5 Best Personal Loans Consumer Reports 2019 – Top Rated

If you need money for any reason, a personal loan can help you get the cash you need. Personal loans offer financial flexibility because you can use them for just about anything as long as it’s legal or connected to higher education.

So, whether you’re looking to finance a home improvement project, solve some short-term cash flow problems, or consolidate high-interest debt, a personal loan can help you get there.

Most personal loans are unsecured, but some lenders also offer secured personal loans for people with bad credit. These loans typically require collateral, such as a car, to get approved.

Top 5 Personal Loans

Bestseller No. 2
Navy Federal Credit Union
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Navy Federal Credit Union
  • Safe and Secure. Access your accounts 24 hours a day.
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Payday Loans Online App
  • Get $100-$1000 loans online.
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- $7.00Bestseller No. 5
The White Coat Investor: A Doctor's Guide To Personal Finance And Investing
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The White Coat Investor: A Doctor's Guide To Personal Finance And Investing
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  • James M Dahle MD

Understand the true cost of a personal loan

When shopping around for personal loans, the interest rate isn’t the only thing you’ll pay on your loan. Also, look into the fees the lender charges, such as origination fees, late fees, and prepayment penalty fees.

Lenders are required to state these fees before you apply, so be sure to read the fine print.

“Average rates on personal loans can vary widely,” says Joe Toms, president of online lender FreedomPlus. “An individual’s credit score will heavily determine the rates.”

To give you an idea of what interest rate you’d qualify for, here’s an average range by credit score:

What to look for in a personal loan

When evaluating personal loans, it’s important to consider several factors to make sure you get the right one for you. Here’s a quick summary of what to think about:

  • Availability: Some lenders only operate in select states.
  • Flexible use: Some lenders require that you use the funds for the reason specified in the loan application.
  • APR: How does the APR you’re offered stack up against the competition? Most online lenders allow you to check your credit without affecting your credit score.
  • Minimal fees: How much is the origination fee? Do prepayment penalties apply?
  • Customer service: Is it difficult to reach a human in the customer service department? Can they answer all of your questions quickly and accurately?
  • Application process: Is the application process seamless? And how long does it take to get funding once the loan application is approved?
  • Reputation: Is the lender accredited by the Better Business Bureau? What are other customers saying?

Is it a good idea to get a personal loan?

Taking out a personal loan can be easy, but that doesn’t mean it’s the best decision for you. It’s important to consider both the benefits and drawbacks of personal loans before you apply.

WEIGH THE RISKS & BENEFITS

Here is a list of the benefits and the drawbacks to consider when applying for a personal loan.

PROS
  • Typically don’t require collateral
  • You’ll get the money in just a few days
  • You can use the cash for just about anything
  • You may get a lower interest rate than on a credit card
  • Offer set repayment terms
CONS
  • Some do require collateral
  • You may qualify for a higher interest rate than on a credit card
  • They can encourage you to borrow when you don’t need it
  • Typically charge higher interest rates than a home equity loan or HELOC
  • Don’t allow you to borrow more than once like with a personal line of credit

Shop around and save

To make sure you get the best deal, avoid taking the first offer you get. Instead, use SuperMoney’s loan engine to get offers from several personal loan companies at once. This will help you compare and contrast various personal loans in one place.

“It is important to find a lender that is right for you and your situation,” says Toms. “It’s much more than just a stated rate
offered,” Toms recommends asking if the lender is committed to evaluating your individual situation.

“Some will have a direct conversation with the consumer that allows the consumer to provide information and context about their credit scores and profiles, savings, and other factors that indicate they are financially responsible,” he adds.

Qualification

Regardless of whether you’re dealing with a loan matching service or a direct lender, all lenders will eventually require your social security number to do a credit check. Online matching services will sometimes initially do a soft pull, but when you are ultimately matched with a lender, there will be a hard pull. As we mentioned, personal loans are unsecured, so the risk is higher on the lender’s side. By checking your credit, a lender will be able to see how you’ve managed previous debt and get an indication of how you may manage a loan with them. The minimum credit score accepted is typically in the low 600s, but of course, this depends on the lender.

Cost of Loan

The most important factor that will influence the ultimate cost of a personal loan is the Annual Percentage Rate (APR). The APR is the interest rate charged for a whole year, including any fees or additional costs associated with the transaction. Generally, the lenders we evaluate will advertise an APR range. The better your credit score, the lower your APR will likely be since the lender’s risk is diminished. Also, most personal loan providers offer a fixed interest rate, meaning the APR will not change throughout the life of the loan, making it easier to plan repayments. At the outset of the loan, many lenders charge application and origination fees.

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