BorrowPersonal Loans6 Best Personal Loans of December 2022

6 Best Personal Loans of December 2022

Compare personal loans for good and bad credit, debt consolidation, home improvement and more.

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The global personal loan market is one of the fastest-growing debt categories. It ascribes its popularity to the fact that it is one of the few financial avenues that allows quick access to unsecured funds. Another reason is because of its open-ended usage and affordable interest rates.

While a personal loan is a significant financial decision, choosing the right lender can be overwhelming, perhaps due to the emergence of multiple lending platforms over the years. Also, the popularity of money lending sectors has made it an easy target for scammers. So, when shopping for lenders, it is vital to keep an eye out for red flags such as upfront fees.

So, are you thinking of acquiring a personal loan for yourself, but you’re unsure of which company you should consult with? Fret not; here is a list of the best lending companies.

Best for Bad Credit
Best for Fair Credit
Best for Good Credit
3.5
4.0
4.5
Best for Bad Credit
Best for Fair Credit
Best for Good Credit
Pros:
  • Min Credit Score: 560
  • APY: 7.96% to 35.97%
  • Loan Amount: $1,000 to $50,000
Pros:
  • Min Credit Score: 600
  • APY: 5.4% to 35.99%
  • Loan Amount: $1,000 to $50,000
Pros:
  • Min Credit Score: 650
  • APY: 7.99% to 22.73%
  • Loan Amount: $5,000 to $100,000
Best for Bad Credit
3.5
Best for Bad Credit
Pros:
  • Min Credit Score: 560
  • APY: 7.96% to 35.97%
  • Loan Amount: $1,000 to $50,000
Best for Fair Credit
4.0
Best for Fair Credit
Pros:
  • Min Credit Score: 600
  • APY: 5.4% to 35.99%
  • Loan Amount: $1,000 to $50,000
Best for Good Credit
4.5
Best for Good Credit
Pros:
  • Min Credit Score: 650
  • APY: 7.99% to 22.73%
  • Loan Amount: $5,000 to $100,000

1. SoFi (Best for Excellent Credit)

best personal loans

SoFi is an online lending company based in San Francisco. Student loans, mortgages, refinancing, and personal loans are part of the company’s lending services. Borrowers can get $5,000-$100,000 with repayment terms stretching from two to seven years. SoFi also has a favorable Annual Percentage Rate (APR) of 7.99%-22.73%. Moreover, the application process is relatively straightforward.

Steps to follow when applying for a SoFi loan:
  • Get pre-qualified by providing details about yourself
  • Assess your loan terms to decide if you still want to proceed with the process
  • Apply by providing additional personal information for verification
  • Sign your final documents to initiate the disbursement process

Pros


  • A+ rating from the Better Business Bureau, proving its legitimacy
  • No origination fee for borrowers
  • Payments may be put on hold for borrowers who unexpectedly lose their sources of income
  • Co-applicants are allowed as long as they share an address

Cons


  • Relatively high minimum credit score rating

2. Marcus by Goldman Sachs (Best for Good Credit)

best personal loans

Marcus is an entirely online investment, saving, and lending platform founded by Goldman Sachs. It offers unsecured personal loans with low rates, making it an excellent option for borrowers with a good credit score. Subject to credit approval, the bank provides applicants a loan amount ranging from $3,500 to $ 40,000, with an APR stretching from 6.99%-19.99%. Also, borrowers enjoy a timeline of three to seven years to pay off the loan.

How to apply for a loan with Marcus:
  • Visit the Goldman Sachs website, and select and click on loans
  • Choose Personal Loans, then click Get Started
  • Enter your email address and create a Goldman Sachs account
  • Provide your essential details as required
  • Wait for approval as the lender performs a credit check

Pros


  • Offers competitive rates
  • Helps you track and optimize your finances
  • Accessible by the borrower at any time through the 24/7 mobile app
  • No monthy fee requirement
  • Offers rewards for on-time payments

Cons


  • No physical location
  • No credit cards
  • No IRAs
  • Undisclosed eligibility requirements

3. Upgrade Personal Loans (Best for Fair Credit)

upgrade

Upgrade is another great online lender. The company generally offers unsecured loans. It is ideal for borrowers with fair credit ratings who need access to smaller loans. Upgrade’s personal loan amounts range from $1,000 to $50,000. The amount issued is based on the borrower’s credit profile. The loan payment term ranges from two to seven years with an APR between 7.96%-35.97% with an origination fee range of 1.85% to 8.99%.

To secure the lowest available rates, approved borrowers must sign up for automatic payments. Furthermore, the lender deducts an origination fee from the loan proceeds.

Steps to follow when applying for an Upgrade personal loan:
  • Check your rate. The pre-qualification process doesn’t impact your credit score
  • Submit your formal application online
  • Accept the loan offer sent to you and send your bank details
  • Wait for loan disbursement

Pros


  • Low minimum loan requirement
  • No penalty fees
  • Allows shared application
  • Gives third-party creditors direct payment

Cons


  • High APRs compared to other lenders
  • Origination fee requirement
  • The maximum loan is limited to $50,000

4. Upstart Personal Loans (Best for Bad Credit)

best personal loans

Unlike other lenders, Upstart underwrites personal loans using artificial intelligence. This method gives borrowers with poor credit ratings a chance to get a loan. What’s more, the platform approves loans almost immediately, thanks to AI. Upstart offers personal loans between $1,000-$50,000, with payment terms of three to five years. 

However, Upstart’s low eligibility requirements don’t come without a price. The platform’s APR is on the high end, ranging from 5.4% to 35.99%, making it less flexible than other online lenders.

Steps to apply for an Upstart loan:
  • Start by submitting an online prequalification form
  • Verify your bank account
  • Wait for approval
  • Sign the loan agreement and wait for the disbursement of the funds

Pros


  • Borrowers can get loans as low as $1,000
  • Offers a prequalification option
  • Quick loan processing
  • Borrowers get to choose a custom settlement date

Cons


  • No cosigner options
  • High origination fees

5. Credible (Best for Comparing Rates)

credible

Credible is an online marketplace for money lenders. It allows borrowers to connect and compare multiple lending options. A comparison of loan rates helps borrowers choose a personal loan lending company that offers favorable rates and interests.

With Credible, you can expect to find personal loan offers ranging from $600-$100,000.The platform generates an annual rate percentage of 5.40% -35.99%. Since Credible does not offer lending services, the lender you choose through the platform determines your credit score requirements.

Pros


  • Fast and easy to use
  • Does not check your credit score to determine your eligibility to use the platform
  • Allows you to connect with different money lenders
  • Free-to-use platform
  • It has a personal loan calculator to help you see the monthly payments to expect
  • It has been a reliable online marketplace since its founding in 2012
  • Potential borrowers get as low as $600 from lenders

Cons


  • It is not a money lending company

6. Discover Personal Loans (Best for Debt Consolidation)

best personal loans

Discover is an online bank that offers unsecured personal loans for almost any purpose. It can be an excellent choice for applicants with excellent credit to consolidate loans. Borrowers approved on this site get a loan amount between $2,500-$35,000, and a repayment term of three to seven years. The lender’s APR is 5.99-24.99%.

Discover also provides a quick and entirely virtual application process. If an applicant’s request is approved, it usually takes 24 hours to disburse the funds in their bank accounts. Moreover, since the lender does not offer an auto-pay option, the borrower gets a free monthly credit report and a 30-day loan surety.

How to apply for Discover personal loans:
  • Pick your preferred amount and the timeline you need to pay the loan back
  • Preview your rate to see if they suit your needs
  • Once you are satisfied with the offered rates, send the application
  • Wait for approval

Pros


  • No origination fee requirement
  • Mobile loan apps are available to help manage your loans
  • Quick release of funds
  • Offers a wide variety of loan payment terms

Cons


  • Does not allow joint loan options
  • Does not discount Autopay

Reasons for Picking the Above Personal Loan Companies

  • Credibility. The above companies have Better Business Bureau accreditations, hence assuring trustworthiness to the customers
  • Transparency. The companies disclose their loan rates and fees on their websites. In addition, they offer soft credit checks during prequalification. The process does not impact the borrower’s credit score.
  • Flexibility. The companies offer borrowers a flexible timeline to clear their debt.
  • Affordability. Most of the companies do not require you to pay an origination fee.

Methodology

We assessed 12 popular lenders founded on 16 data points in the classifications of loan information, loan costs, eligibility, affordability, availability, customer experience, and the time it takes to process an application. Based on the weighting allocated to each classification:

  • Loan information: 20%
  • Loan costs: 35%
  • Eligibility and ease of access: 20%
  • Customer involvement: 15%
  • Application procedure: 10%

We also deliberated several characteristics such as available loan amount, payment terms, APR ranges, and application fees. Additionally, we had a look at the credit score and whether the lender allows co-signers. Finally, we simplified the borrowing process and mentioned the credit score requirements for each lender.

Tips for Comparing Personal Loans

When searching for a personal loan, you may get overwhelmed by endless options available in the market today. While it may not be easy, ensuring you get the best deal for your financial situation is paramount. After all, borrowing money comes at a price, and you want to ensure you get a loan that suits your needs.

Here are a few tips for comparing personal loans:

  • Get a quotation from at least three different lenders and compare which one has the best offer
  • Look for lenders that require only soft credit inquiries without impacting your credit score
  • Compare the total costs, including the annual percentage rate
  • Go through the fine print to know all the minor details that could lead to additional costs

What Does a Personal Loan Mean?

Simply put, a personal loan is a term loan usually approved without collateral. A personal loan is an amount of cash you borrow from banks, credit unions, or digital lenders. Usually, personal loans can either be secured or unsecured. When applying for collateral loans, lenders require you to provide an asset as security before getting approved for a loan. On the other hand, with unsecured loans, creditors do not require any collateral.

However, that’s not to say there aren’t any consequences if you default on a loan. Defaulting can negatively impact your credit score, limiting your chances of getting a loan. The best thing about personal loans is that they are relatively easy to apply for as compared to mortgages.

How Do Personal Loans Work?

The concept of personal loans is relatively straightforward. The minute the lender disburses the money in your bank account, it becomes your obligation to start making monthly payments. You pay back the loan plus the agreed interest in monthly installments. As long as you have personal details on hand, the time it takes from the application time to approval and funding is relatively fast with online lenders. 

Usually, it takes 24 hours or a few days to receive the money. However, factors such as how much time the lender needs to assess your request or the overall time it takes to complete a loan application may affect how fast the money reflects on your account.

Whatever your loan purpose is, most personal loans offer fixed rates. This means the lender spreads out equal payments every month. While most personal loans are unsecured, when you fail to meet eligibility requirements, the lender may sometimes request you to put up collateral to get you approved. Alternatively, getting a co-signer on your loan might help you get approved for the loan.

The payback period may vary from one lender to the other. In most cases, lenders may require you to pay back the loan in a fixed period ranging between one to ten years, but the set payback period is dependent on how much money you get. Altogether, personal loans have flexible repayment periods.

Standard Personal Loan Interest Rates by Credit Rating

Generally, a borrower with an excellent credit score gets an average interest rate as low as 10.3%. At the same time, borrowers with poor credit scores get a loan interest rate above 30%. The following table outlines the average loan interest rate borrowers pay by credit score.

 Credit Score and Average Loan Interest Rate

 Excellent Credit (720-850)    10.3-12.5%

 Good Credit (690-719)          13.5-15.5%

 Average Credit (630-689)     17.8-19.9%

 Bad Credit (300-629)             28.5-32%

Reasons to Get a Personal Loan

While personal loans are designed for borrowers to use at their discretion, there are various good reasons as to why people take out personal loans.

Here are some common scenarios where securing a personal loan makes sense:

  • A personal loan can be an effective way to cover a costly expense. For example, the payment could be a car, land, or wedding budget. However, you need to know the importance of the purchase to avoid taking an unnecessary loan.
  • Funding education. While borrowers use their loans at their discretion, most choose to fund their education. It is incredibly convenient when you’ve already graduated and only want to pay for a certificate program or career training. However, when thinking of getting to college, you may want to compare the pros and cons of student loans and personal finances to decide which suits you best.
  • Finance a business. A business person looking forward to launching a new entrepreneurial venture or reviving a dying industry may fall short of ready cash. Securing a personal loan to start a business may be the best way to get things going.
  • Pay for emergency expenses. Most financial experts always encourage individuals to be financially prepared for an emergency. However, in most cases, people don’t always have emergency funds; if they do, it’s never enough to cover potential financial crises. In such scenarios, applying for a personal loan is the best option.
  • Consolidate high-interest debts. The main goal is to help borrowers save money on interest payments. Securing a personal loan is handy when looking forward to fastening your repayment timeline.

However, personal loans are a form of debt. So, if you gamble, overspend money habitually, or are not in urgent need of cash, personal loans might not be ideal for you.

The Best Place to Get a Personal Loan

The right platform to get a personal loan is subject to your needs. There are countless lenders you could secure a loan from, depending on the intended use of the money, the amount of money you need, and how soon you anticipate repaying the loan. Here are familiar places where one can secure a personal loan:

  • Banks. Banks can offer loans as high as $100,000 if the borrower has a high credit rating.
  • Credit unions. These are non-profit institutes offering competitive loan rates compared to most banks. Applicants with poor credit ratings may be considered for loan approval. Also, they are member-based, meaning one must be a member of the credit union to qualify for a loan.
  • Digital lending platforms. Online lending companies have become increasingly popular globally in recent years. They offer fair loan rates and APRs compared to banks and credit unions. However, there are endless options if you consider getting a personal loan from an online lender. Hence, ample research is crucial.

While banks and other financial institutions like credit unions offer personal loans, the best place to get a personal loan is online. The internet has unlocked various opportunities for people who want to secure personal loans.

How to Get a Personal Loan

When considering getting a personal loan, you would want to put your best foot forward. However, this can be challenging, especially when you are clueless about your lender’s requirements. While your credit score tops your loan eligibility list, there are other factors financial institutions consider before they approve a personal loan. Therefore, you should familiarize yourself with the vital requirements before applying for a loan.

  • Assess your credit history. Loan lenders will want to assess both your personal and business (if you have any that is not a startup) credit history. As the borrower, obtaining a credit report before applying for a personal loan will be wise. It helps you clean up any inaccuracies before they affect your credit rating
  • Assess your income. Money lenders impose earning requirements on borrowers to determine the maximum amount they can apply. However, just because a lender approves a certain amount of money doesn’t mean you should always pick the maximum offered. It would be wise to consider the monthly payment you can comfortably pay without increasing your financial strain.
  • Assess your debt-to-income ratio. The debt-to-income ratio is the proportion of your monthly gross income eaten up by your debt. Lenders use this percentage to weigh your ability to handle monthly loan payments.
  • Shop around for different lenders. Most lenders require prequalification before sending your formal application. The aim is to let borrowers compare favorable terms and rates without hurting their credit score.
  • Submit your formal application and wait for approval. After you compare the different lenders’ offers, you can send your proper application to the one that suits your needs best

Related: White Rock Loans Review: Scam or Legit?

Pros and Cons of Personal Loans

Personal loans come in handy when you are in a financial crunch. This is because they can quickly fill in the void in your budget without much hassle as long as you meet the lender’s standard eligibility requirements. However, personal loans may not be the right choice in all circumstances. Thus, when considering securing a personal loan, it’s always wise to weigh the benefits and drawbacks to determine if it’s ideal for you.

Pros


  • Lenders do not tie unsecured loans to assets
  • Helps you in managing your finances
  • They are flexible and versatile
  • They have a lower interest rate
  • They are easy to manage

Cons


  • Fees and penalties can be high
  • They can increase the debt

Conclusion

Whether it is your first time borrowing or you have borrowed before, the principal rule of smart borrowing is living within your means and taking loans you can comfortably repay. For most people, it’s easier said than done. Personal loans can help fill up a void in your budget. However, some people get caught up in reckless spending, which later on strains their finances. Therefore, living within your means can help you avoid unnecessary loans.

Personal Loan FAQs

How do I calculate my debt-to-income-ratio?

The debt-to-income ratio refers to the percentage of your monthly gross income that goes towards paying off debt. To calculate it, you divide your total monthly debt obligation by your gross monthly income. For instance, if your total monthly commitment is $1,000, and a you have a gross monthly income of $5,000, your debt-to-income ratio would be 20%.

What is a good debt-to-income ratio?

The standard debt-to-income benchmark is 36% or below. A DTI above 36% could translate to financial distress. Therefore, the smaller the percentage, the better.

How do you improve your credit rating?

You can boost your credit rating by:

  • Request a credit report from major credit bureaus – Experian, Trans Union, and Equifax. Ensure that it is error-free before the lender has access to it.
  • Make all your monthly payments on time. Late payment negatively impacts your credit score.
  • Keep your credit utilization to 30%.
  • Diversify your credit mixes such as mortgages, credit cards, and installment loans to help you improve your credit score.
  • Have a balance of positive and negative details on your report. Exaggerated information lowers your credit score.
  • Closing old accounts hurt your credit score.

There are many ways to establish credit history if you don’t have any to begin with.

Does my credit score matter?

All lenders review your credit rating to determine your eligibility for a loan. A poor credit score disqualifies you from securing a personal loan.

How much debt is too much debt?

The general principle is to maintain your debt-to-income ratio below 36%. No more than 36% of your earnings should be allocated to monthly debt payments. For some people, a DTI of 43% or higher may be manageable, but still, it limits them from getting a loan. Anything above 50% is considered severe distress by lenders.

Disclaimers

* Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 6.95%-35.97%. All personal loans have a 1.85% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.

Brian Meiggs
Brian Meiggs
Founder of Smarts, Brian is an entrepreneur and investor who enjoys working out, reading, spending time with his family and friends, playing chess, traveling and creating great content. He’s passionate about helping others make smarter money moves and achieve financial freedom. He uses the free Personal Capital app to manage his cash flow and net worth.
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