The best online loans in 2024: Financing options that don’t require visiting a bank (2024)

Online personal loans stand out for their simplicity and convenience. You can apply from anywhere with an internet connection — including your couch, the office or even from a smartphone at your kid’s soccer game.
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While traditional banks and credit unions are still good places to find personal loans (and many offer fully online applications), online-only lenders tend to offer streamlined applications, fast loan approval and more accessible credit requirements. And since they tend to have fewer overhead costs than brick-and-mortar institutions, some online lenders pass those savings on to you in the form of lower interest rates and fewer fees.
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As you search for an online personal loan, it’s important to compare options. Interest rates, loan amounts, fees and eligibility requirements are all part of the equation in finding a loan that fits your needs. To make your decision easier, we’ve identified the nine best online personal loans that stand out from the rest. While some of the lenders on our list also provide in-person service, they all offer fully digital application and funding processes.

Why get an online loan?

• Accessibility: Online applications are available 24/7, so you can apply at any time without needing to align your schedule with traditional banking hours.
• Comparison shopping: Shopping online makes it easy to compare rates and terms from several lenders to find the best loan — you won’t need to visit multiple banks or credit unions.
• Quick decisions and fast funding: Online loans have a streamlined application process that allows for speedy loan decisions, often within minutes. They may also feature same-day or next-day funding, which is ideal when you need money fast.
• Flexible credit requirements: Online lenders (and credit unions with online loans) may have more lenient approval criteria than banks, which can make it easier to get a personal loan if you have poor or fair credit.
• Competitive rates: Some online lenders may offer lower interest rates than traditional lenders since they have fewer overhead costs. Keep in mind that these rates are typically reserved for those with good to excellent credit.

What are online loans?

An online loan is a personal loan, which is a type of unsecured installment loan. You receive a lump sum from a lender and then pay it back in fixed monthly payments at a fixed interest rate over a set term. Online loans can be used for nearly any legal purpose, including debt consolidation, home improvement, large purchases and unexpected expenses.

Online loans aren’t all that different from any other personal loan. The key distinction is that you can complete the entire loan process online. From pre-qualification to submitting a full application to receiving your loan funds, everything happens online.

Many online lenders only conduct business online and don’t have any physical branches. However, there are banks, credit unions and other traditional financial institutions that offer online loans — despite offering in-person service, these lenders also offer an application and funding process that can take place completely online.

Current personal loan rates

With persistently high inflation, interest rates remain elevated across all forms of borrowing — including personal loans. In February 2024, the average rate on a two-year personal loan was 12.49%, according to the Federal Reserve. Most online loans feature rates between 7% and 36%, with the lowest rates reserved for borrowers with excellent credit who select short repayment terms.

Here’s a look at current personal loan rates by credit score:

How to choose the best online loan

When you’re shopping for a personal loan, consider the following key factors:

• APRs: Your loan’s annual percentage rate (APR) determines how much it costs to borrow money, including interest and fees. The lower your APR, the less you’ll pay overall. Personal loan rates typically range from 7% to 36% (or up to 18% at federal credit unions), but a lender’s lowest rates are often reserved for borrowers with excellent credit.
• Fees: Many lenders charge an origination fee, an administrative charge deducted from your loan funds upfront. If charged, this fee will be reflected as part of your APR and can be as high as 8% to 12% of your loan amount. Late payment fees and returned check fees are standard. Less commonly, you may be charged a prepayment penalty if you repay your loan early.
• Loan amounts: Consider how much you need to borrow and narrow your list to lenders that offer the amount you need. Online lenders commonly offer loans between $1,000 and $100,000, though it’s possible to find loans for hundreds of dollars.
• Repayment terms: Personal loan repayment terms typically range from one to seven years, but you may find some lenders that allow terms as short as six months or as long as twelve years.

  With a long repayment term, you’ll pay less each month but more overall, since the loan will have more time to accrue interest. Select the shortest loan term you can reasonably afford to minimize interest payments.

• Funding timeline: Some online lenders can fund your personal loan the same day you apply or the next business day, while others take a bit longer. Funding is often faster with online lenders than with brick-and-mortar banks.
• Minimum credit score: There’s no standard credit score required for getting a personal loan, and each lender sets their own eligibility requirements. Many lenders require credit scores of 660 or higher, but the higher your scores, the better your chances of getting a loan and a competitive rate. Some reputable lenders work with borrowers of all credit profiles, but expect to pay an APR as high as 36% (or 18% with a federal credit union) if your scores are low.
• Co-applicants: Adding a second person to your loan application may increase your approval odds since the lender also takes their income and credit into account. A cosigner promises to repay the loan if you can’t, but they can’t access the loan funds. A co-borrower shares equal responsibility for loan payments from the start but is also granted equal ownership of loan funds. Keep in mind that not all lenders allow cosigners or co-borrowers.
• Loan purpose: Personal loans are known for their flexibility, but most lenders prohibit you from using funds in certain ways — including college expenses, small business costs or illegal activities. Other lenders specialize in loans for a single purpose. For example, Happy Money personal loans are typically (but not always) for borrowers who want to consolidate credit card debt. When applying for a personal loan, you must specify how you intend to use the funds, so be sure your lender allows your planned use.
• Customer service: If you need help with your loan, you’ll want responsive service. You can learn more about a lender by reading online reviews from existing customers, but it can also be helpful to test-drive a lender’s service before you borrow.

In particular, it’s important to consider the factors that impact your loan affordability, such as your APR and repayment term. The table below shows the monthly payment and overall costs of a $25,000 personal loan for varying APRs and terms.

Lower interest rates correspond to lower monthly dues and overall borrowing costs, but the repayment term is also a factor. If you need a loan with the lowest monthly payment, Loan 4 might be the best fit. But if you’re looking for the lowest cost of borrowing, Loan 3 offers the most savings overall.

A key advantage of an online loan is its convenience. Many traditional lenders still require that you visit a local branch to apply for a loan. Meanwhile, an online lender allows you to complete the entire process online. You can often check your eligibility by getting pre-qualified, which doesn’t require a hard inquiry on your credit reports and won’t hurt your credit.

During the application process, you can upload all identity and financial verification documents online. If your loan is approved, you may receive your money as quickly as the same or next business day.

Of course, online loans also have a few downsides. First, you may not have an existing relationship with a lender like you do with the bank or credit union where you keep your checking and savings accounts. The lender might also lack in-person customer service options or local branches to visit. Finally, you may be at a higher risk of falling for a scam because there are so many lenders to choose from and you can’t visit them in person.

Online loans for bad credit: 4 tips for success

Most lenders require good or excellent credit to qualify for a personal loan, but some lend to borrowers with fair or poor credit. These lenders have low credit score requirements and rely on other factors to determine your creditworthiness, such as your income, level of education and employment history. Here are a few tips you can use to get approved for a personal loan with bad credit:

1. Get a co-applicant

One way to qualify for a loan with bad credit is by applying with a cosigner or co-borrower. Though not all lenders offer joint loans, adding a cosigner or co-borrower to your application — especially if they have good credit — can improve your chances of qualifying. Both cosigners and co-borrowers are responsible for repayment if you fall behind, but co-borrowers also share legal access to the loan funds.

Asking a loved one to cosign or co-borrow a personal loan is no small request. Defaulting on the loan will negatively impact their credit scores, so be sure you can pay the loan as agreed.

2. Expect different loan terms

Getting a personal loan with bad credit often means accepting higher interest rates, lower borrowing amounts and shorter loan terms. Lenders view low credit scores as a sign that you’re a risky borrower, so they’re likely to limit how much you can borrow and charge higher rates to offset their increased risk. The higher your rate, the higher your monthly payment and overall loan costs will be.

Tip: If bad credit means you’re being quoted high, credit card-like APRs from online lenders, consider prioritizing federal credit unions that cap their interest rates at 18% (including Patelco, PenFed and First Tech, above). Many credit unions have flexible eligibility criteria and may be willing to work with bad-credit borrowers.

3. Consider a secured loan

If you have a valuable asset, like a vehicle or savings account, you can offer it as collateral for a secured personal loan. Secured loans are less risky for lenders because they can seize the asset if you fail to make loan payments — so you’re more likely to be approved even with poor credit. Just remember that you’ll lose your collateral if you default on the loan.

Not all lenders offer secured personal loans. Online lenders Upgrade and Best Egg allow vehicle-secured loans, while credit unions like Patelco and First Tech offer loans secured by a savings or CD account.

Related >> The best secured personal loans in 2024

4. Avoid payday loans and guaranteed approval loans

When shopping for a personal loan with bad credit, lenders that promise guaranteed approval, no credit checks and immediate funding may seem tempting. However, these loans are usually predatory and can be financially crippling.

Payday loans and similar products are typically only available in small amounts. And rather than having several years to repay the loan, you may have a term of only a couple of weeks.

The APRs on payday loans often reach as high as 400%, which makes these loans difficult — if not impossible — to repay. Many borrowers end up taking out a second loan to repay the first, trapping them in a cycle of debt.

5 steps to apply for loans online

One of the most attractive parts of an online loan is its seamless application process. Here’s how to get your online personal loan:

1. Check your credit

Knowing your credit scores before you apply will give you an idea of which lenders may be the right fit. And if you have poor credit, this step may help you decide to postpone your loan application until you’re able to increase your credit scores by paying down other debt and making on-time payments.

Review your free credit reports via AnnualCreditReport.com — if you spot any errors, report the incorrect information to the reporting credit bureau (Equifax, Experian or TransUnion). You can often get your credit scores from your financial institution, the credit bureaus or third-party services.

2. Examine your budget

Before taking on additional debt, be sure that your potential monthly personal loan payment will fit within your budget. Knowing how much you can spend on your personal loan will help you decide the best repayment term. Use a personal loan calculator (like this one from Calculator.net) to understand how much you can afford to borrow.

Your budget may also determine whether you’ll qualify for a loan at all. When you apply for a loan, lenders assess your debt-to-income (DTI) ratio when determining your eligibility. If you already have too much debt (resulting in a high DTI), you may not be approved.

3. Get pre-qualified with multiple lenders

This process can give you an idea of whether you’ll qualify for a loan, how much you’ll qualify for and the interest rate you may receive. Getting pre-qualified only requires a soft inquiry on your credit, meaning it doesn’t impact your credit scores.

It’s important to note that pre-qualification doesn’t guarantee loan approval, and the rates and terms you actually receive may differ from your pre-qualified terms.

Once you’ve received multiple offers, compare the APRs, loan amounts and repayment terms to find the least expensive loan with the best features for your needs.

4. Gather necessary documents

Your lender will request documentation to verify your eligibility and ability to repay the loan. To streamline the application process, have the following documents ready to present:

• Government-issued ID
• Social Security number
• Proof of employment
• Proof of income, such as recent paystubs or W-2s
• Proof of residence, such as a mortgage statement or rental agreement
• Verification of other debts and assets

If you’re applying with a cosigner or co-borrower, they must submit the same information.

5. Complete a full application

With a lender chosen and your documents handy, it’s time to complete an online application. Some lenders can provide loan decisions in minutes (especially for borrowers with excellent credit), while others need several hours to several days to review your application.

Before signing a loan agreement, read the contract carefully and be sure it aligns with your needs and expectations. After signing the contract, your lender will disburse loan proceeds as quickly as the same day.

Online loans vs. traditional loans

These days, many lenders — even those with brick-and-mortar locations — have online personal loan applications. Generally, online and traditional personal loans offer similar interest rates, loan amounts and repayment terms. But the two types of loans may differ when it comes to approval and funding timelines and fees.

Online lenders can help you get pre-qualified and compare multiple loan offers — without setting foot in a bank branch. And online lenders’ streamlined application processes tend to be faster than traditional lenders’.

Online lenders without a brick-and-mortar presence may also offer fewer fees and better rates. That’s because they don’t have the overhead costs associated with maintaining physical locations, and they can pass these savings on to customers. (But you can find loans with a fully online application and funding process from lenders with branch locations, too.)

Bottom line: Because loans from online lenders tend to be very similar to those offered by brick-and-mortar institutions, it’s wise to get rate quotes from both types of lenders. In fact, check in with federal credit unions — many offer online application and funding — because of their 18% rate cap.

When an online personal loan may be best

• You need fast funding: Online loans have streamlined application processes and fast funding times, especially compared to brick-and-mortar lenders. You may not even need to leave your home to get an online personal loan.
• You want to comparison shop quickly: You can often get pre-qualified with an online lender in minutes, delivering multiple rate estimates without picking up the phone or heading to the bank.
• You want fewer fees and lower rates: While traditional personal loan lenders may also offer competitive rates or discounts, some online lenders have the advantage of lower overhead costs. They often pass those savings on to their customers in the form of fewer fees and lower rates.
• You have limited local options: If you live in an area with only a handful of traditional lenders, you may not have access to the most competitive rates without going online. Online lenders provide more options to rural borrowers or those who can’t physically travel to a branch.

When a traditional personal loan may be best

• You want in-person service: You may prefer doing business face-to-face rather than online, especially when it comes to financial matters. Or maybe you like having a point of contact you can meet in person for questions and support. In this case, working with a traditional lender (or an online lender with branches near you) may be the better choice.
• You’re set on borrowing from your current bank: Having a good relationship with your current bank or credit union can go a long way when it comes to borrowing. You may have an easier time qualifying for a personal loan or qualify for a relationship discount.
• You’re wary of scams: While reputable online lenders (like the ones featured above) have robust security measures in place, you may simply feel safer working with a traditional lender rather than providing personal and financial information online.
• You don’t have a secure or reliable internet connection: Access to the internet is much more widespread than it used to be, but not everyone has a reliable and secure connection. If that’s the case for you, you may struggle to get through the online application process when working with an online lender.

Alternatives to online loans

Online loans offer noteworthy advantages, but before applying, consider the following alternatives:

• Bank loans: If you value visiting a local branch or getting in-person customer service assistance, a loan from a brick-and-mortar bank is worth considering. You may get better terms and rate discounts if you have an existing relationship with a bank. However, the approval and funding processes tend to take longer with big banks, and your loan may have more fees.
• Credit union loans: The lowest interest rates are typically found at credit unions because they’re nonprofit, member-owned institutions — and the National Credit Union Administration caps interest rates at federally insured credit unions at 18%, much lower than you’ll find with some lenders. However, credit unions require membership and sometimes have strict requirements to join. Plus, credit unions often lack the robust technology (like mobile apps and financial tools) that national banks offer.
• Personal line of credit: If you aren’t sure how much you need to borrow, a personal line of credit works like a credit card. Rather than receiving a lump sum, you’re approved for access to a specific credit limit, which you can draw from as needed. But interest rates are typically variable, making it tough to budget.

  During the initial draw period, often several years, you withdraw funds as needed and make interest-only payments. When the repayment period begins, you’ll make installment payments toward both the principal and interest, until the loan is repaid in full.

• 0% APR credit card: Credit cards have famously high interest rates, so they usually aren’t the best borrowing tool unless you can repay the balance in full each month. However, 0% APR credit cards allow well-qualified borrowers to avoid interest during the introductory period, often between six months and two years.
• Home equity loan or HELOC: If you’re a homeowner and have a substantial amount of equity in your home, a home equity loan or home equity line of credit (HELOC) can be an affordable way to borrow. Because the loan is secured by your home, you may get a better interest rate than personal loans offer.

  A home equity loan is repaid in fixed installments like a personal loan, while a HELOC is a form of revolving credit like a credit card. Remember that if you’re unable to repay the debt, your home will be at risk of foreclosure.

• 401(k) loan: It’s usually not advisable to borrow against your 401(k) because it reduces your eventual retirement income. However, retirement plan loans have a few advantages: They don’t require a credit check and the interest paid goes into your retirement account. If you have bad credit and a high 401(k) balance, this type of loan might be worth considering. Just be aware that if you switch jobs, leaving the employer that manages your 401(k), the loan could become due immediately.

Methodology

Our editorial team and data analysts sought to be as objective as possible when assessing 25 of the most popular online lenders. We designed a rubric to make an apples-to-apples comparison between lenders across 30 data points. After analyzing the data, each lender received an out-of-five star rating to rank the nine best lenders for online loans.

Loan cost (30%)

When you need to borrow money, you want to keep costs to a minimum — after all, unaffordable debt can have a long-lasting effect on your financial health. With that in mind, we examined the affordability of each loan by assessing factors like minimum and maximum APR, available rate discounts and fees.

Loan details (30%)

Borrowers report that a seamless, online application process and fast approval timelines are top of mind when choosing a lender, according to consumer lending data from accounting firm PwC. We prioritized lenders that offer a 100% online experience and same-day loan decisions and funding. Our team also assessed crucial details like loan amounts and repayment terms offered.

Accessibility (25%)

Here, we compared the eligibility requirements for each lender to find the loans that are available to the most borrowers. We asked questions about:

• Geographic availability
• Credit score requirements
• Income requirements
• Whether the lender allows cosigned or joint loans
• Other accessibility restrictions

Customer experience (15%)

Finding a loan you can afford is critical, but what happens once you sign the loan agreement and start repayment? In this category, we aimed to capture the quality of each lender’s customer service. We reviewed data from independent organizations like the Better Business Bureau and the Consumer Financial Protection Bureau, and analyzed service features like whether the lender offers a mobile app or provides weekend customer service.

What didn’t make the cut

Only nine of the 25 banks, credit unions and companies we reviewed made our list of best online lenders. While there was plenty to like about the other lending institutions, they didn’t measure up due to factors like a lack of transparency, high rates and fees or poor customer service scores. Here’s a look at why several popular online lenders didn’t make the cut:

• OneMain Financial, Oportun and Universal Credit charge high APRs.
• Upstart and Rocket Loans only offer two repayment term options.
• Achieve, Avant and Mariner Finance aren’t available nationwide.
• PNC Bank and Regions Bank don’t offer fully online processes.

Additional reporting by Cassidy Horton and Emily Batdorf