Investing, Personal Loans

Earnest: Personal & Student Loans for Responsible Individuals with Limited Credit History

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Earnest - Personal & Student Loans for Responsible Individuals with Limited Credit History

Updated January 24, 2016

Earnest is anything but a traditional lender for unsecured personal loans and student loans. They offer merit-based loans instead of credit-based loans, which is good news for anyone just starting to establish credit. Their goal is to lend to borrowers who show signs of being financially responsible. Earnest is working to redefine credit-worthiness by taking into account much more than just your score.

They have a thorough application process, but it’s for good reason – they consider different variables and data points (such as employment history, education, and overall financial situation) that traditional lenders don’t.

Earnest*, unlike traditional lenders, says their underwriting team looks to the future to predict what your finances will look like, based upon the previously mentioned variables. They don’t place as much emphasis on your past, which is why a minimal credit history is okay.

Additionally, as their underwriting process is so thorough, Earnest doesn’t take on as much risk as traditional lenders do. With their focus on the financial responsibility level of the borrower, they have less defaults and fraud, which allows them to offer some of the lowest APRs on unsecured personal loans.

Personal Loan (Scroll Down for Student Loan Refinance)

Earnest offers up to $50,000 for as long as three years, and their APR starts at a fixed-rate of 5.25% and goes up to 12.00%. They claim that’s lower than any other lender of their type out there, and if you receive a better quote elsewhere; they encourage you to contact them.

Typical loan structure

How does this look on paper? If you needed to borrow $20,000, your estimated monthly payment would be $599-$638 on a three- year loan, $873-$911 on a two- year loan, and $1,705-$1,744 on a one-year loan. According to their website, the best available APR is on a one-year loan.

Not available everywhere

Earnest is available in the following 36 states (they are increasing the number of states regularly, and we keep this updated): Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, Washington D.C., West Virginia, Wisconsin and Wyoming.

Get on LinkedIn

Earnest no longer requires that you have a LinkedIn profile. However, if you do have a LinkedIn profile, the application process becomes a lot faster. When you fill out the application, your education and employment history will automatically be filled in from your LinkedIn profile.

What Earnest Looks for in a Borrower

Earnest AppEarnest wants to lend to those who know how to manage and control their finances. They want borrowers to know the importance of saving, living below their means, using credit wisely, making timely payments, and avoiding fees.

They look at salary, savings, debt to income ratio, and cash flow. They want borrowers with low credit utilization – not those maxing out their credit cards and experiencing difficulty in paying.

Borrowers must be over 18 years old and have a solid education background. Ideally, they attended college or graduate school, have a degree, and have a history of consistent employment, or at least a job offer that gives them the opportunity to grow.

Overall, Earnest wants to make sure borrowers are taking their future as seriously as they are. After all, they’re investing in it! The team at Earnest knows that money often holds people back when it comes to being able to achieve their dreams and goals, and they’re all about helping borrowers get there.

For that reason, Earnest seeks to learn more about those that apply for loans with them. They review every line of your application, and they want to develop a lifelong relationship with their borrowers. They genuinely want to help and see their borrowers succeed.

The Fine Print – Are There Any Fees?

Earnest actually doesn’t charge any fees. There are no late fees, no origination fees, and no hidden fees.

There’s also no penalty for prepaying loans with Earnest – they encourage borrowers to prepay to reduce the amount of interest they’ll pay over the life of the loan.

Earnest states that one of its values is transparency (and of course, here at MagnifyMoney, that’s one of ours as well!), and they are willing to work with borrowers who are struggling to make payments.

Hala Baig, a member of Earnest’s Client Happiness team, says, “We would work with the client to make accommodations that are appropriate to help them through their situation.”

She also notes that if borrowers are late on payments, they do report the status of loans on a monthly basis.

What You Can Do With the Money

The $30,000 loan limit is enough to pay off debt such as an undergraduate student loan, medical debt, or consumer debt, relocate for a job, improve your home or rental property, help you fund a down payment, or further invest in your education.

Earnest’s APR is much, much better than you’ll receive on many credit cards, and it could be a viable way to decrease the burden of debt you’re currently experiencing.

Earnest logo 1

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The Personal Loan Application Process

Earnest does a hard inquiry upon completion of the application. They’re very open about this on their website, stating that hard inquiries remain on credit reports for two years, and may slightly lower your credit score for a short period of time.

Compared to Upstart, their application process is more involved, but that’s to the benefit of the borrower. They aim to underwrite files and make a decision within 7 business days – it’s not instantaneous.

However, once you accept a loan from Earnest and input your bank information, they’ll transfer the money the next day via ACH, so the money will be in your account within 3 days.

Student Loan Refinance

When refinancing with Earnest, you can refinance both private and federal student loans.

The minimum amount to refinance is $5,000 – there’s no specific cap on the maximum you can refinance.

We encourage you to shop around. Earnest is one of the best options, but there are others. You can see the best options to refinance your student loans here.

Earnest offers loans up to 20 years. Unlike other lenders, Earnest allows borrowers to create their own term based on the minimum monthly payment you’re comfortable making. Yes, you can actually choose your monthly payment, which means the loan can be customized to your needs. Loan terms start at 5 months, and you can change that term later if needed.

You can also switch between variable and fixed rates freely – there’s no charge. (Note that variable rates are not offered in IL, MI, MN, OR, and TN. Earnest isn’t in all 50 states yet, either.)

Fixed APRs range from 3.75% to 6.74%, and variable APRs range from 2.55% to 6.03% (this is with a .25% autopay discount).

If you refinance $25,000 on a 10 year term with an APR of 5.75%, your monthly payment will be $274.42.

The Pros and Cons of Earnest’s Student Loan Refinance Program

Similar to SoFi, Earnest offers unemployment protection should you lose your job. That means you can defer payments for three months at a time, up to a total of twelve months over the life of your loan. Interest still accrues, though.

The flexibility offered from being able to switch between fixed and variable rates is a great benefit to have should you experience a change in your financial situation.

As you can see from above, variable rates are much lower than fixed rates. Of course, the only problem is those rates change over time, and they can grow to become unmanageable if you take a while to pay off your loan.

Having the option to switch makes your student loan payments easier to manage. If you can afford to pay off your loans quickly, you’ll benefit from the low variable rate. If you have to take it slow and need stability because you lost a source of income, you can switch to a fixed rate. Note that switching can only take place once every 6 months.

Earnest also lets borrowers skip one payment every 12 months (after making on-time payments for 6 months). Just note this does raise your monthly payment to adjust for the skipped payment.

Beyond that, Earnest encourages borrowers to contact a representative if they’re experiencing financial hardship. Earnest is committed to working with borrowers to make their loans as manageable as possible, even if that means temporary forbearance or restructuring the loan.

Lastly, if you need to lower your monthly payment, you can apply to refinance again. This entails Earnest taking another look at your terms and seeing if it can give you a better quote.

Who Qualifies to Refinance Student Loans With Earnest?

Earnest doesn’t have a laundry list of eligibility requirements. Simply put, it’s looking to lend to financially responsible people that have a reasonable ability to pay their loans back.

Earnest describes its ideal candidate as someone who:

  • Is employed, or at least has a job offer
  • Is at least 18 years old
  • Has a positive bank balance consistently
  • Has enough in savings to cover a month or more of regular expenses
  • Lives in AR, AZ, CA, CO, CT, FL, GA, HI, IL, IN, KS, MA, MD, MI, MN, NC, NE, NH, NJ, NY, OH, OR, PA, TN, TX, UT, VA, WA, Washington D.C., and WI
  • Has a history of making timely payments on loans
  • Has an income that can support their debt and routine living expenses
  • Has graduated from a Title IV accredited school

If you think you need a little help to qualify, Earnest does accept co-signers – you just have to contact a representative via email first.

Application Process and Documents Needed to Refinance

Earnest has a straightforward application process. You can start by receiving the rates you’re eligible for in just 2 minutes. This won’t affect your credit, either. However, this initial soft pull is used to estimate your rates – if you choose to move forward with the terms offered to you, you’ll be subject to a hard credit inquiry, and your rates may change.

Filling out the entire application takes about 15 minutes. You’ll be asked to provide personal information, education history, employment history, and financial history. Earnest takes all of this into account when making the decision to lend to you.

The Fine Print for Student Loan Refinance

There aren’t any hidden fees – no origination, prepayment, or hidden fees exist. Earnest makes it clear its profits come from interest.

There are also no late fees, but if you get behind in payments, the status of your loan will be reported to the credit bureaus.

Earnest logo

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Who Benefits the Most from Earnest

Those in their 20s and 30s who have a good grip on their finances and are just getting started with their careers will make great borrowers. If you’re dedicated to experiencing financial success once you earn enough money to actually achieve it, you should look into a loan with Earnest.

If you have a history of late payments, being disorganized with your money, or letting things slip through the cracks, then you’re going to have a more difficult time getting a loan.

Amazing credit score not required

You don’t necessarily need to have the most amazing credit score, but your track record with money thus far will speak volumes about how you’re going to handle the money loaned from Earnest. That’s what they will be the most concerned about.

What makes you looks responsible?

Baig gives a better picture, stating, “We are focused on offering better loan alternatives to financially responsible people. We believe the vast majority of people are financially responsible and that reviewing applications based strictly on credit history never shows the full picture. One example would be saving money in a 401k or IRA. That would not appear on your credit history, but is a great signal to us that someone is financially responsible.”

Conclusion

Overall, it’s very clear that Earnest wants to help their borrowers as much as possible. Throughout their website, they take time to explain everything involved with the loan process. Their priority is educating their borrowers.

While Earnest does have a nice starting APR at 4.25%, remember to take advantage of the other lenders out there and shop around. You are never obligated to take a loan once you receive a quote, and it’s important to do your due diligence and make sure you’re getting the best rates out there. If you do find better rates, be sure to notify Earnest. Otherwise, compare rates with as many lenders as possible.

Shopping around within the span of 45 days isn’t going to make a huge dent in your credit; the bureaus understand you’re doing what you need to do to secure the best loan possible. Just make sure you’re not applying to different lenders once a month, and your credit will be okay.

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Reviews, Student Loan ReFi

4 Best Parent PLUS Loan Refinance Options

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

mortar board cash

Updated December 22, 2016

Are you a parent who is still repaying student loans taken out to help your children finance their education? While rising student loan debt totals are concerning for graduates, Parent PLUS loans can be troubling for those in their 40s and 50s trying to plan for retirement.

If you’re in this situation, you should consider refinancing your PLUS loans to lower your interest rate and make the loan more affordable. Direct PLUS loans have had interest rates ranging from 6 – 8% over the last few years, and many refinance programs have rates as low as 2% – 4%. Refinancing can save you hundreds of dollars per month.

Below are the best Parent PLUS refinance programs currently available. We encourage you to check each one out to see which suit your needs the most. You should shop around with each lender with whom you think you can qualify. All credit inquiries made within a 30-day period count as one inquiry in the eyes of the credit bureaus.

A Word of Warning on Refinancing

Thankfully, most student loan refinance programs and Parent PLUS refinance programs don’t have fees associated with the loan, so you don’t need to worry about paying origination or application fees. However, you should do the math to make sure refinancing is worth the paperwork.

If you extend your repayment term, you’ll have a lower monthly payment, but you’ll pay more over the life of the loan due to the amount of interest that will accrue. Additionally, if you’re trying to retire sooner rather than later, extending your term might not be in your best interest.

Ideally, you should find a lender willing to refinance your loan on similar terms with a lower interest rate. If your current loan balance is $10,000 and you have an 8% APR with 5 years remaining, and you refinance to a 5.99% APR with 5 years, you’ll save $568.95 on interest.

Beyond interest rates, you should also be aware that refinancing your Federal Direct PLUS loan means giving up several benefits specific to Federal student loans. Private lenders don’t offer the same repayment assistance, though some lenders are more flexible than others.

For example, you’ll no longer have access to different repayment plans, such as the Graduated, Extended Repayment Plan or Income-Contingent Repayment. Your loans won’t be eligible for forgiveness under the various Federal student loan forgiveness programs. You’ll also lose out on the benefit of forbearance and deferment, which temporarily allows you to pause payments in the event you experience financial hardship.

If you haven’t been struggling with paying back your PLUS loans, then losing these benefits might not concern you, but it’s a factor you should consider. Otherwise, if you experience difficulty making payments, you should reach out to your lender to see if any other payment arrangements can be made.

SoFi Parent PLUS Refinance Program

SoFi is one of the leaders in the student loan refinance industry, and it offers refinancing specifically for Parent PLUS loans.

  • You can refinance a minimum of $5,000 up to the cost of attendance
  • Fixed APRs range from 3.38% – 6.74%
  • Variable APRs range from 2.37% – 6.04% with autopay
  • No application or origination fees, and no prepayment penalties
  • Soft credit inquiry with pre-approval; hard inquiry once you accept the loan
  • Should have good credit, but it also takes your employment and credit history into account

 

SoFi Parent PLUS Refinance Programe45ewr

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Citizens Bank Refinance Program

Citizens Bank doesn’t offer a separate Parent PLUS loan refinance program like SoFi does, but you can refinance any student loan under its Education Refinance Loan.

  • There’s a minimum of $10,000 with a maximum up to $170,000 depending on the type of degree your child received
  • Fixed rates: 5.95% APR to 6.55% APR (with autopay)
  • 5, 10, 15, and 20 year terms available
  • No origination, application, or disbursement fees and no prepayment penalty
  • Hard credit inquiry
  • You need a minimum annual salary of $24,000
  • You can apply with a cosigner

citizens-bank

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DRB Parent PLUS Refinance Program

DRB also offers a Parent PLUS refinance program with low interest rates.

  • A minimum of $5,000 is required to refinance and there’s no maximum amount
  • Variable rates: 3.64% – 6.29% (with autopay)
  • Fixed rates: 4.20% – 7.20% (with autopay)
  • Terms of 5, 10, 15, and 20 years are available, though you can request a specific term under 20 years
  • Also offers a hybrid loan (mix of fixed and variable rates), but you must inquire about it
  • Child needs to have graduated college and be professionally employed
  • No origination fee or prepayment penalty
  • Available in all 50 states
  • Hard credit inquiry used

DRB Parent PLUS Refinance Program

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CommonBond Parent PLUS Refinance Program

CommonBond is dedicated to making the refinance process as simple as possible for students, and has recently introduced a refinance program specifically for Parent PLUS loans.

  • The maximum amount you can refinance is $110,000
  • Fixed APRs range from 3.37% to 7.74%
  • Variable APRs from 2.35% to 6.27%
  • Hybrid APRs (5 years at fixed, then 5 years at variable) are offered
  • No application or origination fees, and no prepayment penalties
  • 5, 10, 15, and 20 year terms available (hybrid loans offered on a 10 year term)
  • Temporary loan forbearance is available if certain requirements are met
  • Soft credit inquiry first, then hard credit inquiry if you accept the loan then hard credit inquiry if you accept the loan

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Keep in mind some lenders, such as SoFi, CommonBond, and DRB, offer the option to transfer your PLUS loans to your child. The Direct PLUS loan doesn’t offer this choice. It’s a great option to have if your child can handle making the payments.

There are many Parent PLUS loan refinance programs being created in wake of the success private lenders have had with refinancing regular student loans. Keep an eye out for them in case you’re not eligible for these. You can also check with your local credit union to see if they have any options available, but be sure the math works out in your favor, as some aren’t offering the best rates. Don’t forget – it’s worth shopping around for the most savings!

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College Students and Recent Grads, Pay Down My Debt, Reviews

CommonBond Student Loan Refinance Loan Review

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CommonBond Grad Student Loan Refinance Loan Review

Updated February 9, 2017

CommonBond was founded by three Wharton MBAs who felt the sting of student loans after they graduated. The founders decided to provide a better solution for graduates, as they thought the student loan system was broken and in need of reform. As a result, they strive to make the refinance (and borrowing) process as simple and straightforward for graduates as possible.

CommonBond* began by servicing students from just one school, and has rapidly expanded. Today, CommonBond loans are available to graduates of over 2,000 schools nationwide. Although the business started servicing only students with graduate degrees, today CommonBond is also available to refinance undergraduate degrees as well.

CommonBond is one of the top four lenders identified by MagnifyMoney to refinance student loans.

As you might be able to tell by the name, CommonBond thinks of its community as family. There is a network of alumni and professionals within the community that want to help borrowers. This alone sets it apart from other lenders, as members often meet for events.

While these are all great things, we know you’re more interested in how CommonBond might be able to help you make your student loans more affordable. Let’s take a look at what terms and rates they offer, eligibility requirements, and how they compare against other lenders.

Refinance Terms Offered

CommonBond offers low variable and fixed rate loans. Variable rates range from 2.35% – 6.27% APR, and fixed rates range from 3.37% – 7.74% APR.

Note that these rates take a 0.25% auto pay discount into consideration.

There is no maximum loan amount. CommonBond will lend what you can afford to repay. CommonBond offers fixed and variable rates with terms of 5, 10, 15, and 20 years.

The hybrid loan is only offered on a 10 year term – the first 5 years will have a fixed rate, and the 5 years after that will have a variable rate.

CommonBond has a great chart listing repayment examples based off of borrowing $10,000, which can be found on its rates and terms page.

To pull an example from that, if you borrow $10,000 at a fixed 4.74% APR on a 10 year term, your monthly payment will be $104.80. The total amount you will pay over the 10 year period will be $12,575.90.

The Pros and Cons

CommonBond is available to graduates of 2,000 universities. While that is a very long list, not all colleges and universities are included.

One pro to consider is the hybrid loan option available. It might seem a little confusing at first – why would someone want a variable rate down the road?

If you’re confident you’ll be able to make extra payments on your loan and pay it off before the 5 years are up, you might be better off going with the hybrid option (if you can get a better interest rate on it).

This is because you’ll end up paying less over the life of the loan with a lower interest rate. If you were offered a 10 year loan with a fixed rate of 6.49% APR, and a hybrid loan with a beginning rate of 5.64%, the hybrid option would be the better deal if you’re intent on paying it off quickly.

What You Need to Qualify

CommonBond doesn’t list many eligibility requirements on its website, aside from the following:

  • You must be a U.S. citizen or permanent resident
  • You must have graduated

CommonBond doesn’t specify a minimum credit score needed, but based on the requirements of other lenders, we recommend having a score of 660+, though you should be aiming for 700+. The good news is CommonBond lets you apply with a cosigner in case your credit isn’t good enough.

Documents and Information Needed to Apply

CommonBond’s application process is very simple – it says it takes as little as 2 minutes to complete. Initially, you’ll be asked for basic information such as your name, address, and school.

Once you complete this part, CommonBond will perform a soft credit pull to estimate your rates and terms.

If you want to move forward with the rates and terms offered, you’ll be required to submit documentation and a hard credit inquiry will be conducted. CommonBond lists the following as required:

  • Pay stubs or tax returns (proof of employment)
  • Diploma or transcript (proof of graduation)
  • Student loan bank statement
  • ID, utility bills, lease agreement (proof of residency)

CommonBond also notes it can take up to 5 business days to verify documents submitted, so the loan doesn’t happen instantaneously.

Once your documents are approved, you electronically sign for the loan, and CommonBond will begin the process of paying off your previous lenders. It notes this can take up to two weeks from the time the loan is accepted.

Who Benefits the Most from Refinancing Student Loans with CommonBond?

Borrowers who are looking to refinance a large amount of student loan debt will benefit the most from refinancing with them.

Common Bond

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Keeping an Eye on the Fine Print

CommonBond does not have a prepayment penalty, and there are no origination fees nor application fees associated with refinancing.

As with other lenders, there is a late payment fee. This is 5% of the unpaid amount of the payment due, or $10, whichever is less.

If a payment fails to go through, you’ll be charged a $15 fee.

It’s also noted that failure to make payments may result in the loss of the 0.25% interest rate deduction from auto pay.

Transparency Score

Getting in touch with a representative is simple and there is a chat and call option right on the homepage. Some lenders have this hidden at the bottom, or they don’t offer a chat option at all.

CommonBond also lets borrowers know they can shop around within a 30 day period to lessen the impact on their credit.

It does not list its late fees on its website, unlike other lenders. However, after making a chat inquiry, the question was answered promptly.

CommonBond does offer a cosigner release and is ranked with a A+ transparency score.

Alternative Student Loan Refinancing Lenders

The student loan refinancing market continues to get more competitive, and it makes sense to shop around for the best deal.

One of the market leaders is SoFi. It’s always worth taking a look to see if SoFi* offers a better interest rate.

The two lenders are very similar – CommonBond offers “CommonBridge,” a service that helps you find a new job in the event you lose yours. SoFi offers a similar service called Unemployment Protection.

SoFi’s variable rates are currently 2.355% – 6.280% APR with autopay, and its fixed rates are currently 3.375% – 6.74% APR, which is in line with what CommonBond is offering.

SoFi also doesn’t have a limit on how much you can refinance with them.

SoFi logo

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Another lender to consider is Earnest. There is no maximum loan amount, and Earnest has a very slick application process. Interest rates start as low as 2.55% (variable) and 3.75% (fixed).

Earnest Credit Card

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Lastly, you could check out LendKey. It offers student loan refinancing through credit unions and community banks, but only offers variable rates in most states and fixed rates in a select few. The maximum amount to refinance with an undergraduate degree is $125,000, and the maximum amount to refinance with a graduate degree is $175,000.

All three of these options provide forbearance in case of economic hardship and offer similar loan options (5, 10, 15 year terms).

Lendkey

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Don’t Forget to Shop Around

As CommonBond initially conducts a soft pull on your credit, you’re free to continue to shop around for the best rates if you’re not happy with the rates it can provide. As the lender states on its website, if you apply for loans within a 30 day period, your credit won’t be affected as much.

Since CommonBond does have strict underwriting criteria, you should continue to shop around and don’t be discouraged if you are not approved. The market continues to get more competitive, and a number of good options are out there.

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Pay Down My Debt

Pay for Delete Letters: Do They Work?

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Are you looking to clean up your credit report? Have you recently discovered a delinquent account on your report that you were unaware of until now? Then you might be considering using a pay for delete letter to get this negative mark off your credit report.

There are a few important things you need to know about pay for delete letters – namely, what they are, how (and if) they work, whether or not they’re ethical, and what other credit restoring options are available to you.

What is a Pay for Delete Letter?

Say you have a delinquent account or two on your credit report, and these accounts are bringing your credit score down. You can send a pay for delete letter to the collection agency that purchased your debt. This letter requests that the account be deleted from your credit report upon being paid either in full, or for a settled amount.

It’s essentially as the name describes – debtors pay the collection agency to get the negative mark to disappear from their credit report. Once the mark is lifted, their credit score will likely rise.

Why is this a tactic some people choose to use? Even if you pay the balance in full, the negative mark still stays on your credit report until seven years from the date of delinquency have passed. Those who don’t wish to wait that long turn to pay for delete as a quicker solution.

Keep in mind that pay for delete letters generally have a much higher chance of success if you’re dealing with the collection agency – not the original creditor. So if your credit card with Chase is past due, and your balance has not been charged off yet, a pay for delete letter may not work. Generally, the lower the balance, the easier it might be to obtain a pay for delete. We offer a few alternative solutions below that might work as well.

Note that a pay for delete letter doesn’t delete your debt. You’re only asking for the account to be deleted from your credit report. Most people use pay for delete letters when they know they owe the debt, but due to unusual circumstances, were unable to pay at the time.

A good example of when to request a pay for delete is if you moved and you never received a bill due to changing addresses. You legitimately owed the balance, but you were never aware of it. This doesn’t exactly make you an irresponsible consumer, it just means there was an error along the way and an account ended up delinquent.

The same goes for owing medical debt when you thought your insurance was covering the bill because you never received a request for payment.

In both situations, you technically owe the money, but through no fault of your own, you were never notified of the debt, so you didn’t pay. Debt collectors are more likely to be understanding in such a situation. Just make sure to have proof (such as a change of address) that might help your case.

However, if your credit card balance was charged off and you simply never paid it because you didn’t have the means to, you may be less likely to get a pay for delete approved.

To see an actual example of an effective pay for delete letter, take a look at the myFICO forums. The Credit Karma forums have a slightly different example that may help you craft your own. Note that some pay for delete letters may outright deny the debt is yours; this is not something we recommend as you shouldn’t be lying to collection agencies if you truly owe the debt.

Can a Pay for Delete Letter Help You?

A pay for delete letter won’t necessarily hurt you, but it’s not guaranteed to help you, either.

That’s because collection agencies don’t have to respond to your letter if the debt is accurate. Furthermore, if you write a pay for delete letter and only obtain a verbal agreement from the collection agency, and you pay, they may not honor your request. The negative mark could remain on your credit report. Even worse, the debt could be sold again, and a new collection agency may ask you for payment.

Unless you get a response from the collection agency in writing, you’re out of luck if the agency doesn’t make good on removing the information from your credit report. They’re not obligated in any way to agree to a pay for delete.

Before you even write a pay for delete letter, send a debt validation letter to the collection agency to ensure the information it has on file is accurate. It may not legally be allowed to collect on the debt, so it’s important to start here before offering to pay, otherwise, you risk paying the wrong company.

If the debt is proven to be valid, and you agree that you owe the balance and want to pay it off to get it deleted from your report, you may actually have more luck calling than writing a letter.

Keep in mind that if it comes to that, you should never agree to pay anything over the phone. Always get things in writing when dealing with a debt collector. In most cases, offering to pay in full will typically result in a pay for delete agreement much more often than offering to pay less than the original amount owed.

Are Pay for Delete Letters Ethical?

Pay for delete letters have been labeled as a shady practice, and for good reason: it requires that collection agencies misrepresent the accuracy of their reporting to credit reporting agencies. That means collection agencies are in violation of the service agreement they have with credit reporting agencies if they accept a pay for delete.

Overall, pay for delete is detrimental to the fundamental purpose of the credit reporting system. If someone was unable to pay their balance and their account was sent to collections, paying after the fact and getting the account erased isn’t an accurate representation of his or her credit history. If a lender looks at said person’s credit report, it might deem him worthy to lend to when he’s been irresponsible with credit in the past.

To be clear, pay for delete letters are not illegal. However, remember that collection agencies aren’t required to acknowledge your request; they’re under no obligation to agree to a pay for delete.

Some will because they would rather get paid, and others might agree to settle on a lower amount because they don’t want the hassle. Don’t get your hopes up, though.

In general, we recommend being honest and not trying to game the system. Pay the debts you owe fair and square. If you find any information on your credit report that isn’t accurate, then use the steps outlined in this Credit Repair eBook to help you restore your credit to good standing.

Recommended Credit Boosting Alternatives

A goodwill letter is a good alternative to start with. It’s different from a pay for delete letter in that you’re admitting you were in the wrong, and are asking for forgiveness. A goodwill letter typically works well if you made a late payment, or if an honest mistake occurred and you’re trying to get it corrected. If you’ve had an account in collections for years, the chances of this alternative working aren’t as a great, but it doesn’t hurt to try.

If the collection agency is unwilling to do a pay for delete, they may be willing to settle for the amount owed. What this means is the negative mark will stay on your credit report (until seven years from the date of delinquency have passed), but it will show as “paid in full” or “settled,” depending on the arrangement agreed upon. This might not be as ideal as having the entire account knocked off your report, but it’s a minor improvement over having an unpaid debt on there.

Depending on the FICO scoring model being used, paid collections can improve your score and your chances of getting approved for a loan. FICO 9 won’t penalize you for paid collections accounts, but you will get dinged for unpaid collections (the exception is medical debt). FICO 8 doesn’t take unpaid collections under $100 into account.

Remember that information on your credit report will fall off after seven years. If you just found out about an unpaid debt because you checked your report, and the debt is several years old, you might be better off waiting it out as long as you’re not in the market for a loan anytime soon. The older a collection is, the less of an impact it has on your credit score, too.

Of course, you should also continue to do what you can to repair your credit. You might need to wait out the seven years it takes for black marks to fall off your credit report, but in the meantime, you should take action to maintain a good score for the future. Pay on time, don’t max out your credit lines, and borrow responsibly.

Conclusion

You can’t bribe your way to a perfect credit report. If the information on your credit report is accurate, then you should bear the consequences. Pay for delete letters aren’t guaranteed to work, and it can be difficult to try and get a collection agency to agree to it. Keep proving that you’re a responsible consumer using the methods outlined in this article, and hopefully your actions will show lenders that you’re a reformed consumer.

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CircleBack Lending Review: Borrowing Option for Good to Excellent Credit Scores

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

CircleBack Lending Review

UPDATE: CircleBack lending is no longer accepting new loan applications. If you would like to shop for a personal loan, consider these two options:

  • LendingClub*: Its APR ranges from 5.99% – 35.89%. Its origination fee is 1% – 6%. You can borrow up to $40,000. LendingClub is not available in Iowa or West Virginia.
  • Upstart*: Its APR range starts off at 4.93% and goes up to 29.99%. The origination fee is slightly more, beginning at 1% and ending at 6%. You can borrow from $1,000 up to $50,000.

Otherwise, you can read about the best personal loans here.

Below we keep the original text of our review:

CircleBack Lending is an Internet-based consumer-lending platform for both borrowers and investors. Its goal is to provide consumers with good to excellent credit with a quick way to borrow money.

CircleBack LendingThe entire process of applying for a personal loan with CircleBack Lending* is done online. It aims to have a fast application and approval process, and next day funding is available when you submit all required documents by 10AM ET.

CircleBack Lending is positioned to be a better alternative for consumers with high interest credit card debt, but your debt doesn’t have to be linked to credit cards in order to receive a loan. It offers fixed rates as opposed to variable rates, so you don’t need to worry about the interest on your loan becoming unbearable.

Let’s take a look at what CircleBack Lending has to offer, and how it compares against other peer-to-peer lenders.

Personal Loan Details

CircleBack Lending offers consumers loans ranging from $3,001 – $35,000 and you can borrow for up to 60 months.

The APR ranges from 6.43% – 34.93%.

When you apply for a loan with CircleBack Lending, you receive a credit grade after its loan analysts have gone through your profile. This is so investors know the level of risk associated with your loan. Your APR will vary depending on this credit grade.

CircleBack Lending received an “A” transparency score from MagnifyMoney for allowing potential borrowers to see rates with a soft pull and disclosing fees.

CircleBack Rates

Pros to Borrowing from CircleBack Lending

If you have high interest credit card debt with a variable interest rate, CircleBack Lending may provide a better solution. You can apply to consolidate or refinance your existing debt, and you can often do so at a lower rate than you had before.

CircleBack Lending also claims it has a quick application and funding process, so if you need the funds within a week, you’ll be covered.

Cons to Borrowing from CircleBack Lending

The most obvious con is the APR cap. 36% is extremely high when compared to other peer-to-peer lenders. The starting APR of 12.88% for a 60 month loan is also very high – and that’s the APR for borrowers who receive the best credit grade.

Credit card debt often starts with a 15 percent APR and 12.88% isn’t too far off, and even though it’s a fixed rate, you might be able to get better rates from other lenders.

Qualifications for a Loan

CircleBack Lending requires that applicants be 18 years or older, and loans are only available to those in the following states: Alabama, Alaska, California, Connecticut, Delaware, District of Columbia, Florida, Georgia, Indiana, Kansas, Kentucky, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, or Virginia.

Additionally, since CircleBack Lending aims to provide loans to those with better credit scores, you should have, at minimum, a 660 FICO score. Research indicates CircleBack Lending has a rigorous underwriting process, so the better your credit report looks, the better your chances will be when it comes to getting approved.

Who Can Benefit the Most from a CircleBack Lending Loan?

If your interest rate on debt is much higher than 12.88%, and you have excellent credit, you stand to benefit the most from a personal loan with CircleBack Lending. Its interest rates are unfortunately not very competitive, so you need to make sure you’ll be able to get a low enough APR to make applying worthwhile.

Fees and Gotchas

CircleBack Lending’s fees are standard when compared with other peer-to-peer lenders.

Depending on the credit grade you’re given, your loan origination fee will be anywhere from 0.99% to 4.99%.

If your payment is rejected or fails for any reason, you’ll be charged a $15 fee. CircleBack Lending specifies this fee will be incurred each time a payment fails (other lenders limit this to once per billing cycle).

If you’re late making a payment, on the 16th late date, you’ll be charged $15 or 5.00% of your monthly payment amount – whichever is greater.

Paying by check? CircleBack Lending will charge you a $15 check processing fee.

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Transparency Notes

CircleBack Lending has a minimalist website, especially compared to other personal loan providers. There isn’t much information on it at all. The company “About” page isn’t very helpful, there’s not much information on how the loan application works, and there’s little to nothing provided for investors interested in investing in its consumer loans. Its “Help” section is “coming soon,” and upon calling, no one was available to answer.

Shop Around for the Best Rates

With that said, it’s worth it to you as the borrower to shop around for the best rates. Applying with CircleBack Lending will not affect your credit – it’s a soft pull – so feel free to check other personal loan options including non-peer-to-peer lenders like SoFi*. See who can offer you the best rates. You shouldn’t feel obligated to take the first offer.

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Personal Loans

Upstart Loan Review: Low Rates for Recent College Grads

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Upstart_lg

Updated May 30, 2016

Upstart is an online lender offering unsecured, fixed-rate personal loans. Although it started as a lender targeting recent graduates, it has become a lender that offers loans to a wide range of credit profiles.

The founders of Upstart* wanted to provide young adults that might not have a lengthy credit history with a way to lessen their debt burdens. To do this, it came up with an algorithm to determine creditworthiness based on education, career, job history, and standardized test scores.

Upstart is one of the few lenders who don’t focus entirely on your FICO score, which means its slightly more lenient when it comes to qualifying.

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How Do Upstart’s Rates Match Up?

The APR range is 4.99% – 29.99% (the origination fee is rolled into the APR). Compared to Prosper (6.73% to 35.36% APR) and LendingClub*, (5.99% to 35.89% APR), Upstart has a very reasonable APR.

While the range is large, if you have a decent credit score, you should be able to obtain a loan with an APR less than what you’d normally get with a bank or credit card.

Personal Loan Details

Upstart’s minimum loan amount is $1,000, and its maximum loan amount is $50,000.

A 3-year and 5-year term is available.

If you took out a $10,000 loan, and were able to obtain a fairly good interest rate (say, 7.55%), you would end up paying $311.29 monthly.

What Requirements Do You Need?

While Upstart prides itself on taking education, area of study, and job history into consideration, they still require a minimum FICO score of 640. They also look at your debt-to-income ratio, and you need to be in good standing on all of your accounts to qualify. You can’t have any accounts in delinquency or collections.

If you have insufficient credit history, Upstart will take your application into consideration.

There is no minimum income required to qualify, but you do need to have a debt-to-income ratio of less than 50%.

You also need to have a degree from an accredited institution or be graduating within the next 6 months. Otherwise, you must be accepted to a supported bootcamp starting within 3 weeks from when you apply for the loan, and be actively seeking employment upon graduation from the bootcamp.

Having a full time job (or a full time job offer starting in six months), or another source of regular income is recommended.

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The Fine Print: Fees

There are fees associated with Upstart. First, there is a loan origination fee, ranging anywhere from 1%-6%, depending on the grade of your loan. This fee is rolled into the APR.

Next, if you fail to make a payment within 10 days of your due date, you can be charged a late fee, which is the greater of 5% of the past due amount or $15. If you don’t make any payments within 30 days of the due date, Upstart will report your loan as delinquent to the credit bureaus.

If you prefer to pay by check, you will incur a $15 check processing fee.

If your check bounces, or you have insufficient funds in your bank account, you’ll incur a $15 fee.

There is no prepayment penalty.

What Documents Are Needed to Apply?

You’ll need the standard color photo ID, proof of employment, and proof of income. If you have regular sources of income from full time or part time jobs, you can upload your most recent paystubs.

If you earn any bonuses or commission, you need an offer letter that lists target bonuses or a commission structure that lists target commission levels.

If you have rental income, you’ll need your lease, which should show your full name, monthly amount, and lease term.

If you have side gigs (such as income from being an Uber or Lyft driver), you’ll need to have earned a consistent income for six months before Upstart can take it into consideration. If you meet that requirement, you just need to upload the proof of six months of consistent income.

If you’re self-employed and a sole proprietorship, you’ll need a copy of last year’s tax return and this year’s invoices. They’ll look at Line 31 of your Schedule C.

If you’re involved in a partnership or LLC, you’ll need last year’s personal tax returns that show your portion of income and this year’s invoices.

You might need to provide bank statements or proof of home ownership (if you own a home), but this will vary on an individual basis. Once you complete the application, Upstart will notify you of what you need.

Additionally, if you graduated within 4 years of your application date, you’ll also need your standardized test scores, which you can take a photo of, or take a screenshot of online, and a copy of your transcript.

Who Benefits the Most from Upstart?

Upstart is a great solution to those in their twenties who are finding it difficult to obtain a reasonable personal loan elsewhere. Their interest rates are competitive with the other peer-to-peer lending companies, plus they’re willing to lend to those who have thin credit histories, whereas many companies are not.

If you’re a young adult who doesn’t have a lengthy credit history, but has a decent credit score, and are looking to pay off debt (credit card, medical, auto, or student loans), or finance a larger purchase (such as a wedding or travel), then Upstart’s personal loan is a good fit.

Lastly, if you fit this profile and need a loan quickly, accepting your loan before 5pm ET means you’ll have the funds in your account the next business day (unless you’re paying off private student loans). The entire process is efficient and done completely online.

Remember: if you don’t accept the loan, you won’t receive a hard inquiry on your credit report, only a soft one. In any case, borrowers typically have a 45-day window to shop around for personal loans. Credit bureaus recognize that you’re attempting to get the best rate possible, and will count all inquiries during this time as one inquiry.

If Upstart doesn’t sound like the right fit for you, then explore other personal loan offers with our customizable table

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Pay Down My Debt, Personal Loans

Personal Loans for People with Bad Credit

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Personal Loans for People with Bad Credit

Updated July 20, 2016

When your credit is less than satisfactory, it can be difficult to find a lender willing to give you a personal loan. That doesn’t mean it’s impossible to find one – there are more options available now than ever before to get a personal loan with bad credit. What’s better is you can easily apply online to see the rates for which you qualify.

That’s thanks to lenders such as Springleaf, Avant, and LendingClub. They each have lower credit thresholds and none rely solely on your FICO score when deciding to lend to you, making it easier to qualify.

Even though you might have a poor credit score, your actual credit history may not be that bad. Your credit file could be thin because you didn’t start building any credit until recently, or maybe you’ve only ever had one open line of credit. Whatever the reason, just because your score is low doesn’t mean you’re not creditworthy, and these lenders know that.

Therefore, it’s worth making sure you’re still getting a decent deal on personal loan terms. It can be easy to think that because your score is low, you’ll be approved for a less than ideal interest rate, but you shouldn’t accept the first offer that comes your way.

Let’s take a look at what these three lenders offer so you know what terms are available to you.

Avant Personal Loan

You can borrow anywhere from $1,000 to $35,000 with a personal loan through Avant. Specific rates and terms vary depending on your state of residence, but in general, terms offered up to 5 years, and APRs range from 9.95% to 36.00%.

Checking your rates through Avant doesn’t affect your credit score – it’s initially just a soft pull. On its FAQ, it states most customers have a FICO score ranging from 600 to 700, though you can still qualify with a lower credit score.

Its customer service team is on staff seven days of the week to assist you in case you have any questions. It’s also possible to receive your funds as soon as the next business day.

There is no prepayment penalty. Loans are available in all states except Colorado, Iowa and West Virginia.

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LendingClub Personal Loan

LendingClub* is different than Springleaf and Avant because it’s a peer-to-peer lender. Individual investors can choose to put their money toward your loan – the money isn’t coming from a bank.

You can borrow anywhere from $1,000 to $40,000 with LendingClub. You can borrow for up to 5 years. Its APR ranges from 5.99% to 35.89%.

For example, if you borrow $20,000 on a 5 year term at an APR of 8.91%, your monthly payment will be around $185.24. That’s including an origination fee of 3% (or $600), so the total amount you receive would be $19,400.

There’s no prepayment penalty, but you need to watch out for the origination fees. These range from 1% to 6%, depending on your loan grade. Remember to factor this in when receiving offers, because being charged an origination fee lessens the amount of money you actually receive.

To be eligible for a loan with LendingClub, you must be 18 years or older and have a verifiable bank account. You must be a U.S. citizen, permanent resident, or have a valid long term visa. Your credit score should be at least 600 to qualify.

LendingClub does not offer loans in Iowa and West Virginia.

When determining creditworthiness, it takes the following into consideration:

  • Debt-to-income ratio
  • Credit score
  • Length of credit history
  • Number of open accounts
  • Usage and payment history
  • Other credit inquiries over the past 6 months

It has an A+ rating with the BBB and has been accredited since 2007.

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Springleaf Personal Loan

Springleaf offers personal loans ranging from $1,500 to $10,000. You can apply for a secured or unsecured loan. You can also apply online and have a decision within a day.

Springleaf has been around for over 90 years, has an A+ rating with the BBB. It is a brick-and-mortar bank with over 800 branches across 27 states. Unfortunately, that means it’s limited to those with branches nearby, as you need to physically sign for the loan.

Its website has minimal information on APRs, terms, and fees for loans, but from the calculator provided, we know the APR range is 15.99% to 39.99%, and 2 to 5 year terms are offered.

Springleaf also has a track record for working with borrowers who have low credit. You need a minimum credit score of 550 to qualify.

What would an example loan look like? If you borrow $4,000 on a 3 year term, at an interest rate of 30%, your monthly payment will be around $169.81.

You can check to see if Springleaf has a pre-qualified offer for you, as it doesn’t affect your credit score. If you do accept its offer, then a hard credit inquiry occurs.

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Which Lender is the Best Choice?

It’s largely going to depend on the rates you receive. Luckily, with Avant and LendingClub, you’re able to apply without a hard inquiry on your credit, which allows you to shop around without worry. It’s smart to start with these two lenders and see which of the two offers you better terms.

Here’s a side-by-side comparison of the rates and terms offered by all 3 lenders:

Criteria Springleaf Avant LendingClub
Amount Borrowed Up to $10,000 Up to $35,000 Up to $40,000
APR Range 15.99% – 39.99% 9.95%-36.00% 5.99% -35.89%
Length of Loan Up to 5 years Up to 5 years Up to 5 years
Min. Credit Score 550 580 600

Your best option is to shop around. You can apply to LendingClub, Prosper and Avant without hurting your score. We recommend you start there first.

If you need the money today and live near a Springleaf branch, that is your best option. But if you can wait a day, Avant is able to get the funds to you in one business day.

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LendUp or Elevate: Which is the Better Payday Lender?

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LendUp or Elevate

While the phrase “payday lenders” typically makes you think of shady shops in strip malls or stand-alone stores plastered with self-advertising, there are several “friendlier” options surfacing online.

LendUp and Elevate are two such lenders attempting to change the payday loan landscape, as well as the lives of its customers. The only question is: which lender is the superior choice?

If you’ve found yourself in a bind and need cash quickly, then read on to see which loan may be right for you.

Setting the Context: Traditional Payday Lenders

Before we compare LendUp and Elevate, it’s helpful to have a context for payday lenders in general.

It’s no secret that payday loans are one of the most expensive loans out there, but if you need money in a pinch, it may be your best bet.

First, traditional payday loans are typically littered with fees and traps. For example, if you can’t afford to pay back your loan within the specified time frame, then you may have the option to roll your balance over.

This means that your original loan balance remains (as you can’t pay it off), and a rollover fee is tacked onto that amount.

Depending on how many times you roll your balance over (some states have restrictions on this), you could be looking at paying back a couple hundred dollars more than you originally anticipated. This is an extremely dangerous trap to get caught in.

LendUp is completely against rollover fees and doesn’t charge for extensions (30-day extensions are available on certain loans). Elevate doesn’t penalize you for paying off your loan early if you’re able to, and it says that it offers a 7-day payment extension on its RISE product if you’re unable to make a payment when it’s due.

Second, traditional payday loans usually have very short terms and offer small loan amounts. You have around 7 to 14 days to pay back your loan. This isn’t always realistic, and you may face those rollover fees if you don’t have the money after your next pay day.

LendUp and Elevate both offer longer repayment terms that give you a little breathing room when it comes to making payments, and RISE (Elevate) offers larger loan amounts. The loans are structured to be more cash flow friendly.

As you can tell, both companies are working toward providing better loans for those with poor credit, especially when compared to traditional payday lenders. Let’s see how they compare against each other.

LendUp: What it Offers and Who Benefits

Update: On Sept. 27, 2016, the Consumer Financial Protection Bureau ordered LendUP to pay more than $3.6 million in fines for allegedly misleading customers about its online lending service. Read the full CFPB order here

In a nutshell, the CFPB claims LendUP’s parent company, Flurish, Inc., misleadingly advertised its lowest-priced loans. LendUP advertised its loans as available nationwide, yet the most attractive loans were only available to customers in California, the agency says. 

The CFPB also claims  LendUP failed to accurately market the annual percentage rates offered with its loans and in some cases understated the true APR on its loans. 

What does the CFPB’s order mean for LendUP customers?

The CFPB has ordered the company to pay about $1.83 million in refunds to over 50,000 consumers. Consumers are not required to take any action. The company will contact consumers in the coming months about their refunds, the watchdog says.

In response to the CFPB’s claims posted on its website, LendUP says the transgressions date back to the company’s early days. “When we were a seed-stage startup with limited resources and as few as five employees. In those days we didn’t have a fully built out compliance department. We should have.”

LendUpScreen Shot 2016-05-04 at 7.09.18 PM says its “mission is to expand access to credit and lower the cost of borrowing for the millions of Americans that traditional banks are typically unable to serve.”

How does it accomplish that? It offers terms of 7 to 30 days, with loan amounts of $100 to $250 available. APRs range from 206.83% to 773.80%, depending on the terms you’re approved for, and the state you reside in.

For existing customers, long-term installment loans of up to $1,000 are available with APRs as low as 29.99% and repayment terms as long as 12 months. As of April 2016, LendUp is working on making long-term loans available to new customers as well.

LendUp is available in the following states: Alabama, California, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Louisiana, Maine, Minnesota, Mississippi, Missouri, New Mexico, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Washington, Wisconsin, and Wyoming.

LendUp is unique in that it “gamifies” your payback experience. As you take financial literacy courses, make timely payments, or take out (and pay back) additional loans, you “move up” on its LendUp Ladder. There are four tiers: Silver, Gold, Platinum, and Prime. At the Platinum and Prime tiers, you’re able to report your payments to credit bureaus to rebuild your credit.

LendUp’s APRs rival those of traditional payday lenders initially, but if you ever need to borrow more money, your rate will decrease (as long as you maintain a good track record). LendUp wants to provide its customers with a better financial future, whereas regular payday lenders only focus on making sure they get paid on time.

Additionally, LendUp is a direct lender, which means any loan you take from LendUp is owned and issued by LendUp. There are no third-parties involved in the transaction.

Elevate: What it Offers and Who Benefits:

ElevateElevate offers two different financial products: RISE and Elastic.

RISE is Elevate’s unsecured installment loan – its answer to traditional payday loans. You’ll have a set payment schedule, and similar to LendUp, future loans you take out with RISE are eligible for lower APRs.

RiseTo start, RISE has APRs ranging from 36% to 365%, with loan amounts ranging from a few hundred to $5,000, and repayment terms from as little as a few months to 26 months. The reason for the disparity is because all terms vary depending on the state you reside in.

RISE is only available in Alabama, California, Delaware, Georgia, Idaho, Illinois, Missouri, New Mexico, North Dakota, Ohio, South Carolina, South Dakota, Texas, Utah, and Wisconsin.

You should be aware that even though RISE is available in these states, it is not the lender in all cases. When it’s not, it charges an extremely high fee to find a lender that will extend credit to you. For example, in Ohio, it charges a $1,018 “CSO” fee on a $1,000 loan.

Again, this isn’t the case in all states (a loan in Missouri doesn’t have a CSO fee), but it’s something you should watch out for as those fees will likely make the loan not worth your time.

Elasticelastic differs from RISE in that it’s a bank issued line of credit, which means you can pull funds from it when you need to. You pay for this convenience in the form of a 5% cash advance fee, though.

The credit line is between $500 and $3,500, and your payment schedule is adjusted to match your pay cycle. So if you’re paid bi-weekly, you’ll be required to make a payment every two weeks, and if you get paid monthly, you’ll make a payment one every month.

Elastic requires you to pay off your balance within one billing cycle, otherwise you’ll be subject to a minimum charge. This fee ranges from $1 to $100 for non-monthly customers, and $2 to $200 for monthly customers, depending on your balance. You can view examples on its website here.

Elastic is available in the following states: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Washington DC, Wisconsin, and Wyoming.

As mentioned, Elevate is typically the direct lender on RISE loans, but not all. Republic Bank & Trust Company is the bank that issues the line of credit for Elastic.

Pros and Cons

Let’s review the pros and cons of each lender to see how the competition stacks up.

LendUp

Pros:

  • LendUp is currently available in 23 states, which puts it slightly above RISE.
  • In many cases, you can extend your loan term up to 30 days from your loan origination date for absolutely no fee, although interest will continue to accrue.
  • LendUp is willing to work with borrowers who are unable to pay on time. In multiple places on its site, it says to call if you don’t think you’ll be able to make a payment. It is also very transparent about being an expensive choice for a loan.
  • The LendUp Ladder can be motivating for some individuals, and it’s an experience that neither RISE nor Elastic offer.
  • As an existing customer, you have access to better long-term installment loans as you move up the Ladder.

Cons:

  • The full LendUp Ladder isn’t available in all states, which means credit reporting isn’t an option for all customers. If you want to rebuild your credit, and the LendUp Ladder isn’t available, you might want to consider another lender that will report your timely payments to the credit bureaus. However, LendUp does mention that it isn’t the best option to use to solely rebuild your credit as it’s fairly expensive.
  • LendUp offers short-term loans with lower amounts, so if you’re looking for more than $250, you’re not going to find it here.
  • The APRs on short-term loans are on the higher end to start. Even though your APR will decrease the more you borrow with LendUp, that could encourage people to borrow more often when they shouldn’t rely on loans. This is both a pro and a con, as existing customers who truly need cash will at least pay less the next time around.

Elevate – RISE

Pros:

  • RISE has longer repayment terms and offers larger loan amounts, meaning you have greater flexibility when borrowing funds.
  • Compared to LendUp, RISE’s APRs are slightly lower.
  • If you no longer need the loan, you have the option to reject it for up to 5 business days after you sign the loan agreement. You’ll only have to repay the principal amount you borrowed – no interest or fees.

Cons:

  • RISE is only available in 15 states. The limited availability is a huge drawback, along with the fact that it doesn’t directly offer loans in all of those states.
  • The CSO fee it charges in certain states is hefty.
  • Similar to LendUp, RISE will offer lower APRs to returning customers based on prior payment history. This is both good and bad for the aforementioned reasons.
  • While RISE has lower APRs, the repayment term is typically longer, and on a higher balance, the interest you accrue might end up being just as expensive as a loan from LendUp.

Elevate – Elastic

Pros:

  • Elastic is a convenient and quick option for those who need funds on a continuous basis, as once you’re approved for a line of credit, you can request more funds as you go (provided you continue to make the required payments).
  • The way payments are structured encourages borrowers to pay their loan back on time when they receive their paychecks from work.
  • Elastic is available in more states than LendUp and RISE, making it a viable option for more people.
  • Repayment typically takes around 10 months, making Elastic a decent middle ground between LendUp and RISE.

Cons:

  • The 5% cash advance fee is rather high. Most cash advances on credit cards are around 3%.
  • The repayment terms are slightly difficult to understand. There’s a lot of fine print where the “minimum charge” is concerned.
  • This is both a pro and a con, but if you maintain a balance on your account for 10 consecutive months, you’ll be subject to a “cooling off” period where you will not have access to additional funds.

Other Payday Lender Alternatives

If neither LendUp nor Elevate work in your favor, or if they’re not available in your state, then check out these payday lender alternatives if you’re in a tight spot with money.

Avant

Is your FICO score between 600 and 700, but traditional banks still aren’t willing to lend to you? You may have better luck with Avant. There are no origination fees, and your payments are reported to the credit bureaus.

The vast majority of the loans Avant offers are for $1,000 to $35,000, with APRs ranging from 9.95% to 36%. Repayment terms range from 2 to 5 years. However, Avant’s loans are made by WebBank and affiliates of Avant – not Avant directly. It doesn’t offer loans in Iowa, Maine, North Dakota, or West Virginia.

This is a great option for those with the credit to get approved, as the APRs are much lower than Elevate and LendUp, there are no hidden fees to be concerned about, and it’s available in more states. Avant is an alternative that’s closer to a personal loan than a payday loan, but made for those with lower credit.

Credit Card Cash Advance

As stated before, at least when compared with Elastic, a credit card cash advance may be somewhat cheaper, but it’s still a costly option compared to Avant (or obtaining a personal loan, if your credit is good enough).

If you have a credit card that has a flat fee for a cash advance as opposed to a percentage of the advance amount, this can be the lesser of the “payday lender evils” to go with.

For example, some credit cards charge $3 regardless of the cash advance amount you take out, whereas others charge a 3-5% fee. There are also a few credit cards that do not have any cash advance fees at all. For a list of recommended credit cards for cash advances, check here.

Credit card cash advances are not a good idea for those who currently don’t have a credit card, or those who simply can’t trust themselves when spending with plastic. If you’re in need of a payday loan, you’re not in a stable enough financial situation to risk taking on more debt – especially consumer debt.

Additionally, your credit will be checked when you apply for a new credit card; with some online lenders, you can get preapproved for a loan and see the rates you qualify for with a soft credit inquiry.

Personal Loans from Online Lenders

Speaking of, there are a few other online personal loan lenders similar to Avant that may be willing to lend to you for less than Elevate and LendUp. Quite a few don’t require hard credit inquiries, making them decent options to look into.

Plug your information in here and do a quick comparison of the personal loans that may be available to you. If you need cash quickly, there are some lenders that can have the funds to you within the next business day or two.

Which Payday Lender Will Work For You?

LendUp and Elevate’s RISE and Elastic all serve different purposes, so which one is better for you greatly depends on your circumstance.

The closest thing to a normal payday loan is LendUp because of its small loan amount and quick repayment term. It’s a much better alternative because there are no rollover fees, and LendUp seems willing to work with borrowers unable to pay back the amount they owe. Beware of the high APRs and make sure you know exactly how much the loan is going to cost you upfront.

RISE is closer to a personal loan than a payday loan due to its longer repayment term and larger loan amount. However, since you can borrow a few hundred dollars at a higher APR, it provides flexibility that LendUp doesn’t.

Elastic might be the most convenient choice, as it’s a line of credit option (and the others are installment loans), but it could also be the most expensive with the 5% cash advance fee and minimum charge that gets tacked onto your payment. Since it is a line of credit, that could easily influence you to keep borrowing, and you shouldn’t think of any of these loans as a permanent solution to your financial problems.

Regardless of which choice you go with, be aware of how costly these loans are and what the consequences are if you can’t pay. Just because LendUp allows a 30-day extension, and RISE offers a 7-day extension, doesn’t mean you should rely on it. You want to be the best borrower possible to improve your chances of getting a regular loan in the future, should you need one.

Lastly, don’t be afraid to do the math to see which option is better for you. You may get approved for different rates at different lenders, or a cash advance from an existing credit card you have may turn out to be a better option. While you may not have the luxury of time right now, it’s worth thinking about for the future.

Whatever option you decide to go with, read the fine print, understand the loan in its entirety, and stay away from traditional payday lenders on the street corner. They’re certainly not worth your time (or money).

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Best Debt Consolidation Personal Loans

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Best Debt Consolidation Personal Loans

Are you stuck under an overwhelming pile of consumer debt? Do you feel like it might be impossible to get out? Fortunately there are tools that can help you get out of debt faster.

A debt consolidation personal loan could be a good answer. With a personal loan, you would use the loan proceeds to pay off credit card debt, medical debt or any other form of debt. You would then have a loan at a fixed interest rate and a fixed term.

Debt consolidation provides three benefits:

  1. Make payments simple: If you owe a lot of lenders and are having a tough time keeping track of all the payments, then consolidating will make your life easier. You’ll only owe one lender and have to keep track of one due date. There’s less of a chance of anything falling through the tracks.
  2. Lower your interest rate: This is where you have to run the numbers to see if debt consolidation makes sense for you. What’s the average interest rate you’re paying on your debt? If it’s quite high (which is likely if you have a lot of consumer debt), you may benefit from consolidating under better terms. Just remember to only use a personal loan if the interest rate is lower than the one you are already paying.
  3. Improve your credit score: If your credit cards are currently maxed out, your credit score will suffer. When you pay off your credit card debt with a personal loan, you will often receive a boost to your credit score, so long as you don’t start using your cards again.LendingClub did a study and determined that there is an average score increase of 21 points within three months for people who use loans to eliminate credit card debt.

If you think debt consolidation makes sense for your situation, we have a list of the best debt consolidation loans you can use to refinance your consumer debt. Read on for our recommendations.

Personal Loans to Consolidate Credit Card Debt

SoFi – Excellent Credit Required

You can borrow between $5,000 and $100,000, which is the most out of the personal loans recommended here. The fixed APR ranges from 5.95% – 14.24% if enrolled in autopay. You can choose a term of up to 7 years. Variable interest rates range from 4.83% – 11.43% APR. Although SoFi does not use FICO, you need to be “prime” or “super-prime” to qualify. That means you must be current on all of your obligations and must never have filed for bankruptcy. There is no origination fee or prepayment penalty associated with a personal loan from SoFi.SofiLogo

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If you do not have perfect credit, you should shop around for the best rate. MagnifyMoney has a personal loan shopping tool. In under five minutes, and with just one application, you can receive personal loan offers from multiple lenders. Even better, your application will not hurt your credit score, because all of the lenders use a soft credit pull.

Some of the leading lenders for people with less than perfect credit include:

LendingClub – Minimum FICO of 600

This is a peer-to-peer platform, which means individual investors are contributing to your loan. You can borrow between $1,000 and $40,000 with LendingClub, and its APR ranges from 5.99% – 35.89%, depending on the type of loan grade you’re eligible for. Be aware there are origination fees (ranging from 1% – 6%) associated with this personal loan, but there are no prepayment penalties. You can borrow on terms up to 5 years. The minimum credit score needed is 600. LendingClub is not available in Iowa or West Virginia.

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Prosper – Minimum FICO of 640

Prosper offers loans from $2,000 to $35,000, and APR ranges from 5.99% to 36.00%. It offers loans terms of either 36 or 60 months. Your APR is determined during the application process, and is based on a credit rating score created by Prosper. Your score is then shown with your loan listing to give potential lenders an idea of your creditworthiness. Origination fees range from 1% to 5% and are based on your Prosper score. In order to qualify, you must:

Prosper is a flexible alternative with a low-end APR that usually beats a credit card.

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[Check out other Personal Loans on Our Comparison Table Here]

A Loan or a Credit Card to Consolidate Debt?

Personal loans can be an excellent way to consolidate your debt. Personal loans are best when you have a lot of debt or your credit score isn’t perfect. However, if you have a smaller amount of debt and a great credit score, you can get rates as low as 0% with a balance transfer. If you do have a good credit score, you should apply for a 0% interest balance transfer credit card.

Wait: I Have Student Loan Debt

If you’re thinking about refinancing or consolidating your student loans, there are a couple of things to know.

First, what’s the difference between refinancing and consolidating?

  • Private Loan Consolidation: This involves combining all your loans into one loan so you only owe one lender and have to make one simple payment.
  • Federal Loan Consolidation (Direct Consolidation Loan): Only have Federal student loans? You can combine them through a Direct Consolidation Loan with the government. According to studentaid.ed.gov, “The fixed rate is based on the weighted average of the interest rates on the loans being consolidated.” This doesn’t save you much money, but your payments will be more manageable. For a complete list of Federal loans that can be consolidated, check here.
  • Refinancing: This is when you apply to a completely new lender for new terms – you’ll have a new loan, and your new lender will pay off your old loan.

The difference isn’t all that big – when you consolidate private (or private and Federal) student loans, you’re essentially going through the refinancing process.

If you currently have Federal loans, you need to be aware refinancing or consolidating means giving up certain benefits that come with federal student loans.

That means income based repayment, deferment, forgiveness, and forbearance options disappear. A few of these benefits are forfeited even with the Direct Consolidation Loan. These benefits could get you through an otherwise rough time, so make sure refinancing makes sense beforehand.

If you do have federal student loans, and you’re thinking of refinancing or consolidating, first see if you’re eligible for deferment or forbearance. There’s no reason to go through the process of having your credit checked if you can lessen your student loan burden another way.

If you have private student loans, you can also check with your lender to see if it offers payment assistance. Many lenders are making improvements to their student loan refinance programs and including forbearance and deferment options.

Also, once you consolidate or refinance your student loans, there’s no going back. This applies to the Direct Consolidation Loan as well.

Okay, still think refinancing or consolidating is right for you? You can shop for the best lender to refinance your student loans here.

Shopping Around is a Must When Consolidating or Refinancing

The goal of refinancing or consolidating is to ultimately make your debt less of a burden on you. That means getting the best rates and terms offered. The easiest way to accomplish this is to shop around with different lenders. If you do so within a 45-day window, FICO will not punish you for shopping around. All of your student loan inquiries in the 45-day period will only count as one inquiry. Plus, there are many lenders out there who will give you rates with just a soft credit inquiry (though a hard inquiry is required to move forward with a loan). Always put yourself first, as you’re never obligated to sign for a loan you’re approved for.

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