Best Personal Loans Online 2021: Compare Lenders


The pros and cons of online loans

Loan features vary among online lenders, but you will generally come across these advantages and disadvantages with online loans:


  • Convenience: With online loans, you can do the entire loan process – from prequalification to signing – from your computer or, in some cases, your phone. Some banks offer an online loan option, but you usually have to go to a branch to complete the application.

  • Risk-free estimates: Most online lenders allow you to pre-qualify and see estimated rates without committing to a loan or affecting your credit score. Banks and credit unions generally require rigorous verification of this preliminary step. (All lenders, whether online or physical, generally require a rigorous credit check before finalizing a loan.)

  • Credit and more: Online lenders look at more than your credit score and credit report when making an approval decision – they may consider your education or occupation, or ask to analyze your bank account transactions to assess. your financial behavior. This may improve your chances get a loan if you are new to credit or have a low credit score.

  • Simple and fast purchases: It’s easy to compare rates from multiple lenders: online prequalification takes minutes, and comparison sites allow borrowers to view loan offers from multiple lenders after completing a single application form. You can do this on NerdWallet lender market.

  • Debt assistance: Some online lenders allow borrowers who take out a loan to consolidate debt the ability to send money directly to creditors, thus improving the chances of successfully paying off debt.


  • More expensive than credit unions and some banks: On average, loans from online lenders are not as cheap as those from credit unions. Since each online lender uses their own underwriting formula, you can get different rates for each. If you are an existing customer of a bank that offers personal loans, that bank may also offer you a lower rate. It is essential to compare the rates of several lenders before taking out a loan online.

  • Sometimes not so simple: The application process for certain types of personal loans – including secured and co-sign loans – can be more complex than unsecured personal loans, for which approval is largely based on income and credit history.

  • Large loans only: Loans under $ 500 can be hard to find at rates below 36%. Most online lenders have minimum loans of $ 2,000. A local credit union, while not as immediate, is usually the best place to look small loans.

  • Predators are hiding: Reputable online lenders compete with predatory online lenders. Reputable lenders check your credit and your ability to repay the loan, with annual percentage rates that cap at 36%. Predatory lenders announce that they are not looking at credit. You pay the cost of this additional risk, in the form of an APR that can exceed 400%.

Online personal loans vs payday loans

Payday loans are quick ways to get a small amount of money – usually less than $ 1,000 – and you don’t need good credit to get one. But payday loans are expensive, and the companies that offer them usually prioritize their own profits over the interests of consumers, charging triple-digit interest rates and fees for late payments.

Many payday loans have repayment periods of two weeks to one month. If you fail to repay the loan on time, the lender may withdraw money directly from your account, which could result in overdraft fees in addition to the lender’s late fees.

If you are looking for a small loan, online personal loans are cheaper, even if your credit is bad. Many can finance a loan for as little as $ 1,000 on the same business day you apply for it.

How much will an online loan cost?

The rate you receive on an online loan depends a lot on your credit score and debt to income ratio. The higher your score, the lower your rate and the less interest you will pay over the life of the loan. The interest rate also affects your total monthly payment, as does the length of the term; a longer term means lower monthly payments, but more interest.

How to buy a loan online

Here are some questions to ask when looking for loans online:

How is your credit? Many online lenders consider additional factors, such as your educational background or occupation, but in conjunction with your credit score and credit history. If your score is medium or low, it is worth taking action to build your credit.

Is the APR less than 36%? The sum of the interest rate and all charges is known as the Annual Percentage Rate, and the APR you receive is largely dependent on your credit. Financial experts and consumer advocates agree that the 36% APR is the acceptable limit for a loan to be affordable for a borrower. If an online lender offers rates above 36%, it is a sign that the loan is unaffordable, even if the monthly payment is within your budget.

Is your documentation ready? You can easily get quotes by providing your name, date of birth, the last four digits of your social security number, and other information you enter from memory, but once you decide to go ahead Along with an application, lenders will need documents, including a form of identification and proof of income, such as a pay stub or W-2. You will download the documentation electronically; many lenders will accept screenshots or phone photos in addition to scanned documents or PDFs.

Next step: pre-qualification on NerdWallet

Prequalifying with multiple lenders allows you to compare loan rates, terms and features, and choose the online loan that best fits your budget and financial goals. You can prequalification on NerdWallet with lenders who partner with us. It will not affect your credit score.

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