Best Personal Loans Of 2022

Many personal loans can be used to fund common family expenses like home improvement projects, wedding expenses, vacations and, in some cases, even the purchase of land. Borrowers also turn to personal loans for debt consolidation, because interest rates are often lower for personal loans than for credit cards—especially for applicants with good to excellent credit.

These loans are available from traditional banks, credit unions and online lending platforms that make it easy to apply online—without having to visit a bank branch. What’s more, many personal loans can be funded within a few business days so you don’t have to wait to get the money you need. The best personal loans offer low-interest rates for well-qualified borrowers, flexible loan amounts and repayment terms and limited fees.

Methodology

We reviewed 29 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the 10 best lenders based on the weighting assigned to each category:

  • Loan details: 20%
  • Loan cost: 35%
  • Eligibility and accessibility: 20%
  • Customer experience: 15%
  • Application process: 10%

Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification options and mobile apps.

Where appropriate, we awarded partial points depending on how well a lender met each criterion.


Tips for Comparing Personal Loans

Consider these tips when comparing personal loans:

  • Where possible, prequalify. Many personal loan providers offer prospective borrowers the ability to prequalify for a loan. This means the applicant can submit details about their financing needs, income, housing situation and other relevant information to find out what kind of loan amounts, rates and repayment terms they are likely to qualify for. Even better, this process typically only requires a soft credit inquiry so you can shop around without hurting your credit score.
  • Consider the purpose of your loan. While personal loans can be used for a pretty broad range of purposes, they are limited to things like consumer debt consolidation, home improvements, vacations, weddings, funerals, large purchases and other personal expenses. For that reason, lenders often restrict the use of personal loans for postsecondary education expenses, business purposes and illegal activities, at a minimum. When considering a lender, confirm that your intended use of the loan is permissible under its borrower agreement.

 

  • Keep an eye out for additional fees. Some lenders offer fee-free personal loans that don’t require borrowers to pay origination fees, late payment fees, prepayment penalties or any other common loan costs. However, this is more the exception than the rule, so it’s important to ask about fees when shopping for the best loan terms. And, if a lender charges an origination fee, find out whether it’s built into the APR or taken out of the loan amount prior to funding, as this may impact the loan amount you need to request.

 

  • Evaluate the lender’s customer support options. If you’ve found a lender that’s prepared to offer the money you need at acceptable terms, there’s one more thing to consider before signing the loan agreement. While customer support may not seem like a big deal in the honeymoon phase of your loan, it can make a huge difference if you encounter issues with payments or face financial hardship during your repayment period. Review the lender’s customer service resources and read reviews from past and current borrowers to make sure it’s a good fit.

What Is a Personal Loan?

A personal loan is a type of lump-sum financing borrowers can get from a traditional bank, credit union or online lender, which they can use for a variety of expenses. Common uses include medical bills, auto repairs, home improvement projects and debt consolidation. Personal loans typically have repayment terms between two and seven years and offer interest rates as low as 3% for high-qualified borrowers.

 


How Do Personal Loans Work?

Personal loans are typically available from banks, credit unions and online lenders. Prospective borrowers apply for a loan either online or in-person and then wait for a decision—approval or denial. If approved, borrowers receive their funds as a lump-sum payment into their bank account, and interest starts to accrue in the first month. Personal loans require fixed monthly payments over the entire loan term, typically between one to seven years.

 


Average Personal Loan Interest Rates By Credit Score

Here are the average estimated interest rates for personal loans based on VantageScore risk tiers, according to Experian. Please note that interest rates are determined and set by lenders. The rates provided are estimations.

 

Updated: March 12, 2022 — 2:04 pm