Revised: September 2026
A personal loan can cover a big expense or consolidate debt, but it isn’t your only option. Depending on your credit, what you own, and how much you need, one of these 10 alternatives to personal loans may cost less or fit your situation better.
1. Credit card balance transfer
If you’re paying high interest on credit card debt, a balance transfer card can move it to a 0% intro APR for a set period, often 12 to 21 months. Most cards charge a transfer fee of 3% to 5% of the amount moved. You need good credit to qualify, and any balance left when the promo ends starts collecting interest at the regular rate. To clear the balance in time, divide what you owe by the number of promo months and pay at least that much each month. On a $4,500 balance with an 18-month promo, that’s $250 a month. Compare the two options in consolidation loans vs. balance transfer cards.
2. Home equity line of credit (HELOC)
A HELOC lets you borrow against the equity in your home, up to a set limit, and you pay interest only on what you use. Because your home secures it, the rate is usually lower than a personal loan’s. Most HELOCs have a draw period, often 10 years, followed by a repayment period, and most have adjustable rates. The CFPB warns that you could lose your home if you can’t repay.
3. Online and marketplace lenders
Online lending platforms, such as Prosper, can approve and fund loans faster than many banks, and some weigh factors beyond your credit score. Compare APRs and origination fees the same way you would for any personal loan. Our guide on origination fees explains how they add to the cost.
4. Borrowing from friends or family
A loan from someone you know may come with little or no interest and more flexible repayment. Protect the relationship by putting the amount, the payment schedule, and what happens if you miss a payment in writing, and then sticking to it.
5. Credit union loans
Credit unions are member-owned and often offer lower rates than banks. Federal credit unions cap most loan rates at 18% APR. Many are willing to work with members who have fair or thin credit. You’ll need to become a member first, usually based on where you live, work, or worship.
6. 401(k) loan
Many workplace plans let you borrow from your own retirement savings without a credit check. The IRS rules are:
- You can borrow the lesser of $50,000 or the greater of $10,000 or 50% of your vested balance.
- You generally must repay within five years.
- If you miss payments, the unpaid amount can be treated as a taxable distribution.
- If you leave your job, your plan may offset the loan against your account. You can avoid taxes by rolling that amount into an IRA or another plan by your tax return due date, including extensions.
Money you borrow also stops growing in the market until you pay it back.
7. Secured loans
A secured loan uses something you own, such as a savings account, a CD, or a car, as collateral. Because the lender takes less risk, rates are often lower than on an unsecured loan. If you default, the lender can take the collateral. A share-secured loan from your own savings carries the least risk, and it can also help you build credit.
8. Payday alternative loans (PALs)
Many federal credit unions offer PALs as a cheaper alternative to payday loans:
- PAL I: $200 to $1,000, repaid over 1 to 6 months. You must be a member for at least one month.
- PAL II: up to $2,000, repaid over 1 to 12 months. Available as soon as you join.
- The maximum APR is 28%, plus an application fee of up to $20. No rollovers are allowed.
The NCUA explains PALs in more detail.
9. Crowdfunding
Sites like GoFundMe let you ask your community for help with medical bills, a funeral, or recovery after a disaster. Donations don’t need to be repaid, but results vary a lot, and platforms may keep a share of what you raise for processing fees. Tell a specific, honest story and share it with people who know you.
10. Payment plans and assistance programs
Before you borrow, ask the company you owe whether it offers a payment plan. Hospitals, utilities, and the IRS often do, and some hospitals have financial assistance for patients who qualify. For rent, utilities, food, or other bills, call 211 or visit 211.org to find local programs. Our guides on help with utility bills and rental assistance list more.
Options to avoid
Some fast-cash products cost far more than a personal loan:
- Payday loans: fees of $10 to $30 per $100 borrowed, due in a single payment in a few weeks.
- Car title loans: a short-term loan that uses your car as collateral. Miss a payment and you could lose the car you need to get to work.
- Credit card cash advances: most cards charge a fee plus a higher APR than for purchases, and interest usually starts the day you take the cash, with no grace period.
If one of these looks like your only choice, go back through the list above first, and read how to avoid predatory lending practices.
Which option fits your situation
- High-interest card debt and good credit: a balance transfer card.
- A large expense and equity in your home: a HELOC, if you’re comfortable putting the house on the line.
- Less than $2,000, needed soon: a PAL or a small credit union loan.
- Fair credit and a savings account: a share-secured loan.
- A bill you can’t pay: a payment plan or an assistance program before any loan.
- A steady job and a 401(k): a 401(k) loan, only if you could still repay it if you changed jobs.
Choosing the right option
Compare the total cost of each option, not only the monthly payment, and think about what you’d risk: your home, your retirement, or a relationship. If a personal loan still looks best, see how to qualify for a low-interest personal loan and run your numbers through the loan cost calculator.
Sources
- CFPB: What is a home equity line of credit (HELOC)?
- IRS: Retirement plans FAQs regarding loans
- NCUA: Payday Alternative Loans
This article is general education, not financial, legal, or tax advice. Your situation may differ, so check the details with the lender, agency, or a qualified professional before you act. How we research and review articles.
