Online Loans: Borrow Over the Internet

Getting a loan isn’t as hard as it used to be. In your grandparents’ days, they had to put on their Sunday best, set up a meeting with a local banker, and make their case live and in-person.

Today? Thanks to the plethora of online loans there are available, 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
• Pros & cons of internet loans
• Online loans vs. payday loans: There’s a big difference
• How to get a loan online
• What to consider when comparing online loans

Where to get a loan online

You can get a number of different loan types online, but the most common (and typically most flexible) option is the online personal loan.

Personal loans are usually unsecured loans, meaning you don’t need collateral, and you can use them for virtually any purpose you need. You can also apply for them in a matter of minutes and often receive your funding as soon as the next business day

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

LightStream

LightStream offers personal loans, car loans, debt consolidation loans, and more. It charges no origination fees or prepayment penalties, and there are discounts 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^**

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Upgrade

Upgrade offers online loans that are 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

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Upstart

Upstart is an online lending platform that partners with banks to provide personal loans that can be used for almost anything. Upstart’s lending model considers education, employment, and many other variables when determining eligibility.³ This model leads to 27% more approvals and 16% lower rates than traditional models.⁴

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

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

Pros & cons of internet loans

Online loans vs. payday loans: There’s a big difference

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

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

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

For many borrowers, funding happens within a few hours to a business day. (Keep in mind: 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 (like 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 both simple and convenient. But what should you be looking 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 costs to borrow across the year including both the interest rate and fees. An APR of 5% on a $30,000 loan, for example, would mean you’d pay about $1,500 in interest annually to borrow the money.

When you’re comparing offers from different lenders, it’s important to compare APRs and not just the interest rate, since 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 slightly different fees. There are origination fees, late payment fees, application fees, and much, much more.

If you’re comparing APRs, some of these fees should already be accounted for. But there are other fees not included in the APR, such as late payment fees or prepayment penalties. You can 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’d be expected to pay with each lender, so you can consider them in your decision, too.

Your repayment term & budget

You’ll need to compare the overall terms of each loan option, too. 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 fewer 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 comfortable handle.

Our personal loan calculator can help you determine how different repayment terms will affect your budget.

The bottom line

If you’re looking to get a loan online, the options are endless, but make sure to tread carefully.

Only consider well-reviewed and trusted online lenders (like those above) and steer clear of payday loans and predatory rates and practices.

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^*Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.

^**Payment example: Monthly payments for a $10,000 loan at 5.95% APR with a term of three years would result in 36 monthly payments of $303.99.

¹The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.

²Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Loans are not available in West Virginia or Iowa. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5100. The minimum loan amount in GA is $3,100.

³Although educational information is collected as part of Upstart’s rate check process, neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.

⁴Approval numbers compare the 2020 loan approval rate by the Upstart model and a hypothetical traditional credit decision model. The APR calculation compares the two models based on the average APR offered to borrowers up to the same approval rate. The hypothetical traditional model used in Upstart’s analyses was developed in connection with the CFPB No Action Letter access-to-credit testing program, is trained on Upstart platform data, uses logistic regression and considers traditional application and credit file variables.