10 Common Personal Loans — and Options for When You Can’t Qualify

Whether you’re looking for more money for a costly home project or just need some cash to tide you over until payday, you have a number of options for getting secured or unsecured loans. You can choose from non-traditional options or traditional lenders like banks and credit unions.

Personal loans vary; although most are fixed-rate loans, not all are low-interest loans and some are only available to consumers with good credit. Here are 10 unsecured personal loan types for you to consider. Check out advantages, disadvantages and typical terms and rates so you can better decide which are the best borrowing options.

1. Peer-to-Peer Loans

Peer-to-peer lending connects borrowers with investors to fund loans. P2P lenders operate exclusively online, so customers can get lower interest rates. Approval for P2P personal loans can depend on debt-to-income ratio, financial history and career experience. Application requirements include proof of income and employment.

Pros

• Low, fixed interest rates
• No prepayment penalties
• Loans up to $100,000 available

Cons

• Generally limited to those with above-average credit and income levels
• Origination fee of 1 to 5 percent
• Loans not available in all states

Terms and Rates

Lending Club, the largest P2P lender, offers these terms:

• Fixed-rate interest loans up to $40,000
• Minimum loan amount of $1,000
• Rates starting at 6.16% APR

Read: Pros and Cons of Peer-to-Peer Lending

2. Bank Loans

Banks are the traditional source of personal loans. If you have an existing relationship with a bank, you might get the best rate and loan there.

Pros

• Better rates possible for bank customers
• Loans available up to $100,000

Cons

• Online loans rates might be more competitive
• Some banks don’t offer installment loans in all states

Terms and Rates

TD Bank offers these terms and rates on an unsecured installment loan:

• Fixed-rate interest loans from $2,000 to $50,000
• 12- to 60-month term limit
• Rates from 8.99% APR to 16.24% APR

 3. CashCall

CashCall is an alternative to other unsecured loans for qualified borrowers. You must provide ID, proof of an active bank account and proof of income. These loans are processed through the internet, by phone and by fax. Funds are then wired to a borrower’s checking account.

Pros

• Higher loan amounts and lower interest for those with higher credit scores
• Funds possibly available the same business day

Cons

• High fees
• Possible change of rates and loan products without notice
• Only available in Arizona, California, Idaho, Missouri and Utah

Terms and Rates

For California residents, CashCall offers the following terms:

• Fixed-rate interest loans from $2,600 to $10,600
• 47- to 84-month term limits on loans, depending on amount
• Fees start at $75 for a $2,600 loan
• Maximum rate of 184.36% APR

 4. Check Into Cash

Check Into Cash offers quick money solutions to customers with bad credit looking for a short-term loan. A payday loan — a type of bridge loan — is used to provide cash in between paychecks and is offered in amounts up to $1,000.

Pros

• Speed: Can apply online or in store for same-day pay
• Only basic credit check required

Cons

• Low cash advance amounts
• High interest rates

Although loan qualifications are more lenient in comparison to other lenders, payday loans are often much smaller. Loan payments are automatically withdrawn from your checking account.

Terms and Rates

For California residents, CashCall offers the following on a $255 payday loan:

• 14-day loan with one payment
• Fee of $45
• 460.08% APR
• Repayment of $300

Read This First: Why Payday Loans Are Dangerous

5. Crowdfunding

Chances are you’ve heard of crowdfunded startups, such as the popular Kickstarter, GoFundMe and Indiegogo. These platforms are ideal for raising funds that you don’t have to repay or for using when other loan options are unavailable.

Pros

• No interest or repayment required
• Credit score not relevant
• Available to anyone

Cons:

• Possibly lengthy funding goal process
• Funding not guaranteed

Terms and Rates

• Typical platform fee is 5 percent, but rates vary.
• If the funding goal isn’t met, the fee is refunded.
• Entrepreneurs often reward lenders with products instead of repayment.

Learn: How to Get the Best Personal Loan Rates

6. Debt Consolidation Loan

Another type of personal loan is the debt consolidation loan, which combines all your debts into one monthly payment — ideally, at a lower rate. This type of loan is great for people who can stick to a debt payment plan. Typical uses for debt consolidation loans include credit card or student loan debt.

Pros

• Simplified payments: one per month.
• Interest rates sometimes lower than credit card rates

Cons

• No guarantee you’ll reduce or pay off debt sooner
• Possible debt-transfer fees
• Rates dependent on borrowers’ credit

Terms and Rates

Here’s what an option for student loan consolidation looks like from Wells Fargo: 

• No fees
• 4.49% APR to 9.49% variable interest rates
• 6.24% APR to 10.99% APR fixed interest rates
• 0.25 percent discount for existing customers; 0.25 percent discount for AutoPay
• Amounts approved up to $120,000
• 15-year term for $40,000 loan; 20-year term for $60,000 loan

7. Installment Loans

Under the general terms of an installment loan, you agree to pay back the loan in monthly payments — plus interest and fees — over a set period of time. Unlike payday loans, installment loans have a longer duration, lower interest rates and are available in much larger amounts.

Pros

• Easy to obtain
• Available to low-income customers
• Many money-lending institutions offer them

Cons

• Interest rates are still high compared to other personal loan options
• Large administrative fees

Terms and Rates

Requirements, range of terms, APR and loan amount all depend on credit and customer residence, according to installment loan provider Avant. With installment loans, monthly payments are automatically withdrawn from the borrower’s bank account. 

New Options: With These New Apps, You Can Finance Almost Anything at Checkout

8. Secured Loans

A secured loan is an option for those with equity in property, vehicles or savings accounts that can be used as collateral for the loan. A secured loan is much easier to obtain than a home equity line of credit, which is a second mortgage.

Pros

• Lower interest rates available
• Larger loan amounts available
• Better loan terms than unsecured personal loans

Cons

• Possible loss of collateral upon default
• Could have variable rates rather than fixed

Terms and Rates

Here’s an example of what a secured personal loan from Wells Fargo might look like:

• No fee
• 6.74% APR to 19.74% APR, which includes a 0.25 percent discount for current customers
• Three-year term

9. Single-Payment Loan

Unlike an installment loan in which you repay the lender in monthly installments, a single-payment loan requires you repay the lender all at once. On a set date, you will have to pay the borrowed amount plus interest and other fees in full.

Pros

• Less interest, if you plan to save or have money coming

Cons

• Designed for affluent borrowers
• Risk falls on the borrower, not the lender

Terms and Rates

• No periodic principal payments
• Full amount ­– principal plus interest — due at maturity

Because this option is riskier for the borrower, full repayment will take some strategic planning.

10. Convertible Loan

Also known as convertible notes, these debts convert into equity when a startup raises actual equity. The lender grants a loan of whatever amount, but instead of receiving cash payments, the lender gains a piece of equity in the borrower’s company.

If you’re looking for a loan for personal business matters, you might want to consider this option.

Pros

• Borrowers or investors not required to determine company value for the loan

Cons

• Gives the borrower less control

Terms and Rates

When convertible notes are evaluated, the following — which can vary depending on agreement terms — are considered:

• Discount rate
• Valuation cap
• Interest rate
• Maturity date

What to Do If You Can’t Qualify for a Personal Loan

Despite the range of options available, a personal loan might not be the right solution for your situation. If that’s the case, you can consider the following alternative:

Low-Interest or 0% APR Credit Cards

If you have good credit, you might be eligible for a low-interest credit card with no-fee debt consolidation. If you can afford the monthly payments and don’t need to borrow much, low-interest credit cards could be better for your budget. In contrast, if you have to borrow an amount that will take a longer period of time to repay, a personal loan might be better. Some credit cards offer 0% APR introductory periods for as long as 12 to 18 months.

Tips for Paying Off a Personal Loan

Paying off your personal loan should be a top priority. Using automatic payment features can help you pay down debt without the worry of late fees. Also, if you opt to set up multiple monthly payments, you’ll pay less interest and pay off the loan faster.

Up Next: 5-Step Guide to Refinancing Your Personal Loan