Frequently Asked Questions

Personal loan amounts typically range from $1,000 to $100,000, depending on the lender and your qualifications:

• Small loans ($1,000-$5,000): Upstart, Upgrade, Avant
• Medium loans ($5,000-$35,000): Most lenders including SoFi, Marcus, Best Egg
• Large loans ($50,000-$100,000): SoFi, LightStream (for well-qualified borrowers)

The amount you qualify for depends on your credit score, income, debt-to-income ratio, and the lender's criteria.

Personal loans can be used for almost any legal purpose, including:

• Debt consolidation — combining multiple debts into one payment
• Home improvement — renovations, repairs, upgrades
• Medical expenses — procedures, treatments, bills
• Major purchases — appliances, furniture, electronics
• Life events — weddings, vacations, moving costs
• Emergency expenses — unexpected costs

What you typically CAN'T use it for: Business expenses (use a business loan), education (use student loans), illegal activities, or gambling.

Unsecured personal loans (most common):

• No collateral required
• Approval based on creditworthiness
• Higher interest rates
• Offered by most online lenders

Secured personal loans:

• Require collateral (car, savings, etc.)
• Lower interest rates
• Easier to qualify for
• Risk losing your collateral if you default

For most borrowers, we recommend unsecured loans unless you need a lower rate and are comfortable using collateral.

Credit score requirements vary by lender:

• 580-619 (Fair): Upgrade, Avant, some credit unions
• 620-659 (Fair): Upstart, Best Egg, Prosper
• 660-679 (Good): LightStream, Marcus, Discover
• 680+ (Good): SoFi, PenFed
• 720+ (Excellent): Best rates from all lenders

Pro tip: Don't just look at minimum requirements. To get advertised rates, you typically need a score 50-100 points higher than the minimum.

Pre-qualification (soft pull): Does NOT affect your credit score. Most online lenders let you check your rate without commitment.

Full application (hard pull): May temporarily lower your score by 5-10 points. This impact fades over 6-12 months.

Our recommendation: Pre-qualify with multiple lenders (soft pulls don't hurt), compare offers, then only complete one full application with your best choice.

Yes, but expect higher rates. Options for bad credit (below 620):

• Upgrade: Accepts 580+, offers secured options
• Avant: Specializes in fair/bad credit
• Upstart: Uses AI, considers factors beyond credit score
• Credit unions: Often more flexible than banks
• Secured loans: Use collateral for better rates

Avoid: Payday loans, title loans, and lenders with APRs above 36%. These are predatory and can trap you in debt.

Read our guide: Best Personal Loans for Bad Credit

Having no credit (thin file) is different from bad credit. Your options:

• Upstart: Best for thin files—uses education and employment data
• Credit unions: May consider relationship history
• Co-signer: Add someone with good credit to your application
• Secured loans: Build credit while borrowing

Build credit first: Consider a secured credit card or credit-builder loan if you don't need money urgently.

As of January 2025, here's what to expect:

• Excellent credit (720+): 6.5% - 12% APR
• Good credit (680-719): 10% - 15% APR
• Fair credit (640-679): 15% - 23% APR
• Poor credit (below 640): 20% - 36% APR

The lowest rates available: LightStream at 6.49% APR (excellent credit required).

Rule of thumb: If you're offered an APR above 25%, shop around or work on improving your credit before borrowing.

Common personal loan fees:

• Origination fee: 1-8% of loan amount, deducted upfront. SoFi, Marcus, and LightStream charge $0.
• Late payment fee: $15-$39 or 5% of payment. Some lenders (SoFi) charge $0.
• Prepayment penalty: Fee for paying off early. Most modern lenders don't charge this.
• Check processing fee: For paying by check vs. ACH. Usually $5-15.

Best no-fee lenders: SoFi, Marcus, LightStream, Discover

Interest rate: The base cost of borrowing, expressed as a percentage.

APR (Annual Percentage Rate): The total cost of borrowing, including interest AND fees, expressed as a yearly rate.

Why it matters: Always compare APRs, not interest rates. A loan with a lower interest rate but high fees may cost more than one with a higher rate and no fees.

Example: A $10,000 loan at 10% interest with a 5% origination fee has an effective APR of ~12%.

Timeline by lender type:

• Online lenders (SoFi, LightStream): Same day to 3 business days
• Online lenders (Upstart, Best Egg): 1-5 business days
• Banks: 3-7 business days
• Credit unions: 1-7 business days

Fastest funding: LightStream and SoFi can fund same-day if you apply before their cutoff times (usually 2-3 PM ET).

Typical requirements:

• Government-issued ID — driver's license, passport, state ID
• Proof of income — recent pay stubs, tax returns, bank statements
• Proof of address — utility bill, lease agreement, bank statement
• Social Security number — for credit check
• Bank account info — for disbursement and payments

Self-employed? You may need additional documentation like 2 years of tax returns, profit/loss statements, or 1099 forms.

Some lenders allow co-signers or co-borrowers:

• SoFi: Yes (joint loans)
• Upgrade: Yes
• Best Egg: Yes
• LightStream: No
• Marcus: No
• Upstart: No

Important: Co-signers are equally responsible for the loan. If you don't pay, it hurts their credit too.

It depends on your credit profile:

• Excellent credit (720+): LightStream — lowest starting APR at 6.49%
• Good credit (680-719): SoFi or Marcus — competitive rates, no fees
• Fair credit (640-679): Upstart or Best Egg — more flexible approval
• Poor credit (580-639): Upgrade or Avant — specialize in lower scores

Best approach: Pre-qualify with 3-5 lenders to compare your actual rates.

Choose LightStream if:

• You want the absolute lowest rate
• You have excellent credit (720+)
• You don't need pre-qualification

Choose SoFi if:

• You want to check rates without a hard pull
• You value unemployment protection
• You want member benefits (financial planning, etc.)

Read our full comparison: SoFi vs. LightStream

Reputable online lenders are just as safe as banks. Look for:

• Bank partnerships or charter: SoFi is an FDIC-insured bank; LightStream is part of Truist Bank
• Regulatory compliance: Licensed in your state, follows federal lending laws
• Encryption: Website uses HTTPS and SSL encryption
• Reviews: Established history with customer reviews on BBB, Trustpilot

Red flags to avoid: Guaranteed approval regardless of credit, upfront fees before approval, no physical address or contact info, pressure tactics.

Yes! Most modern lenders allow early payoff with no penalties, including SoFi, LightStream, Marcus, Upstart, and Best Egg.

Benefits of paying early:

• Save money on interest
• Improve your debt-to-income ratio
• Free up monthly cash flow

Tip: Make extra payments toward principal when you can. Even small additional payments can significantly reduce total interest.

Consequences of missed payments:

• Grace period: Many lenders offer 10-15 days before charging late fees
• Late fee: Typically $15-39 or 5% of payment
• Credit impact: Reported to credit bureaus after 30 days late
• Default: Usually after 90+ days, may go to collections

If you're struggling: Contact your lender immediately. Many offer hardship programs, payment deferrals, or modified payment plans. SoFi offers unemployment protection.

Short-term (may hurt slightly):

• Hard inquiry lowers score 5-10 points
• New account lowers average account age

Long-term (usually helps):

• On-time payments build positive history
• Adds to credit mix (installment loan)
• Debt consolidation can lower credit utilization

Bottom line: If you make all payments on time, a personal loan typically improves your credit over the loan term.