee
Eligibility
Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories
Time to get funds
Funds typically deposited into your account in 1 business day13
Loan uses
Debt consolidation, credit card refinancing
Overview
OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Fees
Origination fee, unsuccessful payment fee, late fee
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Fox Business does not make or arrange loans.
You have the best chances of approval if you have good or excellent credit, but that doesn't necessarily mean you can't get a personal loan with bad credit. There are several lenders that consider borrowers with fair or poor credit. These lenders may look at other factors to determine your ability to repay the loan, including your income and debt-to-income ratio.
Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Overview
Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 9.99%, and its top-range interest rates are among the highest of the lenders we reviewed.
Fees
Origination fee, late fee, dishonored payment fee
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, and WV
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Overview
OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Fees
Origination fee, unsuccessful payment fee, late fee
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Fox Business does not make or arrange loans.
Personal loan rates are determined by a few key factors. While your credit score is among the most important factors, your current debt, income, loan amount, and repayment term also play a role. The demand for personal loans can also impact rates, as does the larger interest rate environment.
Common mistakes people make with personal loans are not shopping around for the best rate, failing to plan for loan fees, and borrowing more money than needed. Comparing lenders before getting a loan, knowing exactly what you'll be charged and when, and only borrowing what you need can save you hundreds or even thousands of dollars over the term of the loan.
The best interest rates on personal loans fluctuate based on market changes. As of May 2024, rates can start as low as 7%, but only borrowers with the best credit (a FICO score of 800 or above) and finances will be eligible for that rate.
Meet the contributor:
Erin Gobler
Erin Gobler is a freelance personal finance writer with more than eight years of experience writing online. She’s passionate about making the financial services industry more accessible by breaking down complicated financial topics in simple terms.
