Best Personal Loans for 2022

Personal loan borrowing is still possible — and perhaps more urgent — in the wake of the coronavirus pandemic and its potential effect on your family finances. Some top-rated lenders have started offering lower-dollar, emergency loans to help unemployed and other consumers access the funds they need to get by. Keep in mind, however, that personal loans still carry the same eligibility rules, including credit score and debt-to-income ratio.
 
For current borrowers of personal loans, lenders have made it easier to avoid loan default in light of the ongoing pandemic. Various banks, credit unions and online companies have provided or extended repayment postponements, offered modified terms or waived fees.
 
For more: LendingTree’s Coronavirus Resource Hub

With a personal loan, most lenders will allow you to use your money to pay for almost anything. So whether you need to consolidate your debt, pay off unexpected medical expenses or make repairs at home, these loans empower you to do so.

Though most personal loans are tagged with fixed rates, some lenders do offer variable-rate products. Variable rates typically start lower than fixed rates, but they can also rise over time according to market conditions.

• • Fixed: Your rate and monthly payment are static during repayment.
• • Variable: Your rate and monthly payment is subject to change during repayment.

 
Choose a fixed or variable rate depending on whether you like the idea of a consistent monthly payment amount or have the stomach — and budget flexibility — for a fluctuating amount due.
 
Once you’ve decided on either a fixed or variable rate, make apples-to-apples comparisons among lenders by pitting fixed or variable APRs against each other. Unlike a base rate, the APR accounts for each lender’s fees, such as for loan origination.

To determine your risk as a borrower, lenders will analyze your credit score, your income and any other debts you have out in your name.
 
To make sure you get the best personal loan for your needs, you should also come prepared with the following information: the purpose of your loan, how much money you want to borrow and your preferred repayment schedule.

Some lenders offer fast application processing and approval, which means same-day funding could be available.

Many lenders use a soft credit pull to give you estimated interest rates and loan terms that are available to you based on your credit, income and other factors. If you decide to move forward with the loan, the lender will do a hard credit inquiry. Too many hard inquiries in a given period could hurt your credit score; a soft credit pull won’t.

If you have less-than-ideal credit, you may still qualify for a personal loan. The interest rates you’re offered will likely be higher, however, and the loan would cost more. Alternatively, you may be able to add a cosigner with good credit to your application to access more attractive rates.

Yes, but you may be subject to a prepayment penalty, which could be equal to several months’ interest or a percentage of the remaining loan amount.

The lender relies heavily on your past financial history to make sure you are capable of repaying the loan. Documents that prove someone is capable of meeting loan agreements include proof of income and employment (such as pay stubs), bank account information and statements and proof of other debt (such as mortgage or auto loan forms).

If you have to miss a payment, take responsibility and speak to your lender about options. If you have a good payment track record with the lender, they may be willing to work with you to come up with a favorable solution.
 
However, if you default on your loan, lenders can take action that can hurt your credit and finances for years to come. This includes sending your loan to collections, reporting your default to credit bureaus and taking you to court, which could make getting new credit costly or impossible in the future.

Large and additional payments can be directly applied to your principal balance, decreasing the total cost and interest you pay. But you should always ask lenders about prepayment penalties, which are fees that could be applied if a loan is paid off ahead of the agreed-upon payment schedule.

There are a variety of alternatives to personal loans, from credit cards and lines of credit to peer-to-peer loans and 401(k) loans. One product could be a better fit over another in specific situations.
 
If you’re looking to refinance credit card debt, for example, a personal loan could help you gradually repay your outstanding balances at a lower interest rate. If you’ll have the cash to repay the debt on a faster timetable, though, you might consider opting for a balance transfer card that features an introductory 0% APR.