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10 Best Personal Loans > September > 2022 > Ultimate Guide

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.

When should I get a personal loan?

Personal loan funds can be used for almost any purpose, but taking a loan makes most sense when:

  • It’s the least expensive form of financing.
  • It’s used for something with the potential to increase your financial standing, like debt consolidation or home improvements.
  • You can manage the monthly payments without stressing your budget.

In contrast, a personal loan used for discretionary expenses, like a vacation, can be expensive. NerdWallet recommends using savings for nonessentials to avoid finance charges.

If you’re borrowing for emergency or medical expenses, consider less-expensive alternatives first, such as community assistance or payment plans.

Survey: How people use personal loans

A recent survey published in early November revealed that nearly 3 in 10 Americans (29%) took out a personal loan within the past 12 months, borrowing an estimated $385 billion.

The average loan amount was $5,210, according to the survey, and the three most common uses for a personal loan by those surveyed were:

  • Debt consolidation. Of the 550 people surveyed, 40% percent used a personal loan to consolidate debt. Debt consolidation combines your debt into one loan, ideally with a lower interest rate that reduces your total debt and helps you pay it off sooner.
  • Big events. The survey found that 39% of recent personal loan borrowers used a loan to manage the cost of a large event, which might include a wedding or vacation.
  • Emergency expenses. According to the survey, 35% of respondents used a personal loan to cover an emergency.

Loan interest rates and fees

Personal loan interest rates vary by lender, and the rate you receive depends on factors like your credit score, income and debt-to-income ratio.

Borrowers with high credit scores generally receive lower rates, from about 11% to 15%, while those with low credit scores may get an APR around 25%. Here’s what interest rates on personal loans look like, on average:

How’s your credit?Score rangeEstimated APR
Excellent.720-850.11.2%.
Good.690-719.15.5%.
Fair.630-689.20.5%.
Bad.300-629.25.3% (Lowest scores unlikely to qualify).

Some lenders charge origination fees to cover the cost of processing the loan. Lenders deduct the fee from the loan proceeds or roll it into the balance. This one-time, upfront fee is included in the loan’s annual percentage rate, so consider this when comparing costs between lenders.

Other fees to watch out for include late fees, insufficient funds fees and prepayment fees, which are penalties for paying off your loan early.

Best place to get a personal loan

You can get a personal loan from online lenders, banks and credit unions. The best option depends on where you can get the rate, terms and features that fit your financial situation.

For example, if a fast and convenient loan application is important to you, then consider an online lender. On the other hand, if lower rates and in-person support matter, then a bank loan or credit union loan could be the better option.

Current Personal Loan Rates

COMPANYCURRENT APR RANGELOAN AMOUNTSTERM LENGTHLEARN MORE
SoFi4.99% to 19.53% (with autopay)$5,000 to $100,00Two to seven yearsView More
LightStream2.49% to 19.99% (with autopay)*$5,000 to $100,00*Two to 12 years*View More
Marcus6.74% to 19.74% (with autopay)$3,500 to $40,000Three to six yearsView More
Upgrade5.94% to 35.97%$1,000 to $50,000Two to seven yearsView More
Discover5.99% to 24.99%$2,500 to $35,000Three to seven yearsView More
Avant9.95% to 35.99%$2,000 to $35,000Two to five yearsView More
LendingClub7.04% to 35.89%$1,000 to $40,000Three or five yearsView More
Upstart3.50% to 35.99%$1,000 to $50,000Three or five yearsView More
Payoff5.99% to 24.99%$5,000 to $40,000Two and five yearsView More
Rocket Loans5.97% to 29.99% (with autopay)$2,000 to $45,000Three or five yearsView More
*Some APRs, loan amounts and term lengths are available only for certain loan purposes.

The above personal loan rates and details are accurate as of Dec. 21, 2021. While we update this information regularly, the annual percentage rates (APRs) and loan details may have changed since the page was last updated. Keep in mind, some lenders make specific rates and terms available only for certain loan purposes. Be sure to confirm available APR ranges and loan details, based on your desired loan purpose, with your lender before applying.

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