CNBC Select’s best personal loans of 2023

Editor’s Note: APRs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate changes. Select will update as changes are made public.

Personal loans are a form of installment credit that must be paid back in regular increments over a set period of time. Many people use personal loans as an affordable alternative to credit cards because they often have lower interest rates and consumers can use them to cover a wide range of expenses. These loans typically range from $1,000 to $50,000, but you may be able to borrow smaller or larger amounts of money with some lenders.

CNBC Select evaluated dozens of lenders to round up the best personal loans of 2023. We looked at key factors like interest rates, fees, loan amounts and term lengths offered, plus other features including how your funds are distributed, autopay discounts, customer service and how fast you can get your funds. (Read more about our methodology below.)

• Best overall: LightStream Personal Loans
• Best for debt consolidation: Happy Money
• Best for refinancing high-interest debt: SoFi Personal Loans
• Best for smaller loans: PenFed Personal Loans
• Best for next-day funding: Discover Personal Loans
• Best for a lower credit score: Upstart

Who’s this for? LightStream, the online lending arm of SunTrust Bank, offers low-interest loans with flexible terms for people with good credit or higher. LightStream is known for providing loans for nearly every purpose except for higher education and small business. You could get a LightStream personal loan to buy a new car, remodel the bathroom, consolidate debt, or cover medical expenses, according to the company’s website. 

You can receive your funds on the same day, if you apply on a banking business day, your application is approved and you electronically sign your loan agreement and verify your direct deposit banking account information by 2:30 p.m. ET.

LightStream offers the lowest APRs of any lender on this list, including a discount when you sign up for autopay. Interest rates vary by loan purpose, and you can view all ranges on LightStream’s website before you apply. This is subject to change as the Fed rates fluctuate.

If you select the invoicing option for repayment, your APR will be 0.50% higher than if you sign up for autopay. The APR is fixed, which means your monthly payment will stay the same for the lifetime of the loan. Terms range from 24 to 144 months, dependent on loan purpose — the longest-term option among the loans on our best-of list.

LightStream does not charge any origination fees, administration fees or early payoff fees.

Who’s this for?  A Happy Money personal loan is a good choice if you’re looking to consolidate your credit card debt and pay it down over time at a lower interest rate.

Happy Money’s mission is to help consumers get out of credit card debt once and for all, which is why its loans are geared specifically toward debt consolidation. You can’t use a Happy Money loan for home renovations, major purchases, education, etc.

Borrowers can take out loan amounts between $5,000 and $40,000, and the loan terms range from 24 to 60 months. There’s a soft inquiry tool on its website, which allows you to look at possible loan options based on your credit report without impacting your credit score.

Happy Money doesn’t charge late payment fees, or early payoff penalties if you decide to pay off your debt faster than you initially intended, but there is an origination fee of up to 5% based on your credit score and application. The higher your score, the lower your origination fee and interest rates are likely to be.

Unlike some lenders, Happy Money allows you to deposit the money you borrow into your linked bank account or send it directly to your creditors. Another perk you get from taking out a Happy Money loan is access to various financial literacy tools, such as free FICO score updates, a team that performs quarterly check-ins with you during your first year of working with Happy Money and tools to help members improve their relationship with money through personality, stress and cash flow assessments.

Who’s this for? SoFi got its start refinancing student loans, but the company has since expanded to offer personal loans up to $100,000 depending on creditworthiness, making it an ideal lender for when you need to refinance high-interest credit card debt.

If you have high-interest debt on one or more card, and you want to save money by refinancing to a lower APR, SoFi offers a simple sign-up and application process, plus a user-friendly app to manage your payments.

Another unique aspect of SoFi lending is that you can choose between a variable or fixed APR, whereas most other personal loans come with a fixed interest rate. Variable rates can go up and down over the lifetime of your loan, which means you could potentially save if the APR goes down (but it’s important to remember that the APR can also go up). However, fixed rates guarantee you’ll have the same monthly payment for the duration of the loan’s term, which makes it easier to budget for repayment.

By setting up automatic electronic payments, you can earn a 0.25% discount on your APR. You can also set up online bill pay to SoFi through your bank, or you can send in a paper check.

Once you apply for and get approved for a SoFi personal loan, your funds should generally be available within a few days of signing your agreement. You can both apply for and manage your loan on SoFi’s mobile app.

While taking on a sizable loan can be nerve-wracking, SoFi offers some help if you lose your job: You can temporarily pause your monthly bill (with the option to make interest-only payments) while you look for new employment. You may still incur interest, but your payment history will remain unharmed. You can read more about SoFi’s Unemployment Protection program in its FAQs.

Who’s this for? PenFed is a federal credit union that offers membership to the general public and provides a number of personal loan options for debt consolidation, home improvement, medical expenses, auto financing and more.

While most lenders have a $1,000 minimum for loans, you can get a $600 loan from PenFed with terms ranging from one to five years. You don’t need to be a member to apply, but you will need to sign up for a PenFed membership and keep $5 in a qualifying savings account to receive your funds.

While PenFed loans are a good option for smaller amounts, one drawback is that funds come in the form of a paper check. If there is a PenFed location near you, you can pick up your check directly from the bank. However, if you don’t live close to a branch, you have to pay for expedited shipping to get your check the next day.

Unlike some lenders, PenFed doesn’t offer a discount for autopay.

Who’s this for? Discover Personal Loans can be used for consolidating debt, home improvement, weddings and vacations. You can receive your money as early as the next business day provided that your application was submitted without any errors (and the loan was funded on a weekday). Otherwise, your funds will take no later than a week. 

While there are no origination fees, Discover does charge a late fee of $39 if you fail to repay your loan on time each month. There’s no penalty for paying your loan off early or making extra payments in the same month to cut down on the interest. 

If you’re getting a debt consolidation loan, Discover can pay your creditors directly. Once you’re approved for and accept your personal loan, you can link the credit card accounts so Discover will send the money directly. You just need to provide information such as account numbers, the amount you’d like paid and payment address information.

Any money remaining after paying your creditors can be deposited directly into your preferred bank account.

Who’s this for? Upstart is ideal for individuals with a low credit score or even no credit history. It is one of the few companies that look at factors beyond your credit score when determining eligibility. It also allows you to apply with a co-applicant, so if you don’t have sufficient credit, you still have the opportunity to receive a lower interest rate.

Upstart considers factors like education, employment, credit history and work experience. If you want to find out your APR before you apply, Upstart will perform a soft credit check. Once you apply for the loan, the company will perform a hard credit inquiry which will temporarily ding your credit score.

You can choose a three-year or five-year loan and borrow anywhere from $1,000 to $50,000. Plus, Upstart has fast service — you’ll get your money the next business day if you accept the loan before 5 p.m. EST Monday through Friday. 

One other major draw for Upstart is that this lender doesn’t charge any prepayment penalties. However, if you’re more than 10 days late on a payment, you’ll owe 5% of the unpaid amount or $15, whichever is greater. You’ll also have to pay an origination fee of up to 12% of the loan amount.

Personal loans are a form of installment credit that can be a more affordable way to finance the big expenses in your life. You can use a personal loan to fund a number of expenses, from debt consolidation to home renovations, weddings, travel and medical expenses.

Before taking out a loan, make sure you have a plan for how you will use it and pay it off. Ask yourself how much you need, how many months you need to repay it comfortably and how you plan to budget for the new monthly expense. (Learn more about what to consider when taking out a loan.)

Most loan terms range anywhere from six months to seven years. The longer the term, the lower your monthly payments will be, but they usually also have higher interest rates, so it’s best to elect for the shortest term you can afford. When deciding on a loan term, consider how much you will end up paying in interest overall.

Once you’re approved for a personal loan, the cash is usually delivered directly to your checking account. However, if you opt for a debt consolidation loan, you can sometimes have your lender pay your credit card accounts directly. Any extra cash left over will be deposited into your bank account.

Your monthly loan bill will include your installment payment plus interest charges. If you think you may want to pay off the loan earlier than planned, be sure to check if the lender charges an early payoff or prepayment penalty. Sometimes lenders charge a fee if you make extra payments to pay your debt down quicker, since they are losing out on that prospective interest. The fee could be a flat rate, a percentage of your loan amount or the rest of the interest you would have owed them. None of the lenders on our list have early payoff penalties.

Once you receive the money from your loan, you have to pay back the lender in monthly installments, usually starting within 30 days.

When your personal loan is paid off, the credit line is closed and you can no longer access it.

Most personal loans come with fixed-rate APRs, so your monthly payment stays the same for the loan’s lifetime. In a few cases, you can take out a variable-rate personal loan. If you go that route, make sure you’re comfortable with your monthly payments changing if rates go up or down.

Personal loan APRs average slightly above 10%, while the average credit card interest rate is nearly 20%. Given that the average rate of return in the stock market tends to be around 10% when adjusted for inflation, the best personal loan interest rates would be below 10%. That way, you know that you could still earn more than you’re paying in interest.

However, it’s not always easy to qualify for personal loans with interest rates lower than 10% APR. Your interest rate will be decided based on your credit score, credit history and income, as well as other factors like the loan’s size and term.

Some lenders charge origination, or sign-up, fees, but none of the loans on this list do. All personal loans charge interest, which you pay over the lifetime of the loan. The lenders on our list do not charge borrowers for paying off loans early, so you can save money on interest by making bigger payments and paying your loan off faster.

As you shop for a low-interest loan or credit card, remember that banks are looking for reliable borrowers who make timely payments. Financial institutions will look at your credit score, income, payment history and, in some cases, cash reserves when deciding what APR to give you.

To get approved for any kind of credit product (credit card, loan, mortgage, etc.), you’ll first submit an application and agree to let the lender pull your credit report. This helps lenders understand how much debt you owe, what your current monthly payments are and how much additional debt you have the capacity to take on.

Once you submit your application, you may be approved for a variety of loan options. Each will have a different length of time to pay the loan back (your term) and a different interest rate. Your interest rate will be decided based on your credit score, credit history and income, as well as other factors like the loan’s size and term. Generally, loans with longer terms have higher interest rates than loans you bay back over a shorter period of time.

CNBC Select now has a widget where you can put in your personal information and get matched with personal loan offers without damaging your credit score.

The loan’s term is the length of time you have to pay off the loan. Terms are usually between six months and seven years. Typically, the longer the term, the smaller the monthly payments and the higher the interest rates. 

Lenders offer a wide range of loan sizes, from $500 to $100,000. Before you apply, consider how much you can afford to make as a monthly payment, as you’ll have to pay back the full amount of the loan, plus interest.

Here are some common personal loan terms you need to know before applying.

• Co-applicants or joint applications: A co-applicant is a broad term for another person who helps you qualify by attaching their name (and financial details) to your application. A co-applicant can be a co-signer or a co-borrower. Having a co-applicant can be helpful when your credit score isn’t so great, or if you’re a young borrower who doesn’t have much credit history. If your co-applicant has a good credit score, you might be offered better terms, including qualifying for a lower APR and/or a bigger loan. At the same time, both applicants’ credit scores will be affected if you don’t pay back your loan, so be sure that your co-applicant is someone you feel comfortable sharing financial responsibility with. 
• Co-signers: A co-signer agrees to help you qualify for the loan, but they are only responsible for making payments if you are unable to. The co-signer does not receive the loan, nor do they necessarily make decisions about how it is used. However, the co-signers credit will be negatively affected if the main borrower misses payments or defaults.
• Co-borrower: Unlike a co-signer, a co-borrower is responsible for paying back the loan and deciding how it is used. Co-borrowers are usually involved in decisions about how the loan is used. Some lenders will only consider two co-borrowers who share a home or business address, as this is a firm indicator that they are sharing the responsibility of money in mutually beneficial ways. Both co-borrowers’ credit scores are on the hook if either one stops making payments or defaults.
• Direct payments: Some lenders offer direct payments when you select debt consolidation as the reason for taking out a personal loan. With direct payments, the lender pays your creditors directly, and then deposits any leftover funds into your checking or savings account. Until you see your account balance is fully paid off, it’s best to keep making payments so that you don’t get hit with additional late fees and interest charges.
• Early payoff penalty: Before you accept a loan, look to see if the lender charges an early payoff or prepayment penalty. Because lenders expect to get paid interest for the full term of your loan, they could charge you a fee if you make extra payments to pay your debt down quicker. The fees could equal either the remaining interest you would have owed, a percentage of your payoff balance or a flat rate.
• Origination fee: An origination fee is a one-time upfront charge that your lender subtracts from your loan to pay for administration and processing costs. It is usually between 1% and 5%, but sometimes it is charged as a flat-rate fee. For example, if you took out a loan for $20,000 and there was a 5% origination fee, you would only receive $19,000 when you got your funds. Your lender would get $1,000 of the loan off the top, and you’d still have to pay back the full $20,000 plus interest. It’s best to avoid origination fees if possible. Having a good to excellent credit score helps you qualify for loans that don’t have origination or administration fees. 
• Unsecured versus secured loans: Most personal loans are unsecured, meaning they are not tied to collateral. However, if your credit score is less-than-stellar and you’re finding it hard to qualify for the best loans, you can sometimes use a car, house or other assets to act as collateral in case you default on your payments. When you put an asset up as collateral, you are giving your lender permission to repossess it if you don’t pay back your debts on time and in full.

To determine which personal loans are the best, CNBC Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions, that come with no origination or signup fees, fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.

When narrowing down and ranking the best personal loans, we focused on the following features:

• No (or low) origination or signup fee: The majority of lenders on our best-of list don’t charge borrowers an upfront fee for processing your loan. For the ones that do, the fee is relatively low and only applies if you have a low credit score.
• Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
• Flexible minimum and maximum loan amounts/terms: Each lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
• No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
• Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process. 
• Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
• Fund disbursement: The loans on our list deliver funds promptly through either electronic wire transfer to your checking account or in the form of a paper check. Some lenders (which we noted) offer the ability to pay your creditors directly.
• Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25% to 0.50%.
• Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $500 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.

After reviewing the above features, we sorted our recommendations by best for overall financing needs, debt consolidation and refinancing, small loans, next-day funding and lower credit scores.

Note that the rates and fee structures advertised for personal loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more. 

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*Your LightStream 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 are 0.50% points 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 7.99% APR with a term of three years would result in 36 monthly payments of $313.32.