5 Best Personal Loans of July 2022

Whether you’re looking to consolidate debt, finance a big purchase or make home renovations, a personal loan could be the right tool to help you get there.

Get started with our list of the best personal loans of 2022. Reviews include credit score requirements, available loan terms, loan amounts and annual percentage rates.

Our Top Picks for the Best Personal Loans

• LightStream – Best Variety of Loan Options
• Credible – Best Marketplace
• SoFi – Best Online Lender
• Upstart – Best Peer-to-Peer Lender
• PenFed – Best Credit Union
• U.S. Bank – Best Bank

Why we chose it: LightStream offers a wide variety of loan options and terms ranging from two to eight years, which is longer than most competitors. Additionally, LightStream offers a low starting APR (3.99%), with a discount option for AutoPay.

LightStream, a division of Truist Financial Corporation, has a wide range of loan options, a low minimum APR and loan terms that can range from two to eight years, some of the longest repayment terms available in the market. You can take out a personal loan for any service, product or purchase such as home improvement projects, medical bills, vacations, big purchases, K-12 education, recreational vehicles or family planning.

LightStream offers some of the lowest rates in the industry with a starting APR rate of 3.99%. Borrowers benefit from an additional 0.50% discount to their APR if they sign up for AutoPay. Additionally, Lightstream’s Rate Beat program offers a 0.10% discount if a borrower is offered a lower APR offer by a competing lender (if approved for the same loan options offered by LightStream).

As part of their customer satisfaction guarantee, LightStream will pay you $100 if you’re not satisfied with your experience after closing the loan.

We also like LightStream’s sustainability measures — not only is their online loan process largely paperless, they’ve also partnered with American Forests to plant a tree for every loan closed.

Why we chose it: Credible lets borrowers compare multiple quotes from some of the top-rated personal loan lenders in the market.

Credible’s lending platform lets you compare quotes from multiple lenders in as little as two minutes — without making a dent on your credit score. They feature an excellent network of reputable lenders, which include SoFi, Lightstream, PenFed and others.

This can save you time and money by narrowing your choices by location, loan amount, desired APR and loan purpose.

Additionally, Credible offers a $200 Best Rate Guarantee incentive. If you find a personal loan with a lower rate on a competing website and submit it to them within 10 days of receiving Credible’s personal loan rates, the company will give you $200.

The company welcomes applicants with a variety of credit histories, but applicants with excellent credit histories tend to see more loan offers, more flexible repayment terms and lower interest rates. Credible offers tools to check how prequalifying rates are affected by adding different co-signers.

Why we chose it: We chose LendingTree as a runner-up for our best loan marketplace because it partners with some of the top lenders in the industry. However, compared to competing marketplace Credible, it had a higher number of CFPB complaints.

Like Credible, Lending Tree is a marketplace where you can shop for competitive rates for personal loans from reputable lenders. You can receive quotes within minutes.

LendingTree’s website is easy to use and clearly lists their lenders’ current APR rates as well as minimum credit score needed to apply — for example, as of June 2022, the minimum it lists is 585. Additionally, they offer individual lender descriptions and a personal loan payment calculator to help you make your best choice.

Why we chose it: Online lender SoFi stands out for its ease of use and fast application process.

Initially a student loan lender, SoFi now offers personal loans up to $100,000, one of the highest loan amounts on this list.

You need a good credit score with a minimum of 680 to apply, but there’s a lot to like about SoFi personal loans.

Unlike many other lenders, SoFi considers alternative credit data — like free cash flow, professional history and history of financial responsibility — while still offering competitive interest rates. They also offer an online community and other learning resources. Additionally, they offer the option of pausing loan payments for a certain period of time during important life changes such as graduation or starting a new job.

SoFi also offers unemployment protection. If you lose your job, you can request they modify your monthly payments. In addition, they’ll provide you with free tools, like career coaching and financial advice.

The application process is entirely online and can be completed in a matter of minutes.

Bear in mind, however, that if you’re looking for a small loan, SoFi might not be the best option for you — their minimum loan amount is $5,000.

Why we chose it: Upstart is the only peer-to-peer lender that accepts applicants with lower FICO scores and short credit histories.

Upstart’s peer-to-peer model is simple: instead of getting the money from a traditional financial institution, you get it from investors. Upstart’s AI-powered loan application model takes into account job history, highest level of education you've achieved and area of study to determine eligibility.

Upstart is the only peer-to-peer lender that accepts applicants with a fair credit score (580-669) and short credit histories. Even unemployed individuals may apply as long as they have an employment offer with a starting date that isn’t more than six months from the date of application.

You can check your rate before applying, and loan funds can be disbursed as early as the next business day after you close on the loan.

Why we chose it: PenFed offers both the nationwide presence of a traditional brick-and-mortar lender and credit union perks, like flexible loan terms and low fees.

PenFed is our top credit union for personal loans because of its flexible repayment terms, low loan amounts and lack of loan origination fees or prepayment penalties.

They offer a lower APR range than other credit unions, and candidates can apply individually or with a co-borrower. Non-members can apply for a personal loan and only need to join if they choose to accept the loan offer.

Membership was previously limited to the military, certain government agencies, and residents of eligible locations, but as of 2019, PenFed makes it easy for others to join. All you have to do is select “None of the above” in the membership application’s eligibility section and open a savings account that has at least $5 for the membership fee.

Why we chose it: U.S. Bank offers quick funding and lower APRs than most traditional banks.

U.S. Bank has a starting APR that competes with the best personal loan rates in the industry. Its maximum personal loan APR caps out at 18.49%, much lower than those of other big banks like Citi and Wells Fargo, which cap their APRs at around 24%.

U.S. Bank also has an emergency Simple Loan available for minor, short-term expenses with a minimum loan amount that starts at $100 and goes up to $1,000. While the Simple Loan has a $6 monthly fee for every $100 you borrow, it could be a good alternative if you need a smaller amount quickly.

Do note, however, that, if you do not have a bank account at U.S. Bank, you will be subject to stricter credit score requirements and may only borrow up to $25,000.

Other personal loans we considered

Marcus by Goldman Sachs Personal Loans

Marcus by Goldman Sachs specializes in debt consolidation loans and has many worthy features including no service fees and customizable due dates. However, they don’t allow co-signers or co-borrowers, which can be a deal-breaker for borrowers with lower credit scores.

Best Egg Personal Loans

Best Egg specializes in debt consolidation loans and features quick one-day funding and online approval. However, customers may only have a maximum balance of $50,000 across multiple loans and origination fees are fairly high compared to competitors.

Prosper Personal Loans

Prosper is a peer-to-peer lending marketplace offering loans funded by investors. The high number of complaints lodged against the company with the Consumer Financial Protection Bureau (CFPB) knocked it off our main list.

LendingClub Personal Loans

LendingClub is yet another peer-to-peer lending marketplace. We didn’t include it on our list because of its high origination fees and comparatively low maximum loan amount ($40,000).

USAA Personal Loans

USAA features a variety of loan options ranging from $2,500 to $100,000, with repayment terms ranging from 12 to 84 months. However, their credit requirements vary widely depending on the terms of the loans, their maximum APR is higher than many competitors (18.5%) and their services are only available for military members and their families.

Wells Fargo Personal Loans

Wells Fargo is one of the largest and oldest banks in America. The high number of complaints registered against it with the CFPB disqualified it from our list.

Avant Personal Loans

Avant uses a proprietary algorithm to determine borrowers’ creditworthiness, making its underwriting more lenient. However, it charges high origination and administrative fees and has less competitive rates. Moreover, in January 2022, the Federal Trade Commission returned $3.7 million to Avant customers after alleging the company had engaged in deceptive loan practices.

Discover Personal Loans

Credit card issuer Discover also originates loans, but its minimum income requirement and the fact that it doesn’t allow co-signers on loans disqualified it from our main list.

Personal Loans Guide

The following guide outlines everything you need to know about personal loans, including how they work and what you need to qualify for one.

Table of contents

• What is a personal loan
• How do personal loans work
• How to choose a lender
• How to apply for a personal loan
• Banks vs. credit unions vs. online lenders vs. peer-to-peer
• Alternatives to personal loans

What is a personal loan

Personal loans are a type of installment loan.

Unlike other types of loans, personal loans may feature shorter repayment terms and fixed rates and can be used for any purpose. Common uses are debt consolidation, home improvement projects, medical expenses and financing big purchases, events or vacations.

How do personal loans work

Personal loans can be convenient alternatives for a variety of situations — whether you need to consolidate high-interest debt or you need cash for an emergency, unexpected medical bills, a big vacation or a wedding. Some lenders allow you to use a personal loan as a small business loan; however, note that they cannot be used for educational purposes.

You can request personal loans from banks, credit unions or other financial institutions. Just like with most other types of loans, lenders will take into account your credit profile including credit score, income, existing debt and other factors.

However, unlike other types of loans, the personal loan process tends to be quick. In fact, you could have money deposited into your bank account within 24 to 48 hours from the time you're approved in many cases.

Most personal loans have fixed interest rates, although some could have a variable rate. They’re paid in monthly installments, which can typically range anywhere between 12 to 72 months or more.

How lenders make a decision

Before you set out to find the right loan for you, it’s important to understand the factors that affect the approval of your loan application.

Debt-to-Income Ratio (DTI) – This ratio is your monthly debt divided by your monthly income. It lets lenders know how much of what you earn goes toward paying other debt. The lower your DTI, the likelier you are to get an approval.

Keep in mind that your DTI will only take into account traditional credit obligations, such as credit card debt, student or car loans. It won’t factor in non-traditional credit obligations, for instance rent and utilities, childcare and child support payments, medical bills and life insurance.

Credit History – Lenders will run a credit check to find out how to check your credit score and get a picture of your current debt. Your credit score is impacted by a number of factors including your total debt, the length of your credit history, and, of course, any late payments you might have on record. Most providers will prefer a FICO credit score of 660 and more; however, there are financial institutions that cater to borrowers with lower credit scores.

Credit utilization ratio — This ratio takes into account any revolving debt you have — that is, the amount you owe on credit cards or lines of credit — to calculate how much of your available credit you’re using. Most lenders will favor borrowers with a credit utilization ratio below 30%.

This means that, even if you pay all your bills on time, maxed out credit cards or credit lines can hurt your chances of getting approved for a loan.

Spending habits – Banks will be looking at your bank statements to get an overview of your day-to-day spending. Note that a pattern of overdrawing your account could be a red flag for lenders.

Collateral – Collateral refers to any assets you own, such as your car, home or a savings account. Some banks are even accepting cryptocurrency and non-fungible tokens (NFTs) as collateral. While most personal loans are unsecured — which means they don’t require collateral as a condition for the loan — some personal loan lenders do offer secured personal loans. These secured loans are often the best way for borrowers with poor credit to get approved for a loan with a manageable APR.

Bear in mind, however, that if you were to default on a secured loan, the bank could take possession of the collateral you offered and sell it to pay off your debt.

How to choose a lender

Before you take out a loan, it’s important to understand the terms and the true costs of the loan. The law requires that all lenders and creditors operate transparently under the Truth in Lending Act, but you must always be sure to read the fine print. Here are some tips to help you make the right choice.

Interest rate vs. annual percentage rate (APR)

It’s important to know the difference between interest rates and APR when comparing loan options.

The amount you agree to borrow from a lender is called the principal and the interest rate refers to an additional percentage the lender will charge you to borrow the principal. This rate can be fixed, or it can be variable and change over time.

APR refers to the total annual cost you will pay for a loan. This number takes into account the loan terms and includes the loan principal, the interest rate, plus all additional fees, such as origination fees, administrative fees, and/or discounts you will receive.

Prequalification vs. preapproval

When you’re getting ready to apply for a personal loan, you will often hear the terms prequalification and preapproval. Both these terms involve an assessment of your current financial situation. Sometimes these terms are used interchangeably; however, often there are important differences to be aware of.

To prequalify for a loan, you will turn in your financials for a lender to review, analyze and evaluate. Prequalification can take place online or in person with a lender. In most cases, the process includes a “soft inquiry” of your credit history, meaning that it won’t leave a mark on your report (hard inquiries, on the other hand, can impact your score). You won’t have to provide documentation of income for prequalification; however, in most cases, it won’t lead to a binding offer.

Preapproval, on the other hand, is a much more rigorous process. It typically involves a hard credit inquiry, which can impact your score (albeit slightly). Unlike prequalification, however, the preapproval process generally gives you a better idea of the final amount and APR you can qualify for.

Remember, that prequalification and preapproval requirements can vary from lender to lender. Be sure to check the terminology with your lender and also ask whether your credit score will be affected so as to make the best decision possible.

Consider the purpose of the loan

There are many reasons for getting a personal loan. Most people consider a personal loan when they need access to funds quickly to cover various circumstances and life events such as:

• Debt consolidation
• Emergencies
• Home improvement
• Weddings and funerals
• Travel expenses
• Medical expenses
• Large purchases such as appliances

Though some lenders might not place conditions on how you use a personal loan, many do not give personal loans to cover education or business expenses.

There are also other options depending on the purpose of your loan. An auto loan is still the best choice if you need to buy a car. These generally feature lower interest rates and are sometimes easier to qualify for than personal loans.

Or, if you need money to make urgent repairs to your home, you might consider a home improvement loan. These loans, which are secured by your home (meaning your home is offered as collateral) tend to feature lower interest rates than personal loans. Do keep in mind, however, that this puts your home at risk if you were to fail to pay back the loan.

Additional fees

• Origination fees are also known as administrative or underwriting fees. These are the fees a lender charges for administrative processes and costs involved in your loan. These fees differ from lender to lender and usually range from 1 to 8% of your loan total. They are included in your APR rate. What you are charged can depend on your loan terms and amount, but may also be influenced by your credit score. In addition to origination fees, you might sometimes be charged application, administrative or processing fees as well. Having said that, many banks — including some in our list — have done away with these extra charges.

• Prepayment fees are fees some lenders charge if you pay your loan off early. This time frame will be determined by your loan agreement. Most of these fees are presented as a percentage of the total loan amount, however, some lenders may charge a fixed fee.

• Late payment fees — Lenders might charge a fee if you’re late with your payment. Most lenders charge up to $50 if you don’t pay by the due date, but some lenders might offer a grace period. Fees are either a fixed amount or a percentage of the payment due. Note that if you’re more than 30 days late in your payment, the lender could report it to the credit bureaus, which could have a serious impact on your credit score.

Consider the terms of the loan

Personal loan terms can range anywhere from a few months to eight years. Some lenders offer more flexible repayment schedules than others and allow you to choose a payment date.

Be sure to keep in mind interest rates and upfront fees as you choose a term length. While you might prefer lower monthly payments, this also means you’ll be paying the loan for a longer time and paying more in interest.

Consider customer support options

Customer support is an important part of entering an agreement with a lender. Consider the type of support you prefer and be sure to check whether the lender offers your preferred mode of communication.

Not all financial institutions offer the following.

• Email
• Chat
• Phone
• Physical location
• Mobile app

How to apply for a personal loan

• Get all your financial documents in order: In most cases, you’ll need proof of income, bank statements, along with proof of identity and citizenship to apply.

• Review your credit report: Higher credit scores get the lowest rates, and most lenders will require a credit score of 660 or more. Make sure to analyze your credit thoroughly before applying for a loan — check for any accounts that don’t belong to you or any inaccuracies that could be impacting your score. If there are any, try to clear them up before applying. You can also give your credit a boost by getting your credit usage below 30% or hiring the services of a credit repair company.

• Figure out how much you need to borrow and the rate you can afford: If you’re getting a loan to pay off higher-interest debt, you’ll need to run your numbers carefully. Calculate exactly how much you’re paying in interest rates now and find out the interest rate you’d need from a personal loan in order to truly reduce your debt. After all, you don’t want your new loan to end up costing more than the debt you’re trying to eliminate.

• Shop around: Most online lenders have fast prequalification processes, and can give you an estimate of the rate they could offer you. These prequalifications involve a soft credit inquiry — in other words, they won’t impact your credit score like a hard credit inquiry would.

• Apply: Once you settle on a lender that fits your needs, submit an application and await a response.

Secured vs. unsecured loans

Most personal loans are unsecured; however, some might be secured — in other words, they will require that you offer one or some of your assets as a guarantee of payment. The asset offered as collateral could be a car, home, a boat, stocks or bonds, or even a certificate of deposit account.

While this makes you a safer investment for the bank, it’s definitely riskier for you. If you should default on your loan, the bank would take possession of that asset and sell it to pay off the debt.

Here are other key differences between them:

Secured Loans	Unsecured Loans
Typically lower interest rates because you’re guaranteeing your payment with collateral.	Higher interest rates than secured loans.
Collateral could be a savings account, your home, your car or other valuable financial assets.	Defaulting will hurt your credit; however, it will not lead to foreclosure or losing valuable property as it could with a secured loan.
If you default on your payments, the lender can claim the asset and sell it to pay off the debt.

Banks vs. credit unions vs. online lenders vs. peer-to-peer

You can get personal loans from brick-and-mortar banks, credit unions, or from online and peer-to-peer lenders such as the ones featured on our list. When applying for a loan, remember to use a reputable lender since you will be asked to provide personal identifiable information on your application such as your social security number and address.

Banks	Credit Unions	Online Lenders	Peer-to-Peer (p2p)
Ideal if you prefer in-person customer service.	NCUA-insured, federal credit unions cap their APRs at 18%.	Faster application and funding than traditional banks.	Type of online lender connecting borrowers to funding from individual investors and companies.
Could streamline the process if you already have an account at the bank.	Unlike banks, credit unions are nonprofit institutions.	Lower overhead costs could translate to better APR rates and lower fees.	Provides loan options for people with lower credit scores or limited credit history.
May charge higher fees and penalties than online lenders and credit unions.	Potential borrowers must become members before applying.	Some use alternative credit data, which could help borrowers with shorter or non-traditional credit histories.	Often charges additional fees and higher interest rates.

Debt Consolidation Loans

If you find yourself juggling multiple loans with high or varying interest rates, you might consider taking out a debt consolidation loan.

The way it works is you’d take out a personal loan with a lower interest rate than your existing debt, in an amount that covers all the outstanding debt, and pay your debt using the proceeds from your loan.

As a result your payment process is simplified and you (hopefully) end up saving money you would’ve spent on interest for each debt.

Before you take out a debt consolidation loan, however, you should consider the kind of debt you have, its interest rate and how close you are to paying it off. Consolidating your debt is a good idea when you can find a lower interest rate than what you’re paying now. Bear in mind that most lenders will offer the lowest rates to borrowers with higher credit scores.

Alternatives to personal loans

Personal loans aren’t the only way to consolidate debt or pay for household repairs. You might also look into one of the following options:

Balance transfer credit card

With a balance transfer, you move your debt from one card to a different card which may offer 0% APR and other introductory benefits, such as reward and points programs. Typically this option is available to those with very good or excellent credit.

Credit card advance

A credit card cash advance is a short-term loan that you can get from your credit card issuer at almost any ATM machine. However, these cash advances are usually subject to high APR rates — even higher than the usual rate applied to your purchases.

HELOCs vs. home equity loans

There are two types of loans that allow you to use your home as collateral to access funding: home equity lines of credit (HELOCs) and home equity loans.

Both of them let you borrow against the equity you already have in your home. (Equity is determined by the difference between your home’s current value on the market and what you owe in your mortgage.) However, do note that this means you’re essentially offering your home as collateral and were you to default on your payments, the bank could take possession of the home.

Cash-out refinance

In a cash-out refinance you replace your old mortgage with a larger one and receive the difference as a lump sum.

One benefit to this type of refinancing is that you can receive funds in a relatively short amount of time. You may also be able to obtain a lower interest rate, provided your credit history has improved since you first got your mortgage.

Retirement account loans

Retirement account loans, such as 401k loans, are a hot topic under debate by financial experts.

On the surface, these loans might look like a convenient option since they often have low interest rates and you’re allowed to withdraw up to 50% of your 401k balance (with a cap of $50,000) without getting penalized by the IRS.

However, borrowing against your 401k should only be done when absolutely necessary, since you’re essentially taking money away from your retirement.

You’d also be repaying that loan with money that has been taxed (while the funds invested in a 401k are pre-tax dollars). That being said, these types of loans could be used as a last resort for important needs, such as reducing otherwise unpayable debt or making a down payment on a home.

Emergency Assistance Loans

Many people consider applying for a personal loan when facing an emergency or when struggling to pay their bills. However, if this is your case, you might also want to consider other options for financing assistance.

Federal rental assistance

Emergency Rental Assistance (ERA). The housing crisis has taken a toll on many people’s financial health. Moreover, the pandemic has caused millions of people to face housing insecurity nationwide.The ERA program provides funding at the state and local level for those who need assistance with rent and utility payments. If you’re eligible, it might also cover internet and costs associated with moving, including security deposits. You can check out the Consumer Finance Protection Bureau’s website to find programs in your area.

HUD grants and programs

The U.S. Housing and Urban Development (HUD) Program offers the Housing Choice Voucher Program (section 8) and housing counseling services. Additionally, HUD will provide housing inspection assistance through their Real Estate Assessment Center (REAC). These inspectors review houses for defects to ensure the house is structurally sound and sanitary.

Disaster relief

If you were a victim of a natural disaster, make sure to check out government economic assistance before taking out a loan. The Federal Emergency Management Agency (FEMA) offers help through the Individuals and Households Program (IHP). This can include temporary housing, funds for household repair, as well as other expenses approved by your state.

	Pros	Cons
Balance transfer credit card	Transfer the balance from a high-interest card to a card with 0% promotional APR Many promotional offers give you 12–18 months of no interest	Once the promotional APR ends, the card may have a very high interest rate
Personal line of credit	Lower APR than credit cards on average Borrow against it when you need cash	Great credit needed to qualify Some lenders charge a fee for keeping the line active
Home equity loan or HELOC	Borrow against your home’s equity Lower APR than personal loans Higher loan limit	You pay closing costs The loan is secured by your house, so failure to pay could mean losing the property
Cash-out refinance	Borrow in excess to refinance your home and keep the difference Get a lower APR on your mortgage	Must pay closing costs The mortgage is secured by your house so you could lose it if you default on the loan
401k loan	Borrow against your own retirement funds Any interest you pay goes back into your 401k	Not all employers offer this option The amount you borrow is taxed twice

Inadvisable alternatives

Payday loans and title loans are also immensely popular alternatives to personal loans, especially for borrowers with fair to poor credit. There is also a lesser-known type of quick loan called the tax anticipation loan.

However, we do not recommend any of these options.

Payday loans are typically small, quickly funded loans that are due on your next paycheck.

Payday lenders secure their money by asking for a postdated check or direct access to your checking account to withdraw the funds by your next paycheck. However, their sky-high interest rates — often as high as 400% — can make these loans balloon so quickly that borrowers find themselves unable to repay them.

Title loans, on the other hand, use your car title as collateral, and lenders can repossess and resell your car or motorcycle if you don’t pay it back in time. Although these loans are relatively easy to qualify for, they have extremely high interest rates, typically from 100 to 300%

Tax anticipation loans are loans that give you an advance on your tax refund and act much in the same way as a payday loan. They are issued through a third-party lender once you provide proof that you’re owed a tax refund. These loans might be tempting, especially since you don’t need a good credit score to get them.

But one important risk associated with this type of loan is that the refund listed on the tax preparation documents will not always be the final return you receive after the IRS processes your taxes. Miscalculations can occur on the part of the person doing the taxes, and you might end up owing more than you originally thought.

Failing to pay off these loans in time has trapped many borrowers in an endless debt cycle, where they have to renew or roll the loan over to a further date, stacking up higher interest rates and fees.

As we said above, we don’t recommend these options. If you have poor credit, make sure to look into bad credit loans and secured credit cards aimed specifically at high-risk borrowers. If it’s a time-sensitive issue, many reputable online lenders — including many in our list — guarantee fast funding, with same-day or next business day disbursement.

Latest News

• You might have heard that the Fed will raise loan interest rates soon — but what does that mean for borrowers? Make sure to read 5 Money Moves to Make Before the Fed Hikes Interest Rates to learn how you can best prepare.

Summary of Money’s Best Personal Loans of July 2022

• LightStream – Best Variety of Loan Options
• Credible – Best Marketplace
• SoFi – Best Online Lender
• Upstart – Best Peer-to-Peer Lender
• PenFed – Best Credit Union
• U.S. Bank – Best Bank