Best Personal Loans in Illinois of 2023

There are moments in life when you find yourself in situations that require extra financial resources. Whether you're managing an unexpected medical bill, dealing with a sudden home repair or looking to consolidate existing debt, a personal loan can provide the financial leverage you need to move forward without setbacks.

To help you navigate this important financial decision, MoneyGeek rounded up the best personal loans in Illinois. We picked LightStream as the best overall personal loan lender in the state. Upstart is ideal for borrowers with bad credit, while SoFi is preferable for those with good credit. Upgrade and Best Egg are excellent for debt consolidation and home improvements, respectively.

Personal loans are a versatile financial resource that can help you address a wide array of needs. Unlike other loan types that are earmarked for specific purposes like buying a house or a car, personal loans give you the freedom to use the funds for anything from debt consolidation to home improvements or even a much-needed getaway.

A personal loan involves borrowing a predetermined amount from a lender, which you agree to pay back in monthly installments. The repayment period can vary, often ranging from as short as six months to as long as seven years. The interest rate, which can be either fixed or variable, is another crucial component that will affect your monthly payments and the overall cost of the loan.

When you apply for a personal loan, lenders will examine your financial health. Beyond the obvious factor of your credit score, they will also look at your debt-to-income ratio to understand how much of your monthly income is already allocated to existing debts. Employment history and income stability can also come into play, helping the lender to gauge your reliability as a borrower.

The world of personal loans is rich and varied, offering different types to meet a range of financial needs and preferences. Knowing about the distinct types can empower you to select the one that's most aligned with your financial objectives.

• Secured personal loans: Secured personal loans require you to put up an asset as collateral, which can be repossessed by the lender if you default. The collateral often enables you to secure a lower interest rate, making it a viable option for those rebuilding their credit.
• Unsecured personal loans: With no need for collateral, unsecured personal loans are often quicker to obtain but come at the cost of higher interest rates. They're well-suited for those who are comfortable taking on a bit more cost for the sake of convenience.
• Debt consolidation loans: Debt consolidation loans are tailored to replace multiple existing debts with a single loan, often at a lower interest rate. They can be a strategic move for those looking to simplify their financial landscape and potentially save on interest.
• Co-signed loans: Co-signed loans involve a second party with a strong credit history who agrees to share the repayment responsibility. It's a way for individuals with weaker credit to access loans they might not qualify for on their own.
• Fixed-rate loans: The interest rate stays the same for the duration of the loan, offering you a predictable monthly payment. Fixed-rate loans are an excellent choice for those who like to plan their finances down to the penny.
• Variable-rate loans: Variable-rate loans have interest rates that can adjust over time, usually tied to market indices. They can be advantageous if you're looking for a lower initial rate but are willing to accept some level of risk and unpredictability.

The decision to take out a personal loan comes with its own set of benefits and drawbacks. A clear understanding of both can help you make a choice that complements your financial strategy.

The world of personal loans is populated by a variety of lenders, each with its own set of rules, rates and requirements. The most common financial institutions in this market are traditional banks, online lenders and credit unions.

• Traditional banks: These are the go-to option for many due to their reputation and the range of financial services they offer. However, they can be less forgiving when it comes to credit requirements and may offer less competitive interest rates compared to other lenders.
• Online lenders: Specializing in quick and hassle-free loan approvals, online lenders are a solid choice for those who value convenience. However, the trade-off may be a lack of in-depth financial consultation services that you might find at a traditional bank or credit union.
• Credit unions: These not-for-profit organizations often offer the most borrower-friendly terms, including lower interest rates and more flexible repayment options. The downside is that you'll need to qualify for membership, which can sometimes be a hurdle depending on the credit union's requirements.

While personal loans can be a go-to solution for many, there are other avenues for securing funds that might better suit your needs. Here are some alternatives, each with unique advantages and drawbacks.

• Credit cards: Credit cards can be a quick solution for immediate, smaller expenses and often come with perks like cash back or travel rewards. However, the high interest rates can make this an expensive option if you're unable to pay off the balance promptly.
• Home equity line of credit: If you're a homeowner with substantial equity, a home equity line of credit (HELOC) can offer a large credit line for significant expenses. However, your home is used as collateral, making timely repayment crucial to avoid risking your property.
• Peer-to-peer lending: This modern lending solution matches borrowers with individual investors, often resulting in more flexible loan terms. However, the convenience comes at a price, as these platforms usually charge additional service fees.
• 401(k) loans: Borrowing from your 401(k) is an option that doesn't require a credit check and offers a straightforward way to access funds. However, this approach can have long-term repercussions on your retirement savings and may incur penalties if the loan isn't repaid as agreed.

Whether you're a first-time borrower or someone looking to better understand the nuances of personal loans, questions often arise. To help you in navigating this financial avenue, we answered some of the frequently asked questions about personal loans in Illinois.