The 5 Best Alternatives to Personal Loans

Are you looking for a loan but don’t want to work with a traditional bank? Well you are in luck! In this internet age, there are tons of alternatives to personal loans available. They range from small independent companies to peer to peer lending platforms.

I know, it seems weird that a personal finance blogger striving for financial freedom would talk about loans. We’re trying to get out of debt, not into more debt! But, let’s be real. Most people aren’t debt free (I’m not!), and there are tons of reasons why someone might need a personal loan – from debt consolidation to medical bills (and don’t get me started on how awful that is – but unfortunately, it’s the reality for millions of Americans). Some may also be looking to start a new small business – some of the companies on this list are dedicated to that.

The point is, there is no shame in wanting or even needing a personal loan, regardless of your reasons for it. And if you are in the market for one, check out these awesome alternatives to traditional bank loans.

What Are The Best Alternatives to Personal Loans?


My favorite personal loan alternative is Upstart. They are great because they don’t just look at your credit score. Upstart recognizes that some people may not have had time to build credit, and others may have fallen on hard times, so they try to take the whole person approach. In addition to your credit score, they look at your job history and your education to get a better idea of who you are as a person.


Because Upstart looks at you as more than just a number, they can offer rates that are lower than most traditional companies. Borrowers can generally save around 23% with Upstart compared with traditional credit card companies.


Earnest is similar to Upstart in that they look at more than just your credit score when determining your credit worthiness. Their main focus is on student loan consolidation, but they also offer decent rates on personal loans.

The biggest hindrance to using Earnest is it’s high bar to entry. It has one of the highest credit score requirements of any of the platforms that I’ve researched. Borrowers need a minimum score of 680 to be considered. If you are looking for an alternative to personal loans because your credit isn’t the best, Earnest might not be a good choice. But if you are looking for an alternative because you are looking for a better interest rate, it might be a good option for you.


Sofi is a cool company because they are more than just a loan company. They offer social integration with their loans. If you become a member (either through getting a loan funded with them, opening an investment account, or using them as a stand in for your checking account), you automatically gain access to their social network. 

Sofi’s social network includes career counseling and access to networking and money events (and happy hours!) in addition to basic financial services (advice and access to financial planners). Another cool thing about Sofi is their referral program. If you refer a friend to join the same program that you are in, you get a pretty sweet referral bonus.

"alternatives to personal loans"
Love this post? Be sure to pin it!

Unfortunately I couldn’t find any minimum eligibility requirements while searching the Sofi website. They do state that they check your credit etc. etc., but they don’t list the minimums of what they accept, so if you are worried about your credit, this platform may not be right for you. 

Street Shares

Street Shares is a little different, in that it offers business loans specifically for Veterans, but as a Veteran myself I wanted to include it. It offers great rates for Veterans trying to build something for themselves after their years of military service. I love the concept.  It’s also similar to peer to peer lending in that individuals can invest in these small veteran owned businesses.

Its not exactly a good alternative to personal loans because it’s limited to a very specific demographic for a very specific reason (Veterans to start businesses), but I wanted to include it because there may be some Veterans reading this who are specifically looking for small business loans – and Street Shares is definitely the company for you!

Peer to Peer Lending

Another great alternative to personal loans is peer to peer lending. There are basically only two platforms to chose from as a borrower, and those are Prosper and Lending Club. The main differences between these companies is how they determine eligibility and their fees. Dough Roller has an excellent comparison, if you are interested, but since each platform has a proprietary system for determining your rate, your best bet would be to check both. Some borrowers will get a better deal on Prosper, and others will get a better deal on Lending Club.


The only drawback to Peer to Peer lending for borrowers is that your loan may not be fully funded. Your loan gets placed on the market, and investors get to decide whether they want to invest small amounts into your loan. Many loans do get fully funded, but there are some that do not.

What Can be Used as Collateral for a Personal Loan?

Many of the personal loan options discussed don’t have any collateral -and that’s great! Although unsecured loans tend to have higher interest rates, you don’t have to risk losing your car or your house if something goes wrong and you can’t pay.

If you need a large sum of money, you can consider using your house as collateral and getting a home Equity Loan.  I don’t recommend that unless you really need the money. You can also use your car as collateral with title loans, but I don’t recommend that either. There’s a reason those are listed under the “Bad Alternatives to Personal Loans” section below.

What is the Best Option for a Personal Loan?

I have two favorite companies for personal loans – Upstart and Sofi. Upstart is great because they have a low credit score requirement. I also love that they look at more than just your credit score. Companies that treat you like a real person rather than just a number are always better in my book.

Sofi is great because of all the added benefits you get. I love the idea of combining finance with a social network (I mean hello – I love PF Twitter!).  It’s cool that Sofi is finding ways to integrate the two.

Additionally, because neither company is a peer to peer lending platform, you can be sure that your entire loan amount will be funded. Peer to Peer is great, but if you desperately need that 5K to buy a new car, only getting funded for 4K isn’t going to cut it.

Which Loan Company is Best for Bad Credit?

Of all the companies that I researched; Upstart seems to have the lowest credit score requirement. You need a minimum credit score of 620 in order to qualify for a loan with Upstart. Lending Club does offer products for those with a credit score of 600 and above, but like we said above, that means there is no guarantee that the loan will be funded.


Bad Alternatives to Personal Loans

I get that sometimes people are in dire straits and don’t have a lot of options. But if you can help it, these two personal loan alternatives should be avoided.

Payday Loans

I am not a fan of payday loans. They charge exorbitant amounts for fees and interest. In fact, many people get so caught up in the payday loan cycle that they end up owing thousands of dollars to payday loan companies on a loan that was originally only for a few hundred bucks. I know sometimes there’s a giant emergency and you may think this is your only option, but please explore the other options listed above first.

Title Loans

Title loans are similar to payday loans with the fees and interest, but they are secured. That means you have to give up your car title as collateral in order to get funded for the loan. If you own your car outright, this is a huge risk. Do you really want to risk losing your car for that $500 loan? These are only a good idea if you have no other options.

Loan Options for Everyone

As you can see, there are tons of different companies that offer different types of loan options. There is a product out there for just about everyone, and this post is probably just the tip of the ice berg. But all of the companies that I listed (except for the bad alternatives!) are great companies and great places to start if you are searching for a personal loan and don’t want to use a traditional bank. Happy loan getting!

Comments are closed.