If you are in the market for a personal loan, the important thing is to shop around to find the best banks for personal loans for you. While this will make it harder in the short term, it can make it easier in the long term if you manage to find a better deal than the one first offered to you.
Equally, make sure you can afford the monthly payments, as this can affect your credit score and make it harder to get a personal loan in the future.
If you’re looking to take out a personal loan, this article is for you. We’ll cover everything there is to know about personal loans, including what makes a great personal loan, and review the best banks for personal loans out there.
6 Best Banks for Personal Loans
- APR Range: 7.99% – 24.99%
- Minimum credit score: 660
- Loan amounts: $2,500 to $40,000
Discover is a full-service online bank based in Illinois. Mostly known for credit cards and Diners Club International cards, Discover offers most, if not all, financial products and services that you might need, including personal loans.
The bank’s personal loans are designed to cover various uses and can be customized based on several criteria. Loans are typically approved on the same day, with funds sent your way as quickly as the next day. The APR interest rates start at 5.99% and go up to 24.99%. The actual rate will be made available to you at the pre-qualification stage and will depend on several factors, including the loan amount and duration, your credit score, and other factors.
All loan specialists are based in the US, and you can use their online personal Loan Calculator to see if you qualify before submitting your application. All you need to enter is the loan amount, duration, and credit score bracket to get an indication of whether you’ll be approved.
- Personal loan calculator gives you a rough idea of terms
- You can choose the term
- Full-service bank allows you to build a strong banking relationship
- Low maximum loan amount
- Higher maximum APR rate
- APR Range: 7.99% – 25.49%
- Loan amounts: $5,000 – $100,000
While LightStream is not a bank, it’s part of Truist – an FDIC-member bank. The service is aimed at those with a good credit score, looking for an unsecured loan. LightStream loans can be used for practically anything, with the entire loan application process taking place online.
The APR depends on the loan amount, duration, and credit score. If you opt for AutoPay, you’ll receive a 0.50% discount. Lightstream’s APR starts at a much lower percentage than the competition – making for a good bargain if you can get it. The maximum loan amount is also higher at $100,000, making them an ideal option for looking for a larger personal loan.
LightStream does not have a minimum credit score requirement, though the applicant needs good credit to be approved. The lender considers several factors when determining if an applicant has good credit, including a stable income, long credit record, and good payment history.
- Low starting interest rate
- 0.50% AutoPay discount
- High maximum loan amount
- Rate Beat program offers a rate that is 0.10% less than any best-approved offer
- Good credit score required
- APR Range: Rates vary by zip code
- Minimum credit score: Not specified
- Loan amounts: $1,000 – $35,000
PNC’s personal loans are highly customizable, so you’ll need to submit an application for loan options to learn what terms and rates are available for you. PNC Bank will make a soft pull credit inquiry on you when submitting this request, determining what terms you can get. Soft pull credit checks, for the uninitiated, don’t affect your credit score. However, keep in mind that if you decide to proceed with the application, the bank will carry out a hard pull credit check, which may affect your credit score.
Starting at 6.39%, the APR is not the highest rate, but it’s not the lowest either. PNC doesn’t publish available loan terms – this is worked out case-by-case, depending on your loan requirements and financial situation. PNC limits personal loans to California residents to $10,000 but has no prepayment penalties.
PNC does not charge origination or application fees nor requires collateral in line with personal loans from other institutions. Applications can be submitted online and are quite straightforward (even if thorough).
- Lower maximum APR rate
- Custom terms
- No prepayment penalties
- Lowest APR rate is relatively high
- California residents are limited to $10,000
4. Wells Fargo
- APR Range: 7.49% – 23.24%
- Minimum loan amount: $3,000 – $100,000
Wells Fargo offers customizable personal loans for amounts ranging between $3,000 and $100,000 – a much higher limit than most of the competition offers. While their website offers limited information, you can easily submit an online request with your details to see if you qualify.
Speaking of rates, you’ll get 0.25% off your rate if you qualify for a relationship discount. To qualify, you need to hold a qualifying checking account with Wells Fargo and automate payments.
If you’re taking the loan to consolidate debt, Wells Fargo offers a nifty debt consolidation calculator to see if it’ll work out in your favor. You’ll need to know how much money you have left to pay, the applicable APR, and how much your monthly payments are. Enter all of the information, and the calculator will work it all out for you.
- 0.25% AutoPay discount
- High maximum loan amount
- Long maximum loan term
- Wells Fargo checking account required for AutoPay discount
- Higher APR starting range
5. TD Bank
- APR Range: 8.99% – 23.99%
- Minimum loan amount: $2,000 – $50,000
TD Bank is a subsidiary of Toronto-Dominion Bank – a Canadian bank based in Toronto, Canada. The bank has 1,220 locations in the US and is the 7th largest bank by deposits, offering a full suite of banking services and products, including personal loans.
Applying for a TD Bank personal loan is easy. You can finish your application online in as little as 1 minute. You’ll need to supply your personal and financial information, including employment history, income, and expenses. Approvals are equally fast – start the process early, and you can be approved the same day. Funding usually happens by the next day and is done through an ACH transfer.
- Fast application
- Next day funding
- Low minimum loan amount
- No fees
- The minimum interest rate is slightly higher than the competition
- APR Range: 8.99% – 25.81%
- Loan amounts: $5,000 – $100,000
SoFi is not a bank, but rather a personal finance company. Either way, it offers many products and services that banks do, including personal loans. Founded in 2011, it’s a relatively new entry. However, SoFi has already funded over $50 billion in loans and has some 3.5 million members!
The APR interest rate starts at a higher percentage than some other offers. Remember, the advertised rates include discounts, so if you don’t qualify, your rate may be even higher than this. The good news is that SoFi will give you your rate in one minute, plus a $20 bonus deposited in a Checking, Savings, or SoFi Money account.
One thing worth noting is that SoFi loans come with unemployment protection. Should you lose your job, SoFi will not only adjust your payments but also help you find a new job. And there are no late fees, which is a win.
- No late fees
- $20 bonus when checking your rate
- Unemployment protection
- Starting rate is slightly higher than the competition
- The maximum rate is slightly higher than the competition
What is a Personal Loan?
A personal loan is a type of loan used for personal purposes. Personal loans are typically for smaller amounts of money and shorter periods compared to a mortgage or a car loan.
Several different types of financial institutions offer personal loans, including:
How much can I borrow with a personal loan?
There is no official maximum amount of money you can borrow through a personal loan. The lender will typically devise its own rules.
In 2019, California passed the Fair Access to Credit Act, limiting the maximum amount you can get through a personal loan if you are a resident of California. The act limits the interest rate on loans between $2,500 and $10,000. Some banks may limit the maximum amount given to residents of California to $10,000.
How can you use personal loans?
As personal loans are not necessarily for one particular expense, you can use them for various reasons, including:
- Home renovation and home improvement projects
- Debt consolidation
- Bills and expenses
Some banks will ask you how you’re planning to use the loan, but most include an ‘Other’ option. The important thing here is to know what you will use the money for and budget accordingly. A loan is anything but free money. On the contrary, it’s expensive money as it carries interest.
One important use for personal loans is debt consolidation. With a debt consolidation loan, you take out a loan to pay off all of your debts, then just service the loan. Most debt carries interest, like a fee that you have to pay to the lender/creditor. Different lenders charge different fees, so make sure you use a debt consolidation calculator to see if you’ll save money by taking out a debt consolidation loan.
One last thing about personal loans: in most cases, a dedicated loan (a car loan, for example) will work out cheaper than a personal loan. Be sure to take the time to shop around to see which loan will work best for you.
Personal Loan Fees and Interest
All loans carry interest and fees. Not all lenders have or impose all fees, and some fees only kick in when something happens (like if you miss a payment). This will be laid out in full within the loan terms, including where and how fees become applicable.
It’s important to go through the loan terms before signing anything. You need to understand what you’re getting yourself into (or there may be unpleasant surprises down the line).
The APR is perhaps the most important personal loan fee as it will be by far the biggest expense. APR stands for Annual Percentage Rate and represents, together with the sum borrowed, what you’ll have to pay back to the bank.
APRs are always quoted as a percentage of the borrowed sum you’ll need to pay the lender on top of the borrowed sum. Personal loan rates depend on the duration of the loan. The longer the loan duration, the more interest you’ll have to pay – so if you want low-interest rates, best to take out loans that won’t take years and years to repay.
Fixed vs. Variable APR Rates
One important thing to watch for is whether APR is fixed or variable. A fixed APR rate stays fixed (the same) throughout the loan duration. A variable APR rate can go up or down – depending on the rate issued by the Federal Reserve.
A loan origination fee is paid to the lender to cover the expenses of processing the application. This fee is usually a percentage of the borrowed sum – but most personal loan lenders don’t charge this fee.
A loan application fee is a one-time, non-refundable fee paid during the loan application. Since loan application fees have come under fire for being unnecessary, most lenders don’t charge this anymore.
A prepayment fee is a penalty the lender charges you for repaying your loan early (yes, as hard as it is to believe!). You see, the lender charges interest over the loan term. If you pay your loan early, the lender will not collect those fees – so they charge you a prepayment fee.
The fee acts as an incentive to continue paying until the end of the term to pay the full interest.
Late Payment Fee
As the name suggests, this is a fee you pay when you’re late with your payments. Personal loan repayments are typically due every month. You can expect the bank to charge you late fees if you miss the date. However, some lenders don’t charge this fee.
A bank charges a closing fee to cover all loan-related services. While closing fees are most common for mortgages, it’s always wise to keep an eye open for them as they can quickly add up the total repayable amount.
Now that we’ve covered the most common loan fees let’s discuss a discount – a much welcome change! To have an Autopay discount applied to your APR, you’ll need to sign up for Autopay.
Essentially, it’s a rate discount you get for committing to always make the payment on time. With AutoPay, the amount due leaves your account automatically every month, helping the lender ensure you don’t forget to process the payment while giving you peace of mind that you’ll make the payment on time.
Personal Loan Requirements
Personal loan requirements tend to vary from one lender to the next.
Secured vs. Unsecured Loans
Loans can be secured or unsecured. Personal loans are typically unsecured, meaning you don’t have to put up anything as collateral. On the other hand, secured loans require collateral that the bank may repossess should you fail to make the payments on time.
That doesn’t mean that lenders give personal loans to just about anyone. There are still several approval requirements you’ll need to meet. These requirements will vary from one type of financial institution to another.
You can take out personal loans individually or jointly with a co-signer. Any co-signers will also need to bring any requested documentation.
Typically, your creditworthiness is important as it helps the bank or financial institution decide whether to give you a loan. A healthy credit and FICO score will be the biggest requirement. Some lenders accept those with a fair credit score. However, if your credit score is fair, you can expect your interest rate to increase.
Some lenders will also ask you for your financial histories, such as bank statements and asset declarations – from your savings account to any investments you might hold. While personal loans are typically unsecured, the lender still needs to make sure (as much as possible) that you will be able to pay back the loan amount in full.
Income declaration is another requirement that many lenders ask for from prospective customers. This proof of income helps the lender determine your debt-to-income ratio and, as such, your ability to pay back.
Can You Get a Personal Loan Online?
Depending on the lender you choose for your personal loan, you can apply for a loan online or visit a branch. Online applications are by far the most common, and in most cases, it’s going to be your only option.
Applying for a loan online is easy and fast. Some lenders process successful applications on the same day, making this your best option if you need money quickly.
Online personal loan applications vary from one lender to the next. Some will ask you to submit a pre-application, while others accept a loan application straight away. The same goes for the information you need to provide during the application process; however, you can expect to need to provide:
- Your personal details
- Your credit score
- Banking history
- Reason for taking out the loan
- Annual income
- Monthly commitments
- Loan amount
- Loan term
Should you not have all of the requested information, you might want to contact the lender to see what options might be available to you.
Some lenders will also allow you to apply in person by visiting one of their branches. You might want to call them in advance to ask for an appointment in such cases. Ask what information and documents you need to take to avoid making the process longer than needed.
Pros & Cons
Like everything else, personal loans have both perks and cons. Understanding what these are can help you make the right financial decision.
- Fast funding: Personal loans are typically funded quickly – some lenders can send funds your way the same day! Others promise funds will be in your bank account by the next business day, which can be very helpful should you find yourself in a situation where you need the money urgently.
- No collateral required: Personal loans don’t require collateral, making it easy to apply and qualify. While no collateral is needed, you’ll still need to fulfill other requirements to be eligible for a personal loan, including regular income and a healthy credit score.
- Reduce debt: When used as a debt consolidation tool, personal loans can actually decrease your overall debt. As a rule of thumb, your loan needs to have a lower APR rate than the debt you are paying off for this to work.
- Lower interest rates: Personal loan interest rates can be considerably lower than alternatives (for example, credit cards). The applicable rate will depend on several factors, including the lender, loan amount, loan duration, and your financial health. Unless you are dead set on a particular lender, it’s always good to shop around to see what other options are out there.
- Fixed payments: Personal loans come with a fixed APR so that payments are fixed. Knowing how much you need to pay each month can help you tremendously with budgeting. You can set enough money aside to meet your obligations, and there are no surprises.
- Longer terms: Personal loans can generally be paid back over longer terms, making payments more manageable. Such long terms can make borrowing money more sustainable – as long as you consider the possible cons, which we’ll cover next.
- Debt increase: Personal loans will always need to be paid back (like credit card debt, mortgage, or other ways of borrowing). Unless used wisely, they can increase your debt. While sometimes there is no alternative, it remains important to recognize this in the broader context of your financial health.
- Lower credit score: Personal loans are a form of credit utilization and can lower your credit report score, especially if you’re servicing other debts at the same time. The credit utilization process starts from the loan approval stage, where the lender does a hard pull credit check on you. If you miss payments, you can take further hits to your credit score, making things harder for you in the future.
- Fees: While most lenders we reviewed don’t charge fees, other fees may still apply (like fees for making your payment late). Of course, the interest also needs to be paid, which is a form of fee.
Characteristics of a Good Personal Loan
Several things come into play when trying to decide what makes a great unsecured personal loan. It’s important to consider not only what the bank is offering, but also your financial habits.
Competitive interest rates are great if you meet the eligibility criteria. However, if you’ve missed payments in the past, look for friendlier repayment terms since fees can wipe out what you gain from lower interest rates.
Equally, look at the term lengths available. Longer terms mean your payments will be spread over a longer period, lowering them. On the flip side, the longer the term, the more interest you will pay in the long run.
Also, pay attention to what ancillary services come with the loan, like unemployment protection and AutoPay discounts. These can come in handy.
Frequently Asked Questions
What is the best bank for personal loans with bad credit?
If you have bad credit, your options might be limited, but it isn’t impossible to get a personal loan.
One good lender for people with bad credit is a financial technology company, Avant. Avant specializes in personal loans for people with fair or bad credit. You can get terms of 2 to 5 years and loans of $2,000–$35,000, which is pretty decent.
If you have poor credit, you may also want to consider a lender with more lax criteria, like a P2P lender. Either way, keep an eye on:
- Interest rates: While you might not qualify for the lowest rates, shop around to try and get the best rate for your credit score.
- Fees: Late payment fees, for example, might be higher for someone with bad credit, so make sure you know what these are beforehand.
Which bank is easiest to get a personal loan from?
All banks follow the same personal loan application process – you can apply online in minutes and get a rate straight away. Banks will have different qualification criteria, so shopping around can save you a lot of money down the line.
It is worth noting that some banks only offer loans to those who have a very good or excellent credit score. Make sure you read our reviews to see which bank might be the best option for you.
What bank is most likely to give a loan?
How likely a bank is to give out a loan depends on several criteria, most directly correlated to your financial situation. Some banks list the minimum credit score required to get a loan, but not all do.
Many lenders don’t list the minimum credit score because they consider many other factors such as your income, expenses, loan amount, and other things.
An online lender might be more forgiving when accepting customers and, as such, more likely to give out loans. Since interest payments can be quite substantial, it is always worth shopping around to see who can offer you the best rate.
What banks give personal loans without being a member?
Most, if not all, banks will require you to hold an account with them to give you a loan. Lenders that are not banks might not have this requirement. However, some will give you an account for free!
One lender that stands out is SoFi which will give you an account for free and, for a limited time, fund it with a free bonus worth $20. Read the review to find out how.
Is it hard to get a personal loan from a bank?
If you have an OK credit score (660 or more) and a regular source of income, getting a personal loan shouldn’t be much trouble. The lower your credit score and income, the tougher your terms are likely to be. So, if you don’t have the best credit score, you may be offered higher interest rates and a lower amount.