Best Personal Loans |‌ ACFA

When is it best to get a personal loan?

A personal loans is best choice when:

  • This is the cheapest form of financing.
  • It can be used to improve your financial standing by consolidating debt or making home improvements.
  • Manage your monthly payments without worrying about your budget

A personal loan for discretionary expenses like a vacation can be costly. AFCA suggests that you save for non-essential costs to avoid paying finance charges.

Consider cheaper alternatives first if you are borrowing money for medical or emergency expenses.

Loan interest rates and fees

The personal loan interest rate varies by lender. Rates will vary based on your credit score, income, and debt-to-income ratio.

Low credit score borrowers typically receive lower rates (from 11% to 15%), while those with higher credit scores might get an APR of around 25%. Below are the average interest rates for personal loans.

To cover the costs of processing a loan, some lenders charge an origination fee. The fee is deducted from the loan proceeds or rolled into the balance by lenders. This upfront fee is removed from the loan’s annual percentage rate. It is essential to consider when comparing costs among lenders.

You should also be aware of late fees, insufficient fund fees, and prepayment fees. These are penalties for not paying your loan on time.

The pros and cons of personal loans

A personal loan may be the best option depending on your financial situation.


  • Personal loans have lower starting APRs than credit cards. Credit cards typically have higher APRs for consumers with good credit. Some credit cards offer 0% interest for an initial period. However, rates after that period are usually higher.
  • Monthly payments and fixed rates. Personal loans are a combination of fixed rates and monthly payments. This allows you to know exactly what you owe and how long. Variable rates can also be offered for financing, such as home equity lines. These may lead to fluctuating monthly payments.

Depending on your creditworthiness, you may be eligible for personal loans amounts between $1,000 and $100,000. This loan range can cover a variety of expenses, including small emergency costs and large home improvements.

  • No collateral. Unsecured personal loans aren’t secured by collateral, unlike home equity loans. If you are unable to repay the loan, your credit will be damaged. However, you will not lose any assets.


Personal loans may have higher APRs than credit cards.

  • Fees. Borrowers might have to pay expenses, such as origination fees or late fees, in addition to their loan payments.
  • An increase in debt. You must consider the additional cost and feel confident about repaying it.

How do you choose the best personal loan?

These are some things to keep in mind as you compare personal loans.

  • A soft credit check. Many online lenders will let you know your estimated interest rate by running a credit check during pre-qualification. This will not affect your credit score, so it is worth taking steps to pre-qualify with multiple lenders and compare rates and loan features.
  • Annual percentage rate. APRs include fees and interest rates. This allows borrowers to compare the costs of personal loans.
  • Repayment terms. You have the choice of a shorter-term with lower interest and a longer term with a more down monthly payment. Depending on your financial situation, one might be more financially sensible than the other. Loan amount. It all depends on your needs. One lender may be more appealing than the other. Some lenders offer loans from $2,000 to $40,000, while others can provide up to $100,000. It is easier to compare and decide on the amount that you require ahead of time.
  • Extra features. Features like financial coaching, unemployment protection, and autopay rate discount may be of benefit to you. Check to see if your lender offers any perks that can help you achieve your financial goals.

Apply for a personal loan

Pre-qualify on AFCA to see rates from our partners.

You will apply for the loan after comparing offers and selecting a loan with the lowest interest rate and payment that suits your budget.

Additional personal information may be required for loan applications, such as employment history and education. The lender may ask you to verify your income and pull your credit reports.

Usually, your first loan payment is due within 30 days after loan approval and funding.


AFCA reviews personal loans from over 30 lenders and rates them. We collect more than 45 data points and compare each lender to others who offer similar personal loans by interviewing company representatives. AFCA editors and writers conduct an annual fact check and update and make any updates throughout the year.

Our star ratings award lenders that provide consumer-friendly features points. These include flexible payment options, quick funding times, customer service, reporting to credit bureaus, financial education, transparent rates, terms, low-interest rates with no fees, and easy pre-qualification. We also take into account regulatory actions taken by agencies such as the Consumer Financial Protection Bureau. These factors are weighted based on how they affect consumers’ experience and which are most important.

This method applies to lenders who have a maximum interest rate of 36%. That is the maximum rate that most financial experts and consumer advocates consider affordable. AFCA is not compensated for its star ratings. Read our editorial guidelines.

Questions frequently asked

What if I have bad credit and want to get a personal loan?

Lenders have different requirements regarding credit scores. Lenders may only accept borrowers with excellent credit, while others will lend to borrowers with bad credit. Learn How to get a loan even if you have poor credit.

What is the fastest way to get a loan?

Online lenders can approve loans applications from qualified borrowers and fund them the next day or the next day. Others may take up until a week. Compare Personal loans available quickly.

Where can I apply for a loan?

All online lenders, credit unions, and banks offer unsecured personal loans. Online lenders may offer lower rates and faster funding to some people. However, your bank or credit union might offer a better deal if you are an existing customer. 


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