Traditional banks, credit unions, online-only lenders and peer-to-peer lenders offer personal loans. If your credit is not great or you are trying to establish credit, it might be easier to qualify for a loan at a credit union, but there are online lenders that work with borrowers with less-than-stellar credit.
Depending on the lender or institution, the application and approval process for personal loans is often immediate and you’ll get the funds disbursed in a lump sum amount within one to two business days.
Personal loans are unsecured, so your credit score carries a lot of weight in lending decisions. Borrowers with good to excellent credit get the best rates and terms. That being said, before you start applying get a copy of your credit report and check it for incorrect or outdated information and make sure you meet the lender’s minimum credit requirements.
It’s also crucial to consider the purpose of your loan before choosing a lender. If you are taking out a loan for home improvement, for example, the best lenders will be different than if you are looking for a debt consolidation loan. While you can use personal loans for almost any purpose, some lenders will offer better rates and terms for some situations than others.
When you narrow down the top lenders, compare the annual percentage rates and use the calculator on this page to see how much different rates will cost you over the life of the loan. Also check for fees, including loan origination fees, prepayment penalties, application fees and late fees. While the fees may seem minimal, they can add up and eat into the value of your loan so read every word of the fine print before you sign on the dotted line.
