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Online personal loans: everything you need to know
Updated Nov 03, 2025
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Key takeaways:
Online personal loans are loans you apply for online.
You can apply on your own schedule. If you’re approved, you can use the funds for anything you'd like
You can often get a decision on your application in minutes and funding in days.
Learning how to compare loans could help you level up your financial game and organize your finances.
Researching online personal loans is a great first step. Since online lenders don't have to pay for physical locations, they might be able to give you a better offer than you could get at your local bank branch.
Here's the lowdown on online personal loans and how to get one.
What is an online personal loan?
An online personal loan works like a regular personal loan. You borrow a lump sum of money from a lender and agree to pay it back on a set schedule.
Most personal loans have fixed interest rates. With a fixed rate, your payment won't change. If your loan has a variable interest rate, your payments could change over time. Either way, personal loans are closed-end loans. That means you’ll make monthly payments in an amount calculated to fully pay your loan off by the end of your loan term. You’ll know the loan term when you get the loan (it’s typically between two and seven years for a personal loan).
The main difference between online personal loans and other personal loans is that you apply on a website or app instead of going to a loan officer or a brick-and-mortar bank. You can find online personal loans at traditional institutions with branches as well as from online-only lenders. The entire application is digital. If you qualify, you could get approved within minutes and receive funds as soon as the next business day.
How do online personal loans work?
An online personal loan lets you apply on your computer or mobile device from the comfort of your home. Here's how it works:
Gather information. Decide how much you want to borrow and get a total number for your income.
Research online personal loan lenders. Search for lenders that offer a digital application. Many traditional banks offer an online application, along with digital-only lenders that only lend online.
Decide what kind of loan you want. Secured loans are backed by collateral, and unsecured loans aren’t. Most personal loans are unsecured. You qualify based on your credit standing and financial situation, not on whether you own something valuable that you could use to guarantee the loan.
Compare rates and terms from different lenders. Lenders often allow you to compare borrowing costs without a hard credit check. You can visit the lender’s website, where you'll be asked for basic financial information. Then, you'll get a quote with interest rates and a loan repayment timeline. Look at the APR, the total yearly cost of borrowing. A loan with a low interest rate but high fees could be more expensive than a loan with a higher rate. The APR tells you the total cost of the loan for one year.
Decide which lender is best for you. The right lender will offer loans with competitive rates and affordable fees. They’ll also be well liked by their current and past customers.
Apply for a loan. When you’ve settled on a loan, complete your personal loan application. You'll need to provide information on the amount you want to borrow, your income, and your Social Security number for a credit check.
Provide necessary documents. Your lender may ask for things like ID, pay stubs, tax returns, or other documents to prove who you are and what your finances look like.
Wait for underwriting. Your lender should review your application and give you a decision about the personal online loans you qualify for. This process could be quick and digital, happening instantly or within minutes of applying. If your application requires further review, a human underwriter might need to follow up.
If approved, sign your loan documents. If you get approved, congratulations! You'll sign any required promissory notes or other documents that your lender requests.
Receive the money. The final step is to receive your funds. The money will usually be direct-deposited into your bank account. If you’re getting a debt consolidation loan, the lender might be willing to pay your other creditors directly.
This may sound like a lot of steps, but it's generally easy to apply for a loan online. Many online personal loans grant instant approval and even get you the funds quickly—sometimes inside a day or two.
Advantages of applying for a loan online
Getting a personal loan online has many advantages, such as:
Speed. You can often get an instant decision when you apply for a personal loan online. Applying in person means a human could be entering all of your application details. In the time it takes to do that, an online application may already have a decision.
Convenience. You don't have to wait for a bank to be open or a loan officer to be available if you get a loan online. You can apply for a loan online any time of day or night—without even getting dressed.
Easily track funding. You can typically check your loan application from your laptop or mobile device.
Greater choice of lenders. Your options for local banks near you may be limited. Applying online expands the possibilities tremendously. Of course you can still apply for online personal loans from brick-and-mortar lenders near you—but you could also choose from lenders across the country, including online lenders.
A wider choice of lenders offering personal online loans could mean a better chance of being able to find the right loan when you need it.
Online personal loan costs and fees to expect
Just as with any other loan, you’ll pay interest for an online loan. Nationwide, the average interest rate on a 24-month personal loan was 11.57% in mid-2025. Your rate could be higher or lower.
A few fees to be aware of (and avoid if possible) include:
Application fees
Prepayment penalties
Late-payment charges
Payment processing fees
Some fees, such as application fee or prepayment penalty, aren’t common with online personal loans. If you find a lender charging them, you may want to look elsewhere. Others, like prepayment penalties, could be avoided if you pay on time.
How to choose an online lender
Some things to consider when you’re scouting the field of online lenders:
Interest rate. This is one of the most important, because your personal loan interest rate determines your cost of borrowing. The lower your rate, the less you should pay over time.
Loan term. You generally can choose how long you want your loan to be. It could be a term of 24, 36, or 48 months or longer. Find a lender offering a loan term that suits you and your budget. Longer terms have lower monthly repayments, but you’ll pay more interest in the long run. Shorter terms mean bigger payments, and they save on interest costs.
Fees. Look for a lender that charges minimal fees.
Eligibility requirements. Many lenders have eligibility rules for income and debt to qualify. Look carefully to find a lender likely to give you a loan.
Lender's reputation. Look for a lender with a solid reputation for providing good customer service and loans at a fair price. Check the lender’s name on the Better Business Bureau (BBB) site to find out if anything negative turns up.
Checking all the features of lenders and their loans could help you choose the right online lender. A careful review also reduces the risk of scams and makes it possible to find a trustworthy lender that offers fair, transparent terms.
How to qualify for an online personal loan
Lenders have different criteria for how to qualify for an online personal loan. In general, you'll need:
Good or excellent credit
Enough income to pay back the loan
Manageable amount of existing debt
Stable employment
If you don't meet these criteria, it might be harder to qualify for a personal loan.
You could also try to apply with a co-signer, which lessens the risk for the lender because a second person takes financial responsibility for the loan. Having a co-signer could help you qualify.
How long does it take to get approved for a personal loan?
The amount of time it takes to get approved after you apply for a loan online varies by lender. Many lenders provide instant, or near-instant, approval and may provide funding within a few days.
How does a personal loan impact your credit score?
A new personal loan could cause your credit score to dip in the short term because of a new inquiry on your credit report. Your new loan also lowers the average age of your credit accounts. New inquiries have an impact on your score, and so does a lower account age.
Over time, a personal loan could help improve your credit. Credit scores benefit from a mix of account types, and personal loans—which are installment loans—add variety to your credit profile. Unlike revolving debt such as credit cards, installment loans show you can manage fixed monthly payments, reflecting positively on your ability to repay different types of credit.
As you pay your personal loan on time, you'll also develop a positive payment history—the most important factor in your credit score.
Author Information
Written by
Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.
Reviewed by
Jill is a personal finance editor at Achieve. For more than 10 years, she has been writing and editing helpful content on everything that touches a person’s finances, from Medicare to retirement plan rollovers to creating a spending budget.
Frequently asked questions
What type of personal loan is easiest to get approved for?
Some personal loan providers focus on borrowers with lower credit scores or income. You can search for those providers online if that's an issue for you.
Another option is to look for secured personal loans, which require collateral. Collateral is something valuable that you offer as a guarantee that you'll repay the loan. It's common to use a savings account as collateral for a secured personal loan. Some lenders will also consider letting you borrow against collectibles, fine art, a vehicle, or other items of value.
Lenders consider secured loans less risky because they can take the collateral if you don't repay your loan.
You could also add a co-borrower with better credit or additional income to strengthen your application. That can help you get approved or get you a better loan. At Achieve, we offer interest-rate discounts if you have a co-applicant—check your eligibility.
Is it better to apply online or in person for a loan?
If you're comfortable with the internet and with filling out forms, applying for a loan online is faster and easier than calling or driving to a traditional branch. And many online lenders will help you with chat, email, or phone support if you get stuck.
It won't affect your loan decision if you choose an online or in-person process.
How long does it take to get approved for an online personal loan?
You can get a preliminary loan decision in minutes. It takes a few hours to a few days to finalize a loan approval and transfer your money. The exact time depends on the lender's policies, how quickly you respond to requests, and how simple or complicated your situation is.
Is it possible to get a personal loan online?
Yes, it’s possible to get a personal loan online. Many traditional banks and credit unions now have an online application. There are also online-only lenders that allow you to apply via web or mobile device.
Which personal loan is easiest to get?
Secured personal loans are easiest to get, because there's less risk for lenders. If you're a qualified borrower, you should be able to easily get many different kinds of personal loans, including unsecured loans. Applying online can be faster and help you to more easily find loans you can qualify for.