Personal loans offer maximum flexibility, but borrowing money costs money. The interest rate, loan terms, and fees impact how much you pay for the loan. Total interest charges—how much interest you pay throughout the repayment term—are usually the best indicator of the overall cost.
With those factors in mind, here’s how to find the cheapest personal loan from a reputable lender.
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Your goal is to find the cheapest loan from a reputable lender. But here’s where it can get confusing—different factors impact the cost of a loan. Before you start reviewing offers, make sure you understand the following terms.
You also need to know how each factor affects the total cost of the loan. For example, the total cost of the loan increases with a longer repayment term, but the monthly payment decreases.
A lower monthly payment might be tempting—and in some cases, it’s worth the extra cost—but it’s not the best indicator of the overall cost. That’s why it’s essential to look at the total interest charges.
Here’s how each factor impacts the price of borrowing money.
Factor | Impact on total cost | Tips to lower costs |
APR | Higher rates cost more money | Check if you qualify for rate discounts, like autopay. |
Fees | Increases the cost | Search for lenders with no fees or ask to negotiate fees. |
Length of repayment term | Longer terms cost more money | Pick the shortest repayment term you can afford. |
There are general guidelines for getting a cheap personal loan, but it’s still essential to review the details of each offer. Here’s an example of the difference a slightly higher interest rate and a slightly lower origination fee can make in the overall cost of two example loans.
Detail | 1 | 2 |
Loan amount | $10,000 | $10,000 |
Repayment term | 36 months | 36 months |
Origination fee | 1% | 0.5% |
Interest rate | 10% | 11% |
APR | 10.69% | 11.35% |
Total loan cost | $1,716.19 | $1,835.94 |
Loan marketplaces allow borrowers to compare offers from multiple lenders in one place, including offers from central banks, online lenders, and credit unions. The main perk is getting preapproved with multiple lenders at once. It simplifies the loan process and makes it easier to compare.
Reviewing offers from a marketplace requires a soft credit pull, which won’t impact your credit score. However, you must input personal information—including your Social Security number—to view the offers. Those requirements are standard for preapproval but might seem jarring if it’s your first time.
How you plan to use the loan can impact your loan offers and interest rate. For example, you might have a higher interest rate if the loan is for a significant expense.
Here’s what the loan marketplace results look like on Credible.
Most marketplaces, including Credible, do not organize the results by loan terms, so different term lengths are mixed. For example, the results below have a loan with a three-year term right above a loan with a five-year term.
The loan offers usually include the loan’s monthly cost, fixed APR, origination fee, and term length. You can use those numbers to calculate the total cost with a personal loan calculator, making it easier to accurately compare loan offers.
Marketplace | Rates (APR) | LendEDU rating |
Credible | 7.49% – 35.99% | 5/5 |
LendingTree | 5.99% – 35.99% | 4.8/5 |
LendEDU rating: 5 out of 5
Credible partners with lenders, including SoFi, PenFed, LightStream, Upstart, Avant, and LendingClub. It offers a wide range of personal loan options for debt consolidation, home improvement, medical expenses, and more, with loan amounts ranging from $600 to $200,000.
Known for its user-friendly interface, Credible quickly compares personalized prequalified rates from its partner lenders without affecting the user’s credit score due to the initial soft credit pull. Credible has strong security measures to protect user information and does not sell personal data to third parties.
Credible has a Best Rate Guarantee, offering a $200 gift card if a user finds a lower rate elsewhere after prequalifying through Credible. It offers the ability to add a cosigner to improve loan terms and provides various loan products beyond personal loans, including student loans and mortgage refinancing.
LendEDU rating: 4.8 out of 5
LendingTree works with over 300 personal loan lenders, including banks, credit unions, and other financial institutions. It facilitates various loans, including personal loans, home loans, auto loans, student loans, and more. Loan amounts, terms, and APRs vary depending on the lender.
LendingTree offers a comprehensive comparison tool that allows users to get multiple loan offers by filling out a single application. LendingTree’s platform also helps users to compare rates, terms, and fees across different lenders.
LendingTree emphasizes protecting user data, but, like any large platform, it may share user data with its partners for marketing purposes. Reviewing privacy policies and understanding how your information is being used is crucial.
Beyond loans, LendingTree provides educational resources, financial calculators, and credit score information to help users make informed financial decisions. It also offers a LoanExplorer, allowing real-time rate comparison without affecting the user’s credit score.
We like that LendingTree has relationships with so many lenders—that could allow you to find the cheapest personal loan available. However, Credible’s Best Rate guarantee proves the lender is confident you won’t find a lower rate elsewhere.
LendingTree might be more suitable if you value a larger network of lenders and a wide array of financial products.
Credible could be better if you prefer a curated list of lenders with specific features, such as the Best Rate Guarantee and the option to add a cosigner.
Ask the expert
When evaluating personal loan options, answer the following questions: Does the loan have fees? Can I afford the payments? How long will it take to pay the loan back? How much in total will the interest I pay back over the length of the loan?
Different factors impact the loan cost, including some that don’t have to do with the loan offer.
The total cost of the loan is the most effective way to determine that you’ve found the cheapest loan. Loan marketplaces don’t break down the total cost of the loan, so you have to complete a few extra steps to calculate the price.
The good news is that you don’t need to compare countless offers to get a good deal. Reviewing offers from three to five lenders is usually enough.
As you search for the cheapest personal loan, balance the cost with your financial reality. For example, you might save a few hundred dollars by choosing a shorter term length. But it’s not worth it if you can no longer afford the monthly payments.
Ask the expert
Just as important as the financials involved, it’s important to understand your credit score before you start applying for personal loans! Reviewing your credit for any possible errors or incorrect information can mean a big difference in your credit score and, thus, your rate!
If you’re not happy with your loan offers, you can take steps to get a lower rate. Here’s what to do to get a cheaper rate for your loan.
Marketplace | Rates (APR) | LendEDU rating |
Credible | 7.49% – 35.99% | 5/5 |
LendingTree | 5.99% – 35.99% | 4.8/5 |
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