What Are the Best Personal Loan Companies?
The best personal loan companies offer low interest rates, favorable loan terms and flexible payment options. Because each lender has distinct terms and conditions, you should know what you want in a personal loan before you start comparison shopping.
“Consumers can choose the best personal loan by doing their research, shopping around between multiple lenders, reading the fine print and only selecting a loan that they know they can afford to repay,” says Jared Kaplan, former CEO of OppFi, a financial technology company that offers bad credit loans.
An easy place to begin is to check that a lender is licensed in your state. Make sure each lender can offer personal loans where you live. Then, you can compare these other key factors to help you choose the right lender.
Loan Terms
Each lender sets its own terms, such as:
Minimum and maximum loan amounts. Every lender has a minimum and maximum loan amount. If you’re looking for a small personal loan of less than $2,000, for example, you’ll need to find a lender offering loans at that amount.
Minimum and maximum term lengths. Lenders also have minimum and maximum term lengths, which vary among lenders. It's not uncommon for borrowers to have 60 months to pay off their personal loans, but some lenders offer term lengths of up to 144 months. The longer your loan period is, the lower your payments will be, but you might pay more in interest. If you can afford a higher monthly payment, go with the shorter loan period to save on interest.
Loan use restrictions. Some lenders have restrictions on how you can use your loan. These vary by lender. Don’t lie about how you’re going to use the money. Lying on your loan application can be deemed loan fraud and result in extra charges.
Disbursement times. Lenders also have their own time frames for how quickly you’ll receive your personal loan funds. Some lenders offer funding as soon as the next business day after approval. Usually, funds are distributed within a few business days, and most lenders will disburse them electronically.
Lender Loan Fees and Penalties
One of the most important aspects to compare before choosing the best personal loan is what each lender charges in fees. Fees can significantly increase the cost of a personal loan.
Lenders commonly charge origination fees to cover the costs of processing your loan, though not always. These fees are typically between 1% and 8% of the loan amount.
Because most lenders enforce late fees, you should always pay your loan on time. Some lenders waive late fees, including Marcus by Goldman Sachs and SoFi, but you should still expect interest to accrue if you pay late.
If you don’t have enough money in your account, most lenders will charge a minimal fee for returned payments.
Though rare, prepayment penalties may apply when you repay your loan ahead of schedule.
Repayment Options
Choices vary by lender, so make sure your lender has options that work best for you.
Most lenders offer flexible payment options, including autopay, check by mail or online, and even a chance to change your payment date.
Some lenders, such as Upgrade and U.S. Bank, provide an autopay discount, which can reduce your rate if you enroll.
Researching Personal Loan Companies
Before you move forward with a lender, be sure to read personal loan reviews so you know what to expect – or when to avoid a lender.
Kaplan recommends researching lenders on the Better Business Bureau website to check for negative marks or complaints.
You can also research lenders using the Consumer Financial Protection Bureau’s Consumer Complaint Database.
Additional Lender Offers
Some lenders offer loans with additional features that make them a better fit for certain borrowers.
Discover, for example, lets you return personal loan funds within 30 days, with no interest or other charges, if you change your mind after the loan has been finalized. And SoFi has an unemployment protection program that allows you to temporarily suspend payments and receive personalized help with finding a job if you lose yours through no fault of your own.
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