Best Personal Loans of November 2023

The Bottom Line

SoFi offers the best all-around blend of good things to look for in a personal loan, like low rates, quick funding timelines, and high customer satisfaction scores. Navy Federal Credit Union is our go-to recommendation for military members due to its especially customer-friendly policies and outstanding reputation. Discover, PenFed Credit Union, and First Tech Credit Union round out the top options for the lowest-cost loans available today.

Guide to Choosing the Best Personal Loan

What Is a Personal Loan and How Does It Work?

Personal loans are general-purpose installment loans. Unlike auto loans or mortgages, a personal loan can be used for just about anything. A personal loan is paid out in one lump sum after your application is approved, typically via a bank deposit or a check mailed to your address. Once your personal loan funds are disbursed, you’ll make the same fixed monthly payment for the life of the loan, typically a few years in length. 

Most personal loans are unsecured, which means they’re not backed by collateral. If you have assets such as a car or cash savings, some lenders allow you to pledge them toward a secured personal loan in order to get lower rates or a better chance of being approved. If you default, your lender can claim ownership of your collateral to repay your debt. 

Personal loans may be solo, or you can have a co-signer or a co-borrower on your loan. A co-borrower is typically someone such as a spouse or partner who agrees to share responsibility with you for paying off the loan from the start. A co-signer, on the other hand, only agrees to repay the loan if you default, giving the lender more peace of mind—which can sway them into approving your application. 

Personal Loan Rates Over Time

Where to Get a Personal Loan

It’s easy to find personal loans in most places where you already do your banking. Different types of lenders may offer personal loans with contrasting features or benefits, however.

• Banks: Personal loans aren’t the main attraction at most banks, although most do offer them. Banks tend to charge a higher interest rate on a personal loan and usually have stricter credit score requirements. 
• Credit unions: You’ll need to meet membership requirements to join, but once in, credit unions are generally more flexible than banks in offering affordable personal loans to members.
• Online lenders: You can find many more online lenders than local credit unions and banks, expanding your options significantly. Online lenders generally have the easiest-to-meet personal loan requirements of all.

Note that these are only rough guidelines. Some banks offer lower rates than many credit unions, for example, and some online lenders may be pickier about your credit score than other lender types. 

Reasons to Apply For a Personal Loan

One of the reasons why personal loans are so popular is because they can be used for just about anything. People commonly use personal loans to pay for:

• Surprise emergency expenses
• Veterinary or medical bills
• Consolidating higher-interest debt
• Taking a vacation or getting married
• Home improvement projects and repairs

Most lenders don’t allow personal loans to be used for college tuition, business expenses, gambling, house down payments, or illegal activities.  

Even though you can use personal loans for nearly anything, that doesn’t mean they’re always a great idea. You can use a personal loan to pay for a fancy vacation, for example, but most experts would recommend saving up instead of taking on more debt. It’s generally a better idea to use personal loans for things you need so that you don’t overextend yourself.  

Debt Consolidation a Common Reason to Get a Personal Loan

Debt consolidation is the most popular reason for getting a personal loan, according to the 2023 Investopedia personal loan consumer survey. Home improvements and large purchases were the next two most common reasons cited for seeking a loan.

Pros and Cons of Personal Loans

As with any financial tool, it’s important to weigh the benefits against the drawbacks if you’re looking to borrow money. Here are some important points to consider.

Comparing Personal Loans

Although personal loans are versatile, they’re not all created the same. Here are some of the ways they differ among lenders. Keep an eye out as you shop around for any factors that might be especially important for you, such as:

• Interest rates: This is the biggest expense associated with a loan, so it should be at the top of your comparison list. Look for a lender’s annual percentage rate (APR), which includes fees (like origination fees) and interest, so you’re comparing apples to apples.
• Origination fees: Some lenders charge upfront fees to open the loan. Usually, this cost is subtracted from the total amount borrowed, so be sure you account for that in your planning.
• Loan amounts and term lengths: Some lenders may not offer loans in the amounts and repayment times you want or need.
• Prepayment penalties: These are fees the lender charges if you pay off the debt before the end of the term. These are rare with personal loans (none of the 70-plus lenders in our database charge them), but it’s worth looking out for.
• Minimum credit score and income requirements: Not all lenders share their qualification requirements upfront, but many do. If your credit is lower or your income is, you may have a difficult time securing a loan you can afford.
• Option to use a co-signer or co-borrower: Many lenders allow you to apply with a co-signer or co-borrower, which can help you qualify.
• Option to use collateral: Personal loans are generally unsecured, which means they don’t require collateral. Some lenders do offer secured personal loans (with cars, CD or savings accounts, or even your home’s fixtures as collateral). This can make it easier to qualify and often results in lower APRs.
• Direct payment to old creditors: For debt consolidation loans, many lenders will pay your creditors directly. This is convenient for you and offers a bit of risk reduction for the bank.
• Loan use restrictions: Make sure the lender you are interested in borrowing from doesn’t have restrictions against how you intend to use the funds. Nearly all lenders prohibit using personal loans for gambling or investing, school expenses like tuition, or business funding. Some may have tighter restrictions. 
• Customer reviews and ratings: Finally, read a few reviews of potential lenders on financial product and service educational sites, as well as customer experience sites like Trustpilot to get as broad a view as possible.

How to Qualify For and Apply For a Personal Loan

Personal loans are usually easy to qualify for, although some borrowers face difficulties in getting approved. Each lender has specific requirements you’ll need to meet, but in general, your chances of qualifying with any given lender increase if you have good to excellent credit, a consistently high income, and low existing debt payments. It may be easier to qualify for smaller loan amounts with shorter term lengths as well. 

Similarly, each lender has its own procedures for how to apply and receive your loan. Most lenders allow you to apply for a personal loan online, although you may be able to apply in person or over the phone with a banker at some financial institutions. 

1. Get pre-qualified: The personal loan application process usually starts by getting pre-qualified. You’ll provide a few basic details about yourself, such as your name, contact information, income, and Social Security number, to your potential lender.
2. Review options: The lender will do a soft credit check, which won’t affect your credit score. If the lender deems you likely to be approved, they’ll respond with a loan offer outlining your options, interest rates, and loan costs. You can use this to compare your options among lenders.
3. Complete an application: Once you find the best personal loan option, you’ll complete a full loan application with that lender. You’ll typically need to provide copies of documents proving your identity (government-issued identity photo I.D.), income (recent pay stubs, tax returns, or W-2s), and finances (recent bank statements).
4. Receive funds: If you’re approved, your lender will disburse your loan funds to your bank account or by check, depending on its policies. 

Alternatives to Personal Loans

Personal loans are not your only option if you need a flexible way to borrow money. Depending on your circumstances, here are a few other good options to consider:

• 401(k) loan: Not an option to consider lightly, but in some circumstances, taking a loan from your 401(k) retirement account can be a cost-effective way to borrow funds. 
• Crowdfunding: If you need to borrow money for a compelling and share-worthy reason, you may be able to raise the funds on a crowdfunding platform with no debt needed. 
• Grants or charity: Many government and nonprofit programs offer assistance for things you’d use a personal loan for, like catching up on home repairs. If you need help finding options, 211.org offers free personal assistance. 
• 0% APR credit card: If you can qualify for a 0% APR credit card, you may be able to make a big purchase or transfer existing credit card debt with a long runway to pay it off. 
• Personal line of credit: Some banks and credit unions offer personal lines of credit that you can draw against as needed, a particularly good option if you need frequent small loans.
• Loans from family or friends: Ask around your social support network if someone would be willing to lend you money in exchange for writing a promissory note or loan agreement with interest. 
• Home equity loan or HELOCs: Homeowners with at least 20% equity in their home may be able to use a home equity loan or line of credit to borrow money, a particularly good option for home improvements and repairs. 

Methodology

To evaluate and rank personal loan providers we collected hundreds of data points across 70 lenders, including traditional banks, credit unions, fintechs, and special interest finance companies. We researched and evaluated APRS, loan amounts and terms, fees, customer experience, and much more. To rank the lenders in our database and to generate star ratings, we weighted the data we collected, based in part on what consumers told us were the most important features of a personal loan and lender. We grouped those factors into four broad areas:

• Loan costs (advertised APR, fees, and six other factors): 29.25%
• Loan terms (loan amount, repayment term, and three other factors): 22.25%
• Borrowing requirements (credit score, membership requirement, and six other factors): 28.5%
• Additional features (online application, pre-qualification, and eight other factors): 20%

Learn more about how we evaluated personal loans in our complete methodology.