Finding Personal Loans With Reward Programs

Some personal loans come with reward programs, providing benefits such as cash back or points. These rewards, earned for on-time payments or meeting specific criteria, can add significant value to your loan experience.

Updated: November 1, 2024

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A personal loan offers quick access to funds, which you can use for various purposes such as consolidating debt, financing a big purchase or covering unexpected expenses.

Some personal loans come with reward programs, making them a more attractive option for borrowers. However, they're not as common as rewards programs associated with credit cards. Usually, lenders that do offer rewards with personal loans provide benefits like interest rate reductions for certain behaviors or points redeemable for various rewards

By shopping around, you can select the right personal loan with a reward program that aligns with your financial needs and goals, ensuring you get the most out of the loan's benefits while managing your finances effectively.

Common Reward Programs for Personal Loans

Personal loan reward programs can vary significantly from one lender to another, each offering unique incentives designed to attract and retain borrowers. These rewards can enhance the loan's value for borrowers by providing tangible benefits for responsible loan management or for choosing specific features during the loan application process.

Interest Rate Reductions

Some lenders reward borrowers for setting up automatic payments by reducing the interest rate. For instance, a typical offer is a 0.25% to 0.50% rate reduction, which can result in significant savings over the life of the loan.

Cash Rewards

A few lenders offer a cash reward once you're approved for the loan or after you've made a certain number of on-time payments. This could be a fixed amount or a percentage of the loan amount.

Points Programs

Similar to credit card rewards, loan points programs allow you to earn points for every dollar you spend or repay. These points might be redeemable for gift cards, merchandise or even payments toward the loan itself.

Always read the terms and conditions associated with any rewards program carefully. Some rewards, particularly cash back offers or points, may have specific requirements for eligibility, and interest rate reductions for automatic payments are usually contingent on maintaining those payments for the duration of the loan.

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Remember that the availability of rewards programs and their specifics can change. It’s wise to continuously review your loan terms — don't just assume ongoing perks will stay the same, as lenders often update reward benefits. — Alvin Yam, CFP®

Benefits and Risks of Personal Loans With Reward Programs

Personal loans with reward programs can offer valuable perks that enhance the borrowing experience, but they also have potential drawbacks that could impact your financial health. You can determine whether this option aligns with your financial goals and needs by weighing the pros and cons.

Benefits of Personal Loans With Reward Programs


Rewards for Borrowing	Earn points or other rewards for taking out a loan, which can provide value beyond the loan itself.
Encourages On-Time Payments	Some programs offer rewards for making on-time payments, incentivizing good financial habits.
Potential Savings	Rewards can be redeemed for money, goods or services, potentially saving you money or reducing the loan's effective interest rate.

Risks of Personal Loans With Reward Programs


Limited Availability	Personal loans with reward programs are not as common, making finding and qualifying for one more challenging.
Complex Terms	Understanding and maximizing reward programs can be complicated, requiring careful attention to terms and conditions.
Temptation to Borrow More	The allure of rewards might encourage borrowing more than needed, leading to unnecessary debt.

How to Choose the Right Personal Loan With a Reward Program

Choosing the right personal loan with a reward program can help you maximize the benefits while minimizing the costs and potential downsides. It involves understanding your financial situation, what you need the loan for and how a reward program can add value to your borrowing experience. Here's a step-by-step guide to help you make an informed decision:

1
Assess Your Financial Needs
Start by evaluating why you need the personal loan and how much you need to borrow. Consider your ability to repay the loan within the given term and how it fits into your overall financial plan. This step ensures you only borrow what is necessary, even if attractive rewards are available.
2
Research Available Reward Programs
Look into different lenders and the reward programs they offer with their loans. Compare the types of rewards (cash back, points, interest rate reductions, etc.), how you earn them and how you can redeem them. This process will help you identify which rewards align with your lifestyle and spending habits, offering the most value.
3
Compare Interest Rates and Fees
Even with reward programs, the cost of the loan is a critical factor. Compare interest rates and fees between different loans with reward programs to find the most competitive offer. Remember, a higher interest rate can quickly outweigh the benefits of any rewards.
4
Read the Terms and Conditions Carefully
Understanding the fine print of the reward program and the loan agreement is prudent. Pay attention to how rewards are accumulated and any restrictions or expiration dates. This ensures you know how to qualify for and maintain your rewards.

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While a rewards program can add value to a personal loan, it shouldn't be the sole factor in your decision-making process. Prioritize finding a loan that offers the best terms for your financial situation, including the interest rate, loan term and monthly payment that best fits your budget.

Alternatives to Personal Loans With Reward Programs

Although personal loans with reward programs can offer added benefits, they might not always provide every borrower with the best value or terms. Considering other options ensures that you make the most financially sound decision, potentially saving money or finding more suitable terms for your situation.

Standard Personal Loans

Standard personal loans without reward programs often have lower interest rates and fewer fees. These loans can be more cost-effective over the long term, especially for borrowers focused on minimizing costs rather than earning rewards. Compare the total cost of borrowing, including interest and fees, to determine the best financial product for your needs.

Credit Cards With Reward Programs

For borrowers seeking rewards, credit cards with reward programs can be a flexible alternative, offering cash back, points or miles on purchases. Credit cards may also provide additional perks like purchase protection, extended warranties and travel insurance. However, it's best to manage credit card balances carefully to avoid high-interest charges that can negate the value of rewards.

Home Equity Loans or Lines of Credit

If you're a homeowner, home equity loans or home equity lines of credit (HELOC) can provide lower interest rates than personal loans and might offer tax-deductible interest. These options allow you to borrow against the equity in your home and can be used for large expenses or debt consolidation. However, they do come with the risk of losing your home if you cannot repay the loan.

Credit Unions

Credit unions often offer personal loans with lower interest rates and more favorable terms than traditional banks, especially for their members. As nonprofit organizations, credit unions are focused on serving their members, which can lead to better customer service and financial products tailored to member needs. Membership typically depends on location, employment or other affiliations.

FAQ About Personal Loans With Reward Programs

Navigating the world of personal loans with reward programs can be complex, sparking many questions from borrowers looking to understand how these financial products work and how they can benefit from them. Our answers to some frequently asked questions aim to demystify personal loans with reward programs.

How do reward programs on personal loans work?

Reward programs on personal loans work by rewarding the borrower for certain behaviors, such as making on-time payments or signing up for automatic payments. The specific rewards and how you earn them vary by lender but can include cash back, points toward purchases or travel rewards.

Do personal loans with reward programs cost more?

Not necessarily. While some personal loans with reward programs may have higher interest rates or fees to cover the cost of the rewards, this is not always the case. Compare the overall cost of different loans, including interest rates and fees, and any rewards' benefits.

Can rewards on personal loans be redeemed for cash?

It depends on the lender's specific reward program. Some programs may allow rewards to be redeemed for cash, while others might offer redemption options for gift cards, merchandise, travel or rewards you can apply to your loan balance.

Do all lenders offer personal loans with reward programs?

No, not all lenders offer personal loans with reward programs. These types of loans are less common than other reward-bearing financial products like credit cards. It's helpful to research and find lenders that offer these programs.

What should I consider when choosing a personal loan with a reward program?

When choosing a personal loan with a reward program, consider the type of rewards offered, how you earn them, the interest rate, fees, loan terms and how the rewards align with your financial goals and spending habits.

How do I maximize the rewards on a personal loan?

To maximize rewards, ensure you understand the reward program's terms, make payments on time and take advantage of any potential opportunities to earn rewards, such as signing up for automatic payments.

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About Zachary Romeo, CBCA

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.

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The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.

Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, lender or other entity. Learn more about our editorial policies and expert editorial team.