How to choose the best online personal loan
Personal loans from online lenders have a streamlined application process, and you’ll typically receive funds within a day or two after loan approval. Online loans can be used for almost any purpose, including emergencies, home repairs or debt consolidation. When choosing the best online personal loan for you, make sure you meet the lender’s requirements and the lender offers the loan amount and repayment term you desire.
The loan with the lowest annual percentage rate will be the least expensive. If you pre-qualify with multiple lenders and receive loan offers with similar rates, consider other factors like access to credit-building tools or the ability to change your payment date. Rates for online personal loans
Financial experts recommend a rate below 36% for a loan to be affordable. Here’s a snapshot of average estimated personal loan APRs based on credit score ranges.
Borrower credit rating | Score range | Estimated APR |
|---|
Excellent | 720-850. | 11.81%. |
Good | 690-719. | 14.48%. |
Fair | 630-689. | 17.93%. |
Bad | 300-629. | 21.65%. |
Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified through NerdWallet from January 1, 2024, through December 31, 2024. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 — are unlikely to qualify. Information in this table applies only to lenders with maximum APRs below 36%.
Plug your estimated APR into our personal loan calculator along with your desired loan amount and loan term to find out how much your monthly payments could be. A longer repayment term will give you lower monthly payments, but will cost more in interest overall. Estimated monthly payment
$309.92
Total interest over 3 years
$1,156.95
Total loan payment
$11,156.95
PRINCIPAL AMOUNT — $10,000TOTAL INTEREST PAID — $1,156.95
Tips for getting an online loan with bad credit
Borrowers with bad credit may qualify for a rate on the high end of a lender's range. However, there are some online lenders that look beyond credit scores and use alternative criteria — like cash flow, employment and education history — when assessing a borrower’s application.
Here are ways bad-credit borrowers can strengthen an application for an online loan:
Are online loans legit?
There are plenty of reputable online lenders, but they compete alongside predatory online lenders. The best online personal loans have affordable rates (APRs that top out at 36%) and come with ample time to repay the loan.
Reputable lenders will check your credit and assess your ability to repay the loan by reviewing your income and existing debts. Look for lenders that report payments to the three major credit bureaus — Experian, Equifax and TransUnion.
Avoid predatory lenders
Predatory lenders can entice borrowers with easy access to cash, but since they typically don’t check credit, you’ll pay for the added risk with sky-high interest rates. These types of loans should be considered only as a last resort after you’ve exhausted alternatives to high-cost loans: No-credit-check loans are usually for a few thousand dollars or less and are repaid in fixed amounts over a few weeks to several months. They don’t check your credit score as part of the application process, and lenders tend to charge APRs well above 100%. Online payday loans are a fast way to get loans for amounts less than $1,000, especially if you don’t have good credit. Payday lenders typically withdraw repayments directly from your bank account on the due date. These loans can have APRs close to 400% or more, which can quickly lead borrowers to owe more in interest than the original amount borrowed if the loan is extended.
Alternatives to online personal loans
Bank loans: Banks may offer lower rates than some online lenders, plus special discounts or perks for existing customers. However, bank loans typically require borrowers to have good or excellent credit scores, and funding times may be slower than with an online lender. Credit union loans: Credit unions typically offer small to mid-sized personal loans at low rates, though you must be a member to get a credit union loan. Federal credit unions cap APRs at 18%. These lenders tend to consider your full financial picture when you apply and may qualify borrowers with fair or bad credit. Zero-interest credit cards: You’ll pay no interest on expenses you charge during the introductory rate period of a zero-interest credit card, typically the first 15 to 21 months. After that, rates can jump up to almost 30%. Credit card companies often require good to excellent credit in order to get one of these cards. Cash advance apps: If you need a small loan of $500 or less, a cash advance app can be a fast, no-credit-check option with low fees. You may need to repay the advance as soon as your next paycheck, so this option works only if your budget can withstand it. Buy now, pay later: “Buy now, pay later” plans can be used for purchases at most retailers. These payment plans split your purchase into equal installments, typically due in two-week increments. Most BNPL plans don’t charge interest or require a hard credit pull, but their convenience can lead to overspending. Other ways to make money: If you have extra time, consider picking up online work like freelancing, selling items you no longer use or other ways to earn income. The time investment and amount you earn will vary, but it could allow you to avoid borrowing altogether. 
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