Which Bank Offers the Cheapest Personal Loan in 2024?

Personal loans can be a lifesaver when unexpected expenses arise, or when you need a lump sum of money for planned projects such as a wedding, home renovation, or vacation. Choosing the right personal loan can make a significant financial difference. Many factors come into play when selecting the right loan, but perhaps the most important is the cost. A common question for borrowers is: which bank offers the cheapest personal loan?

This article will guide you through the factors that affect personal loan costs, how to compare different banks, and will list some of the top banks in 2024 that offer the most affordable personal loans.

Factors Affecting the Cost of a Personal Loan

When evaluating the cost of a personal loan, there are several key factors to consider:

1. Interest Rate (APR): The Annual Percentage Rate (APR) is the most important component. This is the interest rate the bank charges you on the loan, and it's expressed annually as a percentage of the loan amount. Lower APR means cheaper loans.

2. Loan Tenure: This refers to the time period you take to repay the loan. A longer tenure might reduce your monthly payment, but the total interest paid over time increases.

3. Fees: Banks may charge additional fees like processing fees, late fees, or prepayment penalties. These hidden costs can make a low-APR loan more expensive than it appears.

4. Credit Score: Borrowers with high credit scores are typically offered lower interest rates, while those with lower scores face higher interest rates.

5. Loan Amount: Depending on the amount you're borrowing, the interest rates might fluctuate. Some banks offer better rates for larger loan amounts.

Which Banks Offer the Cheapest Personal Loans in 2024?

Let's dive into some specific examples. We’ve compared several banks based on their APR, fees, and terms to identify the ones offering the cheapest personal loans in 2024.

1. SoFi

SoFi is well-known for offering competitive APRs, making it one of the most affordable options for personal loans in 2024. As of this year, SoFi provides rates as low as 6.99% for borrowers with excellent credit. Additionally, SoFi has no hidden fees such as origination fees or prepayment penalties, further reducing the overall cost.

• Loan Amount: $5,000 to $100,000
• APR: 6.99% to 22.73%
• Loan Term: 2 to 7 years
• Fees: No origination fee, no late fees
• Pros: Competitive rates, no fees
• Cons: Only available to high-credit score borrowers

2. LightStream (A Division of SunTrust Bank)

LightStream has made a name for itself by offering low interest rates to qualified borrowers. Their rates can go as low as 5.95% for those with excellent credit. They also promise to beat any competitor’s rate by 0.1%, further guaranteeing some of the cheapest loans available.

• Loan Amount: $5,000 to $100,000
• APR: 5.95% to 20.99%
• Loan Term: 2 to 12 years
• Fees: No origination fees, no late fees
• Pros: Very competitive rates, flexible repayment terms
• Cons: Good credit required to secure the lowest rates

3. Marcus by Goldman Sachs

Marcus is another top contender in the list of banks offering affordable personal loans. It’s a popular choice because of its fixed-rate loans and the absence of fees. Borrowers can get loans with APRs as low as 6.99%.

• Loan Amount: $3,500 to $40,000
• APR: 6.99% to 19.99%
• Loan Term: 3 to 6 years
• Fees: No origination fees, no late fees
• Pros: No fees, fixed-rate loans
• Cons: Loan amounts may be too small for some needs

4. Discover Personal Loans

Discover provides personal loans at competitive rates, with APRs starting at 5.99% for qualified borrowers. It also doesn’t charge origination fees, which can save borrowers a significant amount of money.

• Loan Amount: $2,500 to $35,000
• APR: 5.99% to 24.99%
• Loan Term: 3 to 7 years
• Fees: No origination fees, no prepayment penalty
• Pros: No fees, flexible terms
• Cons: Loan amounts limited to $35,000

5. Upgrade

Upgrade is an online lending platform offering personal loans with competitive APRs. Borrowers with less-than-perfect credit can still get loans, though at higher rates.

• Loan Amount: $1,000 to $50,000
• APR: 8.49% to 35.97%
• Loan Term: 3 to 5 years
• Fees: Origination fee up to 8%
• Pros: Available to borrowers with lower credit scores
• Cons: High origination fees, higher APR for poor credit

6. Wells Fargo

Wells Fargo is a traditional brick-and-mortar bank, but it offers competitive personal loans that make it worth considering. Borrowers can receive APRs starting at 5.74% for loans ranging from $3,000 to $100,000.

• Loan Amount: $3,000 to $100,000
• APR: 5.74% to 19.99%
• Loan Term: 1 to 7 years
• Fees: No origination fees
• Pros: Large loan amounts, no fees
• Cons: Existing customers may get better rates

Other Factors to Consider

1. Secured vs Unsecured Loans

Some banks offer both secured and unsecured personal loans. Secured loans require collateral, such as a car or home, to secure the loan, which usually results in a lower interest rate. On the other hand, unsecured loans don’t require collateral but come with slightly higher rates. If you're looking for the absolute cheapest personal loan, you may want to consider a secured loan.

2. Fixed vs Variable Interest Rates

Most personal loans come with a fixed interest rate, which means the rate won’t change over the life of the loan. However, some lenders offer variable-rate loans, which tend to start with a lower APR but can increase over time. While variable-rate loans can be cheaper in the short term, fixed-rate loans are often the safer choice since your monthly payments will remain the same.

3. Loan Flexibility

Some lenders offer features such as payment deferment or the ability to skip a payment during difficult times. Others may offer discounts on interest rates if you set up automatic payments. These small perks can reduce the overall cost of the loan and make the loan more manageable during tough financial situations.

4. Early Repayment Options

Many banks charge a prepayment penalty, which means if you pay off your loan early, you will incur extra costs. It’s important to look for a lender that allows early repayment without penalties. This way, if you find yourself in a position to pay off the loan early, you can save on interest costs without facing fees.

How to Compare Personal Loan Offers

When comparing personal loan offers, make sure to gather information about the APR, fees, loan amount, and loan terms for each loan. Use an online loan calculator to determine your monthly payments and the total interest you will pay over the life of the loan. Don’t just focus on the interest rate — consider all costs and features of the loan, such as whether there are any penalties for paying it off early or fees for missing a payment.

It’s also wise to shop around. Even a slight difference in interest rates can have a significant impact on the overall cost of your loan, especially for larger loans. Check both online lenders and traditional banks, and be sure to factor in any special discounts or promotions.

Conclusion

There are several banks that offer affordable personal loans in 2024, each with its own unique features and benefits. SoFi, LightStream, and Marcus by Goldman Sachs stand out for their low APRs and lack of fees, making them excellent options for borrowers with good to excellent credit. Meanwhile, lenders like Upgrade and Discover cater to a wider range of credit scores, though their interest rates might be higher.

Remember, the cheapest personal loan isn’t just about the interest rate. Consider the full package — fees, terms, flexibility, and additional perks like early repayment options. By taking the time to shop around and compare offers, you can find a personal loan that best fits your needs and budget.