7 Red Flags When Shopping for a Personal Loan Online

While online loans are faster and easier to apply for than ever, they also attract a fair share of sketchy operators.

From misleading rates to predatory terms buried in fine print, it's not always clear who's legit and who's not.

So before you hit "Apply," here are seven red flags to watch for when shopping for a personal loan online.

1. Teaser rates that almost nobody qualifies for

Out of all the sneaky tricks banks pull, teaser rates might be the one that bugs me most.

You'll see ads splashed everywhere promising personal loans with "as low as 5.99% APR." Sounds amazing, right? But the truth is almost nobody actually gets that rate.

Those ultra-low APRs are typically reserved for people with excellent credit (usually a FICO® Score of 760 or higher), plus strong income, low debt, and a near-perfect credit profile.

Everyone else is probably looking at a much higher rate -- which could be double or triple the teaser rate.

That's why it's crucial to use a prequalification tool before applying. These tools do a soft credit check (so your score isn't affected) and show a personalized rate estimate based on your actual credit file, not just the flashy headline rate.

And don't stop at one lender. Compare at least three or four offers side by side. A small APR difference can add up to hundreds or thousands of dollars over the life of your loan.

A solid place to start is with our best personal loans of 2025 list. It's a curated roundup of lenders our experts have thoroughly reviewed, vetted, and ranked. So you can shop around and borrow with confidence.

2. No credit check required

Some lenders say they'll approve you without checking your credit. This sounds convenient -- but it's usually a trap.

Reputable lenders want to assess your ability to repay. If there's no credit check involved, the lender is likely making up for it by charging very high interest, upfront fees, or potentially unfair terms.

It's okay to apply with fair or bad credit. Just do it through a legit provider that's transparent about how they evaluate applications.

3. Vague fees and missing fine print

One of the biggest red flags is a lack of transparency. Before you sign anything, make sure you clearly understand the fees. Common ones are:

• Origination fee. This is a one-time cost to process your loan.
• Late payment fees. How much you get charged if you're late on a payment.
• Prepayment penalties. If you pay off your loan early, some lenders will charge you extra.

If the lender's website doesn't outline these clearly, or they make it hard to find the terms, move on. Even better? Look for lenders that charge zero fees or are up front about them. Many reputable companies now skip the fluff.

4. They ask for payment before approval

No legit lender will ask you to send money (or Bitcoin) before you've received your loan.

This scam shows up in two ways:

1. You're told to pay an "application fee" or "processing charge" upfront
2. They ask for gift cards or wire transfers before disbursing funds

Real lenders subtract any fees from your loan when they send you the money. Not the other way around. If you're ever asked to pay first, it's likely a scam.

Want a loan with clear terms and no hidden fees? Compare the best personal lenders of 2025 here.

5. The lender isn't registered or reviewed

Doing some quick research online can really save your butt sometimes. Before giving out personal info, Google the lender.

Look for verified registration in your state, the lender's Better Business Bureau (BBB) profile and any customer reviews online.

No easily found info is a major red flag. Reputable lenders want to be found and trusted. Scammers stay hidden on purpose.

6. You're pressured to act fast

"If you don't act now, the offer disappears." That's not how good loans work.

Urgency tactics are often used to prevent you from reading the fine print. A trustworthy lender will give you time to review your offer, compare it to others, and ask questions.

Take your time shopping and choosing the right loan for you.

7. You don't understand the loan structure

If a lender offers something confusing (like biweekly or balloon payments), ask questions. Or better yet, skip it.

A personal loan should be simple, with:

• Fixed interest rate
• Fixed term (like three or five years)
• Fixed monthly payment

The clearer the structure, the easier it is to budget and avoid surprises.

Final thoughts

Getting a personal loan online is quick and easy these days -- but don't rush into it.

I always recommend shopping around and comparing at least two to three different lenders. And never sign anything unless the terms are clear, fair, and in writing.

Ready to compare trusted options with low rates and no shady terms? Explore the top personal loans for 2025 to find your match.