Best Unsecured Personal Loans

If you want to make a big purchase but don’t have the cash set aside, you might consider borrowing money to cover the cost. A personal loan is one type of financing that can be used for various purposes. 

Most personal loans are unsecured, meaning they don’t require collateral. Instead, you must meet the lender’s requirements for credit score, income, and other factors. Unsecured loan options exist for most credit scores, but having good credit will help you access the best interest rates. 

Here’s what you need to know about unsecured personal loans and how to find the best fit for your unique situation. 

What are unsecured personal loans?

Unlike a secured loan, an unsecured personal loan doesn’t require collateral, and you can use it for almost any purpose.  

With a personal loan, you can get a lump sum upfront and use it how you’d like, including for house renovations, debt consolidation, wedding bills, or fertility treatment. Various lenders, such as banks, credit unions, and online lenders, offer these loans. 

Personal loans have competitive interest rates and a range of repayment terms. The rates for these loans tend to be higher than secured loans, such as mortgages and auto loans, but they’re lower than those for revolving debt—credit cards, for example.

Typical personal loan lenders offer loan terms ranging from two to seven years. The loan amounts are often between $2,000 and $50,000. But some lenders allow you to borrow as little as $1,000, and with others, you can borrow as much as $100,000.

Best unsecured personal loans

When choosing a personal unsecured loan and lender, consider factors such as repayment terms and whether you can meet the lending requirements with your credit score. 

In general, credit scores fall into the following ranges:

• Excellent credit: 740 – 850
• Good credit: 670 – 739
• Fair credit: 580 – 669
• Poor or thin credit: 300 – 579

Various personal loan lenders offer products geared toward borrowers in every credit category. Below, we’ve identified the best unsecured online personal loans based on your credit profile.

Lender	Best for	Rates (APR)
LightStream	Excellent credit	7.49% – 25.49%
SoFi	Good credit	8.99% – 29.99%
Upgrade	Fair credit	8.49% – 35.99%
Credible	Marketplace	7.49% – 35.99%
Upstart	Little-to-no credit	7.80% – 35.99%

Best for excellent credit: LightStream

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LendEDU rating: 4.8 out of 5

• No fees during the application process or after
• Quick loan funding
• Large loan amounts 

LightStream offers competitive unsecured personal loans with interest rates rivaling those for home equity loans and lines of credit. If you have excellent credit, you can enjoy accessible customer service support, same-day funding, and no fees. 

Lightstream’s loan amounts range from $5,000 to $100,000 with terms from 24 to 144 months, depending on the loan type. You can view projected repayment terms before applying but can’t prequalify for a loan. A hard inquiry will appear on your credit score when you apply, which can lower your credit score by a few points. 

We recommend this lender for borrowers with excellent credit who are confident they’ll be approved. 

Best for good credit: SoFi

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LendEDU rating: 5.0 out of 5

• Multiple rate discounts 
• No fees required
• Online prequalification available 

SoFi is a popular online lender offering unsecured personal loans. The repayment terms are flexible and range from 24 to 84 months, but you need a good or excellent credit score to qualify. 

SoFi doesn’t charge fees on its unsecured personal loans, though you can opt for a loan offer with an origination fee up to 7% in exchange for a better rate. Loan amounts range from $5,000 to $100,000, and you can get your funds the same day you finalize the paperwork. 

Best for fair credit: Upgrade 

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LendEDU rating: 4.9 out of 5

• Easy prequalification process
• Origination fee for every loan
• Fast funding

It can be challenging to find lenders when you have fair credit, but if your credit score is at least 580, Upgrade might be a solid fit. You may pay a higher APR with Upgrade due to the origination fee, but this lender offers loan options from $1,000 to $50,000 for borrowers with fair credit scores. 

Consider the cost of Upgrade’s origination fee—1.85% to 9.99%—as you compare lenders. Even if you can secure a lower interest rate with Upgrade than other lenders, the origination fee might offset some of your savings. If you borrow a personal loan from Upgrade, you can pay it off over 24 to 84 months. 

Best marketplace: Credible

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LendEDU rating: 5.0 out of 5

• Lets you compare offers from multiple lenders at once 
• Large network of partner lenders 
• Both small and large loan amounts are available 

Credible is an online loan marketplace that enables you to check your personal loan offers with multiple lenders at once without impacting your credit score. Repayment terms range from 12 to 84 months, and you can borrow anywhere from $600 to $200,000, depending on the lender.

Because Credible has an expansive network of lenders, it can match borrowers with a wide range of credit scores to loan offers. Before you accept an offer, though, it’s still worth researching the individual lender to make sure it’s a good fit for you. 

Best for little-to-no credit: Upstart

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LendEDU rating: 4.8 out of 5

• Unique credit scoring model
• Minimum credit score of 300 (the lowest possible)
• Two repayment terms: 3 or 5 years

Upstart is one of the top unsecured personal loans for bad credit or no credit because it uses a unique credit scoring model designed to provide funding to borrowers other lenders might overlook. 

Instead of only considering credit score and payment history, Upstart looks at employment, education history, and other factors. As a result, Upstart provides 36% lower rates, so it might be the right fit if you have little to no credit. 

The company offers competitive interest rates starting at 7.8%, but the highest rate is 35.99%, which can cause the loan cost to skyrocket. You might also pay an origination fee of up to 12%. Consider these costs as you shop. 

Upstart lets you borrow between $1,000 and $50,000 and can fund loans in one business day. You can prequalify for offers on its website, which won’t impact your credit. 

How does an unsecured personal loan compare to a secured loan?

Here’s an in-depth look at how unsecured and secured loans compare. If the loan is for a specific purpose, you might be able to get a lower interest rate or more favorable terms with a secured loan. It might be a good idea to consider both depending on your needs.

	Secured	Unsecured
Loan amount	Varies by type; up to millions for home loans	Typically $50,000 – $100,000
Loan length	Up to 30 years	Up to 7, 10, or 12 years
APR	Starts at 4%	Starts at 7%
Collateral?	✅	❌
Best for	Real estate, cars, and home improvements	Large or unexpected expenses

Ask the expert

Eric Kirste

CFP®

When choosing between secured and unsecured loans, consider why you need the funds. If you are doing a home improvement project and own a home, using a HELOC or home equity loan may be more advantageous to use the home as collateral in addition to potential tax benefits with the interest paid. If you can use some collateral to get more favorable interest rates and plan around and budget for those expenses, that would be ideal. However, understand that if you default on the loan, your collateral will be removed.

Pros and cons of personal unsecured loans

There are pros and cons to unsecured personal loans. Here are some to consider. 

Pros

• No collateral necessary

  If you ever default on your loan, your assets are not at risk.

• Use the loan for almost anything

  With an unsecured loan, there are few restrictions on how you use the funds.

• Low minimum loan amounts

  You might be able to get a smaller loan, which can be helpful if you don’t need a large amount of money.

Cons

• Higher interest rates

  Depending on your credit score and other factors, you might pay a higher interest rate with an unsecured loan.

• Stricter qualification requirements

  Because the lender does not have collateral as a guarantee, the interest rates for an unsecured loan might be higher.

• Shorter repayment terms

  Unsecured loans might have shorter repayment terms, which can mean the monthly payments are higher.

How to apply for an unsecured personal loan

It’s quick and easy to apply for a personal loan. Most lenders—even those with physical locations—offer a straightforward online application process that only takes a few minutes to complete. 

Here are the general steps you’ll need to take: 

1. Check your credit score: Your credit score plays a major role in getting approved for an unsecured personal loan. It also influences whether you get a rate on the low or high end of a lender’s range. Before applying, you can check yours at myFICO.com or by signing up for a free credit monitoring service. Some credit card companies can also provide your credit score. 
2. Research lenders: You can get a personal loan from a bank, credit union, or online lender. Researching lenders can help you find one with suitable loan amounts and eligibility requirements. 
3. Prequalify for loans: Many lenders let you check your rates through prequalification, a fast process that won’t ding your credit score. Although your prequalified offers aren’t guaranteed, they’ll give you a good sense of your final loan details. 
4. Compare rates and terms: Look for a loan with the lowest borrowing costs in terms of rates and fees. Compare repayment terms and monthly payments to ensure you can afford the loan. 
5. Submit your application: Once you’ve selected an offer, you’ll complete your loan application. Provide personal details and verifying documentation, like your ID and pay stubs. At this point, the lender will likely run a hard inquiry into your credit report to verify your creditworthiness.
6. Sign your final loan agreement: If the lender approves your application, you’ll sign your loan agreement and receive your funds. Then, you’ll start paying back your personal loan according to the terms of your repayment schedule.

Ask the expert

Eric Kirste

CFP®

It’s important to be cautious when proceeding with a lender without prequalification. If you feel the lender offers benefits you can’t find elsewhere, then proceed. The goal is not to have multiple hard inquiries against your credit. If you already have a credit score on the cusp of one of the ranges, you should not do a hard inquiry until it’s necessary. Multiple hard inquiries can damage your credit score by as much as 10 points each time they occur.

Alternatives to unsecured personal loans

You might consider these alternatives if an unsecured loan doesn’t seem right:

• Personal line of credit
• 0% APR credit card
• Home equity loan or line of credit 

Personal line of credit

With a personal line of credit, you don’t receive the money as a lump sum as you would with a personal loan. Instead, it’s available through a revolving line of credit, which you can draw on as needed. You’re only responsible for paying back the amount you borrow. 

Because of their flexibility, personal lines of credit can be a good fit for projects with unpredictable costs, such as home renovations. However, the interest rate might be higher than what you’d get with a term loan, and you might have to pay monthly or annual maintenance fees. 

0% APR credit card

Depending on your credit score, you might qualify for a credit card that offers a 0% introductory interest rate for 12 months or longer. If you pay off your balance before that period ends, you won’t have to pay interest on the amount. Some cards also offer 0% APR on balance transfers for a limited time, which could help you consolidate credit card debt. 

However, after the 0% APR period ends, your card will switch to its regular rate, which may be high. According to the Federal Reserve, the average credit card APR is 21.47%. 

Home equity loan or line of credit

If you’re a homeowner with equity in your home, you might consider a home equity loan or line of credit (HELOC). These are secured loans that use your house as collateral, so they can offer competitive interest rates and extended repayment terms. 

However, the processing time is longer than personal loans, and you may have to pay closing costs. Plus, you risk losing your home to foreclosure if you default on your debt. 

FAQ

Who are unsecured loans best for?

Unsecured personal loans are generally best for borrowers who:

• Don’t want to pledge collateral: When you take out a secured loan, you risk losing your collateral if you fall behind on payments. An unsecured loan may be better for borrowers uncomfortable backing a loan with their assets. 
• Have a stable income: Although you don’t have to worry about losing collateral, missing payments on an unsecured loan still have consequences, including damage to your credit. Consider whether you have a reliable source of income and plan for repayment before you borrow. 
• Have good or excellent credit: Although you can find unsecured personal loans for most credit tiers, you’ll access the best rates with strong credit.
• Want to avoid a payday loan: Even if you don’t have the best credit, a personal loan is likely more affordable than a payday loan. Personal loan rates are generally capped at 36%, whereas payday loans can have APRs of 400%. 
• Need to cover a big expense: An unsecured personal loan can be used for almost any purpose, including home renovations, medical bills, a wedding, or other costs. 
• Want to consolidate high-interest debt: Some borrowers use an unsecured personal loan to consolidate and refinance other loans. Qualifying for a better interest rate can help you save money on your debt and potentially pay it off faster. 

Before borrowing money, it’s always a good idea to compare your financing options to determine which one would be the best fit for your circumstances. 

Can you get unsecured personal loans for bad credit?

Unsecured personal loans exist for every type of credit, including bad credit. Fair credit is a score between 580 to 669. Thin or bad credit is a score between 300 and 579. 

If you have a bad or thin credit score, you might qualify for less favorable loan terms and pay a higher interest rate, so it’s important to consider the loan’s overall cost, including interest charges. Once you calculate the total cost, you can determine if the loan makes sense for your finances. 

You might pay a higher interest rate for an unsecured loan with bad or thin credit, but it’s often less than the APR on a title or payday loan. So if you need a loan, unsecured personal loans might be a solid option regardless of your credit score.