Best Online Loans of June 2024

Compare the top online loans

NerdWallet reviewed more than 35 financial institutions to find the best online personal loans. See why we chose these lenders, and keep reading to learn how to get an online loan.

What is an online loan?

An online loan is a personal loan where the entire process — from pre-qualification to signing — happens online. These loans are typically unsecured, and your credit score, income and debt determine whether you qualify. Approved borrowers receive the loan funds in a lump sum and pay back 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 (629 score or lower). Financial experts recommend a rate below 36% for a loan to be affordable.

Some online lenders offer features like flexible payment dates or the ability to add a co-borrower. Compare loan features when shopping for an online loan.

Online loans for bad credit

Borrowers with bad credit scores 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 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:

• 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. This person is responsible for the loan amount and any fees if you fail to repay.

• Secured loan. A secured loan requires putting up collateral, like your car or a savings account, to help guarantee the loan. However, 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

How to get a loan online

1. Check your credit score

Before applying for an online loan, you’ll want to check your credit report. You can get your free credit report on NerdWallet or at AnnualCreditReport.com. Look for errors, such as inaccurate accounts, wrongly reported payment history or outdated credit limits, and file any disputes directly with the credit reporting company.

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 estimate monthly payments on personal loans with different rates and loan terms. A longer term will give you lower monthly payments, but also cost more in interest.

3. Pre-qualify and compare 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: Compare rates 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 with the lender by uploading the required documents, which may include a form of identification and proof of income such as a pay stub or W-2. Once you’ve read and understand the fine print of your loan, submit the application.

» MORE: How to apply for a personal loan

5. Get funded

Once approved, you’ll receive the loan documents to sign electronically. 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

Frequently asked questions about online loans

• Are online loans safe?

  The safety of online loans depends on the type of lender. It’s always recommended to do your research and choose reputable lenders.

  If you’re looking for a small loan, online personal loans have lower rates and more manageable repayment terms, even if your credit is bad. Many can fund a loan for as little as $1,000 within one business day of applying for it.

• 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, and different lenders offer features that may be important to you, like payment flexibility or access to credit scores.

• Can I get an online loan with a co-signer?

  Yes, some online lenders offer co-sign loans that allow you to add someone who might have a higher credit score or income to your loan application — boosting your chances of approval.

Pros and cons of online 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

• Convenience: You can complete the entire loan process from your computer or, in some cases, your phone. The best online lenders also have mobile apps you can use to manage your loan.

• No-risk estimates: Most online lenders let you pre-qualify within a few minutes and preview estimated rates without impacting your credit score. (All lenders require a hard credit check before you finalize a loan.)

• Quick and simple shopping: 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

• 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 online and offline before you take out an online loan.

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

• 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.

• 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, but you pay for the added risk with APRs well above 100%.

» MORE: Where to get a personal loan

No-credit-check and online payday loans

Payday loans and no-credit-check loans don’t require credit checks and can seem like easy options for short-term cash needs. However, these loans can be predatory and expensive, with rates in the triple digits.

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.

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.

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