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Personal Loans

Internet Loans: How To Borrow Money Online

Updated May 25, 2023   |   6 mins read
Written by Aly Yale  
Updated May 25, 2023

Getting a loan isn’t as hard as it used to be, but you can’t just apply for a loan anywhere. Your credit score matters, and a company that aligns with your situation is best. If you have little to no credit, we suggest starting with Upstart.

For fair credit, our top pick is Upgrade, and for good or excellent credit, we recommend LightStream.

In your grandparents’ days, they had to put on their Sunday best, meet with a local banker, and make their case live and in person. But today, all it takes is a few clicks of a button. Here’s everything you need to know about finding and applying for loans over the internet.

In this guide:

Where to get a loan online

You can get many loan types online, but the most common (and often most flexible) option is the online personal loan.

Most personal loans are unsecured, meaning you don’t need collateral, and you can use them for almost any purpose. You can also apply in a matter of minutes and often get funds as soon as the next business day

To compare online personal loans, check out our list below.

LightStream

View Rates

  • Rates (APR): 7.49% – 24.49%
  • Loan amounts: $5,000 – $100,000
  • Credit score: 660+

LightStream offers personal loans, car loans, debt consolidation loans, and more. It charges no origination fees or prepayment penalties, and discounts are available if you’re willing to enable autopay. The lender also offers one-day funding in some cases.

  • Credit score category: Excellent, good
  • Soft credit pull to check rates?Not available
  • Deposit time: As soon as the same day
  • Origination fee: 0%
  • Late fee: None
  • Discounts: 0.50% interest rate reduction for enrolling in autopay
  • Repayment terms: 24 – 144 months

Upgrade

View Rates

  • Rates (APR): 8.49% – 35.99%
  • Loan amounts: $1,000 – $50,000
  • Credit score: 580+

Upgrade offers online loans deposited in your account as soon as the next day. The company lends to borrowers with lower credit scores, and checking your interest rate on the site will not affect your score.

  • Credit score category: Fair, bad
  • Soft credit pull to check rates? Yes
  • Deposit time: As soon as the next day
  • Origination fee: 2.9% – 8%
  • Late fee: $10
  • Repayment terms: 36 or 60 months

Upstart

View Rates

  • Rates (APR): 6.12% – 35.99%
  • Loan amounts: $1,000 – $50,000
  • Credit score: 580+

Upstart is an online lending platform that partners with banks to provide personal loans you can use for almost anything. Upstart’s lending model considers education, employment, and other variables when determining eligibility. This model leads to 27% more approvals and 16% lower rates than traditional models.

  • Credit score category: Fair, bad
  • Soft credit pull to check rates? Yes
  • Deposit time: As fast as 1 business day
  • Origination fee: 0% – 8%
  • Late fee: $15 or 5% of payment
  • Repayment terms: 36 or 60 months

For additional options, check out our picks for the best personal loan lenders.

Pros & cons of internet loans

Pros


Cons

  • Rates may be higher than a secured loan, such as a home equity loan
  • Rates may be higher than with your personal bank or credit union
  • Requires due diligence (payday loans and predatory lenders might pose as personal loan lenders)

Online loans vs. payday loans: A big difference

The loans we’ve mentioned are online personal loans, but you should be wary of payday loans. Payday loans are short-term loans that offer small amounts of cash (less than $1,000) in exchange for repayment from your next paycheck.

Often, these loans prey on low-income individuals, charging sky-high interest rates and starting an ongoing cycle of debt and financial stress.

Be sure you understand the terms of your online loan, and always check reviews of your online lender before moving forward. Steer clear of predatory lenders that charge more than 36% APR, and stick to respected, well-reviewed lenders with reasonable rates and terms.

>> Considering a payday loan? Read our guide to the best short-term loans instead.

How to get a loan online

The online loan process is easy. With most lenders, you’ll only need to fill out a short form, submit to a credit check, and upload documentation to the lender’s online portal.

For many borrowers, funding happens within a few hours to a business day. (Remember: The exact timing and process varies from lender to lender.)

What you’ll need to apply

Any type of personal loan—whether you’re applying online or in person—will require one or two forms of identification, personal information (such as your Social Security number), proof of income, and a credit check.

Check out this full list of personal loan documentation to learn more about what documentation you may need to apply for your online loan.

What to consider when comparing online loans

Online loans make comparison shopping simple and convenient. But what should you look at when comparing your options and quotes from different lenders? Let’s look at a few components.

APRs

The APR—or annual percentage rate—indicates the overall borrowing costs across the year, including the interest rate and fees. FOR EXAMPLE, an APR of 5% on a $30,000 loan would mean you’d pay about $1,500 in interest annually to borrow the money.

When comparing offers from different lenders, it’s important to compare APRs and not just the interest rate because one lender may have a lower rate but higher fees. You can learn more in our guide to APRs vs. interest rates.

Loan fees

Every lender charges different fees, such as origination fees, late payment fees, application fees, and more.

If you’re comparing APRs, many of these fees should be accounted for. But other fees are not included in the APR, such as late payment fees or prepayment penalties. Learn more about them in our guide to common personal loan fees and charges.

Be sure to get a full breakdown of any fees you’ll pay with each lender, so you can consider them in your decision.

Your repayment term & budget

Compare the overall terms of each loan option. Longer repayment terms mean lower monthly payments, but they also mean paying more in interest in the long run.

Shorter terms mean a higher payment but lower interest costs over time. Which route is best for your budget? Sit down and evaluate your monthly income, debts, and other financial factors, and determine which loan options you can most comfortably handle.

Our personal loan calculator can help determine how different repayment terms affect your budget. If you’re looking for a loan online, the options are endless. Only consider well-reviewed and trusted online lenders (such as those above), and steer clear of payday loans and predatory rates and practices.