BEST OF

Best Personal Loans of May 2021

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

Steve NicastroMay 3, 2021
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Personal loans have fixed annual percentage rates, generally between 6% and 36%. The loan with the lowest rate is the least expensive — and usually the best choice. Other features, including no fees, soft credit checks and whether lenders directly pay creditors if you’re consolidating debt, set some loans apart.

We spent hours reviewing loans from over 30 personal loan companies to find the best online rates and loan features.

  • LightStream: Best for home improvement loans.

  • SoFi: Best for good to excellent credit.

  • Marcus by Goldman Sachs: Best for bank loans.

  • Upgrade: Best for fair credit.

  • Upstart: Best for short credit history.

  • Avant: Best for bad credit.

  • Payoff: Best for credit card consolidation.

  • Discover: Best for debt consolidation.

  • Rocket Loans: Best for fast funding.

We always recommend you know your credit score and compare loans from multiple lenders before making a choice.

When should I get a personal loan?

Taking a personal loan makes sense when it's the least expensive form of credit, when it's used toward something that has the potential to increase your financial standing, like debt consolidation or home improvements, and when you can manage the monthly payments without stressing your budget.

On the other hand, 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.

Loan interest rates and fees

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

Borrowers with high credit scores generally receive lower rates, from 10% to 12%, while those with low credit scores might get an APR around 30%. Here’s what interest rates on personal loans look like, on average:

How's your credit?

Score range

Estimated APR

Excellent

720-850

11.8%

Good

690-719

17.4%

Fair

630-689

23.4%

Bad

300-629

28.7% (Lowest scores unlikely to qualify.)

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace between Jan. 1, 2020, and Dec. 31, 2020. Rates are estimates only and not specific to any lender.

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 APR, so keep this in mind when comparing costs between lenders.

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

Personal loans vs. credit cards

Average interest rates on personal loans can be lower for good-credit borrowers than average rates on credit cards. In some situations, the fixed interest and monthly payments associated with personal loans, which are installment loans, can be preferable to the revolving credit that credit cards have.

In general, personal loans work better for large expenses that you can repay over years, while credit cards are best for smaller expenses that you can pay off each month.

Before you take a personal loan

  • You don't need perfect credit to get a personal loan, but doing what you can to strengthen your credit before you apply can boost your chances of qualifying and get you a lower interest rate.

  • Use our personal loan calculator to see estimated rates and payments based on credit scores.

  • Shop around and compare loans, not just interest rates but also fees and features. The APR gives an apples-to-apples way to compare total costs between loans.

  • If you're getting a personal loan to consolidate debt, make a plan to pay off your creditors and avoid running up debt again. Building a budget that accounts for debt repayments is a good place to start.

Pre-qualify for a personal loan

Most online lenders will give you an estimated interest rate by performing a soft check of your credit. This won’t affect your credit score, so it pays to take the steps to pre-qualify for a loan with multiple lenders and compare rates and loan features. You can pre-qualify on NerdWallet and see rates from lenders that partner with us.

After you compare offers and select a loan with the lowest rate and payments that fit your budget, you'll formally apply for the loan.

The loan application may require additional personal information, including employment status and education history. You may also need to authorize the lender to pull your credit reports and verify your income.

Your first loan payment is usually due within 30 days of loan approval and funding.

Learn more about the loans and lenders in each of these categories:

Explore more uses for personal loans:

Last updated on May 3, 2021

Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews.

To recap our selections...

NerdWallet's Best Personal Loans of May 2021

Frequently asked questions