Best Online personal loans
|Lender||APR||Loan Amount||Loan term||Origination Fee||Apply|
|5.94 - 35.97%||$1,000 - $50,000||3 - 5 years||2.9 - 8%||Apply now|
On Upgrade‘s site
|27.99 - 35.99%||$2,500 - $12,500||0.25 - 3 years||5%||Apply now|
On Merrick Bank‘s site
|5.99 - 35.99%||$500 - $10,000||0.25 - 6 years||No origination fee.||Apply now|
On BadCreditLoans‘s site
|5.99 - 35.89%||$1,000 - $35,000||0.25 - 8 years||No origination fee.||Apply now|
On Personal Loans®‘s site
|5.99 - 35.99%||$500 - $10,000||0.25 - 6 years||None||Apply now|
On CashUSA‘s site
|2.99 - 20.49%||$5,000 - $100,000||2 - 12 years||No origination fee.||LightStream|
|6.95 - 35.99%||$1,000 - $50,000||3 - 5 years||8%||Upstart|
|4.99 - 19.63%||$5,000 - $100,000||2 - 7 years||No origination fee.||SoFi|
|9.95 - 35.99%||$2,000 - $35,000||2 - 5 years||4.75%||Avant|
|5.99 - 24.99%||$5,000 - $40,000||2 - 5 years||5%||Payoff®|
|6.99 - 19.99%||$3,500 - $40,000||3 - 6 years||No origination fee.||Marcus by Goldman Sachs|
|5.99 - 29.99%||$2,000 - $50,000||3 - 5 years||0.99 - 5.99%||Best Egg|
|7.04 - 35.89%||$1,000 - $40,000||3 - 5 years||3 - 6%||LendingClub|
|5.99 - 29.99%||$4,000 - $25,000||3 - 5 years||1 - 5%||Peerform|
What is an online loan?
Online loans allow you to complete the borrowing process entirely online, from pre-qualification to loan financing, without the need to go to the bank or the institution. That makes them very convenient.
Online loans can be offered by an online-only platform like Upstart or Social Finance, Inc, or an online bank division like LightStream or Marcus by Goldman Sachs. They all set their eligibility criteria, APRs, fees, loan terms, and amounts. The minimum credit requirements vary from lender to lender, with many of them, and pre-approval or prequalification options can be available. That means that potential borrowers can check out their rates and loan options with a soft credit inquiry only, i.e., without affecting their credit score. If you decide to proceed with the loan, a hard inquiry will be performed.
Most of the loans offered online are personal loans, although there are other types as well. A personal loan can be used for any purpose, including credit card debt payoff, car purchase, home improvement, debt consolidation, and many more. Most of these loans are unsecured. You get the loan proceeds in one lump-sum payment, and you pay back the amount plus the interest with monthly installments during the loan's term.
Differences between online lenders and banks
As the internet grew, so did e-commerce, and a lot of online lenders emerged too. Today, we have many options if we decide to get our loan online instead of the traditional way – simply going to the bank and applying on the spot. So, how should we choose? Let's look at some aspects of loans and see how online lenders and banks compare.
Application and funding
Applying for an online loan is usually an easy and convenient process. Online lenders process the application much faster, and you can do it from your couch or anywhere you want. Most of them allow you to check your rates with a soft credit inquiry, and they only make a hard inquiry once you apply for the loan. You can attach and e-sign all the documents without having to set your foot at a bank.
Online lenders are at an advantage with funding too. Getting a loan at a bank is more complicated, so it might take longer to get your funds. With online lenders, however, you could get funding in as soon as a day!
Those with bad credit have a better chance for approval if they apply with an online lender. Banks are heavily regulated, and they're a lot less likely to accept someone with bad credit. Some online lenders explicitly offer their products to people with lower credit scores, like Avant, LLC or Peerform.
Interest rates and fees
As previously mentioned, online lenders are more willing to lend money to those with less-than-stellar credit scores. However, that comes at a cost. APRs for these individuals can be as high as 35.99%. That’s understandable, considering the high risk that lenders are taking on by lending to these consumers. On top of that, they may also charge an origination fee and other fees.
Banks might offer more favorable rates or fees to existing customers, so it'll be wise to call your bank and see if you qualify for any discount.
Generally, banks have excellent customer service. You could stop at a local branch anytime you have a question and solve the issue in person. Online lenders don't offer you this convenience, and there's no face-to-face communication. However, they still have online services support to answer your questions via phone, e-mail, or online chat on the website or a mobile app.
Just because online lenders are a winner in more categories doesn’t mean online lending is the right choice for everyone. That’ll still depend on other things, like your preferences, credit history, how fast you need the funds, etc. We hope this comparison helps you realize your priorities when it comes to loans.
The pros and cons of online loans
Let’s look at some pros and cons of online loans you should consider before applying.
- Convenience – as we said at the beginning of the article, applying for an online loan can be done from the comfort of your home. All documents required can be scanned and attached online, and you can sign the contract with e-signature. That saves consumers a lot of time.
- Prequalification – if you're curious about what your rate will be with a particular online lender, you can have your answer in just a few minutes. Most of the lenders on our list will allow you to see your rates and loan options.
- Window shopping – having in mind the previous advantage, you can easily compare rates offered by several lenders. That makes the decision process easier and less time-consuming.
- Looking past your credit history – Some online lenders will also consider things like your education or career. For example, Upstart accepts applicants who don't even have a defined credit score yet but fulfill other requirements, like a job contract starting in the next six months or a 4-year college degree.
- Might be expensive – Although some online lenders have APRs as low as 2.49% (LightStream), the lowest rates are only available to borrowers with good-to-excellent credit. All the others can expect to pay hefty interest rates. Each online lender has its algorithm for calculating APRs. While some are more transparent, like Peerform (determines APR according to AAA-DDD grades) or Best Egg (only borrowers with a credit score of above 700 will get the lowest APR – 5.99%), some, like LightStream, won’t even allow for a prequalification.
- No in-person customer support – If you prefer talking to a representative in person, and online communication is an issue for you, skipping online lenders will be best.
- Unfortunately, predatory online lenders make life harder both for reputable lenders and consumers. If a loan sounds too good to be true, for example, promises that they won’t check your credit score, you’ll be better off not applying for such loans. Before applying, check out reviews from other clients and apply only for loans from trusted online lenders.
Online personal loans vs. Payday loans
A payday loan is a form of short-term borrowing in which a lender offers credit at a high-interest rate determined by your income. The principal is usually a percentage of your paycheck. Payday loans have high interest rates since they’re used for short-term, urgent credit and provide instant funding.
Unlike personal loans whose minimum loan amounts start at $1,000, payday loans minimums can be as low as $50. The repayment term is from two weeks to a month.
We recommend choosing a personal loan over a payday one. Even if you have bad credit, a personal loan will be a lot cheaper.
How much will an online loan cost me?
We cannot answer this question without knowing your credit history or loan preferences. Those with good credit scores will generally get a lower interest rate and pay lower fees, while those with bad credit scores will get higher APRs to compensate for the lender’s risk.
On some lenders' websites, a payment example can be found. Let's look at a few examples, so you get a better idea.
LightStream: 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.
Upstart: The average 3-year loan offered across all lenders using the Upstart Platform will have an APR of 25.06% and 36 monthly payments of $37 per $1,000 borrowed.
Social Finance, Inc: Monthly payment and total payments during the life of a $30,000 personal loan with a 2-year repayment term, a 0.25% autopay discount, and a fixed rate between 5.99% – 18.85%. It works out to 24 monthly payments ranging from $1,329.48 – $1,490.20 for a total amount of payments ranging from $31,907.60 – $35,764.71. (Assuming you’ve signed up for AutoPay and have made all payments on time without pre-payments).
LendingClub: You receive a loan of $13,411 for a term of 36 months, with an interest rate of 12.16% and a 5.30% origination fee of $711, for an APR of 15.99%. In this example, you will receive $12,700 and will make 36 monthly payments of $446.46.
How to find the best online personal loan?
The prequalification option makes finding the best online personal loan a more straightforward process. We advise checking your rates at several lending websites and then comparing them. Inform yourself about discounts or offers regarding the APR. For example, LightStream has a Rate Beat Program and claims to beat the competitor’s APR by 0.10%.
Another thing you should take into consideration is fees. An origination fee can be found with most of the loans, it typically ranges from 0% - 8%, and it'll be deducted directly from the loan proceeds. However, the extra fees that come with some loans can be hassling. For example, Peerform has four fees you should be aware of if you opt for a loan with them.
Our advice is to read the terms and conditions on every website thoroughly. The more you research and compare, the more confident you can be in your decision.
How to apply for an online personal loan?
We’ve already stressed enough how simple it is to apply for a personal loan. Visit the lender’s website and follow the lead there. You’ll usually be required to enter some information about yourself, like your address, Social Security Number, employment details and income, and credit score. Furthermore, you might be required to provide additional documents to prove the information (such as proof of income). The lender needs this information to determine whether you qualify for a loan and, if yes, at what rate. They'll also use information about your credit provided by the three major credit rating bureaus.
Is getting an online personal loan safe and legit?
We understand why some might be hesitant to borrow money online. There are many stories about online scams, but if you’re careful and trust only legitimate loan companies (like those on our list!), you won’t have much to worry about.
Here are some red flags that imply the lender is probably a scammer:
- Doesn’t ask for your credit history.
- Not registered in any state.
- Has an unsecured website.
- Pressures you to take out the loan right away.
- Guaranteed approval.
- No documents required.
- Not transparent regarding rates and fees.
Do your homework about a lender before giving out your personal or private information and agreeing to a loan.
Is an online loan the right choice?
Online loans are a great way to help you pay back some debts or finance a purchase. They can be used for almost any purpose. But, same as with other loans, it's essential to be responsible and make timely payments to avoid getting stuck in even more debt.
Can You Get an Online Personal Loan With No Credit Check?
No, unfortunately, you cannot. Please be aware of predatory online lenders and don't trust any that offers you a loan without asking for information about your credit.
Can I Get an Online Personal Loan With a Cosigner?
Yes, some lenders, like the LendingClub, allow you to take out a loan with a cosigner. That way, you can get lower rates or a more significant amount.
Can I Get a Personal Loan Online Instantly?
Several loan providers are pretty fast with loan funding once you get approved for a loan. For example, with LightStream, you could get funding the same day, while both Avant, LLC and Best Egg claim a good deal of their customers get funding the next day. However, there aren’t really instant decision lenders.
What are other trustworthy online lenders?
Some other great trusted lenders over the internet are OneMain Financial Group, LLC (great for those with credit scores lower than 620, but you need to make a branch visit) and Rocket Loans
(affordable rates and funding available the same day).
Can I get an online personal loan without a bank account?
All the lenders on our list require you to have a bank account to transfer the loan proceeds into. You might find some lenders that allow you to get a loan without a bank account, but you have to be careful and make sure they’re not scams.