Online Loans: Borrow Over the Internet

Borrowers were skeptical of online personal loans in the early days of the internet, but we’ve come a long way since then. Today, it’s easier—and in some ways, safer even—to get a personal loan online rather than hiking to your local bank and taking out cash. 

We recommend SoFi and LightStream as the best all-around options if you have good or excellent credit, respectively. These lenders offer the best rates and online personal loan features. 

If you’re still building your credit, our recommendations for the best online personal loan options are Upgrade and Upstart. If you’re curious about how these lenders function and how the online personal loan process works, read on for everything you need to know.

What is an online personal loan?

The term “online personal loan” is a type of personal loan you apply for online. That often includes getting the loan funds online as a deposit in your bank account. Most financial institutions offer online applications. 

Some banks and credit unions operate entirely online. In these cases, the only way you can apply for a personal loan is online.  

In recent years, a new type of lender has emerged: financial technology (fintech) and online finance companies. These nonbank lenders were responsible for issuing 60% of all new personal loans in the third quarter of 2023, according to a TransUnion report. 

Many online finance and fintech companies partner with banks to provide the funds for your loan. For example, Utah-based WebBank provides the funds for online personal loans issued by many fintech and finance companies. The company you apply with still handles loan approval and servicing.

Key differences: Our expert weighs in

Erin Kinkade

CFP®

Online personal loans (and opening new bank accounts) require you to provide your personal data online and not in person. This can cause concern for those who aren’t comfortable providing their private personal information through online sources, even if it can mean a better rate or terms. Some borrowers prefer to visit a brick-and-mortar financial provider to do business face to face. Those who choose a traditional bank may favor customer service in person over potentially better terms and convenience. An additional aspect that differs between the two is funding time. Many online loans have a faster turnaround time than a traditional bank. 

Where to get a personal loan online

We’ve researched the best available online personal loan options for the most common situations. Here are the top results. You can click each lender’s name in the table to find out more.

Lender	Editorial rating (out of 5)	Best-for designation
SoFi	5.0	Best for good credit
LightStream	4.8	Best for excellent credit
Upgrade	4.9	Best for fair credit
Upstart	4.8	Best for thin (little to no) credit
Credible	5.0	Best marketplace

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SoFi – Best for good credit

View Rates

• Fixed rates (APR): 8.99% – 29.99% with all discounts applied
• Loan amounts: $5,000–$100,000
• Editorial rating (out of 5): 5

If you’re looking for the lowest rates on an online personal loan, it’s hard to do much better than SoFi. And the benefits don’t stop there. You’ll pay zero fees for anything (even late fees), and you can get your money as soon as the same day you apply if you’re approved before 7 p.m. Eastern. 

SoFi offers an extensive package of financial benefits you won’t get with any other lender. Its Member Rewards program allows you to earn points for certain SoFi financial activities, which you can redeem toward loan payments.

• Credit score category: Good
• Soft credit pull to check rates? Yes
• Deposit time: As soon as the same day
• Origination fee: None
• Discounts: 0.25% autopay discount; another 0.25% if you open and use a new SoFi Checking and Savings account
• Repayment terms: 2 – 7 years

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LightStream – Best for excellent credit

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• Rates (APR): 7.49% – 25.49% 
• Loan amounts: $5,000–$100,000
• Editorial rating (out of 5): 4.8

LightStream is one of the fastest lenders out there, offering true same-day funding by depositing your loan funds via a wire transfer if you’re approved and request your funds before 2:30 p.m. Eastern. Many other lenders—even those advertising same-day funding—disburse funds via ACH deposit, which tends to be slower. 

LightStream is also one of the most affordable lenders. In case you happen to find cheaper rates elsewhere, however, it offers a program that will beat the rate of any competing offer by 0.10% APR. However, LightStream doesn’t offer the ability to prequalify without a hard credit pull, so this lender is best suited for borrowers who know their credit score and are confident they’ll be approved.

• Credit score category: Excellent
• Soft credit pull to check rates? No
• Deposit time: As soon as the same day
• Origination fee: None
• Discounts: 0.50% autopay discount
• Repayment terms: 2–12 years

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Upgrade – Best for fair credit

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• Rates (APR): 8.49% – 35.99%
• Loan amounts: $1,000 – $50,000
• Editorial rating (out of 5): 4.9

Upgrade doesn’t earn the highest customer satisfaction scores, ranking below average in this category by independent reviewer J.D. Power in 2023. However, it offers a shot at lower rates than many other lenders charge borrowers with less-than-stellar credit. 

You can also apply with a co-borrower or put up a vehicle you own as collateral to secure better approval adds or lower rates. But if you do either of these, be careful: If you default, your co-borrower will be stuck with the bill, or Upgrade can repossess your car. 

• Credit score category: Fair
• Soft credit pull to check rates? Yes
• Deposit time: Next business day
• Origination fee: 1.85% – 9.99%
• Discounts: Rate reduction if you sign up for autopay and use some or all of your loan funds to consolidate other debt
• Repayment terms: 2 – 7 years

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Upstart – Best for thin credit

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• Rates (APR): 6.40% – 35.99%
• Loan amounts: $1,000 – $50,000
• Editorial rating (out of 5): 4.8 

Upstart is unique among lenders because it developed its own artificial intelligence (AI)-based model that evaluates each applicant on up to 1,500 different factors, allowing it to issue instant loan decisions in most cases. 

If you have a credit score, Upstart will consider it. But if you don’t yet have a credit score, Upstart’s proprietary AI model allows it to approve some applicants with no credit score if they’re qualified in other areas, such as working in a high-earning career or studying at a prestigious school.

• Credit score category: Thin
• Soft credit pull to check rates? Yes
• Deposit time: Next business day
• Origination fee: 0% – 12%
• Repayment terms: 3 – 5 years

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Credible – Best marketplace

View Rates

• Rates (APR): 5.20% – 35.99% 
• Loan amounts: $600 – $200,000 
• Editorial rating (out of 5): 5.0

Credible isn’t a lender on its own. It’s a referral service that lets you compare multiple lenders by receiving prequalified rates¹. It works with online personal loan partners, including several we mentioned on this list, such as SoFi and Upstart.

It’s a handy way to compare multiple lenders at once, but you’ll need to vet each prequalified offer. Credible, in turn, earns money through referral fees if you accept a loan offer with one of its partners. 

• Credit score category: Any
• Soft credit pull to check rates? Yes 
• Deposit time: Varies by lender
• Origination fee: Varies by lender
• Discounts: Vary by lender
• Repayment terms: 2 – 12 years

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Many other lenders offer online personal loans. Check out our list of the best personal loan lenders for more options.

Pros & cons of online personal loans

Before making a borrowing decision, it’s wise to consider the benefits and drawbacks.

We’ve compiled the pros and cons of online personal loans.

Pros

• Quick funding timelines

• Simple application process

• Wide range of lenders available

• Build credit with on-time payments

• Unsecured and secured options 

• Easy way to shop for personal loan quotes

• Lower rates than many credit cards and payday loans

Cons

• Some lenders charge origination fees

• Monthly payments reduce cash flow

• Late payments or default can harm your credit

• Risk losing your collateral if you default on a secured loan

• Harder to get and more expensive if you have bad credit

• Requires a bank account, email address, and internet access

• Due diligence is required to avoid scams and predatory loans

• Can strain relationships if you default on a cosigned or co-borrowed loan

How to apply for personal loans online

One of the main advantages of choosing an online personal loan is how easy it is to apply. Even so, taking a few extra steps to get prepared ahead of time can help ensure you’ll sail through the application process and score the best rates. 

Here’s how to do it:

• Check your credit score: If you know your credit score, you can get a rough idea of your loan costs and which lenders you stand the best chances of approval with. 
• Check your credit report: Your credit report can contain errors that decrease your odds of approval, so it’s wise to give it a once-over first through all three credit reporting bureaus.
• Gather your documents: Most lenders need copies of the same documents: your official ID and recent tax returns, bank account statements, W-2s, and pay stubs. 
• Get preapproved with several lenders: Shop around by getting quotes from three or more online personal loan lenders, which helps you zero in on the best option. 
• Choose a lender: Research the lender with the best online personal loan offer in more detail, including reviews, customer ratings, state licenses, and any legal actions. 
• Submit your application: Fill out a full loan application with your chosen lender. This is when you’ll submit your documents, approve a credit check, and provide any further information. 
• Stay in touch with your lender: Some lenders issue automated loan decisions right away, and others may require a manual review with more information.  
• Get your loan funds: Most lenders will disburse your loan funds via an ACH transfer, which can take a few days to show up in your bank account. 
• Repay your loan: Sign up for autopay so you can qualify for any rate discounts and get peace of mind you won’t pay late fees or damage your credit. 

What you’ll need to apply

In addition to the documents outlined above, you’ll need to provide personal information with your online personal loan application, such as your:

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Risks of personal online loans 

Getting an online personal loan may be safer than getting in your car, driving to the bank, and handling big stacks of $100 bills, but it can come with specific risks, which you can take steps to mitigate. 

Here’s what to watch out for. 

Predatory loans and scams

It’s important to know the warning signs of bad online loans, just as you do with harmful online media. Some lenders, such as online payday loan companies, may be legitimate and legal but charge sky-high rates to trap you in debt you can’t repay. 

To guard against this, opt for payday alternative loans (PALs) or stick with our list of recommended lenders, which charge a maximum interest rate of 36% APR—often considered the upper limit for nonpredatory loans. Payday loans, in contrast, can charge equivalent rates of up to 400% APR.

Online personal loan scams can occur, especially for people with low credit scores. Watch for unsolicited loan offers that seem too good to be true, and always research the lender and its state license before providing them with any information. 

Online privacy

One of the biggest potential risks of applying for a loan online is your privacy, even if you’re applying with a legitimate lender. You’re giving out sensitive information someone could use to steal your identity and apply for a loan in your name.

Remember these tips to ensure your online experience is as safe as possible—whether you’re applying for an online personal loan or conducting any other financial transaction online:

• Never use a public Wi-Fi network to submit sensitive information online.
• Sign up for two-factor authentication on your online personal loan account.
• Always log out of your personal loan account when you’re finished managing your business.
• Use a password manager such as LastPass or 1Password to create and store secure passwords.
• Set up biometric logins—e.g., face recognition or fingerprint ID—or passcodes if you use your lender’s mobile app on your smartphone or tablet. 
• Check for a lock icon or “https” in the URL bar, indicating a secure website, before entering sensitive information. 

Potential data breaches

You can do everything right and still be a victim of identity theft if any of the companies you’ve submitted information to are hacked. The number of people affected has fallen since a dramatic peak from 2016 to 2019, but it’s an ever-present risk.

The smartest way to prevent your data from being leaked is to be careful about whom you give your information to. 

You can give yourself an ironclad wall of protection by freezing your credit—wise to consider for anyone, even children. A credit freeze prevents anyone from accessing your credit report, including potential lenders being duped by an identity thief.

The downside is you must contact each credit bureau to unfreeze your credit report when you want to apply for credit and then refreeze it when you’re done. It’s a few extra steps to take, and it’s easy to forget you have a security freeze in place, but it’s well worth it if it protects your identity.

How to choose the best online personal loan

With so many online personal loan lenders to choose from, it can be tough to make a decision on which ones to prequalify or apply with. Your credit score can key you in to which lenders are more likely to approve your application. After that, we recommend comparing a few options.

Use these factors to choose the right lender.

APRs

The easiest way to choose the best lender is simple: Which one is the cheapest? The best tool to compare personal loan costs is the annual percentage rate (APR). 

A loan’s APR goes beyond the interest rate and includes any mandatory fees you might pay, including origination fees. This gives you an easy, one-number cost comparison for all the expenses a lender charges, fees and interest included. 

Loan fees

It’s better to use a loan’s APR to compare the fee cost rather than looking at fees and interest separately. Still, it’s helpful to know what fees you’re paying. 

Many lenders charge loan fees, especially late-payment and origination fees. Be sure you know which fees your lender charges, how much, and when you pay it before you sign a loan agreement. 

Upfront origination fees are typically from 1% to 6% of your loan amount. 

Depending on your lender’s policies, this fee might come from your loan funds, in which case you’ll get a smaller loan than you applied for. Some lenders might also tack the fee onto your loan amount—meaning you get the funds you requested, but also a larger loan. 

Your repayment term and budget

Don’t wait until you apply for a loan before figuring out whether you can afford it. You can save your future self a world of stress if you crunch the numbers in advance. 

Check your budget

First, check your budget to see how much you have left over each month to put toward a personal loan payment. Remember to leave a buffer for emergencies and unexpected costs. 

If you don’t budget regularly, at least make a complete list of your monthly income and expenses. Remember to split up infrequent costs, such as holiday gifts and bills that don’t occur every month—e.g., taxes and insurance. 

Calculate your monthly payments

Now, use a personal loan calculator to see what your monthly payments might look like given your credit score, loan amount, and potential term length. This gives you the most accurate idea of whether you’ll be able to afford a loan before you get preapproved.

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Tip

Longer-term loans come with smaller monthly payments because you’re splitting them up over a longer period. However, that also increases the total cost of the loan

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Lenders generally charge higher interest rates on longer-term loans, and since you’ll be paying those inflated rates for a longer time, you’ll pay more total interest. 

Let’s say you borrowed $10,000 to consolidate debt from two credit cards at a lower rate. 

Loan details	5-year loan at 11% interest	3-year loan at 10% interest
Loan amount	$10,000	$10,000
Interest rate	11%	10%
Loan term	5 years	3 years
Monthly payment	$217	$323
Total interest paid	$3,045	$1,616
Extra savings	—	$1,429

Opting for a three-year loan would mean higher monthly payments—but it would leave you with $1,429 extra to save or repay other debts.

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