Most people get stuck financially once in a while and so the need to fill the gap arises. One of the ways to fill the gap is by borrowing and one of the best loans you could ever apply for is a personal loan. The reasons are that one, this type of loan is unsecured. This means that you don’t need any type of collateral to put against the loan as collateral.
In addition, personal loans have a fixed interest rate as well as fixed monthly installments. These make it easy for you to plan and budget ahead making your life a lot easier.
So, with that in mind, the next step would be to dig and find the companies that offer the best personal loans in the market. In this article, you’ll find some of the best lenders for various credit scores as well as some tips on how to identify these lenders.
What is a personal loan?
As mentioned earlier, personal loans are unsecured and offer fixed interest rates that can be lent to you without putting up collateral. This is different from secured loans which allow lenders to use your assets such as your house to get back their money should you fail to pay up.
Even though the lenders won’t have anything to use to recoup their money, you stand to damage your credit. In addition, prepare for a suit or you’ll have to deal with the collections department.
You can get personal loans at various credit unions and various banks, not forgetting online peer-to-peer lenders.
Can One Get a Personal Loan with a Bad Credit?
Mostly yes, but it’s possible to get a lender who will be willing to lend with a bad credit. Nevertheless, there’s a catch. You will most probably pay super high interest rates just so the lender reduces the risk.
Credit scores in the range of 640 to 660 will most likely fall out of favor with big peer-to-peer lenders. If you are in such a category, the advisable thing to do is borrow from your bank since they understand your financial situation more. You can also try and apply at a credit union with flexible criteria.
Top tips on Identifying the Best Personal Loans
There are numerous factors that lead you to settle on a particular lender. Below are some of the key factors you need to consider when hunting for one:
- Low or no fee – there are lenders that don’t charge other fees apart from the interest. Others include multiple fees such as origination fees and late payment fees among others. If you fall in love with one that has such fees, make sure that these fees are not as high.
- High Loan limits – sometimes you could get into a situation that requires a huge sum of money. Therefore, it is important that you get lenders with quite high caps.
- Countrywide availability – the wider the reach for online lenders, the better.
- Information transparency – you’ve probably come across lenders who share little to no information when it comes to fees, APRs, limits and terms among other critical information. The best lender is one who is transparent with their lending processes. So, strive to get into business with a lender like that.
- Flexible terms – the best lender is the one who strives to strike a balance with their customers on a personalized level. This means having flexible terms that allow borrowers to manage their financial situations better.
- Low APRs – look for lenders with competitive rates in the market. Lower is better, but always stay alert for hidden traps in the terms of the loans.
- Check out customer feedback – if they are on the internet, there’s bound to be some feedback from previous customers. You can also check with the BBB (Better Business Bureau).
Best Personal Loans for Average Credit
Since finding lenders with reasonable interest rates could be a daunting task, here are some lenders you may want to consider if you have an average credit.
PersonalLoans.com is a referral site and not a lender that partners with a huge network of lenders that offer various loans, installment loans and personal loans. You can access the service in all 50 states with loans going as high as $35,000 depending on APRs that start from 5.99% to 35.99%.
- Quick turnaround on the loan
- Fast and easy 3-step process with a loan approval decision in minutes
- You can get an offer as a referral source
- Not a direct lender so advance information is not available
This lender is perfect for anyone with credit scores as low as 600. In addition, Peerform has competitive APRs ranging between 5.99% and 29.99%. The fees involved are clearly stated.
- Competitive rates
- All loans are repaid in 3 years
- Available in 42 states only
- Long waiting periods of up to 2 weeks
- Multiple fees included, such as check processing fee and late payment fee
At Avant, you can get personal loans starting from $2,000 to $35,000 with rates of between 9.95% and 35.99% depending on your credit, income and other factors.
Note that there are certain applicable fees such as an administration fee of up to 4.75%. Their services are available in the District of Columbia and 46 other states.
Best Personal Loans for Good Credit
If you have excellent credit, then the good news is that you qualify for loans with very low interest rates. It’s not all done and dusted with your credit history alone. Some of these lenders will want more evidence of your financial health including a reliable source of income such as employment.
Take a look at some of the best in the market.
LightStream is a fantastic lender with competitive rates starting from 3.09% up to 14.24% for auto-personal and non-home loans.
- Flexible lending terms with high limits
- Great for borrowers in need of huge sums and longer repayment periods
- High threshold needed to qualify
- Multiple other documents to prove creditworthiness required
SoFi is a great lender if you’re looking to refinance your student loan. Furthermore, SoFi has competitive fixed rates starting from 6.990% to 14.865% APR for loans starting from $5,000 to a staggering $99,999.
In addition, you can choose a flexible repayment period starting from 3 to 6 years.
- Low interest rates
- You can suspend loan payments via the unemployment protection program
- High threshold to be met including a dependable source of income and a high credit score among others
If you are financially responsible and are looking for low-cost loans, then Earnest should fit the bill. It’s a recent startup, but it offers competitive fixed rates starting from 5.25% APR on loans as high as $75,000.
You will also be put under the scope for various other financial indicators such as career, savings and education to determine whether you qualify.
- The best lender for young borrowers with almost no credit history
- Competitive rates. As low as 5.25% APR
- Only available in 45 states and Washington D.C.
- Only offers 1, 2 and 3-year loan repayment periods
- Needs more proof of a healthy financial history
Best Lenders Overall
Apart from the above categories, there are lenders who cut across both divides to rank top in the best lenders overall. Take a look at some of them.
#1 Wells Fargo
If you have good credit Wells Fargo should be perfect for you. Their APRs start from 7.24% to 24.24% for loans starting from $3,000 to $100,000. The repayment periods also vary from 12 to 60 months and they don’t have origination or prepayment fees.
- Wide network (over 6,000 locations across the country)
- You can secure your loan with a savings account
- Flexible personal credit line
- You can only apply online if you are an existing customer
- Lacks transparency on lending criteria
- Slightly poor customer service
This is one of the leading peer-to-peer lenders in the country offering loans of up to $40,000. They are quite lenient when it comes to credit scores. As a matter of fact, you can get a loan with a credit score of 600 with rates starting from 6.16% to 35.89% APR.
- Competitive rates, transparent and widely available
- You’ll generate a soft inquiry on loan application which won’t affect your credit score
- Charges loan origination and processing fees of 1 to 6% and $7 respectively.
At Prosper, you’ll need a minimum credit score of 640 to apply for a loan. In addition, you can borrow as much as $40,000 and as low as $2,000 with APRs starting from 6.95% to 35.99%.
- Widely available (48 states)
- Competitive interest rates
- Transparent on the lending process
- Takes quite long to process loans (up to 7 days)
Personal loans are good mainly because they are unsecured. Credit unions and banks provide lower APRs and personalized services if you have a stellar credit score.
You need to be aware of various aspects of the loan, including terms and applicable fees before you sign on any loan documents.