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You can use an unsecured personal loan to consolidate debt or finance large purchases. Interest rates and terms can vary, based on your credit score and other factors. Compare loans from multiple lenders and learn more about personal loans.

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We can’t show loan options in Connecticut just yet, but we’re on it.

While we work on bringing Nerdy recommendations to your state, you can dig into our articles to learn more about personal loans. See:

How to choose the best personal loan

November 18, 2020

What is a personal loan?

An unsecured personal loan is a fixed-rate loan that is not backed by collateral and is repaid in monthly installments over a specific term, usually two to seven years. When you need money to cover a large expense or to consolidate your debt, consider a personal loan.

To qualify you, lenders look at factors including your credit score, credit report and debt-to-income ratio. You can get a personal loan from some major banks, credit unions and online lenders.

What rate should I expect?

Borrowers with good to excellent credit (690 and higher on the FICO scale) typically get the lowest interest rates and can borrow larger amounts. They also have the most options when it comes to shopping for a loan.

Those with fair to bad credit (FICO scores below 689) may have to look a little harder and pay a higher rate for a personal loan. Some online lenders target low-credit borrowers, offering loans with rates from 18% to 36% APR. Having steady income, low debt, a long credit history and a record of on-time payments will improve your chances of being approved.

Here’s what interest rates on personal loans look like, on average:

How's your credit?

Score range

Estimated APR












27.2%; lowest scores unlikely to qualify

Source: NerdWallet lender survey

Before you choose a personal loan

  • Check your credit score. Learn about your personal loan options based on your credit score. This will give you an idea of what to expect as you shop for loans. You might decide to postpone getting a loan and instead take steps to build your credit.

  • Compare your options. Interest rates on personal loans for good credit start around 5% APR, but if you can qualify for 0% interest credit card — and pay off the balance within the promotional period — then you’re better off with the credit card.

  • Find a co-signer. If you have bad credit, having a co-signer with good credit allows you to piggyback on his or her creditworthiness and potentially get a better rate.

  • Consider a secured loan. Using a car, savings account or other asset as collateral may get you a lower rate.

  • Assess your overall financial well-being. Personal loans work best as part of a balanced financial plan. Borrow money to consolidate debt if it means you’ll get out of debt more quickly. But don’t borrow if it only adds financial strain. If your current debt is overwhelming, investigate your debt-relief options.

How does coronavirus impact personal loans?

In response to the COVID-19 crisis, some lenders have introduced small-dollar loans for consumers dealing with financial losses. Other lenders have tightened requirements for their loans, making it more difficult for borrowers with bad credit to qualify for a personal loan.

Especially during difficult times, it’s important to know the hardship options lenders offer. Some lenders allow you to defer loan payments for a specified time. If you miss payments without first notifying your lender, your credit will take a hit and your loan could be in default.

Reasons to get a personal loan

One benefit of getting a personal loan is you can use the money for nearly any purpose. Ideally, getting one positively impacts your overall financial health, by helping you pay off debt faster, for example, or adding to the value of your home. Here are some top reasons consumers get personal loans:

  • Debt consolidation: Roll your debts into one monthly payment, potentially reducing the interest you pay toward the debt and helping you pay it off faster.

  • Home improvement: Need to add on a home office? Use a personal loan to cover the costs.

  • Large expenses: You can use a personal loan to buy a boat, RV or other items with large price tags.

  • Weddings: Using a personal loan to pay for your wedding can help you stick to a budget.

How do I pick the best personal loan?

If you decide a personal loan is right for you, always compare rates from multiple lenders. The loan with the lowest APR is the least expensive — and therefore, usually the best choice.

Also consider the loan’s term and monthly payments. A longer term may mean lower monthly payments, but you’ll pay more in interest over the life of the loan. Assess how the payments fit into your monthly budget.

Some loans have features that may be important to you. If you’re consolidating debt, a lender that sends your loan proceeds directly to your creditors saves you that step in the process. Some lenders offer flexible payment options that allow you to change a payment due date or defer a payment.

How to get a personal loan

Most online lenders allow you to pre-qualify and see estimated rates without affecting your credit score, so it pays to shop around.

If you have good credit and an existing banking relationship, it’s worth checking out loan options from your current bank or credit union. Here are some top banks that offer personal loans.

To compare rates from online lenders, use NerdWallet’s lender marketplace above to pre-qualify and easily compare several offers at once. If you qualify, you could receive your money as soon as the next day.

Online personal loan companies reviewed by NerdWallet

Best lenders for excellent-credit borrowers (FICO score above 720):

Best lenders for good-credit borrowers (FICO score between 690 and 719):

Best lenders for fair- or bad-credit borrowers (FICO score below 690):

See more personal loan options on NerdWallet


Annual Percentage Rates (APR), loan term and monthly payments are estimated based on analysis of information provided by you, data provided by lenders, and publicly available information. All loan information is presented without warranty, and the estimated APR and other terms are not binding in any way. Lenders provide loans with a range of APRs depending on borrowers' credit and other factors. Keep in mind that only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend on factors like credit score, requested loan amount, loan term, and credit history. All loans are subject to credit review and approval.