Learn more about personal loans and our top choice online personal loan companies to use!

"We take a look at personal loans and explain how they work and the benefits of having one as well as providing our three top choice online companies to use (Marcus, SoFi, and Payoff)."


By: Allan R. Kirby


What is a personal loan and how does it work?


A personal loan is a loan that allows you to borrow money and a fixed or variable rate, with fixed payments whereby you pay a percentage of the outstanding loan plus interest in monthly installments. These types of loans typically come with lower interest rates than credit cards which is why most debt consolidation is centered on consolidating credit card debts into a single lower-cost monthly payment through a personal loan. But personal loans are not just for credit card consolidation, there are other reasons to take out a personal loan for things such as:

  • Home improvement projects such as an upgrade or major fixes such as a roof.

  • Buying large household appliances such as a fridge or even a furnace

  • Paying for college.

  • Purchasing a used car.

  • Weddings.

  • Medical bills for surgery or an ER visit not covered by insurance.

  • Veterinary costs such as an operation for your pet.


Is it a good idea to get a personal loan?


Typically you are better served to try and use your savings or emergency fund to cover unexpected expenses, however, if you are unable to personal loans are a good option to pay for larger expenses. The principal reason is that it's cheaper to take out a personal loan instead of using a credit card. You will normally get a better interest rate and more manageable monthly payments with a personal loan. It will ease the burden of paying off the loan, this is why many people use personal loans for debt consolidation.


So Should I take a personal loan to pay off debt?


Yes! If you're struggling to afford credit card payments, taking out a personal loan with a lower interest rate and using it to pay off the credit card balance in full may be a good option for you. Remember the most important thing you can do is to pay off your debt as quickly as possible, with the lowest interest rate which is why personal loans are a good choice. The longer you make our repayment terms, the more interest you will pay.


"A personal loan could actually help you financially by saving you money through a lower interest rate, more managemeable payments and get you out of debt faster."

Is it easy to get a personal loan?


This is a common question and the answer depends on a few factors such as your credit rating, the amount you want to obtain, and whether the lender is looking for a co-signer or a secured loan instead of an unsecured loan. However, if you do meet the lender's requirements and have a relatively good credit rating it should not be difficult to get a personal loan. However, you do need to make sure there are no hidden fees or closing costs that can add to the costs of getting your personal loan. Most major banks do not and we will highlight a few later in the article that provides no-fee personal loans.


"Can I pay off a personal loan early? Yes, but some lenders charge fees for paying off your loan early. Check this before you take a personal loan or see if you can get the fee waived if you do."

Secured or Unsecured


Most personal loans that are provided are normally unsecured but they can be secured loans as well. Unsecured loans mean the loan is not backed by collateral (something of value you forfeit if you do not pay back the loan ) but there can be secured personal loans available as well. Lenders will decide whether to give you an unsecured loan based on several factors which include:


1. credit score.

2. credit history.

3. debt-to-income ratio.

4. Employment.


Now as mentioned, most loans are normally unsecured, but some lending institutions do offer cosigned loans as well as secured backed loans. Co-Signed loans are helpful when the added applicant has a strong credit score and history, who is helping guarantee the loan. They like the other applicant will be on the hook if the loan is not paid back. Secured loans are backed by assets such as a car, which the lender can repossess if you fail to pay the loan.


What happens if I miss making payments on my personal loan?


This is critical, before even going out to see if you can get a loan, you do need to make sure you know you can pay the loan off. There is no question unforeseen events can happen but for the most part, you need to ensure you can pay the loan off over the long term. If you are having problems, you need to take action immediately and talk to the lender about options. Avoiding the problem will actually make matters worse. I have seen this happen, people are too embarrassed to talk to the lender only to have them miss a couple of payments, thinking everything is ok. However later on they find out they took a significant hit to their credit rating. It can in fact take years to fix your credit rating!


Where to get a Personal Loan?


There are so many online lenders, banks, and credit unions that provide personal loans at great rates. I do not recommend payday loans, their terms are ridiculous with very high-interest rates and the amount of money you can borrow is very low. You would actually do better with a credit card over a payday loan. But to help you, I have listed three great companies, Marcus, SoFi, and Payoff, with Marcus by Goldman Sachs being a top choice.


Marcus which is owned by Goldman Sachs is a financial company that provides great personal loans with no fees and reasonable rates depending on your credit score, we selected them as our top choice;

#1 Marcus personal loan


  1. Personal loans from $3,500 - $40,000

  2. No Fees

  3. Rates range from 6.99% to 19.99%*





Note: loan terms range from 36 to 72 months. Only the most creditworthy applicants qualify for the lowest rates and longest loan terms. Rates will generally be higher for longer-term loans.


Rewards and Discounts


On-time payment reward: Pay your loan on time and in full every month for 12 consecutive months and you can skip a month. Interest will not accrue during this time, Marcus will just extend your loan for one month.

AutoPay Discount: Receive a .25% APR reduction when you enroll in AutoPay. This reduction will not be applied if AutoPay is not in effect.


Other Personal Loan Lenders:



#2 SoFi personal loan


  1. Personal loans up to $100,000

  2. No Fees

  3. Rates starting from 5.99%.



Note: Co-applications are allowed and flexible terms of 24-84 months to pay back the loans. However, you do need to have a good credit score (680) and the loan origination can take hours but up to two weeks.


#3 Payoff personal loan


  1. Personal loans up to $40,000

  2. No Fees

  3. Rates starting from 5.99% to 24.99%



Note: Co-applications are not allowed and a credit score of 640 and a debt-to-income ratio of approximately 50% or less. Additionally, Payoff is limited to using the funds: to pay off debt such as credit cards and other debt consolidation only. This is not for you if you're looking for loans for home renovations or to pay for your wedding.


Finally Thoughts


Personal loans are a great way to borrow money with low-interest rates to purchase a large item or for debt consolidation such as paying off your high-interest credit cards. We highlighted a couple of good financial companies that offer such loans, however, you may need to have a decent credit rating to obtain loans from some of the companies. Overall you will save significantly and be able to better control your finances if you use a personal loan over a credit card. Additionally, many online financial companies offer loans with no fees and great interest rates when compared to most credit cards.


Good luck and start looking at saving money today with a low-cost personal loan!

This is a MySmallBank.com blog written by Allan R Kirby, who writes and produces Personal Finance articles and videos.


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