Traditional banks, credit unions, and online lending platforms all offer personal loans. Few lenders offer loan amounts up to $100,000, with the typical range being $1,000 to $50,000.
However, more than 70% of Americans borrow less than $20,000, according to a Forbes Advisor survey. Additionally, a lot of personal loans can be funded in a matter of business days, saving you time and allowing you to get the cash you require immediately.
Additionally, a lot of personal loans can be funded in a matter of business days, saving you time and allowing you to get the cash you require immediately.
- Sofi: Best Overall Personal Loan
- LightStream: Best for Low Interest Rates
- LendingPoint: Best for Below-Average Credit & Quick Funding
- Upgrade: Best for Bad Credit
- Universal Credit: Best for Comparing Multiple Offers
- Discover: Best for No Interest if Repaid Within 30 Days
- Upstart: Best for Loans as Low as $1,000
- Avant: Best for a Range of Repayment Terms
Tips for Comparing Personal Loans
Borrowers can obtain a personal loan, a type of lump-sum financing, from a traditional bank, credit union, or online lender, and use the money for a variety of expenses. Common applications include paying for medical expenses, car repairs, home renovations, and debt consolidation.
Personal loans typically have repayment terms between two and seven years and offer interest rates as low as 3% for high-qualified borrowers.
How Do Personal Loans Work?
Usually, banks, credit unions, and online lenders offer personal loans. A decision—approval or rejection—is made after prospective borrowers submit an application for a loan, either in person or online. If approved, the funds are transferred to the borrower’s bank account in a single lump sum, and interest begins to accrue after the first month. Over the course of the loan, which is typically between one and seven years, personal loans require fixed monthly payments. You won’t have to wait long to receive the money you require because many personal loans can be funded in a few business days.
What Personal Loan Terms Are People Opting for?
Our survey found that 43% of respondents borrowed between $1,000 and $4,999, while 22% borrowed $5,000 to $9,999 and another 13% borrowed $10,000 to $19,999, respectively. Moreover, 30% of respondents opted for a one-year loan, 24% opted for a two-year loan and 19% opted for a three-year loan.
How Much Did You Borrow?
| Loan amount | % of respondents |
|---|---|
| $1,000 to $4,999 | 43% |
| $5,000 to $9,999 | 22% |
| $10,000 to $19,999 | 13% |
| $20,000 to $29,999 | 10% |
| $30,000 to $49,999 | 4% |
| $50,000+ | 4% |
| Not sure / prefer not to say | 5% |
The loan amount you have access to depends on your creditworthiness and what a specific lender offers. For example, personal loans typically range from $1,000 to $50,000, but some lenders offer up to $100,000. Larger loan amounts are usually reserved for highly qualified applicants because those transactions are riskier for lenders.
Because you’ll owe interest on the entire loan amount, it’s crucial to only borrow the amount you need and nothing more. We also recommend using our personal loan calculator to estimate your monthly payments and ensure you can afford your desired loan amount.
Which Term Length Did You Opt for When Taking Out Your Most Recent Personal Loan?
| Term length | % of respondents |
|---|---|
| One year | 30% |
| Two years | 24% |
| Three years | 19% |
| Four years | 8% |
| Five years | 11% |
| Six years | 1% |
| Seven years | 2% |
| Not sure | 6% |
Personal loan term lengths are important in determining your monthly payment and interest rates, just like your loan amount is. Shorter-term loans have higher monthly payments but lower overall interest rates. However, loans with longer terms offer smaller monthly payments at the expense of accruing more interest.
For example, if you borrow $3,000 over one year with 11% interest, you’d owe $265 per month and $182 in interest overall—a total of $3,182. Now imagine that you take out the same loan for three years. You would have a monthly payment of $98 but a total interest obligation of $536, totaling $3,536. This demonstrates that choosing a shorter loan term can save you money, but only if you can afford the higher monthly payment.
Interest rates on personal loans on average by credit score
According to Experian, these are the average projected interest rates for personal loans based on VantageScore risk categories. Please be aware that lenders determine and set interest rates. The rates offered are merely estimates.
As an applicant, you can improve your chances of getting favorable terms while lenders decide and set rates.
Average Personal Loan Interest Rates By Credit Score
| Vantage V4 credit score | Average interest rate |
|---|---|
| Deep subprime (300-499) | 15.30% |
| Subprime (500-600) | 15.91% |
| Near prime (601-660) | 15.56% |
| Prime (661-780) | 10.93% |
| Super prime (781-850) | 6.59% |
Rod Griffin, senior director of consumer education and advocacy at Experian, says, “Consumers with higher credit scores generally will qualify for lower interest rates. To increase your credit scores, make sure you make your payments on time and try to keep your balances low. Missed payments and high [credit] utilization rates, or balance-to-limit ratios, on your credit cards are the two most heavily weighed factors in determining your credit scores. If possible, I recommend checking your credit report and scores three to six months before you apply for a personal loan. This will give you time to take steps to improve your credit standing if necessary.”