Maybe it was an unexpected dental procedure, or a tax bill you didnât plan for, or a car repair that came out of nowhere.
Whatever the reason, if you need money quickly, a personal loan can deliver it.
As you shop for a personal loan to solve your short-term problem, look for loan terms that wonât hurt your long-term financial life.
7 Best Personal Loans & Lenders for 2020
Online lending has opened a new world of personal loan options.Â
Not that long ago we had just a couple of legitimate choices:
- Your Local Bank or Credit Union: You can usually borrow money at a decent fixed interest rate at your neighborhood bank or credit union. The downside: Youâd need to make an appointment or at least spend an hour or two on the phone.
- A Credit Card: Itâs hard to beat the convenience of a credit card, but the interest rates, late fees, and over-the-limit charges can make this option too volatile.
We still have these two options, and sometimes they can get the job done. But we also have scores of online lenders that compete to give you installment loans with more competitive interest rates. You can also finalize loans and receive money more quickly online.
Here are some of the best personal loan choices:
Credible Personal Loans
Iâm starting here because Credible isnât a lender. Itâs a way to connect with and compare a variety of lenders, including several from lower on this list. To start the process, youâll submit Credibleâs initial application which generates up to six loan offers.
This initial process will run a soft check of your credit score which shouldnât hurt your score the way a hard check can. If you like one of the offers, you can complete the next steps to apply for the loan which will, of course, result in a hard credit check.
Pros & Cons of Credible Personal Loans
- An efficient way to compare loan offers
- Fast and easy application process
- Many quality participating lenders
- Not for people with credit scores below 640
- Could result in unwanted phone calls from lenders
LendingClub Personal Loans
I was an early fan of LendingClub back in 2007, and I still recommend this trailblazer in the peer-to-peer (P2P) lending market.
Rather than using bank funds, P2P lenders finance your loan with money from investors. Youâll still have to go through an application process, but LendingClub has opened new doors to people who donât want to borrow from a bank.
- Loan Amount: LendingClubâs maximum loan amount is $40,000. You can repay the money in terms ranging from three to five years.Â
- Costs: Interest rates typically range from 7 to 36 percent depending on your qualifications. The higher your qualifications, the lower your rate.
LendingClub continues to evolve. It now has debt consolidation loans and allows for co-signers which lets more people borrow.
Pros & Cons of LendingClub Personal Loans
- Credit scores of 600 can get approval
- New co-sign option lets more people borrow
- Debt consolidation loans available
- No prepayment fee
- Loan origination fees (1% of loan)
- Check processing fee ($7)
Payoff Personal Loans
As the name indicates, Payoff Personal Loans specializes in debt consolidation, helping you pay off other debts. You can potentially save money by having fewer loans and paying a lower interest rate.
The payoff isnât a good option for people with shaky credit, though.Â
Youâd need a score of 650 to 660 — and a few years of credit history on your report — to get approval at a decent interest rate. So donât wait until youâve already fallen behind on your other debts to consolidate with Payoff.
- Loan Amounts: Eligible borrowers can get up to $35,000 to pay off other lenders such as credit cards, auto loans, or other personal loans.
- Interest Rates: Loans range from about 6 to 25 percent depending on your borrowing credentials.
Pros & Cons of Payoff Personal Loans
- No late or check processing fees
- No prepayment penalty
- See interest rate without a hard credit check
- Not for people with shaky credit
- A loan origination fee of 2% to 5%
Applicants with rocky credit histories appreciate PersonalLoans.com because the site lends to people with credit scores as low as 580.
- Loan Amount: You could borrow up to $35,000 on a six-year (72-month) payback plan through PersonalLoans.com. Spreading money across six years can lead to lower monthly payments.
- Interest Rates: This sounds like a friendly situation, but remember youâll pay higher interest — up to 36 percent — if you have a lower credit score, and the interest can increase your monthly loan payment significantly.
Pros & Cons of PersonalLoans.com
- Available to credit scores 580+
- Easy-to-use online application
- Up to 72-month term loans
- Access money within a day
- Wide range of interest rates (5.9%-35.99%)
- Uses a third-party lender
Prosper Personal Loans
Many borrowers like the way Prosper Personal Loans gives them a platform to share why they need to borrow money. This opportunity comes during the application process to this P2P lender. You can use this platform to appeal directly to the investors who would be funding your loan.
Of course, the numbers will tell their story, too: Youâd need at least a 640 credit score to get funding, and Prosperâs rates range from 6.9 to 35.99 percent APR.
- Loan Amount: If you qualify, you could borrow up to $40,000 with payments spread over three to five years.
- Interest Rates: Prosper also offers a wide range of rates, from 6.9 to 35.99 percent.
Pros & Cons of Prosper Personal Loans
- Soft credit check to see terms
- No prepayment penalties
- Fast and efficient service
- Higher interest for lower credit scores
- Origination fee can reach 5%
- Late fee is steep ($15 or 5% of payment, whichever is higher)
SoFi Personal Loans
SoFi has become a standard in student loan consolidation, but the lender also has personal, unsecured loans for non-academic borrowing.
SoFi stands out because the lender does not focus exclusively on an applicantâs credit score. This can be misleading because youâd still need a 680 or higher to get a loan.
But SoFi will not deny a loan if you have a short credit history as many lenders do. Instead, this P2P lender will consider your career and earning potential. In this way, SoFi can be a good fit for young professionals starting new careers.
SoFi calls its borrowers âmembersâ and hosts social gatherings in major cities for members which can lead to networking opportunities.
- Loan Amounts: SoFi will lend up to $100,000 which is significantly higher than most online lenders.
- Interest Rates: SoFiâs rates range from 5.75 to about 17 percent.
Pros & Cons of SoFi Personal Loans
- Larger loan amounts (up to $100,000)
- Good for someone with a short or thin credit history
- Flexibility to change due dates
- No loan origination fee
- Funding can take up to 7 business days
- 680 or higher credit score required
LendingTree Personal Loans
I started this list with Credible, an aggregator, and Iâll conclude it with a nod to another aggregator.Â LendingTree helped establish one-stop shopping for loans back in 1998, and the service has continued to lead the industry.
Like Credible, LendingTree turns one application into loan offers from a variety of lenders. Youâll still need to assess each offer on its own merits, but LendingTree can save you a lot of legwork.
Pros & Cons of LendingTree Personal Loans
- Efficient way to shop
- Trusted leader in the field
- Can send too many loan solicitationsÂ
Other Personal Loan Options to Consider
My list of best personal loan providers above includes most well-known lenders. Youâve probably heard of most of them already.
Below Iâm including a list of lesser-known options that have gotten my attention for various reasons. Most of these are loan matching services with P2P funding sources.
AmOne has been around 20 years and has about a million customers. I like the companyâs versatility. It can handle all sorts of borrowing needs, including personal loans.
- Amounts: Loans range from $1,000 to $100,000.
- Interest rates: Youâll find a wide range, but highly qualified borrowers should get competitive rates.Â
Fiona provides another loan-matching service similar to Credible or LendingTree. The service hasnât been around long, but itâs growing quickly by partnering with a lot of the lenders on this list.
Fiona works quickly — many applicants have funds within a business day.
Yet another loan shopping service, Monevo stands out because of its speed and its high loan amounts. You could borrow $100,000 through the site.
I like the siteâs simplicity and its large volume of partnering lenders which means a wider variety of borrowers can benefit.
Federal Trust partners with Fiona, which I listed above, to match loan shoppers with potential lenders.Â
You could borrow up to $100,000, and with such a wide variety of lenders in their network, Federal Trust can find competitive rates for eligible borrowers.
I also like Federal Trustâs option of a seven-year installment loan for someone who needs to keep loan payments as low as possible.
Will A Personal Loan Work For You?
Yes, personal loans can help get you out of a tough financial spot. But theyâll also cost you money for months or years, depending on how long you need to pay back the loan.Â
It goes without saying: You should always look for the lowest, fixed interest rates when borrowing.Â
Here are some other ways to save money when you borrow:
- Look for Shorter-Term Loans: Monthly payments will be higher with shorter-term loans, but youâll pay less money over the life of the loan. If you can afford the higher payments, go with a shorter-term loan.
- Avoid Fees: Even if youâre getting a lower interest rate, be sure the lender isnât compensating by charging high origination fees or punitive late fees that could eclipse your savings on interest.Â
- Pay it Off Early: Look for a loan with no prepayment penalty, but even if you would incur a prepayment fee, consider whether this fee would exceed the interest youâd be paying over the life of your loan.Â
- Avoid Borrowing: Maybe this isnât the time or place, but as a financial advisor I have to say it: If you can save up an emergency fund, you may be able to avoid borrowing in the first place. I recommend having at least three months of income in reserve. Then you can borrow from yourself in an emergency. Maybe itâs too late to save for the current emergency, but this is something to think about when life gets back under control.
Wherever you borrow — online or at a neighborhood bank — try to look out for your future as well as your present financial situation.
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