November 30, 2022

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Best Personal Loans for August 2022

Whether you want to consolidate debt, finance a home improvement project or need access to a large stream of money, a personal loan can be a helpful tool. With lower interest rates and more flexible repayment terms than credit cards, personal loans offer financing for a variety of uses.

We’ve evaluated the major national personal loan providers and highlighted the best personal loan options below. As interest rates continue to rise, you can expect personal loan rates to also climb throughout the year. We’ll update this list regularly as interest rates change and new loan products are released.

LightStream

  • APR: 3.99% to 20.49%
  • Repayment terms: 2 to 12 years*, depending on loan purpose
  • Funding amounts: $5,000 to $100,000
  • Funding timeline: As soon as same business day (conditions apply)
  • Origination fee: None
  • Other fees: None
  • Minimum credit score required: Good credit

LightStream delivers just about everything you want in a personal loan: flexible repayment terms, a $100,000 maximum, no fees and same-day funding (note, it’s possible, but not guaranteed). There’s also a low APR range — though, of course, your interest rate will reflect your specific credit profile. As such, we think it’s a great place to start your search for a personal loan. (Note that LightStream is a division of SunTrust Bank, which recently merged with BB&T to become Truist.)

Personal loans through LightStream also come with longer repayment terms. If you’re borrowing for home improvement purposes, you could receive repayment terms up to 12 years. All other personal loan repayment terms extend only up to seven years. 

If you have a checkered credit history or blemished financial profile, keep in mind that LightStream’s credit requirements are stringent. When asked about its criteria for good credit, the company said that there’s “no single definition,” but that people who qualify for loans usually have several years of credit history with few delinquencies, a “manageable” amount of revolving credit card debt, some liquid savings and a stable and sufficient income.

SoFi

  • APR: 6.99% to 22.73% (with AutoPay)
  • Repayment terms: 2 to 7 years
  • Funding amounts: $5,000 to $100,000
  • Funding timeline: Up to 7 days
  • Origination fee: None
  • Other fees: None
  • Minimum credit score required: 680

SoFi’s personal loans have low rates, a $100,000 maximum loan amount and no origination, administrative or late fees. It’s also one of the few lenders that’s transparent about its credit score requirements — though all loan providers take into account factors such as credit history and debt-to-income ratio when determining eligibility. It’s worth noting that SoFi routinely runs promotions on its site. At the moment, the company is offering a bonus of up to $310 on some loans.

Sarah Tew/CNET

  • APR: 5.74% to 20.99%
  • Repayment terms: 1 to 7 years
  • Funding amounts: $3,000 to $100,000
  • Funding timeline: Next business day
  • Origination fee: None
  • Other fees: Rejected payment: $39; late payment: $39
  • Minimum credit score required: None

The personal loan market has come to be dominated by a fleet of online banks that, in most cases, don’t have physical branches. (With no branches to maintain, they can often offer better online personal loan terms.) But some people may feel more confident borrowing money after an in-person conversation with an employee from a bank located in their neighborhood. Among the big national lenders, Wells Fargo offers a reasonable range of APRs, no fees, flexible repayment terms and a wide array of funding amounts. One caveat: Wells Fargo may change fees for rejected payments (also called NSF or nonsufficient-funds payments) and late payments. And those can add up.

Avant

  • APR: 9.95% to 35.99%
  • Repayment terms: 2 to 5 years
  • Funding amounts: $2,000 to $35,000
  • Funding timeline: Next business day
  • Origination fee: Up to 4%
  • Other fees: Rejected payment: $15; late payment: $25
  • Minimum credit score required: 600

For those with less than excellent credit — referred to as fair credit by lenders — Avant could be a good loan option. Though the company will accept a loan application from anyone, applicants with a score of 600 or higher “have the best chance of being accepted,” according to a company representative. 

As with most financial products, if you have a less stable financial standing or consistent credit card debt, you should expect to pay higher fees and more interest for a personal loan. Avant charges up to 4.75% in administrative fees, depending on factors including your credit history and where you live. And if your credit score is 600 or lower, you will likely end up with a higher APR. Avant’s top rate annual percentage rate is a whopping 35.99%, which could end up costing you thousands of dollars in interest over the course of a loan. Proceed with caution.

Happy Money

  • APR: 5.99% to 24.99%
  • Repayment terms: 2 to 5 years
  • Funding amounts: $5,000 to $40,000
  • Funding timeline: 2 to 5 business days
  • Origination fee: Between 0% and 5%
  • Other fees: None
  • Minimum credit score required: 640

With a low credit score requirement, lower-than-average APR and fairly flexible repayment terms, Happy Money is a personal loan worth considering if you have credit card debt. We like that Happy Money, formerly known as Payoff, allows you to check your rate and determine different repayment options before it runs a hard pull on your credit. That means if you want to compare personal loan offers — and you should — no harm will be done to your credit score until you officially apply.

Its loan funding amount is lower than many competitors, but with average credit card balances for Americans sitting at $5,525 as of the beginning of 2022, this shouldn’t be an obstacle for average borrowers. Happy Money also notes that on average, borrowers who paid off at least $5,000 in credit card debt saw an average FICO credit score increase of 40 points after their first few payments, according to a 2021 Happy Money survey.

Best personal loans, compared

Best for Overall No fees Flexible terms Low credit Credit card debt
Lender LightStream SoFi Wells Fargo Avant Happy Money
APR 3.99% – 20.49% 6.99% – 22.73% (with autopay) 5.74% – 24.49% 9.95% – 35.99% 5.99% – 24.99%
Repayment terms 2 – 7 years; up to 12 years for home improvement loans 2 – 7 years 1 – 7 years 2 – 5 years 2 – 5 years
Funding amounts $5,000 – $100,000 $5,000 – $100,000 $3,000 – $100,000 $2,000 – $35,000 $5,000 – $40,000
Funding timeline As soon as same day (conditions apply) 7 days Next business day Next business day 2 – 5 business days
Origination fee None None None Up to 4% 0% – 5%
Other fees None None Rejected payment: $39; late payment: $39 Rejected payment: $15; late payment: $25 None
Credit requirement (estimated) 700 – 800 680 and up N/A 600 and up 640

FAQs

Most people take out a personal loan to consolidate debt, finance home improvements, or pay for a wedding, a family-related expense or a medical emergency. You can generally use personal loan funds for any purpose, other than paying for school and educational costs or investing.

A personal loan is a type of installment loan, meaning you repay the balance in fixed installments over the lifetime of the loan. Though lenders may advertise different types of personal loan options for specific purposes, there are only two major types of personal loans — secured and unsecured loans. A secured personal loan requires you to put up an asset as collateral before you can secure loan funding, like with a car loan or home loan. With an unsecured personal loan, collateral is not needed.

Personal loan amounts generally fall between $5,000 and $50,000, though some lenders will lend you as little as $1,000 or as much as $100,000. The average repayment period (or term) is between three and five years. Most institutions charge an interest rate between 10% and 15%, though they can go as low as 3.99% and as high as 36%. Borrowers may tailor a loan to their specific circumstances, though lenders may be less flexible if your credit history has blemishes.

How do I choose a personal loan?

With interest rates rising, we recommend shopping around for the least expensive personal loan. Your credit score is the main criteria lenders will use to determine your loan APR, or annual percentage rate, which is the amount of interest and fees you’ll pay a lender, over the duration of your loan. We recommend comparing APRs and loan terms to find the best option for your budget.

For example, borrowing $10,000 at a 9.99% APR paid back over five years would require 60 monthly payments of $212.42 — and would cost you $2,745.27 in total interest. However a $10,000 loan at a lower rate of 8.99% APR, repaid over seven years would require 84 payments of $160.84 — and would cost you $3,510.56 in interest overall. So, even though the APR on the first loan is higher, because the loan terms are shorter, you save on interest. You can use a loan calculator like Bankrate’s to help you compare personal loan offers.

Some loans may offer perks, such as autopay discounts. On the flip side, pay special attention to any origination fee, loan application fee, prepayment penalties or rejected payment fee. And be aware that submitting a loan application will trigger what’s called a hard pull, which may temporarily impact your credit score, even if you aren’t approved or decide not to take out the loan. 

What credit score do I need for a personal loan?

Most lenders look at an array of factors to determine eligibility for a personal loan. Yes, your credit score is important — but so is your credit history, current financial situation (including employment status and annual income), debt-to-income ratio and any other debts and obligations. Lenders want to understand how likely you are to pay off the loan on time.

Having a credit score of 700 and up increases your chances of being approved and receiving a lower APR. A credit score under 600 may make it more challenging, though not impossible. Happy Money, for instance, recommends having a minimum credit score of 600 to apply — but that doesn’t mean you’ll be disqualified with a lower score. Some lenders, like Upgrade, also use alternative credit history, such as rent and utility payments and a steady job history, to help determine your eligibility. 

If you have low credit — say a FICO credit score under 600 — check out our best loans for bad credit recommendations.

What are the alternatives to a personal loan?

Generally a personal loan will offer lower interest rates than alternatives. But, if you’re not able to get approved for a personal loan or want to consider a different option, you could apply for a balance transfer credit card or other card that offers an introductory 0% APR period. With both options, you should make sure you can repay the total balance before the balance transfer or 0% introductory APR period ends — otherwise interest will start accruing. And credit card APR is typically much higher than personal loan APR. So, if you can’t confidently repay the balance before your intro period ends, a personal loan is a safer, less expensive option.

What happens if I miss a payment or default on a loan?

Even if a lender doesn’t immediately charge you a fee if you miss a payment, you’re still responsible for paying off the loan. If your payment is more than 30 days late, your loan could be considered in default. Defaulting on a loan can carry severe consequences; your credit history will suffer, your credit score will plunge — as much as 100 points per late payment — and you’ll be far less likely to get another loan in the future.

If you continually miss payments, a lender can sell your debt to a collection agency that may charge its own fees and aggressively pursue you through emails and phone calls. Ultimately, a lender can take you to court to seek reparations if you don’t remedy the situation. Be careful, make your payments promptly and don’t borrow money that you can’t pay back.

More loan advice

*Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.

Payment example: Monthly payments for a $10,000 loan at 5.93% APR with a term of 3 years would result in 36 monthly payments of $303.90. 

Truist Bank is an Equal Housing Lender. SunTrust, Truist, LightStream, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.