Lindsay VanSomeren is a personal finance writer based out of Kirkland, Washington. Her work has appeared on Business Insider, Credit Karma, LendingTree, and more.
Lindsay VanSomeren is a personal finance writer based out of Kirkland, Washington. Her work has appeared on Business Insider, Credit Karma, LendingTree, and more.
Jordan Tarver has spent several years writing and editing for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor’s degree in business finance and his personal experience to simplify complex financial topics. Jordan’s promise is actionable advice that’s easy to understand.
Jordan Tarver has spent several years writing and editing for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor’s degree in business finance and his personal experience to simplify complex financial topics. Jordan’s promise is actionable advice that’s easy to understand.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.
Unsecured personal loans don’t require you to provide collateral, which is something of value lenders can repossess if you default. However, lenders typically charge higher interest rates and have more stringent qualification requirements to compensate for the additional risk.
The best unsecured personal loans can help you secure financing without having to worry about jeopardizing a personal asset like the cash in your savings account.
Best Unsecured Personal Loans
BEST OVERALL UNSECURED PERSONAL LOAN
SoFi®
APR range
8.99% to 29.99%
with autopay
8.99% to 29.99%
with autopay
Why We Picked It
SoFi is an online lending platform that offers unsecured fixed-rate personal loans in every state. Founded in 2011, SoFi has extended over $50 billion in loans and stands out for allowing high loan amounts and its availability of extended loan terms.
Loans are available from $5,000 to $100,000, making SoFi a great option for those with excellent credit who need to borrow a large amount of money. Loan amounts available may vary by the state you live in. Repayment terms range from two to seven years, making SoFi an incredibly flexible option for those with sufficient credit (minimum 650) and annual income (at least $45,000). SoFi also lets prospective borrowers submit joint applications—although co-signers are not permitted.
Approved borrowers are rewarded with comparatively low APRs. What’s more, SoFi doesn’t charge origination fees, late fees or prepayment penalties—a stand-out feature because personal loan lenders often charge origination or late payment fees at a minimum.
However, if you’re considering a debt consolidating loan from SoFi, keep in mind that the lender does not offer direct payment to a borrower’s other creditors. This means the loan proceeds will be deposited to your bank account and you’ll have to pay off your other lenders individually. The platform does offer customers a number of other perks and discounts, including unemployment protection and the ability to change their payment due date once a year.
Pros & Cons
- Prequalification with soft credit check
- Funding in as little as one to two days
- High loan amounts and lengthy terms
- Does not offer direct payment to third-party creditors for debt consolidation
- Some applicants report difficult qualification standards
- Co-signers are not permitted
Details
Overview: Founded in 2011, SoFi is an online lending platform that offers unsecured fixed-rate personal loans in every state, extending over $50 billion in loans. SoFi offers comparatively low APRs and doesn’t charge origination fees, late fees or prepayment penalties—a stand-out feature because personal loan lenders often charge origination or late payment fees at a minimum.
However, if you’re considering a debt consolidating loan from SoFi, keep in mind that the lender does not offer direct payment to a borrower’s other creditors. This means the loan proceeds will be deposited to your bank account and you’ll have to pay off your other lenders individually.
Eligibility:
- Minimum credit score required: 650
- Minimum annual income: $45,000
- Co-signers not permitted
Loan uses:
- Medical expenses
- Credit card consolidation
- Home projects
- Moving costs
BEST FOR LOW INTEREST RATES
LightStream
APR range
7.49% to 25.49%
with autopay
7.49% to 25.49%
with autopay
Why We Picked It
LightStream offers loans with both a low minimum and maximum interest rate, along with a rate-beat program. LightStream’s unsecured personal loans range from $5,000 to $100,000 with loan amounts varying based on the loan purpose. In addition to offering appealing and flexible terms, LightStream charges no origination, late payment or prepayment fees. The lender also offers a 0.50% rate discount for borrowers who enroll in autopay.
Pros & Cons
- No origination, prepayment or late fees
- Low, competitive rates
- Fast approval and funding
- No prequalification process
- No due date flexibility
- Limitations on use of loan proceeds
Details
Overview: LightStream is a consumer lending division of Truist—which formed following the merger of SunTrust Bank and BB&T. The platform offers unsecured personal loans from $5,000 to $100,000. Loan amounts vary based on the loan purpose. Although a number of lenders offer smaller loans than the LightStream minimum, few lenders offer a higher maximum loan. Repayment terms are available from two to seven years.
LightStream offers loans in all 50 states plus Washington, D.C., and applicants can contact the lender’s customer support team seven days a week; current borrowers have access to customer support from Monday through Saturday. While LightStream doesn’t offer a mobile app for loan management, customers can access their account through LightStream.com.
Eligibility:
- Applicants should have several years of credit history
- Minimum credit score: 660
- Can’t prequalify
Loan uses:
- Large expenses
- Finance land, timeshares and tiny homes
- Home project
BEST FOR FAST FUNDING & BELOW-AVERAGE CREDIT
LendingPoint
APR range
7.99% to 35.99%
with autopay
7.99% to 35.99%
with autopay
Why We Picked It
LendingPoint is an online lender based in Atlanta that offers personal loans to prospective borrowers in 48 states and Washington D.C.; it does not offer loans in Nevada and West Virginia. Prospective borrowers in eligible states can apply online and benefit from quick funding.
LendingPoint personal loans range from $2,000 to $36,500; Georgia loans have a minimum loan amount of $3,500. Repayment terms range from 24 to 72 months—or two to six years.
There are two main disadvantages to LendingPoint: high maximum APRs and origination fees. While you can typically avoid high APRs by maintaining a high credit score, LendingPoint origination fees (up to 10%) depend on the state you live in.
Pros & Cons
- Quick funding
- Low credit score requirements
- No prepayment penalty
- Origination fee up to 10%
- Co-signers or joint loans not permitted
- Not available in Nevada and West Virginia
Details
Overview: LendingPoint is an online lender based in Atlanta that offers personal loans to prospective borrowers in 48 states and Washington D.C.; it does not offer loans in Nevada and West Virginia. Prospective borrowers in eligible states can apply online and benefit from quick funding.
There are two main disadvantages to LendingPoint: high maximum APRs and origination fees. While you can typically avoid high APRs by maintaining a good credit score, LendingPoint origination fees (up to 10%) depend on the state you live in.
Eligibility:
- Minimum credit score: 600
- Must live in a state other than Nevada or West Virginia
- Doesn’t allow co-signers or co-applicants
Loan uses:
- Debt consolidation
- Home project
- Medical expenses
BEST FOR BAD CREDIT
Upgrade
Why We Picked It
Upgrade was launched in 2017 and provides accessible online and mobile credit and banking services. Since that time, the platform has made more than $3 billion in credit available to over 10 million applicants and continues to expand its online and mobile services. Although maximum APRs are on the high end compared to other online lenders, Upgrade makes loans available to those with poor credit history.
Loans amounts, which range from $1,000 to $50,000. Upgrade has two- to seven-year terms available. Upgrade charges an origination fee between 1.85% and 9.99% of the loan, and borrowers will encounter a $10 fee if their payment is more than 15 days late or if the payment does not go through; there are no discounts for autopay. That said, Upgrade borrowers are not subject to a prepayment penalty, so you can reduce the overall cost of the loan if you’re able to pay it off early.
Beyond offering accessible personal loans, Upgrade streamlines the lending process with a mobile app that lets borrowers view their balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy to track your credit score over the life of your loan.
Pros & Cons
- Low minimum credit score requirement
- Borrowers can use loans to cover business expenses
- Offers direct lender payoff for debt consolidation loans
- High APR range
- Charges fees for origination, late payment and insufficient funds
Details
Overview: Upgrade was launched in 2017 and provides accessible online and mobile credit and banking services. Since that time, the platform has made more than $3 billion in credit available to over 10 million applicants and continues to expand its online and mobile services.
Upgrade charges an origination fee between 1.85% and 9.99% of the loan, and borrowers will encounter a $10 fee if their payment is more than 15 days late or if the payment does not go through; there are no discounts for autopay. That said, Upgrade borrowers are not subject to a prepayment penalty, so you can reduce the overall cost of the loan if you’re able to pay it off early.
Beyond offering accessible personal loans, Upgrade streamlines the lending process with a mobile app that lets borrowers view their balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy to track your credit score over the life of your loan.
Eligibility:
- Minimum credit score: 580
- No minimum income requirement
- Allows co-applicants
Loan uses:
- Debt consolidation
- Home projects
- Large expenses
- Business expenses
BEST FOR COMPARING MULTIPLE OFFERS
Universal Credit
Why We Picked It
Universal Credit is an online lending platform that offers personal loans between $1,000 to $50,000 through its partners. Repayment terms range from three to seven years.
While Universal Credit makes finding a personal loan accessible even to those with damaged credit, it comes with a few tradeoffs. First, it charges high APRs, well above the most competitive rates seen on our list. Second, Universal Credit charges a 5.25% to 9.99% origination fee on all personal loans. Because this is deducted from your loan proceeds, you’ll need to factor this in when determining your loan amount to ensure you receive the necessary amount after the fact.
Pros & Cons
- Flexible qualification requirements
- Next-day funding
- No prepayment penalty
- High APRs
- All personal loans charge a 5.25% to 9.99% origination fee
Details
Overview: Universal Credit is an online lender powered by Upgrade with loans originated by partners Cross River Bank and Blue Ridge Bank. The lender offers its loans in every state except Iowa, West Virginia and Washington, D.C.
Eligibility:
- Minimum credit score: 580
- Minimum income requirement: Does not disclose
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Debt consolidation
- Large expense
- Home project
BEST FOR NO INTEREST IF REPAID WITHIN 30 DAYS
Discover
Why We Picked It
Discover is an online bank that also offers customers credit cards, retirement solutions and personal loans in all 50 states. As a lending platform, Discover stands out because of its online application and mobile banking tools, well-reviewed customer support team and quick funding.
In general, loans are available from $2,500 to $40,000 and may be issued for between three and seven years. So, while borrowers may get a larger loan from another lender, the repayment terms are fairly flexible. Discover charges a late payment fee and does not offer an autopay discount; however, it does not charge any origination fees or prepayment penalties, making it competitive with other top personal loan providers.
Pros & Cons
- Option to pay off creditors directly
- No origination fees or prepayment penalties
- Directly pays creditors
- Charges late fees
- Low maximum loan amount
Details
Overview: Discover is an online bank that also offers customers credit cards, retirement solutions and personal loans in all 50 states. Discover charges a late payment fee and does not offer an autopay discount; however, it does not charge any origination fees or prepayment penalties, making it competitive with other top personal loan providers.
Eligibility:
- Minimum credit score: 660
- Minimum household income: $25,000
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Medical bills
- Business expenses
- Home renovation
BEST FOR LOANS AS LOW AS $1,000
Upstart
Why We Picked It
Upstart has made a mark on the personal loan space because of its artificial intelligence- and machine learning-based approach to borrower qualification. In fact, Upstart estimates that it has been able to approve 27% more borrowers than possible under a traditional lending model. With competitive APRs, Upstart is not a top lender for borrowers who can qualify for more competitive rates. Even so, the platform’s minimum 300 credit score makes it an accessible option to those with fair credit.
Upstart also offers a pretty flexible range of loan options, with amounts ranging from $1,000 to $50,000 so you don’t have to borrow (or pay interest on) more than you really need. And, while Upstart’s loan cap is lower than some lenders—this is likely to be enough for many prospective borrowers.
Even though Upstarts three-, five-, seven-year loan terms are more restrictive than other lenders, it’s likely to be an acceptable tradeoff for applicants who might not be approved in a more traditional lending environment. Plus, it’s available in every state except West Virginia and Iowa, so it’s as widely available as many other top lenders.
Pros & Cons
- Accessible to borrowers with fair credit
- Offers prequalification with a soft credit check
- Ability to choose a custom payment date
- Charges an origination fee up to 8% of the loan amount
- No secured or co-signer option
- Loans only available for three-, five-, seven-year terms
Details
Overview: Upstart has made a mark on the personal loan space because of its artificial intelligence- and machine learning-based approach to borrower qualification. In fact, Upstart estimates that it has been able to approve 27% more borrowers than possible under a traditional lending model.
Even though Upstart’s three-, five-, seven-year loan terms are more restrictive than other lenders, it’s likely to be an acceptable tradeoff for applicants who might not be approved in a more traditional lending environment. Plus, it’s available in every state except West Virginia and Iowa, so it’s as widely available as many other top lenders.
Eligibility:
- Minimum credit score: 300
- Minimum income requirement: $12,000
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Debt consolidation
- Medical expenses
- Educational expenses
BEST FOR A RANGE OF REPAYMENT TERMS
Avant
Why We Picked It
Founded in 2012 and based in Chicago, Avant is a consumer lending platform that offers secured and unsecured personal loans through a third-party bank (WebBank). Unsecured loans are available in Washington, D.C. and every state but Hawaii, Iowa, New York, Vermont, West Virginia and Maine. The platform specializes in middle-income borrowers with fair to good credit and only requires a minimum score of 580 to qualify.
Maximum loan amounts are low compared to other lenders, but the low minimum amount and flexible repayment terms (two to five years) make it an accessible option for borrowers. However, as with many loans for subprime borrowers, Avant personal loans come with a price. In addition to charging an administrative fee of up to 4.75% of the loan amount, Avant’s APR range (9.95% to 35.99%) is on the high end for applicants with a good to excellent credit score—and there is no autopay discount. Still, the platform earns top marks for borrowers with less than stellar credit who need quick access to funds.
Pros & Cons
- Secured and unsecured loan options available
- Low credit score requirement (580)
- Loan terms available up to 60 months
- Charges an upfront administrative fee
- High starting APR for prime borrowers
- Co-signers and co-applicants not allowed
Details
Overview: Founded in 2012 and based in Chicago, Avant is a consumer lending platform that offers secured and unsecured personal loans through a third-party bank (WebBank). Unsecured loans are available in Washington, D.C. and every state but Hawaii, Iowa, New York, Vermont, West Virginia and Maine. The platform specializes in middle-income borrowers with fair to good credit and only requires a minimum score of 580 to qualify.
Eligibility:
- Minimum credit score: 580
- Minimum income: $20,000
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Debt consolidation
- Large expenses
- Home projects
Summary: Best Unsecured Personal Loans
Methodology
We reviewed 29 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
- Loan cost: 35%
- Loan details: 20%
- Eligibility and accessibility: 20%
- Customer experience: 15%
- Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, annual percentage rate (APR) ranges and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology.
Tips to Compare Unsecured Personal Loans
Here’s what you should think about as you compare each loan offer:
- Prequalification: Some lenders let you check your personalized rates online with no impact on your credit score. Having this option to prequalify can make it easier to shop for loan offers, so it may be worth prioritizing lenders that offer it.
- APRs: The APR is the best apples-to-apples comparison tool for the overall cost of the loan. It includes the interest rate plus any other fees like origination fees.
- Loan amounts: Some lenders may offer you the full loan amount you request while others may only extend a partial amount, depending on your qualifications. Choose an offer that matches your needs.
- Funding time: Some lenders may be able to offer you funding as soon as the same day after approval. Consider how quickly you need the funds when comparing lenders.
- Customer service channels: Find out how you can communicate with a lender, whether by phone, email, live chat or all three. The amount of support a lender provides may sway your decision toward one over another.
- Customer reviews: Finally, take some time to read customer reviews before selecting your unsecured loan. Consumer review sites like Trustpilot can show you whether other borrowers had a good experience with the lender.
What Is an Unsecured Personal Loan?
An unsecured personal loan is a type of debt that doesn’t require any collateral. By contrast, a secured loan uses collateral that a lender can repossess if you default on the loan, such as a home or a vehicle in the case of a mortgage or a car loan, respectively.
If you fail to make your payments on an unsecured personal loan, the lender has no quick-and-easy way to get its money back. For that reason, unsecured personal loans typically come with higher rates and have more stringent credit and income qualifications than secured loans.
Types of Unsecured Loans
Most unsecured loans are one of three loan types:
Personal loans
Personal loans are some of the most common unsecured loans since they can be used for nearly any expense, including home repairs, medical expenses and debt consolidation. These loans can come in amounts up to $100,000 or more and are made available to a wide range of borrowers.
Student loans
Student loans are unsecured loans used to pay for education and related expenses. There are both federal and private student loans, and they don’t require any collateral. These loans can only be used for their intended purpose.
Credit cards
Although credit cards aren’t technically loans, they’re a form of revolving credit and many credit card holders use them to borrow money. Credit cards are unsecured and can be used for nearly any purchase.
How Do Unsecured Personal Loans Work?
Banks, credit unions and online lenders typically offer unsecured personal loans. You can either apply online or in person, depending on the lender, and then wait for a decision—approval or denial. If approved, you’ll receive your funds as a lump-sum payment, usually by direct deposit into your bank account. Interest will begin accruing in the first month. Personal loans require fixed monthly payments over the entire loan term, which typically range from one to seven years.
Pros and Cons of Unsecured Personal Loans
How to Qualify for an Unsecured Loan
Here are common personal loan requirements that lenders look for:
Credit Score
You’ll typically need a credit score of at least 670 to qualify for a personal loan. However, if you have excellent credit (at least 800), you’re more likely to be approved by just about any lender you like—and for better rates, too.
But even if you don’t have strong credit, it’s still possible to get an unsecured loan. Some lenders accept credit scores as low as 560. However, you’ll likely pay higher interest rates and/or higher fees.
Income
Unlike credit, there isn’t a specific income requirement per se. Instead, it generally depends on your desired loan amount. Lenders also consider your debt-to-income (DTI) ratio—your current debt levels compared to your income—to make sure you’re able to afford the loan you’re applying for.
Most lenders have their own internal criteria for the maximum DTI ratio you can have and still be approved for a loan, although they typically don’t disclose this. As a rule of thumb, the less debt you have relative to your income, the better your chances of qualifying for an unsecured personal loan.
Frequently Asked Questions (FAQs)
How hard is it to get an unsecured loan?
It’s harder to qualify for an unsecured loan versus a secured loan. But even if you have bad credit or income challenges, it’s not impossible. You may need to pay more for a loan and/or borrow less money to get approved. In these cases, it’s especially important to make sure you’re able to afford the payments.
Do banks give loans without collateral?
Yes, banks, credit unions and online lenders typically offer loans without collateral. This means that the loan is unsecured. Common types of unsecured loans include unsecured personal loans and student loans.
What is the most I can borrow unsecured?
Some lenders, such as SoFi, allow you to borrow up to $100,000 in an unsecured personal loan. In order to be offered one of these loans, however, you’d likely need to be highly qualified with an excellent credit score and high income.
Next Up In Personal Loans
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
Credit: Source link
