If you find yourself in a financial crunch and need some extra cash, a personal loan might be a reasonable option. Personal loans often have lower interest rates than credit cards, and some lenders even offer same-day approval and funding. But with so many banks and credit unions out there, how do you know which one is the best for you?
Best Banks for Personal Loans Compared
Let’s take a look at the best banks and credit unions for personal loans in January 2024:
| Bank | Best For |
|---|---|
| Navy Federal Credit Union | Military and veteran households |
| Discover | Borrowers with excellent credit |
| Axos Bank | Borrowers with less-than-excellent credit |
| PenFed | Auto loan refinancing |
| SoFi | Large personal loans |
| LightStream | Borrowers with excellent credit |
| Avant | Borrowers with less-than-excellent credit |
Our Recommendations
Best for Low Fees: Discover
Discover personal loans stand out for their low fee structure, making them ideal for cost-conscious borrowers. There are no origination fees or prepayment penalties, so most borrowers only pay interest charges. Discover can even pay off your outstanding loans and credit cards directly on your behalf if you’re using their personal loan for debt consolidation. With competitive interest rates for borrowers with outstanding credit, you can borrow up to $40,000 with terms from 36 to 84 months. Discover also offers low-fee checking accounts and high-yield savings accounts with no minimums.
Best for Fast Funding: Axos Bank
Axos Bank offers quick funding, with the possibility of receiving your loan as early as the same day you accept the terms. You can prequalify and get your loan options in minutes. To qualify, you’ll need a credit score of at least 700. Axos Bank offers loans up to $50,000, with terms of 36 to 72 months. While there’s no prepayment penalty, loans do have an origination fee of 1% to 2% based on your credit rating. Apart from personal loans, Axos Bank also provides a range of online banking services, including rewards checking accounts, savings accounts, investing, business banking, auto loans, and mortgage loans.
Best for Auto Loan Refinancing: PenFed
PenFed is our top choice for auto loan refinancing. You can refinance an auto loan up to $150,000 with a competitive interest rate. Terms range from 36 to 84 months, allowing you to balance costs and monthly payments. For traditional personal loans, PenFed offers up to $50,000 with interest rates ranging from 7.99% to 17.99%. Terms can extend up to 60 months, and there are no origination or prepayment penalties. Funds are typically received one to two days after approval. In addition to personal loans, PenFed provides checking and savings accounts, credit cards, and home loans. To get a loan from PenFed, you need to be a member. However, membership is open to anyone without restrictions.
Best for Large Personal Loans: SoFi
SoFi offers personal loans ranging from $5,000 to $100,000. The standout feature of SoFi loans is their unemployment protection. If you lose your job, SoFi may change your payment terms temporarily while you get back on your feet, and they provide support to find a new job. While rates may not be the lowest depending on your credit, you can still receive funding as soon as the same day your loan is approved. Consolidating credit card debt with a SoFi loan can lead to significant interest savings and help you get out of debt permanently. SoFi also provides checking and savings accounts, a cash back credit card with no annual fee, investment accounts, and other types of loans.
Best for Military and Veteran Households: Navy Federal Credit Union
Navy Federal Credit Union is a nonprofit financial institution exclusively open to households with a military connection, including the Department of Defense or National Guard. They offer personal expense loans with competitive interest rates, allowing you to borrow as little as $250. In addition to personal expense loans, Navy Federal provides home improvement loans, debt consolidation loans, and personal loans secured by savings or certificate of deposit (CD) accounts. Secured loans come with extremely low interest rates compared to most other personal loans. Navy Federal also offers competitive checking, savings, credit card, auto loan, and mortgage accounts. If Navy Federal is an option for your family, consolidating all your accounts with them might be a good choice.
Best for Borrowers with Excellent Credit: LightStream
LightStream offers personal loans with one of the lowest interest rates available for qualifying borrowers. They even have a Rate Beat Program, which ensures that their rate is 0.10% lower than any comparable unsecured loan you’re approved for elsewhere. To qualify for LightStream loans, you’ll need good to excellent credit. They offer loan terms of up to 144 months for specific uses, such as home improvement. LightStream stands out by not charging any fees, including origination, prepayment, and late fees. While LightStream operates exclusively as a personal lender, their operations are backed by Truist Bank, which offers a full suite of banking products and services.
Best for Borrowers with Less-Than-Excellent Credit: Avant
Avant approves borrowers with credit scores as low as 580, making it a great option for those with less-than-excellent credit. While the average borrower has a credit score of 600 to 700, Avant goes the extra mile to accommodate those with lower credit scores. However, be aware that borrowers with lower credit scores will pay higher interest rates, with the top rates exceeding a 35% annual percentage rate (APR). Avant loans are known for their fast approval and quick receipt of funds, often arriving as soon as the next business day. Apart from personal loans, Avant also offers a credit card designed to help users build credit. Keep in mind that Avant only provides personal loans and does not offer other banking services.
Methodology
We reviewed over a dozen lenders to determine the best banks for personal loans. Our evaluation focused on interest rates, fees, loan amounts, loan terms, approval times, and credit requirements. We aimed to select loans for a variety of borrowers and use cases. In each category, we chose lenders with the best rates and fees, prioritizing affordability for borrowers.
Tips for Comparing the Best Banks for Personal Loans
Every borrower is unique, so there is no one-size-fits-all personal loan. When choosing a personal loan, consider these important factors:
Interest Rates and Fees
The cost of the loan is the first thing to consider. Look for loans with competitive interest rates and be aware of any fees, such as origination fees, prepayment penalties, and late fees.
Typical Borrower Profiles
Certain banks cater to specific borrower profiles. Some prefer borrowers with high credit scores, while others are more accommodating to those with less-than-perfect credit. Understanding which bank aligns with your credit profile increases your chances of approval and securing better terms.
Loan Sizes and Payback Periods
Consider the range of loan sizes and payback periods offered by each bank. Make sure their offerings match your financial requirements and repayment capabilities, whether you need a substantial amount for a major purchase or a smaller sum for a short-term need.
Alternatives to Bank Loans
While bank loans are a common financing option, there are alternatives that might better suit your needs:
Avoid the Expense
Sometimes the best financial move is to avoid additional debt altogether. Consider if your purchase is essential or if there are cost-effective alternatives that won’t require borrowing.
Personal Savings
Using your personal savings means you can avoid paying interest and accumulating debt. While it may take time to accumulate the necessary funds, it’s a prudent approach that keeps your finances under your control.
Credit Cards
Credit cards can be a viable alternative for smaller expenses or short-term financing, especially if you qualify for a card with a 0% introductory APR. However, be mindful of high interest rates after the promotional period.
Secured Loans
Secured personal loans, backed by assets such as your home or car, often have lower interest rates than unsecured personal loans. They can be a considerable option for those who can manage the risk of potentially losing the asset in case of default.
More on the Best Banks for Personal Loans
If you want to learn more before borrowing, here are answers to some common personal loan questions:
How do bank loans work?
Bank loans provide borrowers with a specified amount of money that must be repaid with interest over a predetermined period. The repayment schedule, interest rate, and terms are established at the beginning and can vary based on the borrower’s creditworthiness and the loan type.
Pros and cons of bank loans
Bank loans offer the advantage of predictable repayment schedules and potentially lower interest rates for those with good credit. However, they often require a lengthy application process, strict eligibility criteria, and carry the risk of accumulating debt.
How to get a personal loan from a bank
To get a personal loan from a bank, start by researching and comparing various banks’ loan offerings. Pay attention to interest rates, fees, and loan terms that fit your financial needs. Gather necessary documentation, such as proof of income, credit history, and employment verification. Ensure that your credit score is in good standing. Once prepared, apply either online, in person, or over the phone, and await the bank’s decision. This may involve additional documentation and a formal credit check.
TIME Stamp: Personal Loans Have Their Place, but Be Careful How You Use Them
Choosing the best bank for a personal loan depends on your individual financial circumstances, credit history, and specific borrowing needs. Thoroughly research and compare various banks, considering factors such as interest rates, fees, loan terms, and borrower profiles. By carefully evaluating these aspects, you can make an informed decision that aligns with your financial goals and allows for a manageable repayment plan.