Best Online Personal Loans of December 2024

NerdWallet’s guide to the best online loans

On this page

• What is an online loan?

• Average online personal loan rates

• Pros and cons of online personal loans

• How to get a loan online

• Online loans for bad credit

• Predatory online loans

• Alternatives to online personal loans

• Frequently asked questions about the best online loans

What is an online loan?

An online loan is a personal loan where the entire loan process — from pre-qualification to signing — happens online, on a computer, tablet or mobile phone. The primary benefit of online loans is fast funding: approval may be instant, and qualified borrowers may receive loan funds the same or next day.

Online personal loan amounts typically range from $1,000 to $100,000, and your credit score, income and debt determine whether you qualify. Borrowers receive funds in a lump sum and repay the loan in fixed monthly installments over the loan term, typically two to seven years.

Online loans can be used for almost any purpose, including emergencies, home repairs or debt consolidation. Loans are available to borrowers across the credit spectrum, but the annual percentage rate tends to be higher if you have bad credit (a score below 630). Financial experts recommend a rate below 36% for a loan to be affordable.

Some of the best online loans include features like flexible payment dates or the ability to add a co-borrower. Compare loan features when shopping for a personal loan online.

» MORE: Where to get a personal loan

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Average online loan rates

Online lenders often use credit scores to determine annual percentage rates for personal loans. Here’s a snapshot of average estimated APRs based on credit score ranges.

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Pros and cons of online personal loans

It’s a good idea to weigh the pros and cons when deciding whether to go with an online lender versus an in-person lender, like a bank or credit union. Certain features may vary, but here is generally what you can expect with online loans:

Pros of online loans

• Fast and convenient: You can quickly complete the entire loan application process from your computer or phone. Several online lenders provide same- or next-day funding. The best online lenders also have mobile apps to manage your loan.

• Ability to pre-qualify: Most online lenders let you pre-qualify within a few minutes using a soft credit check, which allows you to preview estimated rates without impacting your credit score. (All lenders require a hard credit check before you finalize a loan.)

• Easy to compare rates between lenders: Though rates differ between lenders, comparison websites allow borrowers to fill out one application and see loan offers from multiple lenders. This is easier than banks or credit unions that may only service loans in person or require you to visit a branch during the application process.

• Debt help: With some online lenders, borrowers can opt to have the loan money sent directly to creditors with a debt consolidation loan, removing the burden of paying off individual credit cards yourself.

Cons of online loans

• Can be more expensive than credit unions and some banks: On average, loans from online lenders are not as cheap as those from credit unions. And if you already have a relationship with a bank, it may offer you lower rates than online lenders. Compare rates from multiple lenders before you take out an online loan.

• Smallest loans not available: Online loans under $500 may be hard to find at rates below 36%. Many online lenders have loan minimums from $1,000 to $2,000. Some credit unions may be able to provide smaller loans starting at $250.

• No in-person customer service: Most online lenders only service loans digitally. This can be a challenge if you ever want to speak to a representative face-to-face.

• Predators lurk: Reputable online lenders compete alongside predatory online lenders. Reputable lenders check your credit and ability to repay, and they usually have APRs that top out at 36%. Predatory lenders typically don’t check credit, and you pay for the added risk with APRs well above 100%.

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How to get a loan online

1. Check your credit score

It’s not required, but a good first step before applying for an online loan is to check your credit report and fix any errors, such as inaccurate accounts or wrongly reported payment history. Doing so can boost your credit and get you a lower rate on a loan. You can get your free credit report on NerdWallet or at AnnualCreditReport.com.

2. Calculate your loan payments

Once you’ve checked your credit report, consider how much you want to borrow and how long you need to pay off the loan. Use a personal loan calculator to see your estimated monthly payments with a selected loan amount, rate and repayment term. A longer repayment term will give you lower monthly payments, but will cost more in interest overall.

3. Pre-qualify and compare online offers

Compare offers from multiple online lenders to find the lowest interest rate. This process, known as pre-qualification, involves a short application and soft credit check only, so it won’t hurt your credit score. You may need to supply basic personal information, including your Social Security number, and details about your desired loan.

» MORE: Pre-qualify with multiple online lenders for free on NerdWallet

4. Submit your application

After comparing offers from multiple lenders, pick the online loan that best fits your budget and financial needs. Apply for the personal loan online by uploading the required documents, which may include a form of identification and proof of income such as a pay stub or W-2.

» MORE: What are the requirements for a personal loan?

5. Get funded

Once approved, you’ll receive the loan documents to sign electronically. Make sure to read and understand the fine print of your loan. Funding time varies, but many online lenders can fund loans within a day or two. Once the money is in your account, make sure to add your monthly loan payment to your budget. Your first payment is typically due in 30 days, and any missed payments can hurt your credit and cause late fees.

» MORE: How to manage your personal loan

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Online loans for bad credit

Borrowers with bad credit scores (scores below 630) may qualify for a rate on the high end of a lender's range or be approved for a lower amount when compared to borrowers with good or excellent credit (scores above 689).

Some online lenders who offer loans to bad-credit borrowers look beyond credit score when assessing a borrower’s application. They may consider factors like cash flow, employment and education history, which can help your chances of approval.

» MORE: How to get a personal loan with bad credit

There are ways bad-credit borrowers can strengthen an application for an online loan:

• Choose a co-signed or joint loan. Add a co-signer or co-borrower to the loan application to boost your eligibility or get a lower rate or higher loan amount. Your co-applicant is responsible for the loan amount and any fees if you fail to repay.

• Get a secured loan. Most personal loans are unsecured, but some lenders offer secured loans that require collateral, like your car or a savings account, to guarantee the loan. You risk losing the collateral if you default on the loan.

• Build your credit. If you don’t need the loan immediately, do what you can to build your credit before applying.

» MORE: Boost your chances of personal loan approval

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Predatory online loans

No-credit-check and payday loans can seem like easy options for short-term cash needs. However, these loans can be predatory and expensive, with rates in the triple digits.

No-credit-check loans are usually for a few thousand dollars or less and are repaid in fixed amounts over a few weeks to several months. Since they don’t check your credit score as part of the application process, lenders tend to charge sky-high interest rates for these loans.

Online payday loans are a fast way to get loans for amounts less than $1,000, especially if you don’t have good credit. Payday lenders typically withdraw repayments directly from your bank account on the due date. These loans have APRs close to 400%, which can quickly lead borrowers to owe more in interest than the original loan.

Both no-credit-check and payday loans should be considered only as a last resort after you’ve exhausted alternatives to high-cost loans.

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Alternatives to online personal loans

Cash advance apps: If you need a small loan of $500 or less, a cash advance app can be a fast, no-credit-check option with low fees. You may need to repay the advance as soon as your next paycheck, so this option works only if your budget can withstand it.

Buy now, pay later: “Buy now, pay later” plans can be used for purchases at most retailers. These payment plans split your purchase into equal installments, typically due in two-week increments. Most BNPL plans don’t charge interest or require a hard credit pull, but their convenience can lead to overspending.

Other ways to make money: If you have extra time, consider picking up online work like freelancing, selling items you no longer use or other ways to earn income. The time investment and amount you earn will vary, but it could allow you to avoid borrowing altogether.

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Frequently asked questions about the best online loans

• Are online loans safe?

  The safety of online loans depends on the type of lender. While shopping for a loan, watch for signs of predatory lending and choose reputable lenders that assess your ability to repay the loan.

• What is the best online loan?

  The best online loan helps you reach a money goal, such as consolidating debt or covering a large expense, without creating financial stress. Interest rates and terms are typically based on your income and credit. Some online lenders offer personal loan features that may be important to you, like payment flexibility or access to credit scores.

• How can I get $500 quickly?

  Cash advance apps are alternatives to online personal loans that give you early access to your next paycheck. Advance amounts range from about $50 to $500, and you may receive the funds within hours. Watch for fees that can make cash advances expensive.

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