How to Find the Right Lender (and Rate) for Unsecured Personal Loans

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The term “unsecured personal loans” might not make you feel too secure about taking one out.

After all, if you’re looking to borrow money, you’re probably already in a skeptical mindset. And you should be. There’s a lot of shady lenders out there looking to lock you into a bad loan agreement.

Here’s the good news: Although they might have an unfortunate name, unsecured personal loans can also be found from reputable lenders. Before we address how to find one, let’s first review why the loan is called “unsecured” in the first place.

The basics of unsecured personal loans

There are many differences between secured and unsecured loans. The key distinction is that because unsecured loans don’t require you to hand over collateral, you’re shifting the risk to the lender. Because of that, they charge you a higher interest rate.

Receiving a good interest rate on unsecured personal loans is possible. It usually requires having a strong credit history and low debt-to-income ratio. Your application could be helped by including a cosigner, too.

The other notable difference between secured and unsecured loans is how the loan is handled when you’re unable to repay it. A secured loan gone bad means your lender could keep the collateral. This is why a secured loan is more dangerous. It could cost you a personal asset like your car.

But if your unsecured loan goes unpaid, the lender will have to recoup their losses in another way. They could send the unpaid debt to a collections agency or, worse, attempt to garnish your wages by taking you to court. This isn’t an ideal outcome either, but unsecured loans typically give you more time to get back on track than a secured one.

How unsecured personal loans work

Because you’re not providing your lender with collateral, you’ll receive an unsecured personal loan based on your creditworthiness. Lenders use this factor to determine how likely you are to pay back the loan.

Your credit score is a driving force in determining your interest rate. In fact, borrowers with excellent credit scores (between 720 and 850) receive average rates between 10.30% and 12.50%, according to ValuePenguin. Meanwhile, borrowers with average credit scores (640 to 679) could receive rates between 17.80% and 19.90%.

Once you receive the loan amount in one lump sum, the clock starts ticking. Your interest rate and loan term will decide your monthly payment. A fixed rate would keep your monthly payment static, but a variable rate could cause your payment to increase or decrease over time. This means that finding a low, fixed rate offers the safest route to repaying unsecured personal loans.

Say you borrow $5,000 at a fixed rate of 18.00% and are slated to pay it back in three years. You would pay $181 per month for 36 months. Because of accruing interest, it would cost you $6,507 to borrow that original $5,000.

As with any loan, it’s important to borrow only if you need to. You’ll also only want to borrow the amount you need, and not a penny more. That’ll make repayment as manageable as possible.

How to shop for unsecured personal loans

Before shopping around for unsecured personal loans, figure out exactly what you want from your lender. You should at least have a sense of:

  • How much you need to borrow
  • How much you can afford to repay each month
  • How long it will take you to repay the balance

When you have those pieces of information handy, use our personal loan calculator to find loan terms that could work for you.

You can compare lenders based on these details:

  • Loan amount
  • Interest rate
  • Repayment term
  • Monthly payment
  • Fees

You might be happy with a $5,000 loan amount and three-year loan term, for example. But you might shy away from a high interest rate and the monthly payment it would dictate.

Remember: The stronger your credit score, the more you can dictate lenders’ offers.

As you shop around, limit the effect on your credit report by submitting only to a soft credit check. If you’re applying for a preapproval — not the loan itself — most lenders won’t do a hard check. The lender might not make this distinction obvious on the loan application or its website FAQs, so ask about their credit review policies before proceeding.

Once you have preapprovals in hand from contending lenders, you might take their loan offers back to our personal loan calculator. Then, you’ll be able to separate the best offer from the rest.

How to find top lenders for unsecured personal loans

It’s fine to start your search for lenders on Google or another search engine. But watch out for the red flags of shady personal loan companies. These might include extremely high rates, hidden fees, and inflexible loan terms.

If you do find a lender that offers the loan terms you’re seeking, do a background check on the company. You can use crowdsourced review sites like TrustPilot to ensure the lender hasn’t been accused of scamming customers. You could also test the lender’s customer service. If they’re slow to respond or are unhelpful, you might take your business elsewhere.

If you started with a search engine and found a loan offer you like, compare its preapproval offer with traditional lenders’ offers. Personal loans, unsecured or otherwise, can be found via local and national banks, nonprofit credit unions, and online companies.

Each type of lender offers something different. SoFi, one of our recommended personal loan companies, forgives a late fee if you’ve made three straight timely payments. Earnest, to name another example, offers personal loans without any origination, late, or early-payment fees.

No two lenders offer the same exact perks. Plus, you might value a loan feature that another borrower couldn’t care less about. That’s why it’s important to find the right lender for your situation. If you have a solid credit score but are still working on advancing your career, for example, you might appreciate a lender like Upstart, which takes your earning potential into account.

Consider your unsecured personal loan options

Borrowing money should likely be your last resort because it requires taking on debt. If you’re in a bind, there are quick-cash alternatives to taking out a loan.

But if borrowing is your best or last remaining option, you might find that an unsecured personal loan is the best way to do it. That could be the case if you have the credit score to land a low interest rate, plus the regular income to make your monthly payments with ease.

If you’re unsure about whether borrowing is right for you, review the pros and cons of unsecured personal loans before making your decision.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderAPR RangeLoan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal Loans: Fixed rates from 6.990% APR to 14.865% APR (with AutoPay). Variable rates from 6.255% APR to 12.555% APR (with AutoPay). SoFi rate ranges are current as of September 1, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.255% APR assumes current index rate derived from the 1-month LIBOR of 2.08% plus 4.425% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

    To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.See Consumer Licenses.
  2. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  3. SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of AK and WY is 9.99% APR, for residents of IL with loans over $40,000 is 8.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, VA, SC is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Residents of PA have a minimum loan amount of $25,001. Variable rates not available to residents of AK, TX, VA, WY, or for residents of IL for loans greater than $40,000.
  4. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

3 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 4.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 4.99% APR loan, a borrower will need excellent credit on a loan of $15,000 with a term of 24 months, and qualify for at least two of the following discounts: (1) add a co-borrower who has sufficient income; (2) use at least fifty percent of the loan proceeds to directly pay off existing debt; or (3) show proof of having at least forty-thousand dollars in retirement savings – contact FreedomPlus for further details.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

5 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $25,000, at rates ranging from a low of 15.49% APR to a high of 34.49% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.

6 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.


7 Important Disclosures for Earnest.

Earnest Disclosures

  1. Earnest does not lend in Alabama, Delaware, Kentucky, Nevada, or Rhode Island.

8 Important Disclosures for Avant.

Avant Disclosures

* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.

** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33


* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from you bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. All loans made by WebBank, member FDIC. Please refer to Upgrade’s Terms of Use and Borrower Agreement for all terms, conditions and requirements.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

7.73% – 29.99%$1,000 - $50,000Visit Upstart
6.26% – 14.87%1$5,000 - $100,000Visit SoFi
6.99% – 35.97%*$1,000 - $50,000Visit Upgrade
5.99% – 24.99%2$5,000 - $35,000Visit Payoff
4.99% – 29.99%3$10,000 - $35,000Visit FreedomPlus
5.99% – 18.99%4$5,000 - $50,000Visit Citizens
15.49% – 34.49%5$2,000 - $25,000Visit LendingPoint
6.16% – 35.89%6$1,000 - $40,000Visit LendingClub
6.99% – 18.24%7$5,000 - $75,000Visit Earnest
9.95% – 35.99%8$2,000 - $35,000Visit Avant
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.