Personal Loan Rates |‌ ACFA

ACFA’s Guide for Choosing the Best Personal Loan

Personal loans are one of the most popular loan products in banking. After the 2008’s financial crisis, they were created to be a flexible, cheaper option to high-interest credit cards. Personal loans can be taken out for a variety of reasons. However, the most popular reason is to consolidate credit card debt. Many factors can affect the interest rates on personal loan. The loan terms (e.g., repayment term, borrowed amount) and your credit history will all affect the rate.

ACFA: Why should you trust it?

ACFA’s mission is to help you make smart financial decisions that will impact your wealth. We aim to offer balanced editorial opinions that are backed up by expert analysis and facts. Our staff writers carefully research our reviews and “best-of” lists like this one and keep them updated with new information.

These Lenders: How we chose them

All information regarding loan rates and interest rates is correct as of October 18, 2021. This information is updated regularly by the ACFA editorial team, although APRs or other information may have changed since its last update. Secured loans are the best-selling rates. These loans require collateral like your car or home. Some loan offers may not be available in your area.

Details: The Best Personal Loan Rates for October 2021

Avant: Fast funding

Overview: Avant is an online lender that caters to customers with “fair” credit. It’s known for its fast funding and lenient qualification.

Pros: Avant provides fast funding. Funds are typically deposited within one day after loan approval. Avant allows borrowers with “fair” credit (5580+) to qualify for personal loans.

Cons: It offers a high APR range, so be careful not to miss a monthly payment. To increase your chances of approval, you can’t add a cosigner to your application.

Best Egg: Excellent Customer Ratings

Overview: Best Egg is an internet-only lender that offers unsecured personal loans to people with good-to-excellent credit for credit card refinancing and debt consolidation.

The pros: You have flexibility when it comes to terms if your credit is good. Best Egg personal loans are available to borrowers with “fair” credit (640+). The loan amount ranges from $2,000 to $35,000, and the repayment term is between three and five years. There are other benefits. There is no prepayment penalty if you wish to make extra off-schedule payments or pay your loan off early. Best Egg is a high-rated company with the Better Business Bureau.

Cons: You will need to have a minimum 700 FICO score, and you must make at least $100,000 per year in income individual (not household). A co-borrower, cosigner, or collateral cannot be added to your application.

Discover: Good for Longer Repayment Terms

Overview: A major credit card brand, offers credit products and banking services — including a customer hotline and mobile app.

There are many pros to this personal loan: The APR range is competitive, and the repayment terms can be extended up to seven years, which is longer than most lenders. Discover offers fast decisions, and funds are deposited to your account within 24 hours of accepting the loan terms. There is no origination fee, usually ranging from 1% to 6 percent of the loan amount.

Cons: To qualify for a Discover Personal Loan, your annual household income must exceed $25,000

LendingClub: Great for Fair Credit

Overview: LendingClub offers personal loans through an online marketplace. It connects borrowers with investors.

The pros: A personal loan can be obtained for as low as $1,000 or as high as $40,000; there is no prepayment penalty.

Cons: The APR for this loan is higher than other lenders. If you have good credit, you might be able to find a better deal elsewhere.

LightStream Overall: The Best

Overview: Lightstream, the online lender for Trust, results from the merger between SunTrust Bank, BB&T, and BB&T. It promises personal loans and financing “for practically everything,” including hot tubs and IVF/fertility treatment, adoption, horses, and tiny homes.

Pros: Lightstream’s APR is the lowest among all lenders reviewed in this review. The maximum loan amount offered is also the largest. The company will send $100 to you if you are not satisfied with LightStream’s services.

Cons: It’s impossible to determine what your rate would look like without going through the entire application process (including hard inquiries on your credit reports).

Marcus by Goldman Sachs: No Fees

Overview: Marcus is an online lender from Goldman Sachs that offers personal loans to consolidate debt and improve your home.

Pros: Marcus by Goldman Sachs personal loans have an APR range that is lower than other lenders. Enrolling in AutoPay will give you a discount of 0.25% on your APR, and there is no origination fee.

Cons: The lender does not specify a minimum credit score to approve loans or receive a favorable interest rate. It highlights that only borrowers with a “good credit score” (660+) will be eligible for a fair interest rate. A cosigner, joint borrower, or collateral cannot increase your chances of getting personal loans.

OneMain Financial is a good choice for secured loans

Overview: OneMain Financial offers an online loan to borrowers who might not otherwise be eligible for traditional personal loans. Although this lender is open to people with fair-to-poor credit, the interest rates will be higher.

OneMain Financial has pros: OneMain Financial is available to those with fair-to-poor credit ratings or new to borrowing. If you are approved, you might be eligible to receive funds as soon as you apply. In addition to applying online, you can also apply in person at your local branch.

Cons: Potential loan amounts may be lower than those offered by major lenders, and interest rates can be much higher. A secured loan must have collateral that is insured.

For debt consolidation, a Payoff is a good option.

Overview: Payoff is an internet lender that only lends to borrowers with fair-to-excellent credit and is looking to consolidate high interest credit card debt.

Pros: The APR range for personal loans is quite low. Payoff provides monthly FICO score updates for its customers and doesn’t charge late fees for late payments.

Cons: To qualify, you must have at least three years’ credit history and a credit score of 640+ (“fair”). Loans are not available for borrowers in Massachusetts and Mississippi, Nebraska, or Nevada.

Prosper: A good choice for peer-to-peer lending

Overview: Prosper is an internet-only peer-to-peer lender that offers personal loans to consolidate debt, improve homes, and other purposes.

Pros: A Prosper personal loan can be obtained for as low as $2,000, and you can have co-borrowers or cosigners. Lenders will consider applicants with “fair credit” (640+).

Cons: You can’t use collateral to increase your chances of getting a loan. There are only two repayment terms available: three- or five years.

Rocket Loans: Great for Bad Credit

Overview: Rocket Loans, a Quicken Loans company, offers unsecured personal loans to consolidate debt, pay for auto expenses, and fund home improvements.

Pros: Rocket provides instant approvals and same-day funding for personal loan applications. It’s also open to those with low credit scores (less than 540), but you will likely be charged a higher interest rate.

Cons: There are no options for extending the repayment terms beyond three or five years. Your chances of getting a loan are not increased if you have a coborrower, cosigner, or collateral.

SoFi: Good for Extra Membership Perks

Overview: SoFi is an online lender for people with good credit and an established employment history.

Pros: The loan limit is large ($100,000.), and the APR is competitive. SoFi offers “unemployment protection,” which will temporarily suspend your payments and help you find a job if it becomes unemployed.

Cons: To qualify, you need to have a good credit score of 680+ and be working, earning other income, or offering employment within the next 90 days. Mississippi is not eligible for SoFi personal loans.

TD Bank: Same-Day Approval

Overview: TD Bank offers unsecured personal loans and has offered lines of credit and secured loans in the past.

Pros: TD Bank offers in-person assistance at its retail locations across 15 states. The lender does not charge an origination fee nor a prepayment penalty.

Cons: Personal loans from TD Bank are only available in Connecticut, New Jersey, Delaware, New York, Washington, D.C., North Carolina, Florida, Pennsylvania, Maine, Rhode Island, Maryland, South Carolina, Massachusetts, Vermont, New Hampshire, Virginia.

Upgrade: Great for Multiple Products

Overview: Upgrade is an online lender offering a variety of loans to borrowers with good-to-excellent credit. Upgrade offers personal loans as well as a rewards checking and credit card.

The pros: With an Upgrade personal loan, you can borrow as little as $1,000 or as much as $50,000. If you want to increase your chances of approval or secure a lower rate, co-borrowers are allowed. Upgrade has options available for you to open a checking or credit card along with your loan. If you have an Upgrade checking account, you may be eligible for a rate reduction on your loan.

Cons: If you have fair credit, the maximum APR and origination fees are very high. Personal loans via Upgrade are not available in Hawaii and Washington, D.C.

Upstart: Ideal for nontraditional lending requirements

Overview: Upstart allows borrowers with less conventional credit histories to borrow. It uses job history, college education, and its AI technology for credit checks.

The pros: Personal loans can be obtained by people with good-to-excellent credit (580+). However, the application process considers more than just your credit history. It also considers other factors such as your employment history, educational history, and where you live. In most cases, you will receive the funds within one day of approval.

Cons: Upstart does not offer three- or five-year terms. Also, the maximum APR is very high. The maximum APR does not apply to residents of West Virginia and Iowa.

U.S. Bank: Great for Existing U.S. Bank Customer

Overview: U.S. Bank, a brick-and-mortar bank that only offers personal loans to existing customers, is U.S. Bank.

Pros: This APR is lower than other major lenders. You can borrow as low as $1,000 with no prepayment penalty or origination fee. U.S. Bank offers separate personal loans for home improvements and “simple loans” up to $1,000 to existing checking account holders.

Cons: To get a personal loan, you must be an existing U.S. Bank client with 680+ credit scores.

What is a personal loan?

Personal loans allow you to borrow a fixed amount with a fixed interest rate and be paid over a set period. Personal loans are usually unsecured and do not require collateral such as a home or car. They can be used to consolidate debt, pay off large bills, or for home improvements.

What are the current personal loan rates?

According to Bankrate, the average personal loan interest rate is 10.49% as of September 8, 2021.

Personal Loan Rates based on Credit Level

Your personal loan interest rates will be affected by your FICO credit score. Some lenders may charge rates that are not within the ranges below.

Excellent

You must have good credit to be eligible for interest rates of 10% to 12%. Also, you should use as much of your credit available as possible and make sure that all your bills are paid on time.

Good

You can get a personal loan rate between 13.5% and 15.5% with a credit score of 690-719. This credit score means you have likely paid all your bills on time and no late payments for more than 90 days.

Average

A personal loan with an average credit score between 630 and 689 will likely have an interest rate between 17.8% and 19.9%. This category could be for you if you have more than 30% available credit, a single negative mark on your credit report, or a history of late payments or credit card debt.

Bad

You may have trouble getting a loan if you have a credit score below 300. Personal loan rates will vary from 28.5% to 32.0%, depending on which loans you are eligible for. Credit scores will be affected if you have had a bankruptcy in the past, have unpaid bills a lot, or have maxed out your credit cards.

What is a good personal loan interest rate?

The terms of the loan and the creditworthiness of the borrower will affect the interest rate. The definition of a “good rate” will vary from one person to another depending on the purpose of the loan and other options available. A personal loan is a loan that consolidates debt.

The interest rate for a personal loan is the rate that is lower than your credit card debt or the average interest rate if you have multiple credit cards. A debt consolidation loan is not a good idea if you don’t intend to save money. The average credit card interest rates hover around 15%.

A personal loan’s interest rate measures how much you can spend over the long term and how likely you will end up in a cycle of debt. A $10,000 loan with a term length of five years would have a difference in cost of $4,862.56 between an interest-rate of 10% and a rate of 25% over five years.

To get the best rate, we recommend that you compare offers from different lenders. Different lenders will weigh different variables, such as credit history, income, and credit score. It is a good idea to have several options. For a quote, you can either apply online or contact a lender by phone. However, these processes will require that you disclose your personal information. The credit check needed to complete the application will likely cause a temporary decrease in your credit score.

How to get the best personal loan rates

Your credit score, debt to income ratio, creditworthiness, amount of loan, and whether it is secured or unsecured will all influence the personal loan rate that you receive.

These are the things you can do to get the best rates:

  • Compare rates.

    You can compare rates from multiple lenders by pre-qualifying. However, if you decide to submit a formal application, the lender may require a hard credit inquiry, which could affect your credit score. You might be eligible for special offers from lenders. Ask a representative or look on their website to find out about these discounts.

  • Your credit score can be improved.

    Increasing your credit score will increase your chances of getting a loan or a better rate. You can improve your credit score by paying your credit card bills on time, keeping your credit utilization rate low (ideally below 30%), and not applying to too many credit accounts within a short time period.

  • A secured loan might be an option.

    A secured loan may be an option if you have low credit scores and difficulty getting unsecured loans at good rates. Secured loans are different from unsecured loans in that you must put down collateral (e.g., a house) to secure the loan. Although secured loans have higher rates than unsecured loans, they are less risky for the lender and riskier for you. You could lose your collateral if you default on your payments.

Personal Loan Rates at Credit Unions vs. Banks

You may get better rates if you are a member of a credit cooperative than at other lenders. Credit unions are not run for profit and offer members better rates than any for-profit lender. Credit unions may offer better rates to members with less credit scores than those with good credit. They’ll also be more likely not to disregard other factors.

A credit union member is required to be eligible for a loan. It’s worthwhile to check out the rates if you are already a member. If you aren’t a credit union member, it might be worth signing up for a loan at a lower rate. Membership fees could apply. Credit unions offer less options to get pre-qualified than other lenders. This may make it more difficult to compare rates.

The pros and cons of personal loans

Pros

  • Fixed interest rate
  • Credit cards have lower rates
  • Unsecured – no collateral required
  • Consolidate high-interest debt
  • You can use it for any expense

Cons

  • A low rate requires a high credit score
  • Poor credit is difficult to obtain
  • Credit cardholders pay a higher monthly payment than those who have a credit card.
  • Charges for loan origination
  • It’s easy to spend too much

How to get a personal loan

  • Examine your credit history

It’s a good idea for you to check your credit reports before you begin looking for personal loans. This will help you determine if you are eligible for a loan and the interest rate that you might qualify for.

You can correct errors in your credit report by reviewing it before you make any decisions. You can save money by improving your credit score and securing a lower interest rate.

  • Take a look at all of your options

A personal loan might not be the best financial tool for you, depending on your goals. You may be able to borrow money at a lower rate if you have collateral to secure a loan. If you need the cash quickly and can repay it within 6-12 months, then a credit card offer might be a good choice.

Before moving forward, make sure you are certain that a personal loan is right for your needs.

  • Compare rates and loans

You should shop around to get the best rates and terms. As existing customers may be eligible for better rates and terms, you should always start with a bank or credit union with which you are already familiar.

When comparing loans, don’t just look at the interest rates. You should also consider prepayment penalties, late fees, loan origination fees, and whether your payment rate is fixed or variable.

  • Get prequalified

Prequalifying for a loan doesn’t usually have any impact on your credit score. The lender will typically do a soft check. Prequalification will allow you to find out which lenders are available to you for a loan. This is a less complicated step than filling out a complete application. You will typically only need to provide basic information such as your birth date, social security number, and address.

  • Apply for the loan

Now it is time to apply for a loan. The lender will verify your financial and personal information during this step. You will need to provide documentation, such as a government ID, proof of address, bank statements, payslips, and verification of any existing debt.

How to choose a personal loan lender

There are many personal lenders available. How do you choose which one is right for you? While it is up to you to decide which personal lender you choose, we believe the following criteria are essential for an excellent personal loan lender:

  • Its website is transparent and upfront about its interest rates, terms, and fees.
  • Customer service that is responsive and helpful
  • Reputation and track record of positive results
  • Offers an APR of not more than 40%
  • You don’t need to enter any personal information to compare rates
  • There is no penalty for early repayment
  • Exempts from exploitative repayment terms (e.g., quick payback, high-interest rates, and exorbitant fees)

There are many reasons to get a personal loan

Some people have used personal loans to pay for weddings, funerals, or vacations. However, we do not recommend this. You could end up paying more in the long term if you take out a personal loan for the wrong reason.

A personal loan may be a good option in certain circumstances, like:

  • Consolidating high-interest debt
  • Home improvements or repairs
  • Change from an adjustable-rate to a fixed interest rate
  • Emergency vehicle repairs can be paid

Why you should get a personal loan

Consolidating debt is the best reason for a personal loan. You will enjoy the simplicity and lower monthly payments of one loan, replacing multiple credit cards and other loans with higher interest rates. Personal loans can also be used for home repairs such as termite extermination or leaking roofs. However, you must have a plan to repay the debt.

What you shouldn’t do with a personal loan

Personal loans are not recommended for weddings or vacations. Personal loans are not recommended for anyone other than emergencies or self-improvement. Consolidating student debt is not recommended as you may lose access to forbearances, deferments, and other payment arrangements.

Tags

annual percentage rates aprs
prepayment penalties
credit report
personal loan interest rates
loan amounts
checking accounts
consolidate debt
improve your credit score
online lenders
origination fees
unsecured personal loan
qualify for the lowest
credit cards
36 month
rates and terms
student loans
qualify for a personal
credit pull

Leave a comment

Your email address will not be published. Required fields are marked *