6 Best Personal Loans of February 2022 | Smart Change: Personal Finance

1. Best Variety of Loan Options
   

   LightStream

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   • Company Highlight:Offers some of the longest loan terms in the market. If you’re not satisfied after closing, you get $100.
   • Loan Amounts:$5,000 – $100,000
   • Loan Terms:24 to 144 months
   • APR:2.49% – 19.99% (with AutoPay)
   • Minimum Credit Score:700+

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2. Best Marketplace
   

   Credible

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3. Best Online Lender
   

   SoFi

   Our Partner

   

   • Company Highlight:Loans for up to $100k. Apply entirely online for a streamlined process. Offers unemployment protection.
   • Loan Amounts:24 to 84 months
   • Loan Terms:$5,000 – $100,000
   • APR:4.99% – 20.25%(with AutoPay)
   • Minimum Credit Score:680

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4. Best Peer-to-Peer Lender
   

   Upstart

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5. Best Credit Union
   

   PenFed

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Whether you’re looking to consolidate debt, finance a big purchase, or make home renovations, a personal loan could be the tool to help you get there.

Read on for our list of the best personal loans of 2022, with reviews that include credit score requirements, available repayment terms, loan amounts and annual percentage rates.

• Online application
• Autopay discount
• Better rate guarantee
• No origination fees
• No prepayment penalties

• Qualifying applicants need good or excellent credit
• No pre-approvals

Term Lengths

24 to 144 months

Loan amounts

$5,000 – $100,000

Minimum credit score required*

700+

Why we chose it: Lightstream offers a low starting APR, along with a wide variety of loan options and longer repayment terms than most competitors.

LightStream, a subsidiary of SunTrust Bank (now Trust), has a wide range of loan options and some of the longest repayment terms available in the market. You can take out a personal loan for home improvements, medical bills, vacations, big purchases, K-12 education, recreational vehicles, family planning, and even to purchase horses.

Lightstream’s starting APR is 3%, which is lower than the industry average. Borrowers benefit from an additional 0.50% discount to their APR if they sign up for AutoPay, and a 0.10% discount may apply as well if they get a lower APR offer from a competing lender.

LightStream topped J.D. Power’s 2020 U.S. Consumer Lending Satisfaction Study. As part of their customer satisfaction guarantee, LightStream will pay you $100 if you’re not satisfied with your experience after closing the loan.

• Free marketplace and comparison service
• Access to pre-qualification and quotes from multiple lenders
• Best rate guarantee

Term Lengths

12 to 84 months

Loan Amounts

$600 – $100,000

Minimum Credit Score Required*

Depends on lender

Why we chose it: Credible lets borrowers compare multiple quotes from some of the top-rated personal loan providers in the market.

Credible’s lending platform lets you compare quotes from multiple lenders in as little as two minutes — without making a dent in your credit score. They feature an excellent network of lenders, which include SoFi, Lightstream, PenFed and others.

This can save you time and money by narrowing your choices by location, loan amount, desired APR and loan purpose.

If you find and close a personal loan with a lower rate on a competing website within eight days of applying at Credible, the company will give you $200.

The company welcomes applicants with a variety of credit histories, but applicants with excellent credit histories tend to see more loan offers, more flexible repayment terms and lower interest rates.

• No origination fees
• No prepayment penalties
• No late fees
• 0.25% AutoPay discount
• Option to add co-borrower

• Disbursement of funds can take a few business days

Term Lengths

24 to 84 months

Loan Amounts

$5,000 – $100,000

APR*

5.74% – 20.28% (with AutoPay)

Minimum Credit Score Required*

680

Why we chose it: Online lender SoFi stands out for its ease of use and fast application process.

Initially a student loan lender, SoFi now offers personal loans up to $100,000, one of the highest loan limits on this list..

You need a good credit score to qualify, but there’s a lot to like about SoFi personal loans. Unlike many other lenders, SoFi considers alternative credit data — like free cash flow, professional history and history of financial responsibility — while still offering competitive interest rates.

The application process is entirely online and can be completed in a matter of minutes.

SoFi also offers unemployment assistance if you lose your job, modifying your monthly payments and providing you with free tools, like career coaching and financial advice.

• Accepts applicants with fair credit and shorter credit histories
• Considers alternative data
• No prepayment penalty

• Charges late payment fees
• Offers only two repayment terms
• Charges origination fees

Term Lengths

36 and 60 months

Loan Amounts

$1,000 – $50,000

Minimum Credit Score Required*

620

Why we chose it: Upstart is the only peer-to-peer lender that accepts applicants with lower FICO scores and short credit histories.

Upstart’s peer-to-peer model is simple: instead of getting the money from a traditional financial institution, you get it from investors. Upstart’s alternative loan application model considers job history, highest level of education you’ve achieved and area of study to determine eligibility.

Upstart is the only peer-to-peer lender that accepts applicants with a fair credit score (620) and short credit histories. Even unemployed individuals may apply as long as they have an employment offer with a starting date that isn’t more than 60 days away from the date of application.

You can check your rate before applying, and loan funds can be disbursed as early as the next business day after you close on the loan.

• Branches nationwide
• Flexible repayment terms
• No prepayment penalties or origination fees

Term Lengths

6 to 60 months

Loan Amounts

$500 – $20,000

Minimum Credit Score Required*

Not disclosed

Why we chose it: PenFed offers both the nationwide presence of a traditional brick-and-mortar lender and credit union perks, like flexible terms and low fees.

PenFed is our top credit union for personal loans because of its flexible repayment terms, low loan amounts and the lack of loan origination or prepayment penalties.

They offer a lower APR range than other credit unions, and candidates can apply individually or with a co-borrower. Non-members can apply for a personal loan and only need to join if they choose to accept the loan offer.

Membership was previously limited to the military, certain government agencies, and residents of eligible locations, but as of 2019, PenFed makes it easy for others to join. All you have to do is select “None of the above” in the membership application’s eligibility section and open a savings account that has at least $5 for the membership fee.

• Lower APR than similar banks
• No origination fees or prepayment penalty
• Fast funding

• Credit score must be at least 660, higher if not a U.S. Bank customer

Term Lengths

12 to 60 months

Loan Amounts

$1,000 – $50,000

Minimum Credit Score Required*

660

Why we chose it: U.S. Bank offers quick funding and lower APRs than most traditional banks.

U.S. Bank has a starting APR that competes with the best loan rates in the industry. Its maximum personal loan APR caps out at 18.49%, much lower than those of other big banks like Citi and Wells Fargo, which cap their APRs at around 24%.

U.S. Bank also has an emergency Simple Loan available for minor, short-term expenses with a minimum loan amount that starts at $100 and goes up to $1,000. While the Simple Loan has a $6 monthly fee for every $100 you borrow, it could be a good alternative if you need a smaller amount quickly and want to avoid payday loans.

Do note, however, that , if you’re not already a U.S. Bank customer, you will be subject to stricter credit score requirements and may only borrow up to $25,000.

Marcus by Goldman Sachs Personal Loans

• Ranked #2 in J.D. Power’s 2020 U.S Consumer Lending Satisfaction Study
• Customizable due dates
• One-time deferral bonus for consecutive, on-time payments
• No service fees

• No co-signers or co-borrowers

Marcus by Goldman Sachs specializes in debt consolidation loans and has many worthy features such as no service fees and customizable due dates. However, they don’t allow co-signers or co-borrowers, which can be a deal-breaker for borrowers with lower credit scores.

• Fast online loan approval
• Minimum credit score of 600 – 700 for best rates
• Funding in as little as one business day

• Origination fees vary from 0.99% to 5.99%
• $50,000 loan maximum across multiple loans

Best Egg also specializes in debt consolidation loans and features quick one-day funding and online approval. However, customers may only have a maximum balance of $50,000 across multiple loans and origination fees are fairly high.

• Accepts lower than average credit scores
• No prepayment fees
• Pre-approval available

• Alternative credit data not considered
• A high number of complaints registered against it with the (CFPB)

Prosper is a peer-to-peer lending marketplace offering loans funded by other individuals and investors. The high number of complaints lodged against the company with the Consumer Financial Protection Bureau (CFPB) knocked it off our main list.

LendingClub Personal Loans

• Pre-approval available
• No prepayment fee
• Option to apply with a cosigner

• Loan amounts up to $40,000
• 3% – 6% origination fee

LendingClub is yet another peer-to-peer lending marketplace. We didn’t include it on our list because of its high origination fees and low maximum loan amount.

LendingTree Personal Loans

• Reputable lender options: Marcus, LightStream, SoFi, OneMain Financial and others
• Online tools: credit and debit analyzers, calculators and FAQ’s

• Higher number of CFPB complaints than other marketplaces
• Maximum loan amounts and credit score requirements are not as competitive

LendingTree is a loan marketplace where borrowers can compare rates from multiple highly rated lenders. Unfortunately, a high number of CFPB complaints have been lodged against LendingTree, which disqualified it from our main list.

Wells Fargo Personal Loans

• Lower minimum APR than similar banks
• Fair credit scores accepted
• Extensive online tools
• Over 8,000 physical branches

• High number of complaints with the CFPB when compared to similar lenders

Wells Fargo is one of the largest and oldest banks in America. The high number of complaints registered against it with the CFPB disqualified it from our list.

• Lenient underwriting
• Fair credit scores accepted

• High loan origination fees
• Administration fees
• APR range from 9.95% to 35.99%

Avant uses a proprietary algorithm to determine borrowers’ creditworthiness, and its underwriting is more lenient and lower credit scores are accepted when compared to other lenders. However, it charges high origination and administrative fees and has less competitive rates, which kept Avant out of our main list.

• No prepayment penalty
• 3-, 5- and 7-year repayment term options
• Next-day fund disbursement

• $39 late payment fee
• $25,000 minimum household income required
• No cosigner option

Credit card issuer Discover also originates loans, but it was its minimum income requirement and the fact that it doesn’t allow cosigners on loans that disqualified it from our main list.

The following guide outlines everything you need to know about personal loans, including how they work and what you need to qualify for one.

Personal loans can be convenient alternatives when you need cash for an emergency or if you need to consolidate already existing debt.

You can request personal loans from banks, credit unions or other financial institutions. These types of loans can be used for a variety of purposes such as paying off debt, home remodeling, medical bills, or vacations.

Just like other types of loans, the interest rate on personal loans will depend on your credit score, income, and other factors. They’re paid in monthly installments, which can typically range anywhere between 12 to 72 months or more.

Here are a few things to consider when you’re shopping for a lender:

• Your credit score: Most providers will prefer a FICO credit score of 660 and more; however, there are financial institutions that cater to borrowers with lower credit scores.

• Your debt load: The debt-to-income ratio is a deciding factor for lenders, as it shows them how much debt you already have and whether you’re able to repay the new debt you’re undertaking.

• Annual percentage rate: The APR includes the interest rate plus other lender fees and represents the loan’s actual cost.

• Loan purpose: There are lenders that specialize in, for example, credit card debt consolidation, medical bills, or have specific loans available for home renovations.

• Fees and penalties: Lenders often charge other fees in addition to the monthly payment, such as origination fees, late or missed payment fees and early payment (or prepayment) penalties. However, many banks — including some in our list — have done away with these extra charges.

• Get all your financial documents in order: In most cases, you’ll need proof of income, bank statements, along with proof of identity and citizenship to apply.

• Check your credit report: Higher credit scores get better rates, and most lenders will require a credit score of 660 or more. Make sure to check your credit thoroughly before applying for a loan — check for any accounts that don’t belong to you or any inaccuracies that could be impacting your score. If there are any, try to clear them up before applying. You can also give your credit a boost by getting your credit usage below 30% or hiring the services of a credit repair company.

• Figure out how much you need to borrow and the rate you can afford: If you’re getting a loan to pay off higher-interest debt, you’ll need to run your numbers carefully. Calculate exactly how much you’re paying in interest rates now and determine the interest rate you’d need from a personal loan in order to truly reduce your debt. After all, you don’t want your new loan to end up costing you more than the debt you’re trying to eliminate.

• Shop around: Most online lenders have fast pre-qualification processes, and can give you an estimate of the rate they could offer you. These pre-qualifications involve a soft credit inquiry — in other words, they won’t impact your credit score like a formal underwriting process would.

• Apply: Once you settle on a lender that fits your needs, submit an application and await a response.

While most personal loans are unsecured, some can be secured. Secured loans require that you offer collateral — in other words, that you offer one or some of your assets as a guarantee of payment. While this makes you a safer investment for the bank, it’s riskier for you. If you should default on your loan, the bank would take possession of that asset and sell it to pay off the debt.

Unsecured loans, on the other hand, do not require collateral.

Here are other key differences between them:

You can get personal loans from brick-and-mortar banks, credit unions, or from online lenders such as the ones featured on our list.

Personal loans aren’t the only alternative available for covering emergency expenses, or consolidating credit cards.

If you need cash to do repairs or remodel your home, you might be interested in home improvement loans, which are secured by your home and tend to feature lower interest rates than personal loans.

Payday loans are typically small, quickly funded loans that are due on your next paycheck.

Payday lenders secure their money by asking for a postdated check or direct access to your checking account to withdraw the funds by your next paycheck. However, their sky-high interest rates — which can often be as high as 400% — can make these loans balloon so quickly that borrowers find themselves unable to repay them.

Similarly, title loans lenders use your vehicle title as collateral, so they can repossess and resell your car or motorcycle if you don’t pay it back in time.

Failing to settle either of these loans in time has trapped many borrowers in an endless debt cycle, where they have to renew or roll the loan over to a further date, stacking up higher interest rates and fees.

As we said above, we don’t recommend either of these options. If your credit isn’t where you’d like it to be, keep in mind that there are bad credit loans and credit cards aimed specifically at high-risk borrowers. If it is a time-sensitive issue, many reputable online lenders — including many in our list — guarantee fast funding, with same-day or next business day disbursement.

Most personal loan lenders offer unsecured loans. Unsecured loans don’t require collateral — that is, you won’t have to put up valuable assets as a guarantee of payment. However, the lack of a guarantee makes this type of loan riskier for a lender, and will likely feature a higher interest rate as a consequence.

Personal loans are a type of installment loan. Unlike other types of loans, personal loans may feature shorter repayment terms and can be used for a variety of purposes. Common uses are debt consolidation, home improvement projects, medical expenses and financing big purchases, events or vacations.

Technically, there is no limit to the number of personal loans you can have at once. That said, financial institutions place limits on the number of loans they’re willing to give any one borrower at a time. These policies may vary depending on your particular circumstances. Additionally, the more debt you have, the less likely you are to be approved for a loan.

Some lenders restrict loans a bit more than others and forbid the using of funds for paying for college or contributing to retirement plans, among others. Additionally, taking out a loan on behalf of someone else or using it for any form of gambling — including investing — is a no-no with any type of personal loan.

Personal loans are a safer bet than a balance transfer card when it comes to credit card debt consolidation. Personal loans feature lower interest rates than credit cards, with terms lasting up to 60 months. Lenders may even offer loans with no fees. Balance transfer credit cards have lower interest rates than traditional credit cards, and most offer an introductory 0% APR. However, these offers typically last between 12-18 months, after which your APR will be based on your creditworthiness and market conditions. Transfer fees of up to 5% of the transferred amount may apply as well.

While it’s not impossible to get a loan while unemployed, it will be difficult without a job offer or another source of income. Some lenders may still extend you a loan offer, but keep in mind that interest rates will likely be high, as you’ll pose a higher risk of default.

We looked at the 2020 Largest 50 Institutions By Consolidated Banking Assets report by the Federal Deposit Insurance Corporation (FDIC). We also took into account the top unsecured personal loan companies from the growing fintech market.

We checked J.D. Power’s 2020 U.S Consumer Lending Satisfaction Study to measure consumer satisfaction, favoring companies with the highest ratings. As an additional metric, we considered the number of complaints each had with the Consumer Financial Protection Bureau (CFPB).

We wanted lenders that cater to both consumers with excellent credit and those who are just getting started or have less-than-stellar credit scores. We looked at each lender’s minimum credit requirements and noted those which considered alternative credit data.

Finally, we checked the lenders’ APRs, selecting those with the lowest starting APRs.

We ranked the companies based on what they offer for: loan options, APR range, available terms, credit score requirements, fees, and prepayment fees.

We also looked at service or interest rate guarantees, funding times, fund disbursement options, ways to apply, state availability, discounts, and customer support.

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