Finest On-line Lenders of 2020
Online loans are an alternative for borrowers who prefer the convenience of virtual lending. Just like you can apply for a loan through a traditional financial institution, online loan companies exist to help borrowers looking for an accessible way to borrow. The best loans online boast low fees, low interest rates, great customer support and loans that can do everything from financing a remodel to helping you get out debt. Whether you’re searching for online loans for bad credit or online loans for home improvement, you can find some of the best online loans below, sorted by category.
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The 7 best online lenders of 2020
|LightStream||2.49%–19.99% w/AutoPay||$5,000–$100,000||2–12 years||None|
|Marcus by Goldman Sachs||6.99%–19.99%||$3,500–$40,000||3–6 years||None|
|Payoff||5.99%–24.99%||$5,000–$40,000||2–5 years||0%–5% origination fee|
|Upgrade||7.99%–35.97%||$1,000–$50,000||3–5 years||2.9%–8% origination fee; $10 late fee|
|Avant||9.95%–35.99%||$2,000–$40,000||2–5 years||Up to 4.75% administration fee|
|LendingClub||10.68%–35.89%||$1,000–$40,000||3–5 years||2.%–6% origination fee; 5% or $15 late fee|
*Rates accurate as of November, 2020
The 7 best online lenders of 2020
Best overall – LightStream
LightStream offers borrowers with established credit promising personal loan terms. If you have great credit, this is a prudent option that eliminates frittering away money on fees and high interest rates.
2.99%–20.49% w/out Autopay
4.8 / 5.0
Borrowers with strong credit scores and long credit histories can benefit from LightStream’s lack of fees, low rates and high loan amounts.
LightStream offers borrowers large loan amounts for loan consolidation, home improvements and big-ticket expenses. Interest rates vary based on the purpose of the loan, the terms, amount borrowed and your overall creditworthiness.
One of the best features of this lender is that they will beat a competitor’s interest rate by one-tenth of a percentage point, assuming the terms of the loan are the same. Unfortunately, LightStream doesn’t offer pre-qualification, so borrowers can’t determine their likelihood of getting approved without a hard pull on their credit.
Disclaimer: 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 may be 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 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66
© 2020 Truist Financial Corporation. SunTrust, Truist, LightStream, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.
Best for no fees, ever – Marcus by Goldman Sachs
The lack of fees, flexible payment dates and direct payments to creditors make this an ideal lender for borrowers. Marcus is an excellent choice for paying down your debt and avoiding piling more on top in the form of fees.
5 / 5.0
Marcus by Goldman Sachs 5
For borrowers who are seriously fee-averse, Marcus by Goldman Sachs provides a bevy of perks.
If you hate fees, you’re in luck. Marcus by Goldman Sachs doesn’t charge any fees — even if you pay your bill late. Plus, Marcus offers payments directly to creditors for debt consolidation loans, and you can opt for a monthly payment amount and loan term that best fits your financial situation. After you’ve chosen your wish list of loan terms, Marcus puts together loan options you can choose from. Plus, you get support while paying down your debt in the form of tools to monitor your credit score and debt amount.
The only real drawback of Marcus is there’s no option to include a cosigner, so you’ll need to qualify based on your own creditworthiness.
Marcus by Goldman Sachs Disclosure
Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. The availability of a loan offer and the terms of your actual offer will vary due to a number of factors, including your loan purpose and our evaluation of your creditworthiness. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans). Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions.
Best for member perks – SoFi
SoFi’s exclusive member benefits can help you learn and network. The biggest benefit are its range of loan options and peace of mind offered by its forbearance policy should you end up unemployed.
Borrowers who want access to exclusive financial literacy events and advice in addition to their loan might find SoFi to be their lender of choice.
SoFi offers both fixed-rate and variable-rate loans, although the fixed-rate option is more common. This lender won’t charge you fees for late payments or for loan origination. If you lose your job as a result of something out of your control, you can apply for unemployment forbearance for three months at a time.
SoFi is unique among lenders because of its members’ only social and networking events, where you can tap into financial and career advice. Drawbacks to using SoFi include the required high minimum credit scores and the lack of direct payments to creditors if you’re paying down debt.
Fixed rates from 5.99% APR to 18.28% APR (with AutoPay). SoFi rate ranges are current as of October 5, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
Best for debt consolidation – Payoff
If you have overwhelming credit debt, Payoff offers consolidation loans and great customer support. With the abundance of resources and tools available to borrowers, this is a great online loan choice for those who want to axe credit card debt.
4.5 / 5.0
Payoff is ideal for borrowers who are serious about paying down debt.
Payoff delivers fixed-rate debt consolidation loans so borrowers can pay off credit card debt. It offers helpful features like personalized recommendations to keep you on the right financial path and interactive tools like quizzes to help establish your financial habits. Based on your input, you’ll get tools and resources to help you achieve your financial goals. If you miss a payment, you won’t have to pay a late fee and you may be able to change your payment date or defer payments, after talking to a representative.
Unfortunately, there are few drawbacks to using Payoff as your online lending company: there’s no co-signer option and it charges a loan origination fee. Also, the company doesn’t offer direct payment to creditors.
Best credit health tools – Upgrade
For borrowers who want to go beyond getting just a loan, Upgrade provides context and resources to help you become a more fiscally responsible individual.
3.5 / 5.0
Upgrade’s range of loan options and credit education resources make this a well-rounded online loan choice.
Upgrade offers loans for home improvements, large purchases and debt consolidation. Borrowers can pre-qualify with a soft credit pull and don’t need a low debt-to-income ratio to get approved. Plus, Upgrade offers a personal line of credit option if you don’t want a traditional loan.
Upgrade’s most useful features include a suite of tools designed to help borrowers get insight into their credit health like credit monitoring alerts, a credit score simulation based on different financial choices and free financial education resources.
This online lender charges late fees and loan origination fees, so keep that in mind when you’re weighing your options.
Personal loans made through Upgrade feature APRs of 7.99%-35.97%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.
Best for average credit – Avant
For borrowers with average credit, it can be hard to find a loan with agreeable terms and conditions. Avant gives these borrowers a chance to finance a project or consolidate loans without making it too expensive to carry the debt.
Borrowers with average credit can get financing and may qualify for even better terms after six months of on-time payments with Avant.
Avant provides loans for borrowers with lower credit scores. Funds can be put toward emergency expenses, loan consolidation or home improvement projects. This online lender boasts pre-qualification, fee transparency and flexible payment options. Some borrowers can even refinance their loans for higher amounts and lower interest rates after six months of paying on-time.
Avant doesn’t offer direct creditor payments for debt consolidation or any secured loan or co-signed loan options. In addition, there are a few fees you might have to watch out for like an unsuccessful payment fee, a late fee and an administrative fee.
The actual loan amount, term, and APR amount of loan that a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state. Avant branded credit products are issued by WebBank, member FDIC.
Best peer-to-peer lender – LendingClub
LendingClub is a smart online lending option for borrowers looking to consolidate debt. With its supportive debt consolidation features simplifying the consolidation process, borrowers can quickly eliminate debt.
3.2 / 5.0
Borrowers who want an alternative lending option may want to use LendingClub to pay off debt.
LendingClub operates differently than many of the other online loan providers on this list. With its peer-to-peer lending models, borrowers are matched with investors to fund their loans. You’ll be assigned a grade determining your interest rate based on your credit scores and income.
LendingClub can help you with debt consolidation and pays creditors directly. You can also apply as a joint loan application. You will be charged an origination fee and late fees if you opt for this lender, however.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. For example, you could receive a loan of $5,700 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. *The origination fee ranges from 1% to 6%; the average origination fee is 5.2% (as of 12/5/18 YTD).* There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
[ Read: The Best Personal Loans if you Have Good Credit ]
How should I choose the right online loan?
To choose from the best personal loans available online, think about the main reason for your loan in the first place. Are you looking for a personal loan to fund a home improvement project? Are you looking to consolidate your credit card debt? Online lenders often specialize in a specific type of loan.
After you know what kind of loan you want or need, evaluate your credit score and history. If your credit score is poor, pause on your loan applications and focus on rebuilding your credit first — otherwise, you’re unlikely to get approved by any lender or you may be stuck with a higher interest rate.
Once you’re ready to apply, gather all documentation required to complete the loan application process. You’ll need an official form of identification, proof of income and other financial paperwork.
[Read: When Is an Emergency Loan a Good Option?]
What you should know about online loans
Before applying for an online loan, there are a few things you should know. Online loans are similar to traditional loans secured in-person in that lenders will run your credit and some may require you to have a cosigner if you have a less than ideal credit score.
Where they differ is that online lenders tend to allow applicants to prequalify for a loan which is a helpful tool for borrowers shopping around for the best deals. Furthermore, as their name suggests, online loans are originated entirely online — including the application, approval and final document signatures. This is extremely convenient for some borrowers who prefer digital banking.
Paying attention to these pros and cons of online personal loans will make finding the best online lender even easier.
What are the pros of an online personal loan?
Online personal loans are easily accessible and convenient alternatives to traditional loans where one would normally have to walk into a credit union or bank branch to apply. It’s especially advantageous if you’re not a member of a local bank because, with an online lender, you might be able to find lower interest loans online. Depending on your location and credit score, this could be a dealmaker.
Online loans usually have a prequalification process, which involves using a soft credit check to see if you can be approved. This is great because it doesn’t adversely affect your credit score. That way you don’t waste time getting too far into applying for a loan for which you could be denied or do a hard pull on your credit, potentially damaging your credit score. Another bonus is that many lenders offer interest rate discounts if you sign up for automatic payments.
What are the cons of an online personal loan?
While there are plenty of benefits to using online personal loans, borrowers should watch out for the cons as well. The internet is, unfortunately, full of people and groups who want to take advantage of the unwary. This includes online loan scams, such as equity stripping, bait-and-switch schemes, loan flipping, packing a loan with charges you did not request, and hidden balloon payments.
Another con to be aware of is customer support. While it’s convenient to get funding online with a simple application and signature, if you ever run into trouble with your loan, you can’t walk into a bank branch and request in-person help. You’re stuck with online chat or a phone call — which could translate to hold times and shoddy service.
How to get an online loan with bad credit
If you have poor credit but you need a loan to help you get out of debt or money for an emergency, it’s still possible to obtain a loan. Lenders that offer bad credit loans will still evaluate your credit history but will have less strict underwriting requirements. In some cases, these lenders will also consider other factors outside of your credit scores to determine your approval for a loan, such as your income.
Although you might find a lender willing to approve a loan for you, there are some drawbacks to consider. In many cases, you’ll be saddled with a much higher interest rate, typically above 20%. For borrowers, that means it’s much more expensive to borrow money.
Lenders who work with borrowers with poor to fair credit include LendingClub, Avant and Upgrade. You’ll need to research each lender’s requirements before applying.
One note of caution: watch for red flags and predatory loan schemes like payday loans targeted at borrowers on the hunt for bad credit online loans. While they may offer you enticing upfront sums, the terms and conditions associated with them often take advantage of those in vulnerable financial positions.
Things to keep in mind
Before you decide to get an online loan, consider all the different variables involved.
- Soft credit checks versus hard credit checks: If a lender offers pre-qualification, you can get a good idea of whether or not you’ll be approved for a loan without a “hard pull” on your credit. A hard pull can result in a temporary decrease in your credit scores. If the lender doesn’t offer prequalification, you’ll go directly to the “hard pull” stage where the lender conducts a hard inquiry.
- Loan terms: Remember to take the time to parse through the loan terms and conditions, otherwise known as the fine print of your loan. Can you change the payment date? What happens if you lose your job? How long is your loan for? These are all questions you should have an answer to.
- Payment portals: Does the lender offer a user-friendly payment portal laying out the framework of your loan terms and showing you where and how to pay? The ease and convenience of paying your loan is an important consideration.
- Autopay discounts: Many lenders offer interest rate discounts if you opt into auto-pay.
- Fixed-rate versus variable-rate loans: Fixed-rate loans mean your monthly payments and interest rate stays the same over the life of the loan. Variable-rate loans mean your interest rate, and therefore your monthly payments, may fluctuate month to month.
- Fees: Some lenders don’t charge for late payments or even missed payments, but you need to double-check the terms outlined by your lender.
- Early payoff penalties: Paying off your loan early is good, right? Well, in some cases, a lender can charge you a penalty fee for “shortchanging” what they’d make on interest for the time period you’d still be paying the loan.
[ Read: How No Credit-Check Loans Work ]
Too long, didn’t read?
To find the right loan and online loan lender, approach your decision with a patient mindset. First, you’ll want to establish what the loan is for and evaluate your finances to determine if you’re in a financial position to pay a monthly loan bill on top of your other debt obligations. Then, you can shop and compare to determine the best online loan option for your specific situation.
We welcome your feedback on this article and would love to hear about your experience with the personal loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.
Last editorial update – December 17, 2020, updated lender information