How to Compare Personal Loan Offers Without Getting Burned

Personal loans can consolidate high-interest debt or cover a large expense with a fixed rate and a set payoff date. But offers vary widely, and comparing them on monthly payment alone can cost you.

1. Compare APR, not just the interest rate

The annual percentage rate (APR) includes the interest rate plus most fees, so it is the best single number for comparing loans of the same length.

2. Watch the origination fee

Many lenders charge an origination fee, often deducted from the money you receive. On a $10,000 loan with a 6% fee, only $9,400 reaches your account, but you repay all $10,000 plus interest.

3. Weigh the term

A longer term lowers your monthly payment but increases total interest. Ask for the total cost of the loan for each term you are considering.

4. Prequalify before you apply

Most online lenders, banks and credit unions let you check estimated rates with a soft credit pull that does not affect your score. Collect three or more prequalified offers before submitting a full application.

5. Read the fine print

• Prepayment penalties for paying the loan off early.
• Late fees and returned-payment fees.
• Autopay discounts, which can shave a fraction of a percentage point off your rate.
• Whether the lender reports to all three credit bureaus.

Red flags

Be wary of lenders that guarantee approval regardless of credit, ask for upfront fees before funding, or pressure you to decide immediately. Check complaints with the CFPB and your state attorney general.

The bottom line: line up offers by APR, total repayment and fees. The best loan is the cheapest one you can comfortably repay.

This guide is for general information only and is not financial advice. See our Disclaimer.