Some of the best places to get a personal loan

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The rates and terms of personal lenders can vary widely, depending on your credit, your needs, and the lender. It is essential to shop around to find the best deal. (iStock)

Type “personal loan” into a search engine and you’ll likely get over a billion results. Even though only half a percent of those results are from actual lenders, that’s a staggering amount of information to go through in pursuing a personal loan.

Whether you want a personal loan for debt consolidation or to spread the cost of an expensive purchase over several months, choosing the right lender is essential – and difficult. Different lenders offer varying interest rates and terms, which can add up to hundreds or even thousands of dollars of difference in the total cost of a loan.

Let’s take a look at some of the best places to get a personal loan and what you need to know about each option.

Where can I get a personal loan?

Personal loans come from four main categories of financial institutions:

  • Banks: Not all banks offer personal loans, but there are a few that do.
  • Credit unions: You will need to be a member of one of these non-profit institutions to get a personal loan from them.
  • Online lenders: It may be easier to qualify for a loan through one of these non-bank virtual organizations.
  • Peer-to-peer lenders: Through an online platform, individual investors lend money directly to borrowers.

Each lender will have their own requirements to qualify for a personal loan, and it can be difficult to tell from a lender’s website what your chances of approval are. You can compare your prequalified rates with several personal lenders through Credible.

DISCOVER 16 OF THE BEST PERSONAL LOAN COMPANIES

Personal loans from banks: may need good credit

If you need to borrow a large amount or want a longer repayment period, a bank may be a good option for obtaining a personal loan tailored to your needs. For example, Wells Fargo offers personal loans of up to $ 100,000 and up to 84 months of repayment.

That said, some big banks no longer offer personal loans. Or, they can limit personal loans to small amounts for current account holders. Others who offer personal loans generally require that you have a good or even an excellent credit rating in order to benefit from a favorable interest rate and terms.

Funding is usually fast, which means you may be able to get funds in just one business day.

Benefits of personal loans from a bank

  • May offer larger loan amounts than other types of lenders
  • Sometimes allow longer repayment periods
  • Can offer loyalty or auto-pay discounts to current customers
  • Can waive common costs, such as origination or closing costs

Disadvantages of personal loans from a bank

  • You may need a good credit score to qualify for a personal loan from a bank
  • Interest rates may be higher than those of other types of lenders
  • May require collateral in order to qualify or qualify for preferential rates and terms
  • You may need to open an account with the bank or have a checking account

LEARN MORE ABOUT CURRENT PERSONAL LOAN INTEREST RATES

Personal loans from credit unions: flexible credit requirements, but only for members

Because credit unions are not-for-profit organizations, they are often able to offer less costly products to their members than for-profit financial institutions.

You can find lower interest rates on loan products, including personal loans, at a credit union. And, it may be easier for members to qualify for a personal loan with less than perfect credit.

Benefits of personal loans from a credit union

  • Some credit unions offer loans for small amounts – as little as $ 250.
  • You may qualify for a loan with a lower credit score (although you may get a higher interest rate)
  • Can offer alternative payday loans for as little as $ 100

Disadvantages of personal loans from a credit union

  • Must be a member to apply for and be eligible for a loan
  • Must meet membership conditions to join
  • May charge fees, such as origination fees

Personal loans from online lenders: quick decisions and financing

If your credit score is lower, if you have blemishes in your credit history, or if you need money fast, you may choose to apply for a personal loan from an online lender. There are many online lenders available for personal loans, and there are many options for people with credit problems.

Approval decisions from an online lender tend to be quick, and sometimes funding is the same day if you are approved, depending on the lender. However, the trade-off between a better chance of approval and quick funding is often higher interest rates.

Benefits of personal loans from online lenders

  • Many options available for people with lower credit scores
  • The application and approval process is usually completely online
  • Funding is often fast – typically less than five business days, but sometimes as early as the same day or the next business day

Disadvantages of personal loans from online lenders

  • The highest rates can be very high
  • It can be difficult to find a loan online if you need a large amount
  • Lender may charge setup, application, or other fees

It can be difficult to know what rate you might qualify for on a personal loan just from the information on a lender’s website. With Credible, you can compare personal loan rates in just two minutes.

Beware of personal loan applicants

If you need a small amount of money right away and want secured approval, you might be tempted to consider a payday loan or a title loan. Payday lenders and lenders generally don’t require a minimum credit score or even a credit check.

Typically, you borrow a small amount of money – usually $ 500 or less – and pay off the full amount, plus a fixed fee, when you get your next paycheck in two weeks.

The Consumer Financial Protection Bureau notes that the effective annual percentage rate (APR) on a typical payday loan that charges a flat fee of $ 15 for every $ 100 borrowed is 400%. And, if you cannot repay the entire loan on your next payday, the payday lender may be able to roll over the loan into a new one.

Title loans work the same way as payday loans, but the lender will keep the title of your vehicle as collateral. You usually have 30 days to pay off the small loan, but if you can’t pay it off on time, the lender can take your vehicle.

If you’re in a financial bind and need cash right away to cover your expenses, try other options, like borrowing from a family member or friend, applying for a personal loan from a reputable lender. or even use your credit card.

What to know about personal loans

As you explore the best places to get a personal loan, there are some important things to keep in mind.

Interest rates and fees

Interest rates can vary widely from one personal lender to another, and even within the same lender depending on factors such as the loan amount and your credit score. Generally, the better your credit score, the more likely you are to qualify for the best personal loan rates.

Also note that personal lenders may also charge various fees, including:

  • Application fees to cover the processing costs of your loan application
  • Administrative fees to accept your loan request
  • Prepayment penalties if you prepay the loan
  • Late payment fee if you are late or miss a payment after the repayment period has started

Be sure to read the lender’s disclosure so that you understand the fees, if any, that they will charge for your loan.

Loan conditions

The length of time you have to repay the loan can also vary widely depending on the amount you borrow, the lender you choose, and other factors. Some lenders offer loan terms as short as 12 months – terms of 36 and 60 months are also common.

When choosing a loan term, keep in mind that a longer term can mean a lower monthly payment, but it also means that you will likely pay more interest over the life of the loan than if you took a longer term. short.

How to pre-qualify for a personal loan

With so many personal loan options available, you might be tempted to apply to multiple lenders, but too many in-depth inquiries in a short period of time could affect your credit score.

Getting prequalified for a personal loan can help you better understand your chances of getting approved before you apply for a loan. During the application process, the lender will almost certainly check your credit, which can affect your credit score.

But prequalification usually doesn’t affect your credit because it doesn’t involve a serious credit investigation. You can view your prequalified rates from multiple personal lenders through Credible, which is free, all with no impact on your credit.


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About Joan Ferguson

Joan Ferguson

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