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College Students and Recent Grads

Understanding Student Loan Interest Rates

Editorial Note: 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 prior to publication.

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Looking into student loans to pay for college or graduate school? Before you take on debt, it’s important to understand how the interest on student loans work, so you can make smart decisions before you borrow and when it comes time to repay the debt.

Understanding how student loan interest works

When you take out a student loan, the lender charges interest as a fee for borrowing the money. Interest on student loans isn’t a flat fee. Instead, interest on student loans is expressed as a percentage of the unpaid loan amount. Right now, federal direct unsubsidized loans for undergraduates carry a 4.45% annual interest rate (but they’re about to go up for the 2018-19 school year). That means the lender charges 4.45% of the unpaid loan balance per year.

When interest on a student loan goes unpaid, the balance of the loan grows over time. For example, during college many students “defer” student loan payments. In general, during deferment, the bank continues to charge interest, so the balance grows over time. A student who borrows $5,000 at a 4.45% interest rate at the start of his freshman year of college will owe $5,974 four years later when he starts making payments. Generally, any unpaid interest is added to the principal balance once the loan enters the repayment period.

Even though interest rates on student loans are expressed as an annualized interest rate (such as 4.45% per year), interest on federal student loans is determined by a daily interest rate. A 4.45% annual interest rate translates to a 0.0122% daily interest rate.

Once you start making standard monthly payments on the loan, the balance of the loan and dollar amount of interest being charged each day drops. For example, on a 10-year repayment plan, the $5,000 loan that grew to $5,974 loan from the previous example will have a $61.77 monthly payment.

After making the first payment, the balance will fall by $39.62 to $5,934 — the other $22.15 goes toward paying interest. By contrast, with the last payment, $61.27 goes toward balance reduction, and just $0.23 goes towards paying interest.

Many people have heard stories of student loan borrowers who have faithfully made regular payments for decades but have barely made a dent in their balance or owe more money today than when they graduated from college. This doesn’t happen when borrowers make payments based on standard repayment plans. However, it can happen when federal loan borrowers opt for income-driven repayment plans. Under these plans, the monthly payment is based on a person’s income, not on a repayment schedule. That means that the required monthly payment could be less than the amount of interest that the lender charges on the loan. In that case, the balance of the loan grows over time, and the amount of interest charged grows, too.

Variable vs. fixed interest rates

All federal student loans disbursed since July 1, 2006, have fixed interest rates, meaning the interest rate will never change. By contrast, some private lenders offer variable-rate loans. Variable-rate loans are loans where the interest rate may change over time. In general, variable interest rates are set based on an index rate such as the LIBOR (London Interbank Offered Rates). When the LIBOR increases, the variable interest rate on a student loan increases. When it decreases, the interest rate on a student loan decreases. The interest rate on a variable-rate loan could change as often as once a month.

As the interest rate on a variable-rate loan changes, the minimum monthly payment changes, too. A higher interest rate will mean a higher monthly payment, and a lower interest rate will mean a lower monthly payment.

Some variable-rate loans will have maximum interest rates. That means, no matter how high the index rate goes, the lender will not charge more than the maximum rate.

The primary advantage of fixed-rate loans are that borrowers will know exactly how much they owe each month, which makes it easy to budget for. However, most private lenders set higher interest rates for fixed-rate student loans compared with variable-rate loans. That means that borrowers could end up paying more in interest over time.

The lower starting interest rates mean that some people may save money by opting for a variable-rate loan. But variable-rate student loans are riskier than fixed-rate loans. The changing interest rates could mean that borrowers have to make large monthly payments and pay more in interest over the life of a loan.

When should borrowers choose a fixed-rate student loan?

No wiggle room in budget: Fixed-rate student loans are an ideal choice if you don’t have a ton of wiggle room in your budget. You may pay a bit more — but you might not — and you don’t have to worry about your monthly payment increasing.

Long repayment periods: Fixed-rate loans also tend to make sense if your repayment plan will last several years. By contrast, variable rate loans are riskier when you face longer repayment periods. Longer repayments mean that you’ll face a higher risk that the rate will increase significantly from where you first took out the loan.

Small rate difference between fixed- and variable-rate loans: Variable-rate loans often have lower prices, but you get that lower price by taking on more risk. If the interest rate you’ll pay on a fixed-rate loan is just a tiny bit more than the interest rate on a variable-rate loan, the peace of mind is probably well worth the financial cost. Plus, if interest rates fall, you may be able to refinance to a lower, fixed rate in the future.

When should borrowers choose variable-rate student loans?

Expect rapid loan payoff: Borrowers who plan to aggressively pay back loans (and cut years off of standard repayment plans) can take advantage of lower interest rates in the early years of the loan. Even if interest rates rise over time, people who aggressively pay back loans in the early years will save enough in interest to compensate for the higher rate in the later years.

Rate difference between fixed- and variable-rate loans: Most of the time, variable-rate loans are less than 1% cheaper than fixed-rate loans. This offers some savings. But depending on your borrower qualifications (credit score, debt-to-income ratio, etc.), you may qualify for a much better variable-rate loan. If you personally qualify for a much lower rate on a variable rate loan (compared with a similar fixed-rate loan), you can expect to save a lot of cash over the life of a loan, even when student loan interest rates start to rise.

Federal student loan interest rates

Congress sets interest rates on federal student loans. Once you borrow the money, the interest rate on the loan will not change because federal student loans have fixed interest rates, but not all federal student loans have the same interest rates. For example, direct unsubsidized and subsidized loans for undergraduates carry a 4.45% interest rate for the 2017-18 school year. The same loan for graduate or professional students is 6%. PLUS loans, which are available for parents and graduate students, have a 7% interest rate. For federal student loans disbursed between July 1, 2018 and June 30, 2019, rates are as follows: 5% for undergraduate loans, 6.6% for graduate and professional unsubsidized loans and 7.6% for PLUS loans borrowed by parents or graduate and professional students.

How does interest work during deferment?

Many students defer payment on their student loans while they are studying or for select other reasons, such as unemployment or active-duty military service, if their loans offer such flexibility (some private loans and all federal loans do).

During deferment and the grace period following graduation, you will not make payments on your student loans, but interest continues to accrue on the loan. Interest that accrues during deferment is added to the balance of the loan, so your principal loan balance grows during deferment.

However, the U.S. Department of Education helps reduce the burden of interest by paying interest on subsidized loans while the borrower is enrolled in school at least halftime, during deferment and during the grace period that follows graduation. Subsidized loans include direct subsidized loans, federal Perkins loans and the subsidized portions of direct consolidation loans and FFEL consolidation loans.

It’s important to note that deferment is not the same as forbearance. Forbearance is a period of reduced or suspended payments a lender may grant to a borrower going through financial hardship. During forbearance, interest continues to accumulate and will capitalize (be added to the principal balance).

Current interest rates and fees on federal student loans

The table below shows the interest rates and fees on federal student loans for the 2018-19 school year. It’s important to note that some loans have a loan fee. These fees are a percentage of the principal balance, taken from the disbursement and paid to the bank. For example, a $5,000 loan will actually be a $4,946.70 disbursement to you (assuming the 1.066% loan fee).

Federal loan type

Borrower type

Interest rate

Loan fee

Does interest accrue during deferment?

Direct unsubsidized

Undergraduate

4.45% (for loans disbursed between July 1, 2017 and June 30, 2018)

5% (for loans disbursed between July 1, 2018 and June 30, 2019)

1.066%

Yes.

Direct unsubsidized

Graduate or professional students

6% (2017-18)

6.60% (2018-19)

1.066%

Yes.

Direct subsidized

Undergraduate

4.45% (2017-18)

5% (2018-19)

1.066%

No.

Direct consolidation

Past borrowers

Weighted average interest rate of all loans being consolidated, rounded up to the nearest one-eighth of one percent.

None.

Generally yes. The subsidized portions of the loan do not accrue interest during deferment.

PLUS

Parents, graduate students and professional students

7% (2017-18)

7.6% (2018-19)

4.264%

Yes.

Private student loan interest rates

Private student loans can be a double-edged sword for students and their parents. The private student loan marketplace allows a greater level of borrowing, and some people find better interest rates in the private loan marketplace. However, private student loans generally do not offer the safeguards of federal student loans.

For example, many private loans don’t offer forbearance or deferment (except in-school deferment), and they may have very high student loan interest rates. Unlike federal student loans, most private student loans don’t have income-driven repayment plans, and the interest rates on private student loans aren’t set by legislation. Instead, interest rates on private loans are determined by a variety of factors:

  • Your credit score (or the score of a cosigner)
  • Your income (or the income of a cosigner)
  • Employment status
  • The length of repayment
  • Fixed- or variable-rate terms
  • Rates charged by other lenders

Many private lenders require a cosigner (someone who promises to make payments if you can’t) if you don’t have a high enough income or credit score to qualify for the loan.

Interest rates on private student loans have a much greater variety than federal student loans. For example, some student loan refinancing companies offer interest rates as low as 2.57%. However, some lenders charge interest rates that exceed credit card interest rates.

Borrowers who are considering private student loans should research the costs and have a plan to make the required monthly payment once they graduate.

Student loan interest rate vs. APR

When it comes to student loan borrowing, borrowers should understand both the interest rate and the APR (annualized percentage rate) on a loan. The Federal Truth in Lending Act requires lenders to disclose a loan’s APR. APR measures the annualized cost of all finance charges (including interest and transaction fees) if you make all your payments on time. By contrast, the interest rate on a loan is simply the annual cost of borrowing the money, and does not include other fees.

When you pay off student loans early, you will reduce the total interest you pay on the loan. However, finance charges (such as loan fees or origination fees) are not reduced by paying off the loan early.

Lowering your student loan rates

When it comes to any type of borrowing, paying less in interest means you’ll have more money to put elsewhere. Student loan borrowers should consider methods for reducing the interest rate on their loan, and methods to pay less interest overall. These are just a few options to consider.

Lowering your student loan interest rates

Fill out FAFSA: If you’re a traditional student (generally under 24 years old with limited work/life experience), federal student loans likely offer the lowest possible interest rates on student loans. To qualify for federal aid, you and your parents must fill out the FAFSA (Free Application for Federal Student Aid). The FAFSA may also be required for merit-based aid at your university.

Get a cosigner: Borrowers in the private marketplace may find that a cosigner helps them qualify for a reduced rate. Its common for grandparents or parents to cosign private student loans, but cosigners must exercise caution. If a borrower can’t make their monthly payments, the cosigner has to step up and make the payments, otherwise both borrowers’ credit scores will suffer from the impact of missed payments.

Refinance: Following graduation, borrowers (especially those with high incomes or good credit scores) may be able to reduce their student loan interest rates by refinancing with private loans. However, borrowers must be careful when refinancing. Private lenders generally do not offer income-driven repayment plans or other safeguards that can help borrowers who experience unemployment, underemployment or low incomes. Plus, debts that are refinanced with private lenders will not qualify for federal student loan forgiveness programs.

Enroll in automatic payments: Many private lenders offer borrowers a rate discount when the borrower sets up automatic monthly payments.

Reducing total interest paid

Reducing interest rates aren’t the only way to free up cash. Borrowers may also use other methods to reduce the total amount of interest they put toward loans.

Borrow as little as possible: The less you borrow during school, the less interest that will accrue on the loans. Students may be able to minimize borrowing during school by working, applying for scholarships and grants, and using savings. This may sound obvious, but it’s important to point out, because the amount you’re approved to borrow may exceed what you need, resulting in unnecessary debt and, as a result, unnecessary interest payments. Budget carefully and borrow only what you need.

Pay more than the minimum: The more money you put toward your loans each month, the faster you’ll pay them off. Extra principal payments are especially helpful in the early life of the loan when a large portion of the standard payment goes to interest. When you put extra money toward your loan, be sure that the additional payment goes toward repaying the principal. The Consumer Financial Protection Bureau offers guidance on how borrowers can make sure their lender processes their payments correctly.

Combine income-driven repayment with student loan forgiveness: A lot of times, income driven repayment plans reduce monthly payments only to have the loan balance grow over time. However, if you qualify for a student loan forgiveness program, the lower payment is a huge advantage. Not only will you reduce your cash outflow during the repayment phase, once you complete the requirements for loan forgiveness, you may qualify for forgiveness without any incurring tax penalties. (However, some loan forgiveness requires you to pay income taxes on the forgiven amount.) Different loan forgiveness programs have different requirements, so be sure you qualify before planning to use this strategy.

Pay interest during school: Many students are cash-strapped during their studies, but putting money toward interest may go a long way toward keeping loans at a manageable level. Making interest-only payments during college allows students to keep loans at a set level instead of allowing the lender charge interest on interest once the loan enters repayment and unpaid interest is capitalized (added to the principal loan balance).

Refinance to a shorter term: Borrowers who have sufficient cash flow can reduce their total interest payment by refinancing their loans to a shorter term. Sometimes a shorter term means a better interest rate. But, even without a lower rate, a faster repayment means that less money goes to interest overall. For example, a borrower with a $10,000 loan at 3.5% will pay $1,866.21 in interest over the life of a 10-year loan. If that borrower refinances to a five-year loan (also at 3.5%) the total interest is cut in half to just $915.03.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Hannah Rounds
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Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

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Reviews

Synchrony Bank Review: CD, Savings Account, Money Market, and IRA Rates

Editorial Note: 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 prior to publication.

synchrony bank review
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Synchrony Bank is a relative newcomer to the banking scene, having opened up right around the same time as the World Wide Web was being developed in the late 1980s. Today, it’s one of the largest online-only banks around, offering a range of products including high-interest savings accounts, CDs, money market accounts, and IRAs.

Big banks can have notoriously high fees and low rates, so since Synchrony is a smaller, online bank, we put them to the test. In general, they offered very high rates on their savings and CD accounts, but their money market accounts are a little behind in the rate department. Read on to find out the specific details. This will help you decide whether or not this bank is right for you.

Synchrony Bank CD rates

You might need a higher-than-average minimum deposit for these CDs, but you’ll earn a very good interest rate.

Term

APY

3-months

0.75%

6-months

1.00%

9-months

1.25%

12-months

2.25%

14-months

2.35%

18-months

2.15%

24-months

2.45%

36-months

2.55%

48-months

2.65%

60-months

2.85%

As of 5/22/2018

  • Minimum opening deposit: $2,000
  • Minimum balance to earn APY: $2,000
  • Early withdrawal penalty: For CDs of 12 months or less, you’ll pay 90 days’ worth of interest. For CDs of between 12 months up to 48 months, you’ll pay 180 days’ worth of interest. For CDs over 48 months, you’ll pay 365 days’ worth of interest.

You’ll need to come to the table with a fairly hefty minimum deposit of $2,000 to open a CD at Synchrony. But, once you have it, this bank offers a fair amount of flexibility in how you are paid your dividends. You can elect to roll them over in the CD account, or have them paid out to you directly in the form of a check or an electronic deposit into another Synchrony, or other external, bank account.

Once your CD completes its term, you also have a few options. Your CD will automatically roll over into another CD of the same term length, but you’ll get a 10-day grace period to make any changes. During this grace period, you can withdraw the cash, add more cash, and/or open up a new CD with a different term length.

How to open a CD account with Synchrony

You can easily open up a CD account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

How Synchrony Bank’s CD rates compare

While Synchrony doesn’t currently offer the highest rates, they’re still consistently among the top of the pack for the current highest CD rates. Specifically, their 12-month and 60-month CDs are among some of the best offerings out there right now.

The early-withdrawal penalties at Synchrony Bank are also right on par with many of their competitors. You can rest assured that you won’t be paying inordinately high fees should you need to withdraw your cash early.

Synchrony Bank savings account

Synchrony charges no fees and offers a very high interest rate to boot.

APY

Minimum Balance Amount

1.65%

$0

As of 5/1/2018.

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash.
  • ATM fee refund: Synchrony will refund up to $5 per month in ATM surcharge fees.
  • Overdraft fee: None.

This is one of the most accessible high-interest savings accounts for people looking for low fees and low minimum balance requirements. While most banks charge an overdraft fee if you overdraw your account, Synchrony Bank does something different: They may not honor the withdrawal, meaning that you won’t incur an overdraft fee.

Watch out, though: you’re limited to six withdrawals and transfers per month as per Federal Regulation D (not including ATM withdrawals). If you go over that amount, Synchrony Bank reserves the right to close your account for you for “misuse.”

How to open a savings account with Synchrony

You can easily open up a savings account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license. Finally, by signing up for an account, you authorize Synchrony to run your application through ChexSystems, which checks to see if you have any negative standings with other financial institutions.

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on Synchrony Bank’s secure website

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How Synchrony Bank’s savings account compares

Synchrony currently has one of the best online savings accounts. For people looking for a no-minimum-balance account, or those looking to grow a small savings account balance into a larger one, you can’t go wrong with this account.

Synchrony Bank money market account

Synchrony’s money market account doesn’t offer very high interest rates, but does give you the power to write checks.

APY

Minimum Balance Amount

1.05%

$0

As of 5/1/2018.

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash.
  • ATM fee refund: Synchrony Bank will refund up to $5 per month in ATM surcharge fees.
  • Overdraft fee: None.

Money market accounts technically work a little differently than savings accounts. But for you, the consumer, Synchrony Bank’s money market and savings accounts essentially operate the same way. One big difference is that the money market account offers a lower interest rate than their savings account. One other important difference is that you can actually request and write checks using your money market account, whereas the savings account doesn’t come with this option.

Otherwise, you can still expect the same withdrawal limits dictated by Federal Regulation D. You’re stuck with six transactions (minus ATM withdrawals) per month, lest the bank close your account for “misuse.” You’ll also incur few, if any, fees with this account. Given that these two accounts are so similar, we recommend going with the regular savings account, because that one offers a truly exceptional interest rate with the same terms of this money market account.

How to get Synchrony Bank’s money market account

You can easily open up a money market account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

How Synchrony’s money market account compares

Synchrony Bank offers exceptional rates on their savings accounts and CDs. However, their money market account is a little underwhelming in the interest rate department. If you’re looking for the best money market account rates, you can easily find better accounts at other banks and credit unions.

However, Synchrony Bank still does stand out in the fee department. This account — like Synchrony’s savings account — comes with very little fees attached.

Synchrony Bank IRA rates

These IRA CDs are virtually identical to Synchrony’s regular CDs — and still, the fairly high minimum deposit requirements may exclude some savers.

Term

APY

3-months

0.75%

6-months

1.00%

9-months

1.25%

12-months

2.25%

18-months

2.15%

24-months

2.45%

36-months

2.55%

48-months

2.65%

60-months

2.85%

As of 5/22/2018.

  • Minimum opening deposit: $2,000
  • Minimum balance to earn APY: $2,000
  • Early withdrawal penalty: For CDs of 12 months or less, you’ll pay 90 days’ worth of interest. For CDs of between 12 months up to 48 months, you’ll pay 180 days’ worth of interest. For CDs over 48 months, you’ll pay 365 days’ worth of interest.

These IRA CDs work just like Synchrony Bank’s regular CDs, with one exception: they play by the rules of IRA accounts. That means you can open them up within a Roth or traditional IRA, complete with all of the rules governing these two accounts.

Just like Synchrony’s regular CDs, these IRA CDs come with some fairly high minimum deposit requirements. This will exclude some people who can’t come to the table with a full $2,000 — but for those folks, Synchrony Bank has another option: the IRA money market account (discussed below).

If you need to withdraw your money early (if you decide to move it to another company to invest in the stock market, for example), you’ll still face an early withdrawal penalty. However, if you are at the age where you need to take required minimum distributions from CD money held in a traditional IRA, Synchrony Bank will waive the early withdrawal penalty.

How to open an IRA CD with Synchrony

You can easily open up an IRA CD account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

How Synchrony Bank’s IRA CD rates compare

Synchrony’s IRA CDs are again very close to being the top IRA CD rates around. However, there are a few banks offering higher rates on IRA CDs, so if this is your preferred retirement savings option, it may pay to shop around.

Synchrony’s IRA money market account

This money market account — like Synchrony’s regular money market account — doesn’t offer very high rates.

APY

Minimum Balance Amount

1.05%

$0

As of 5/1/2018.

  • Minimum opening deposit: $250
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash.
  • ATM fee refund: Synchrony Bank will refund up to $5 per month in ATM surcharge fees.
  • Overdraft fee: None.

If you need a bit more flexibility in your retirement savings or can’t afford the minimum deposit requirement of Synchrony’s IRA CDs, you might want to consider their IRA money market account.

You can deposit or withdraw cash at any time, however you’re still subject to Federal Regulation D that limits you to six transactions per month. Since this is an IRA account, you’ll also need to stick to the rules of whichever IRA you choose — Roth or traditional — lest you end up paying a tax penalty at the end of the year.

However, in return for this flexibility and low cash requirement to open an account, you’ll pay for it with lower interest rates. You can earn much higher rates on your retirement savings with Synchrony Bank’s IRA CDs, or even with an IRA savings or money market account at another bank entirely. In fact, many of the best money market accounts out there also offer you the ability to open them as an IRA.

How to open an IRA money market account with Synchrony

You can easily open up an IRA money market account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

Overall review of Synchrony’s banking products

We really like Synchrony Bank for their low-fee, high-yielding savings products, especially their savings account and CDs. These accounts are among the top contenders for highest interest rates available.

However, Synchrony’s money market account falls a bit short in the interest rate department. Once upon a time, money market accounts offered higher interest rates than savings accounts, but today that’s often not true — and Synchrony Bank is no exception.

On the whole, however, Synchrony is a great option for people looking for high interest rates on their savings — just skip their money market account.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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Earning Interest

The Best CD Rates – May 2018

Any opinions, analyses, reviews or recommendations expressed in this articles are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any lender or provider of the products listed.

The Best CD Rates
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Updated May 22, 2018

If you are looking for a better yield on your savings, a high rate CD (certificate of deposit) offered by an online bank could be a good option. Internet-only banks offer much better interest rates than traditional banks. For example, a 12-month CD at Bank of America would require a $10,000 minimum deposit and would pay only 0.07%. At an online bank, you could earn 2.25% with no minimum deposit. (If you would rather get a savings account or money market with no time restriction, look at the best savings accounts or best money market accounts).

The Best CD Rates in May 2018

This list is updated monthly, and competition continues to intensify. Here are the accounts with some of the best CD rates:

Term

Institution

APY

Minimum Deposit Amount

1 year

Capital One

2.25%

None

2 years

Colorado Federal Savings Bank

2.51%

$5,000

3 years

MainStreet Bank

2.70%

$500

5 years

American Bank

3.00%

$500

See a full list of the best CD rates below.

  • 12-Month CD: Capital One – 2.25% APY, No minimum deposit

12 Month 360 CD from Capital OneCapital One is famous for its credit card business. It is now getting aggressive with CD rates. There is no minimum deposit, which make these CDs comparable to Barclays’ CDs. Capital One CDs are FDIC insured, up to the federal maximum. And you get the comfort of depositing your money with a very large, publicly traded bank. Here are their other rates:

  • 18-month: 2.30% APY
  • 2-year: 2.35% APY
  • 3-year: 2.40% APY
  • 5-year: 2.80% APY

LEARN MORE Secured

on Capital One’s secure website

Member FDIC

  • 3 months – 5 years: Synchrony Bank – 0.75% APY – 2.60% APY; $2,000 minimum deposit

Synchrony Bank
Synchrony used to be a part of GE, and now has an online bank that pays competitive rates. The online deposits are used to fund their store credit card portfolio – and the company is publicly traded. Your deposit will be insured up to the FDIC limit. In a rising rate environment, this is a great way to get a high interest rate without locking yourself into a long term.

  • 12-months: 2.25% APY
  • 24-months: 2.45% APY
  • 36-months: 2.55% APY
  • 60-months: 2.85% APY

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

  • 1 year – 5 years: Barclays Bank – 2.20% – 2.80% APY, no minimum deposit

12 Month Online CD from Barclays Barclays is one of the oldest banks in the world. Although they’re based in London, they do have a U.S. presence and offer competitive rates on their CDs and savings account. Currently, they’re offering some of the highest CD rates in the market, and they have an edge over the rest of the institutions on this list: they don’t require a minimum balance to earn the APY or open an account. Deposit as little or as much as you’d like into a term of your choice and you can start earning interest as long as the account is funded within 14 days of opening the CD. Additionally, your funds are insured through the FDIC.

  • 1-year: 2.20% APY
  • 2-year: 2.30% APY
  • 3-year: 2.35% APY
  • 5-year: 2.80% APY

LEARN MORE Secured

on Barclays’s secure website

Member FDIC

  • 6 months – 6 years: Goldman Sachs Bank USA – 0.60% APY – 2.85% APY; $500 minimum deposit

Goldman Sachs Bank USA
Our advertiser Marcus by Goldman Sachs is the online consumer bank of Goldman Sachs Bank USA (the large investment bank). Your funds are FDIC insured, and Goldman offers very competitive rates. Even better: there is only a $500 minimum deposit. So, if you don’t have enough money to meet the minimum deposit of the other banks on this list, or you are looking for another bank for your savings, GS is a good option. It also doesn’t hurt that they also offer some of the best CD rates in the market today. You can currently earn an outstanding 2.20% APY by only committing to a 12-month term. Here are their other rates:

  • 2-year: 2.30% APY
  • 3-year: 2.35% APY
  • 5-year: 2.80% APY
  • 6-year: 2.85% APY

LEARN MORE Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

  • 3 months – 5 years: Ally Bank – 1.00% APY – 2.60% APY; $0 minimum deposit (higher APY with higher deposit)

Ally Bank
Ally is one of the largest internet-only banks in the country. Ally’s former advertising campaign made it very clear: no branches = higher rates. And Ally has consistently paid some of the highest rates in the country across savings accounts, money market accounts and CDs. For savers with fewer funds, Ally is unique. There is no minimum deposit to open a CD. However, if you have more money, you can earn a higher APY. If you have more than $25,000 to deposit, you can earn between 1.50% APY and 2.60% APY. And one of our favorite features of Ally: they often (although not always) offer preferential rates on renewal. Far too often banks give the biggest bonuses to new customers, but Ally has done a good job of rewarding its existing customers. All deposits at Ally are FDIC insured up to the legal limit.

  • 12-months: 2.10% APY (less than $5k); 2.15% APY ($5k minimum deposit) and 2.25% APY ($25k minimum deposit)
  • 18-months: 2.15% APY (less than $5k); 2.20% APY ($5k minimum deposit) and 2.30% APY ($25k minimum deposit)
  • 3-year: 2.40% APY (less than $5k); 2.45% APY ($5k minimum deposit) and 2.50% APY ($25k minimum deposit)
  • 5-year: 2.40% APY (less than $5k); 2.50% APY ($5k minimum deposit) and 2.60% APY ($25k minimum deposit)

LEARN MORE Secured

on Ally Bank’s secure website

Member FDIC

  • 1-Year CD from a Credit Union: PenFed Credit Union – 2.12% APY, $1,000 minimum deposit

12 Month Money Market Certificate from PenFed Credit UnionPenFed is a credit union that offers very competitive interest rates. You need to join the credit union in order to benefit from their products. If you have a military or government affiliation, it is free to join. Otherwise, you would need to join an organization like Voices for America’s Troops, which costs $17.00. Once you are a member, you can open PenFed products (including this certificate) online. Your deposit would be insured by the NCUA, which is the National Credit Union Administration. There is a $1,000 minimum deposit for the one-year certificate.

LEARN MORE Secured

on PenFed Credit Union’s secure website

NCUA Insured

  • 2-Year CD: Colorado Federal Savings Bank – 2.51% APY, $5,000 minimum deposit

24 Month CD from Colorado Federal Savings Bank
Colorado Federal Savings Bank is new to our list this month. Despite having the state of Colorado in their name, this institution doesn’t have any branches and serves customers nationwide through their online banking platform. They’ve been around since 1990 and have over $1 billion in assets. Currently, they’re offering a 24 month CD for 2.51% APY with a minimum deposit amount of $5,000. While they’re an online-only bank, they don’t currently have a mobile app.

LEARN MORE Secured

on Colorado Federal Savings Bank’s secure website

 

  • 2-Year CD from a Credit Union: Greenwood Credit Union – 2.80% APY, $1,000 minimum deposit

Greenwood Credit Union
Greenwood Credit Union is open to anyone and everyone. The only requirement to become a member with this credit union is to open their Share Savings Account with a minimum deposit amount of $5. You’ll also have to maintain that amount in the account to remain an active member. When you go to apply for membership, you can also add that you want to open their 24 month CD. You’ll need to deposit $1,000 in order to earn their outstanding 2.80% APY. This deposit will be in addition to the $5 to open the Share Savings Account. Accounts can be managed online or through their mobile app. Deposits made to Greenwood Credit Union are insured by the NCUA.

LEARN MORE Secured

on Greenwood Credit Union’s secure website

 

  • 3-Year CD: Mainstreet Bank – 2.70% APY, $500 minimum deposit

3 Year CD from MainStreet Bank
Mainstreet Bank is located in Northwern Virginia and has a nationwide presence through their mobile and online banking platforms. Established in 2004, they currently have over $800 million in assets. With only a minimum of $500, you can open a 3 year CD with a 2.70% APY. All deposits made to MainStreet Bank are insured by the FDIC.

LEARN MORE Secured

on MainStreet Bank’s secure website

  • 3-Year CD from a Credit Union: Latino Credit Union, 2.60% APY, $500 minimum deposit

Latino Credit Union
Latino Credit Union surprises us with their outstanding rate of 2.60% on a 3-year CD. As a bonus, the minimum amount to open the account is five times lower than Live Oak Bank’s deposit requirement. This credit union is open to anyone who is willing to donate $10 to join the Latino Community Development Center (LCDC). Deposits are NCUA insured.

LEARN MORE Secured

on Latino Credit Union’s secure website

  • 5-Year CD: American Bank – 3.00% APY, $500 minimum deposit

60 Month CD from American BankAmerican Bank is a state-chartered bank headquartered in Allentown, PA. They have over $500 million in assets and have experienced steady growth year over year. They’re currently offering the most competitive rate on a 5-year CD provided by an online bank. All you need is $500 to deposit to open the account. They have an online banking platform as well as a mobile app.

LEARN MORE Secured

on American Bank’s secure website

  • 5-Year CD from a Credit Union: Northwest Federal Credit Union – 3.05% APY, $1,000 minimum deposit

5 Year Share Certificate from Northwest Federal Credit UnionNorthwest Federal Credit Union was established in 1947 and has grown to obtain over $3 billion in assets. This credit union is open to anyone willing to join one of their Community Partner Organizations. They give you the opportunity to do so when you go to fill out your membership application. In addition to banking online, this credit union also has a mobile app.

Northwest Federal Credit Union offers incredible rates on their 5 year CDs. Their rates are as follows:

  • $1,000-$99,000: 3.05% APY
  • $100,000-$249,999: 3.10% APY
  • $250,000+: 3.15% APY

LEARN MORE Secured

on Northwest Federal Credit Union’s secure website

3 Questions To Ask Before You Open A CD

1. Should I just open an online savings account instead?

With a CD, the saver and the bank make stronger commitments. The saver promises to keep the funds in the account for a specified period of time. In exchange, the bank guarantees the interest rate during the term of the CD. The longer the term, the higher the interest rate – and the higher the penalty for closing the CD early. With a savings account, there are few promises. You can empty the account without paying a penalty and the bank can change the interest rate at any time.

If you have a high level of confidence that you do not need to touch the money for a specified period of time, a CD is a much better deal. However, if you think you might need to use the money in the next couple of months, a savings account is a much better idea.

You can earn a lot more interest with a CD. Imagine you have $10,000 and know that you do not need to touch the money for two years. In a high-yield savings account earning 1.60%, you would earn $322.56 over two years. If you put that money into a 2.51% CD, you would earn $508.30. Given the ease of switching to an online CD, the extra interest income is easy money.

2. What term should I select?

The early withdrawal penalties on CDs can be significant. On a 1-year CD, 90 days is a typical penalty. And on 2 and 3 year CDs, a 6-month penalty is common. The impact of the penalty on your return can be significant. If you opened a one-year CD with a 2.20% APY and closed it after six months, you would forfeit half of the interest and earned only 1.11%. You would have been better off with a savings account paying 1.60%.

The worst case scenario is with the longest CDs. 5-year CDs usually have a one-year penalty for taking out funds early. If you open a 5-year CD and close it quickly, you could actually end up losing money.

Given the early penalties, you need complete confidence that you will not need to withdrawal the money early. Ask yourself this question: “do I have 90% confidence that I will not need access to the cash during the CD term?” If you don’t have confidence, go for a shorter term or a savings account.

3. Should I consider my local bank or credit union?

The interest rates shown in this article are all from online banks that offer products nationally. Our product database includes traditional banks, community banks and credit unions. If traditional banks offered better rates, they would have been featured in this article. The internet-only banks have dramatically better interest rates. That should not be surprising. Because internet-only banks do not have branches, they are able to pass along their cost savings to you in the form of higher interest rates.

However, you can always visit your local bank or credit union and ask them to beat the rates listed in this article. The chance of getting a better deal is extremely low (remember that Bank of America is only paying 0.07%), but you can try.

How To Find The Best Account

If you don’t find an account that meets your needs in this article, you can use the MagnifyMoney CD tool to find the best rate for your individual needs. Input your zip code, deposit amount and term. The tool will then provide you with CD options, from the highest APY to the lowest.

You can learn more about us and how we make money here.

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Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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News

Survey: Nearly 40 Percent of Students with Loans Consider Dropping Out of College

Editorial Note: 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 prior to publication.

What To Do if a Student Loan Refinancer Rejects You

Today’s college student bears the weight of trying to succeed academically as well as his growing debt from student loans.

According to a new MagnifyMoney.com survey, nearly 40% of current students with loans have considered dropping out to avoid racking up more student loan debt. And of the students who thought about leaving before earning their degree, over half were more than $20,000 in debt.

It’s no secret that student debt is causing many individuals to consider whether their degree is even worth the financial stress. An analysis by The Hechinger Report revealed that 3.9 million people with student loan debt dropped out of college during the 2015 and 2016 fiscal years alone.

For fall 2017, total undergraduate enrollment dropped by nearly 224,000 students from a year ago, according to the National Student Clearinghouse Research Center. The center said it’s the sixth consecutive year of total enrollment declines and does not cite reasons, but our survey found financial concerns seem to play a role in student enrollments and dropouts.

The survey was conducted via Google Consumer Surveys’ online student panel from April 23-May 7, 2018. It included responses from 3,069 college students. Approximately 2,000 of respondents had at least some student loan debt.

Key findings: Work, kids add to financial strain

In our survey, 39% of our respondents with student debt said they have considered stopping college before graduating so their financial situation wouldn’t get worse. For those students, balancing school with part-time work was also a major worry, with more than half citing the juggling act as a main reason they considered quitting.

Nearly 45% of those who contemplated dropping out said they worked 20 hours or more per week, with 20% saying they worked more than 40.

Still, 35% of the students in our study who had thought about leaving weren’t working at all, signifying that loan debt is still a major stress for those who don’t earn extra money while in college.

Concerns such as children and expected income seemed to play a large role in these anxieties as well: 30% of students listed balancing work and family as a main reason they had thought about quitting, while 26% said they considered quitting because they were worried about not making enough in their chosen career field.

Debt amounts hit $50,000 and up

In addition to the 52% of our in-debt respondents who owed $20,000 or more, nearly 25% were facing at least $50,000 in total loans. Additionally, almost 10% owed $100,000 or more.

Loan structure varies widely among these students. Based on our survey, 48% of our respondents said they had at least some private loans, while 52% were exclusively using federal aid.

No one-size-fits-all plan for paying off debt

There was no clear favorite strategy for paying off debt. While 39% of people said they would use an income-based plan to manage their loans, 25% said they would use a standard repayment plan. Still, another 26% weren’t yet sure how they would deal with the debt.

Despite the stress caused by student loans, most of our respondents were generally positive about their job prospects after school.

Nearly half said they thought they would make at least $20,000 extra per year as a result of their degree, with 34% of them saying they expected to earn at least $30,000 extra.

Tips for dealing with student debt

Student loans don’t have to be such a headache, though. With the proper planning and preparation, students can work around the overwhelming costs of loan debt and keep the stress of repayment at bay from their daily lives.

Jeremy Wine, supervisor of student loan counseling services for Take Charge America, a Phoenix-based nonprofit credit consulting agency, shared tips for approaching the repayment process.

    • Think ahead. As our survey shows, worrying about loans during college can be a major source of anxiety among students. Still, Wine said it’s best to set up a plan of action long before you put on your cap and gown. “Realize that it’s there and that it’s something you have to pay back,” he said. He added that a nonprofit loan counselor can help you lay out a set of repayment goals and a budget that fits your financial situation.
    • Look at repayment options. If you have federal student loans, there are a number of flexible repayment options available to you. Contact your loan servicer to enroll.
    • Don’t waste money. It may be tempting to use the loan funds on items such as a new computer or a car payment. Wine said it’s best to only use the money for tuition and fees, even if that means getting a part-time job to pay for the rest.
    • Consider consolidation carefully. Student loan consolidation or refinance involves paying off each of your loans with a new loan. Refinancing your debt can help lower your interest payments and make your loans easier to manage. Typically, you’d take out the new loan with a private lender. Just know that if you refinance federal student debt with a private loan, you’ll lose access to flexible repayment programs offered to federal borrowers. There is a consolidation program available for federal loans specifically, however, which is another option.

 

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Dillon Thompson
Dillon Thompson |

Dillon Thompson is a writer at MagnifyMoney. You can email Dillon here

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Small Business

18 Options for Small Business Loans in 2018

Editorial Note: 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 prior to publication.

Historically, business lending involved a massive time commitment, high costs and a high risk that a business wouldn’t get all the funding it needs. Online lenders have completely changed the business lending landscape, making it possible to get funding in as little as a few days in some cases. That being said, borrowing from one of these newer online lenders means working with a company you may not be familiar with, which may pose some challenges.

If you’re a small business owner looking for a loan, this guide can help you decide which type of loan best suits your needs. It will also help you compare some of the best lenders and small business loan marketplaces, so you can apply with confidence.

5 ways to use a business loan

Business financing tends to be more complex than consumer finance, so it pays to understand how business lending works.

Businesses typically look for financing during start-up or expansion phases, but businesses may need financing for more mundane reasons. These are a few common reasons businesses seek financing.

Starting a business: More than half of all start-ups use personal savings to start their business, but in many cases personal savings alone aren’t enough to pay for start-up costs. That means many companies need to consider taking out a start-up loan (or finding other means of finance). Antara Dutta, a volunteer mentor and former president of the Delaware chapter of SCORE (the nation’s largest network of volunteer expert business mentors), explained, “Start-up companies need enough money to cover at least twelve months of expenses. It usually takes at least twelve months to get to break even, and we usually say about 18 months to get to the point of earning a profit.”

Managing cash flow: Seasonal businesses may need to seek financing to pay for inventory and materials to complete a project or to stock a store. Other businesses experience a gap between when they pay their bills and when customers pay them. Business owners who cannot cover cash flow needs from personal or business savings may require financing. Invoice factoring or a line of credit may provide the right financing solution for businesses that need to pay bills.

Expanding operations: Businesses looking to expand often need a loan to cover certain costs. Although profitable businesses should consider using business savings, a loan can help a business achieve faster growth. Dutta recommended, “When you’re expanding operations you may be in a good position to refinance any existing debts. Combining debts can allow you to get better terms on all your debts.”

Refinance existing debt: A business that has debt may be able to refinance to cut back on interest or reduce monthly payments. This will strengthen their financial position, and allow for more growth, more profitability or better cash flow.

What to know before you borrow

When it comes to finding the right loan for your business, you’ll have to weigh multiple priorities to find the right loan for your business. These are a few areas business owners should consider when applying for a loan:

Know exactly how much you need to borrow: Whether you’re starting a new business or you’re expanding current operations, you need to explain how much money your business needs, how the business will use the proceeds and how the business will pay back the loan.

Understand the cost of capital: The cost of capital is how much it costs to borrow money. The most common measure for this is APR, although you may see other terms being used. Business owners may struggle to maintain profitability when the cost of capital is too high.

Ask about repayment terms: Unlike most consumer loans, business loans can have a variety of repayment schedules. You may have to make daily, weekly or monthly payments. Be sure you understand how the repayment schedule will affect your cash flow and ability to make timely payments during the repayment period.

Collateral requirements: Business loans may require you to put up certain assets as collateral against the loan. Collateral reduces the lender’s risk because the lender can automatically seize the collateral to recoup their losses. A bank’s collateral requirements aren’t limited to just business assets. Oftentimes, business owners have to use personal assets (like home equity) to guarantee the loan.

“Banks need to know that you’re going to pay them back,” Dutta told MagnifyMoney. “So they might need some collateral, especially for start-ups or high-risk businesses. A lot of times, you’ll have to take out a second mortgage to cover your collateral.”

How much funding you’ll receive: Most start-up companies (69%) who apply for a loan experience a financing shortfall, according to a 2017 small business survey by the Federal Reserve Board of New York. This means the business is approved for a smaller loan than what the company needed. When applying for a loan, it’s important to understand that you may struggle to get enough financing.

How long it will take to get the funds: According to one Harvard Business School working paper, time to funding for business loans ranged from an average of less than five days for short-term lines of credit to more than 45 days for SBA-guaranteed loans. Most online lenders focus on high speed lending, but business owners may have to make sacrifices in other areas (such as cost or repayment terms) to find fast underwriting.

Are pricing and terms transparent? Small business owners often have a tough time comparing prices and payback terms on products from nontraditional (online) lenders. To be sure you’re getting a fair deal, look for clear pricing and terms, including an estimated monthly payment, an APR calculation and whether you face prepayment penalties. If a lender has adopted the SMART Box pricing approach, you can find all this information in your schedule of fees.

18 options for online small business lenders

LendingTree*
LendingTree is an online marketplace for business loans. It has one of the largest networks of lenders in the U.S. Business owners can submit one simple form for business financing, and LendingTree will match the owner with real offers from several lenders. This gives business owners the power to pick the best deal for their business.

  • Financing options include: Term loans, SBA loans, working capital loans, equipment financing, business lines of credit, accounts receivable financing and business credit cards.

*LendingTree is MagnifyMoney’s parent company.

National Funding
National Funding is a non-traditional lender that’s been in business since 1999. The company specializes in lending smaller dollar loans (less than $100,000) to businesses that are underserved by banks. National Funding often takes less than a day to underwrite loans. Loans from National Funding are fixed-interest loans, but the company offers discounts of up to 7% to customers that pay off their loans early.

  • Financing options: Short-term loans, equipment financing, merchant cash advances
  • Short-term loans:
    • Four to 24 months
    • daily or weekly payments
    • $5,000-$500,000
  • Equipment financing:
    • Two to five years
    • Monthly payments
    • Up to $150,000
  • Funding in under 24 hours

RapidAdvance
RapidAdvance is an alternative business lender that’s been issuing loans for more than a decade. The company has an A+ rating with the Better Business Bureau, and most customers appreciate the company’s quick and thorough customer service. RapidAdvance helps business owners get funding fast, but its loans tend to carry very high-interest rates.

  • Financing options: Short-term loans, unsecured lines of credit
  • Must be in business two years, with at least $5,000 per month in revenue
  • $5,000-$1,000,000 (lines of credit up to $500,000)
  • Loan terms up to 18 months
  • Interest rates starting from 16% APR (fixed simple interest rates)
  • Funding in three days or less

OnDeck
OnDeck is an online business lender and a leader in transparent pricing. It is a member of the Innovative Lending Platform Association, which is an industry coalition that has adopted the SMART Box™ to increase transparency in pricing. OnDeck offers both term loans and lines of credit. Most OnDeck customers will have fair or better personal credit scores (above 600 FICO scores).

  • Financing options: Short-term loans, unsecured Business lines of credit
  • Short-term loans:
    • Three to 12 months
    • Fixed simple interest (you pay all the interest, even if you pay off the loan early)
    • Daily or weekly payments
  • Longer term loans
    • 15 to 36 months
    • Compounding interest rate (you pay less when you pay off the loan early)
    • Daily or weekly payments
  • Lines of credit:
    • Up to $100,000
    • Fixed weekly payments
    • Only pay interest on what you draw
  • Funding in under 24 hours

Credibly
Started in 2010, Credibly (originally RetailCapital) is a small business lender with a focus on using technology and customer service to make business underwriting easier and better. Credibly focuses on short-term lending, and it differentiates itself by having reasonable interest rates (9.99%-36%*) on 18- and 24-month loans.

  • Financing options: Working capital loans and “business expansion loans” (short-term loans with weekly repayment options)
  • Working capital loans
    • Six to 17 months
    • $5,000-$250,000
    • Interest expressed as interest rates (not expressed as an APR*)
    • Daily repayments
  • Business expansion loans
    • 18 or 24 months
    • $5,000-$250,000
    • 9.99%-36% annualized interest rate.
    • Interest rates set as a factor fee. Paying off the loan early will not reduce interest payments.
    • Weekly repayments
  • Funding in 48 hours on average

Finance Factory
The Finance Factory is a one-stop shop for all things related to business financing. It is an online lending marketplace that matches small business lenders to small business borrowers. Because it is a network, it offers a huge range of business loan products including start-up loans, SBA loans, lines of credit, unsecured business loans and more. Some of the products have very low-interest rate loans (however, the underwriting times aren’t as fast as other lenders).

  • Financing options: Start-up funding, SBA loans, business express loans, revenue-based loans, equipment financing, franchise financing
  • Most loans range from $5,000-$500,000 (revenue-based advances from $10,000 to $1 million)
  • Interest rates vary by product from 0%+ on start-up loans, to 6%-8% SBA loans and other rates based on credit and business history
  • Up to 25 years
  • Funding time varies based on loan type. Some loans can be funded in less than 48 hours, but other loans, like SBA loans, may take a month or two.

Seek Capital
Seek Business Capital is a business lending broker that helps business owners navigate the complex business funding world. Seek Capital will use information that you provide to create a funding estimate which is a range of funding amounts, rates, and payback terms that a business owner can expect to procure. Business owners who are happy with the estimate can apply for loans, and Seek Capital will have the loans funded in one to three business weeks. Seek Capital does charge broker fees, so businesses should be careful to compare Seek’s offers and fees with other competitors.

  • Unsecured business loans
  • $5,000-$500,000
  • Same-day loan estimates, three weeks to funding

The Business Backer
Despite major innovations in the world of online business lending, The Business Backer believes that financing is still all about relationships. To help businesses qualify for better interest rates, The Business Backer gives business owners the opportunity to share the story of their business and the circumstances leading them to apply for a loan.

The Business Backer funds some of its own loans, but they also have a network of lending partners. The network means that borrowers can use a single application to apply for multiple types of financing.

  • Financing options include: SBA loans, business line of credit, long-term loans, short-term loans, equipment financing, commercial real estate loans, start-up loans
  • Start-up loans
    • Up to $150,000
    • 8%-20% APR
  • Short-term loans
    • Up to $200,000
    • 14%-51% Annualized Interest Rate
    • Four to 18 months
    • Daily, weekly or monthly payback
    • Fixed interest with early payment discounts available
  • Business line of credit
    • $5,000-$150,000
    • 1- to 3-year terms
    • 18%+ interest rate
  • Funding in as little as 48 hours (though this can vary by loan type)

LoanMe
LoanMe is a business lender that specializes in lending to businesses that don’t qualify for loans from banks, and businesses with urgent cash needs. Interest rates on loans from LoanMe are higher than those from traditional banks, but terms range from two to ten years. Also, unlike many other lenders, LoanMe uses traditional interest formulas. That means the faster you pay off the loan, the less interest you’ll pay.

  • Funding options: Term loans
  • $3,500-$75,000
  • Loans from 2 to 10 years with monthly repayments
  • Interest rates from 24%-149%
  • Same-day funding available

Elevation Capital
Elevation Capital is a lender that offers alternative loan products (especially unsecured short-term loans) to business with as little as three months of revenue history. Elevation’s unique underwriting style means that business owners with poor credit may be able to qualify for a loan.

  • Financing options: Not available
  • Payback terms: Not available
  • Interest Terms: Not available
  • Up to $500,000 in loans
  • Funding in as little as 24 hours.

Reliant Funding
Reliant Funding was founded in 2008, in the midst of the financial crisis. It boasts of over $1 billion in lending to small businesses, and an A+ rating with the Better Business Bureau. Reliant focuses on speed of funding, and underwrites using current business performance rather than personal or business credit history.

  • Term loans ranging from six to 18 months
  • Loans up to $250,000
  • Fixed simple interest rates- (you’ll pay the same amount of interest, no matter how quickly you pay off the loan)
  • Daily payment schedules
  • Same day loan approvals and funding

SmartBiz
SmartBiz is an online marketplace for SBA-guaranteed loans. SBA-guaranteed loans are known for slow turnaround times (with an average of 45 days to funding), but SmartBiz streamlines the process. Their computer algorithm can help determine whether you’re SBA loan-eligible before you complete the complex application. Businesses that qualify can complete their application through the SmartBiz website and may receive funding within seven days of completing their loan application.

  • Funding options: Commercial real estate loans, SBA-guaranteed working capital loans
  • Commercial real estate loans
    • $500,000- $5 million
    • Terms up to 25 years
    • Interest rates ranging from 6.25%-8.5%
  • Debt refinance and working capital loans
    • $30,000 to $350,000
    • Terms up to 10 years
    • Interest rates ranging from 6.25%-8.5%
  • Funding as fast as seven days after application is complete (but it may take longer)

Funding Circle
Funding Circle is one of the nation’s first peer-to-peer (P2P) business lending companies. It specializes in low interest-rate term loans for established businesses. Applications for the loans can take as little as 10 minutes if you have all the required financial documentation ready. Funding Circle is a signatory of the Small Business Borrowers’ Bill of Rights which means that business owners can expect clear and transparent terms from Funding Circle.

  • Funding options: Term business loans
  • Loans from $25,000- $500,000
  • Terms ranging from six months to five years
  • Interest rates from 4.99%-26.99%
  • No prepayment penalties
  • Funding in five days or less

Fora Financial
If your business grosses at least $12,000 per month, and you need cash fast, Fora Financial could provide a viable loan solution for you. The company provides unsecured short-term loans with funding in as little as 72 hours. Business owners who are looking into these loans should read the fine print carefully. Fora offers partial discounts for early repayment. Early repayment discounts are not equivalent to the interest savings you would receive if you paid off a traditional loan early. This means that loans from Fora may be substantially more expensive than traditional loans if you pay the loan early.

  • Financing options: Unsecured short-term loans
  • $5,000-$500,000
  • Terms up to 15 months
  • Fixed simple interest with partial discounts for early repayment.
  • Funding in as little as 72 hours

LendingClub
LendingClub is a P2P lender that specializes in affordable term business loans for business owners that have fair credit (or better). Businesses must have been in business at least 12 months and have revenue in excess of $50,000 annually.

  • Financing options: unsecured term loans, secured term loans
  • Loans above $100,00 require a blanket lien on all business assets
  • Loans from $5,000-$300,000
  • Payback terms from one to five years
  • Interest rates ranging from 9.77% – 35.71%
  • Funding takes an average of 7 days

Headway Capital
Headway Capital is a lender that specializes in small business lines of credit with fixed simple interest rates. This means that Headway charges interest as soon as the funds are drawn, and businesses pay the funds back through weekly or monthly payments.

The Headway Line of Credit may be a good solution for businesses that cannot qualify for traditional credit lines, but need the flexibility that a line offers. To qualify for a Headway line of credit your business must have been operating for at least 12 months with at least $50,000 in annual revenue.

  • Financing options: Line of credit
  • Credit limits: Up to $50,000
  • Repayment periods: 12 to 24 months
  • Fixed simple interest (interest charged when you withdraw and does not compound over time).
  • Weekly or monthly repayments

BlueVine Capital
BlueVine Capital is a company that’s creating innovative working capital solutions for small businesses. They currently offer business lines of credit and invoice factoring options that allow businesses to only pay for financing when they need it. Business owners need a 600 credit score to qualify for a business line of credit and a 530 credit score to qualify for an invoice factoring option. Businesses also need at least $10,000 in monthly revenue to qualify for either option.

  • Financing options: Line of credit, invoice factoring
  • Line of credit
    • Weekly payments
    • $5,000-$5 million
    • Interest rates from 6.9%
  • Invoice factoring
    • $20,000- $5 million
    • Invoice due date must be less than 13 weeks
    • 85%-90% advance rates
  • Funding within 24 hours for first advance, and faster afterward

StreetShares
StreetShares is a newcomer in the P2P lending space. It specializes in moderate interest rates and fast lending. Military members and veterans are especially valued customers, and StreetShares makes sure to give veterans special treatment.

  • Financing options: Term loans, lines of credit, invoice factoring
  • Term loans
    • Three to 36 months
    • $2,000- $100,000 limits
    • Weekly repayments
    • No prepayment penalties
  • Line of Credit
    • $5,000- $100,000
    • Weekly repayments
    • Three to 36-month paybacks
    • No prepayment penalties
  • Invoice factoring (contract factoring)
    • Advance rates up to 90%
    • Monthly factor fees as low as 1%
  • Funding in as little as a few days

LEARN MORE: Types of small business loans

Small businesses operate in every industry, with revenues ranging from less than $100,000 per year to over $100 million per year. On top of that, business have varying levels of profitability and business credit quality. With such diverse business circumstances, it’s not surprising that there are dozens of business loan options.

These are the most common loans for businesses.

#1 Term loans aka short-term, unsecured, secured and equipment loans

Term loans are an umbrella category of business loans comprised of several different types of loans. In general, a term loan is repaid over a fixed period of time, usually by making even payments on a fixed schedule.

Here are the main types of term loans available to small business owners:

Short-term loans

What they are: Short-term business loans have payback periods ranging from three months to two years. Business owners make fixed payments on the loans until they are paid off.

How they work: After approving a loan, lenders deposit funds directly in a business’s bank account. Then, business owners make regular payments to pay off the loan.

General terms offered: Short-term loans often require daily or weekly payments. Many short-term loans have fixed simple interest rates. This means that you will pay the same amount of interest and fees whether you pay off the loan early or on time. The interest rates on short-term loans can be very high.

Most of the time, short-term loans are not secured by any collateral. However, there are important exceptions to this rule. For example, invoice financing (where invoices serve as collateral) can be set up as a short-term loan arrangement.

Speed: Online lenders specialize in short-term lending, and most can fund loans within 72 hours.

Who should use them: Business owners should be careful when taking out short-term loans. The daily payment schedules may make it difficult to maintain positive cash flow while the loan is being repaid. Short-term loans offer funding fast, but they aren’t a sustainable way to fund a business.

Unsecured term loans:

What they are: Unsecured term business loans are loans that are not backed by any underlying asset like your home. Unsecured business loans may require a personal guarantee, which is a promise to repay the loan regardless of business performance.

How they work: When funding on an unsecured term loan, a lender gives a business owner a lump sum of cash to be used for the business. The lender generally doesn’t restrict how the business uses the loan. In exchange for the upfront cash, the business commits to ongoing payments until the loan is repaid.

General terms offered: Unsecured business loans range from short-term loans (such as the loans explained above), to loans lasting up to several years. They may require business owners to make fixed daily, weekly or monthly payments. Except in the case of short-term loans, business owners will generally save money by paying off unsecured term loans early.

Speed: The time it takes to receive funds depends on the type of lender you work with. Online lenders offer funding in as little as three days, but larger lenders may take a week or more.

Who they are best for: Unsecured loans offer excellent protections for borrowers and are ideal to fund riskier ventures. If the business defaults on payments, the lender will have to go through proper collection channels before collecting any assets from the business owner. However, this protection comes at the cost of higher interest rates.

Secured term business loans

What they are: Secured term business loans are term loans that are directly secured by some collateral. That means if the business fails to pay its loan, the lender can immediately seize the underlying asset. Two in five (42%) business loans are secured by business assets (such as equipment, inventory, buildings or land), but an almost equal number (39%) are secured by personal assets, such as a personal vehicle, cash reserves or home equity, according to the Federal Reserve small business credit survey.

How they work: When business owners take on a secured loan, they receive an upfront sum of cash. The lender may limit how the business can use the cash (for example to purchase equipment). The business will make fixed monthly payments until the loan is paid off.

General terms offered: Most of the time, secured business loans have terms longer than two years. The interest rates on secured loans tend to be lower than rates on unsecured loans.

Speed: Like unsecured term loans, midterm loans tend to take several weeks to fund, but the time for funding will vary by lender.

Who should use them: Secured term loans are riskier for business owners since defaulting could lead to the loss of personal assets. However, they are a good choice for a stable business that has the cash flow to support the new loans.

Equipment loans

What they are: An equipment loan is a loan that’s backed by the equipment you purchase for the business. Business equipment would generally include heavy machinery, vehicles, computer servers, farm equipment and more.

How they work: In general, business owners put 10%-20% down on an equipment purchase, and finance the rest using the equipment loan. The business owner will make monthly payments on the loan (in most cases). If the business defaults on the loan, the lender may repossess the equipment and sell it to recoup its losses.

General terms offered: Down payment requirements generally range from 10% (on an SBA 504 loan) to 20% or more. Payback periods usually range from five to 10 years).

Speed: Business owners who complete an equipment loan application should expect to receive funding in under one week.

Who should use them: Businesses with good credit history are approved for equipment financing more than 90% of the time. If your company needs new equipment, an equipment loan is likely the best way to finance it.

#2 SBA-guaranteed business loans:

What they are: SBA-guaranteed business loans are loans that are partially guaranteed by the Small Business Administration. In most cases, the SBA will reimburse banks up to 85% of the loan value if a business owner defaults on the loan. The SBA limits the interest rate that can be charged on these loans, so SBA loans tend to have low-interest rates relative to other forms of business financing.

How they work: To qualify for an SBA loan, business owners must put up personal or business assets as collateral for the loan. In general, the collateral must cover at least 20%-25% of the loan value.

General terms offered: SBA loans are term loans with monthly payments. The interest rates on SBA loans vary by product, but SBA 7a loans (with terms less than seven years) have maximum interest rates ranging from 7%-9% depending on loan size.

Equipment and inventory loans have terms ranging from seven to ten years. Real estate loans may have terms up to 25 years.

Speed: Compared with other loans, SBA loans tend to have slow funding times. The fastest turnaround time is likely from SmartBiz, which claims it can fund loans as fast as seven days after the application is complete. However, the average time to funding for SBA loans tends to be much longer. Industry experts estimate that most SBA loans take at least a month to fund, and could be much longer.

Who should use them: With great interest rates and limited collateral requirements, an SBA loan makes a great choice for any business owner who has the time to wait for funding. These can be especially helpful for starting or expanding a business.

#3 Business lines of credit

Business lines of credit allow business owners to draw from a predetermined credit limit to meet business needs. After drawing down on the line of credit, business owners will make regular payments to pay it off. Business owners only pay for money they borrow, which makes lines of credit a cost-effective financing option for seasonal businesses.

These are a few lines of credit your business might consider:

Unsecured lines of credit

What they are: Unsecured lines of credit are business lines of credit that don’t require any specific form of collateral.

How they work: An unsecured line of credit allows business owners to draw on a line of credit to meet business needs. The business can continue to draw up to the credit limit. When the business repays the line, the credit limit is replenished.

General terms offered: Unsecured lines of credit have a drawdown period (where the business owner can draw from the credit limit). The drawdown period is usually a year long. After that, businesses must renew their line of credit or begin repayment. Generally, the business owner has to make minimum monthly payments during the drawdown period. The interest rates on unsecured lines of credit can be as low as 6.25%, but can be far higher.

Speed: Time to access funding will vary by lender. Large lenders may be able to approve your loan within a week and have funding to your business shortly thereafter.

Who should use them: Unsecured lines of credit are a low-cost, short-term financing solution for mature businesses. Business owners must have a plan to repay the credit line, or they may end up defaulting.

Asset-based lines of credit:

What they are: An asset-based line of credit is a line of credit that’s backed by an asset. The assets are usually outstanding invoices and equipment or real estate.

How they work: Some businesses have a long gap between when they produce work and when they receive payment for it. These businesses may need access to cash to bridge the gap between the time they spend money and when they receive payments. An asset-based line of credit allows businesses to draw on a line of credit that is secured by outstanding receivables and equipment. The business is free to draw on the line up to the credit limit. Once the business repays the loan, the credit limit is restored.

General terms offered: Most lenders will extend asset-based lines of credit for short terms (under a year). Having short terms on the line of credit gives the lender repeated opportunities to evaluate the strength of the line of credit. To qualify for an asset-based line of credit, you generally have to work in the B2B space, and have large receivables.

Speed: Establishing an asset-based line of credit generally takes a week or more.

Who should use them: Asset-based lines of credit are ideal for businesses with long collection cycles such as custom manufacturers and other businesses that sell on terms.

#4 CAPLines

What they are: CAPLines are SBA-guaranteed lines of credit designed to meet cyclical or short-term working capital needs. Businesses may need to show the expected costs of their projects or contracts to qualify for a CAPline.

How they work: Businesses apply for a CAPLine based on the projected costs of an expansion or larger product. When approved, a business can draw on the line up to the credit limit. When the business repays the credit line, the credit limit is restored.

General terms offered: Maturities on these lines of credit top out at 10 years. Currently CAPLines have interest rates ranging from 7%-9% APR.

Speed: Speed will vary by lender.

Who should use them: CAPLines are an appealing option for established businesses with short-term or seasonal borrowing needs.

Frequently asked questions

Lenders consider a variety of factors when underwriting business loans. More than nine in 10 start-ups (92%) rely on the owner’s personal credit score to obtain business financing, according to the Federal Reserve.

On top of business and personal credit, lenders also need to evaluate your business’s financial prospects during underwriting. Banks lean heavily on the information in your last two years of tax returns. “Banks need to see that you have revenue in excess of your expenses, or you’re not likely to be approved,” Dutta told MagnifyMoney. “Some business owners show losses year after year to minimize their taxes, but that means they won’t be able to get a loan when they need it.”

Start-up companies may need to submit a business plan and a detailed sales model to show how they will earn the revenues to pay back a loan. The plan will show the bank that you have a plan to fix problems should they arise.

The application process for business loans varies by lender.

Most online lenders have simple applications that take just minutes to complete. You’ll provide basic information about yourself and your company. On top of that, you’ll upload documentation to show the financial state of your company (for example, three months of bank statements or two years of tax returns).

Local banks, some of the biggest providers of loans to small business owners may have a more complicated lending process. It’s common for banks to require a detailed business plan with an application. Dutta recommended, “Before taking out a loan, you’ll want to get help from an industry-specific accountant who can help you make a business plan. Don’t be afraid to spend a little money if you’re taking on a big amount of debt. If you can’t afford [an industry-specific accountant], of course, get free help from SCORE. Just be sure to customize any templates you use to meet your needs.”

Following the 2008 financial crisis, small business lending took a dive, and it hasn’t fully recovered. Finding business funding remains a challenge for many business owners.

Small businesses tend to have the hardest time getting financing. In 2015, just 54% of businesses with less than $100,000 in annual revenue were approved for loans. By comparison, businesses earning between $1 million – $10 million in annual revenue saw an approval rate of 81%.

Approval rates for business funding also depend on your firm’s credit quality and where you apply. Firms with good credit (low credit risk) that applied at small banks were approved for business loans 78% of the time in 2016. Firms with medium or high credit risks had the best odds of being approved by an online lender. However, even with online lenders, just 45% of high-risk businesses managed to gain approval.

As of 2014, the average business owner who needed a loan, spent 33 hours looking for financing options, but the actual time to get a funding depends on the loan you’re considering. For example, SBA-guaranteed loans take up to several months to underwrite. On the other hand, online lenders in the business space can often underwrite and fund loans in a matter of days.

The cost of a loan varies based on the type of loan, the collateral required and who issued the loan. For example, loans from prominent online lender OnDeck had an average interest rate of 42.5% annualized, but borrowers often faced even worse interest rates when they took on financing from online lenders.

On the other hand, some forms of business financing can be very cost effective. Interest rates on most SBA loans are under 10% APR, and some lenders boast rates as low as 4.99% on fixed-term loans.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

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Personal Loans

Prosper Personal Loan Review

Editorial Note: 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 prior to publication.

Prosper
APR

5.99%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 5.00%

APPLY NOW Secured

on Prosper’s secure website

Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. The interest rate you receive is determined by their own proprietary “Prosper Rating”. You can qualify for a loan with average credit and there are no prepayment fees, but your origination fee can be expensive, depending on your Prosper Rating. Prosper is not available in Vermont, Connecticut, Iowa, North Dakota, Maine, New York and Pennsylvania.

Prosper personal loan details
 

Fees and penalties

  • Terms: Loan terms are set at 36 or 60 months.
  • APR range: Rates range from 5.99% to 35.99%.
  • Loan amounts:Prosper will loan a minimum of $2,000 and a maximum of $35,000.
  • Time to funding: On average, borrowers will see funds deposited in their bank accounts within five days. However, investors have up to 14 days to fund loans.
  • Hard pull/soft pull: Prosper does a soft pull on your credit when you check your rates.
  • Origination fee: Origination fees range from 1% to 5% and will be deducted from the final loan amount.
  • Prepayment fee: Prosper has no prepayment penalties for paying your loan off early.
  • Late payment fee:You will be assessed a late fee of $15 or 5% of your unpaid monthly amount — whichever is greater — if you have not paid in full within 15 days of your due date.
  • Other fees:Prosper charges a check processing fee — the lesser of $5 or 5% of your monthly payment — as well as an insufficient funds fee of $15 for each returned or failed payment.

Eligibility requirements

  • Minimum credit score: To qualify, borrowers must have a score of 640 or above.
  • Minimum credit history: Borrowers must have at least three open trades on their credit reports.
  • Maximum debt-to-income ratio: A borrower’s DTI must be below 50%.

In addition, borrowers must:

  • Be 18 years of age
  • Have a bank account and a Social Security number
  • Have fewer than seven inquiries on their credit reports in the previous six months
  • Report an income greater than $0
  • Have not filed for bankruptcy in the last 12 months

Prosper is not available to borrowers in Iowa or West Virginia.

Applying for a personal loan from Prosper

To apply for a Prosper loan, start by filling out their online form to check your rates, which will trigger a soft pull on your credit — this does not impact your score.You’ll have to provide some personal information, including your physical address, birthdate, email, annual income, monthly housing cost and employment status.

You can also apply via phone.

Your loan offer is based on your Prosper Rating, a proprietary score assigned to you when you apply. This score indicates the level of risk you pose to lenders and is intended to create consistency in the evaluation and approval process. An AA rating indicates the lowest estimated annual loss (up to 1.99%), while an HR rating represents the highest (15% or more).

If you choose to accept the offer you receive, you can submit documents for verification via email to approval@prosper.com, or upload them within your Prosper account. The latter is recommended. Log in to check the status of your documents, application and the percentage of funding you’ve received. Once you accept an offer and request funding, Prosper will perform a hard inquiry on your credit.

Your loan will be listed for up to 14 days, during which investors commit funds, and Prosper completes the underwriting and verification process. The latter usually takes seven business days or less. If your loan is not funded after 14 days, your listing will be canceled and you’ll need to create a new one.

Once your loan application has been approved and your listing is funded, you can expect to see your money deposited in your bank account within 1-3 business days.

Pros and cons of a Prosper personal loan

Pros:

Cons:

  • Qualify with lower credit. Prosper will consider applicants with scores as low as 640, though the best rates are offered to those with excellent credit. Borrowers can receive funds in as little as one business day after loan approval
  • Check rates with a soft credit pull. Your credit won’t be affected when you check your interest rates with Prosper.
  • No prepayment penalties. Prosper offers longer terms of three and five years, but you won’t be penalized if you are able to pay your loan down early.
  • The origination fee. Prosper charges 1%-5% to originate your loan, so consider whether this added cost makes sense for you.
  • Potential to go unfunded.Investors have to commit to your loan within 14 days of listing. If this doesn’t happen, you will have to create a new listing, which means more time before you receive your funds.

Who’s the best fit for a Prosper personal loan

If you have average credit, Prosper may be a good fit for you. With a minimum score requirement of 640, you’ll have slightly more leeway than you would with lenders who have stricter standards. However, you’re more likely to qualify for a better rate with a higher score — Prosper’s APRs go up to 35.99%, which is higher than other lenders with similar credit requirements.

Prosper is also a good option for those who want to reduce their monthly payments and pay down their loans over a longer period of time. Terms are set at three or five years — and if your financial situation improves and you are able to pay more quickly, there are no penalties to do so.

Checking rates at Prosper doesn’t impact your credit, so there’s no harm in gathering this information and comparing it with other lenders.

Alternative personal loan options

Here are several alternatives to Prosper:

Lending Club

Lending Club
APR

5.98%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 6.00%

APPLY NOW Secured

on Lending Club’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores in the mid-600s. The loan application process is online and only takes a few minutes to complete and you can check your interest rate without hurting your credit. The loan processing time can take a while and you might not get approved if you have missed payments in the past. LendingClub is not available in Iowa and West Virginia

Like Prosper, LendingClub is a peer-to-peer lending platform funded by investors. The rates and terms are similar, and they won’t do a hard pull on your credit until after you’ve checked your rates and completed your application. LendingClub is a good alternative if you don’t meet Prosper’s minimum credit score requirement — they will consider borrowers with scores as low as 600. You will pay an origination fee, but there are no prepayment penalties. Expect to wait up to seven days to see your funds deposited.

Upgrade

Upgrade
APR

5.96%
To
35.97%

Credit Req.

620

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 6.00%

APPLY NOW Secured

on Upgrade’s secure website

Loans made through Upgrade feature APRs of 5.96%-35.97%. All loans have a 1% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay. For example, a $10,000 loan with a 36 month term and a 17.97% APR (which includes a 5% origination fee) has a required monthly payment of $343.28. Upgrade is available in all states except: Connecticut, Colorado, Iowa, Massachusetts, Vermont, West Virginia.

Upgrade is an online lender that offers similar personal loan rates and terms to both Prosper and LendingClub. You can check your rates without impacting your credit — sign up for autopay and get a better rate. Upgrade is a good alternative if you need to borrow more or less than what Prosper offers, as loans are a minimum of $1,000 and a maximum of $50,000, or if you need your money more quickly. Upgrade claims most borrowers can expect to see their funds within four business days of approval.

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®
APR

6.99%
To
24.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Fees

No origination fee

APPLY NOW Secured

on Marcus By Goldman Sachs®’s secure website

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information.... Read More

Consider Marcus by Goldman Sachs if you want a no-fee personal loan. This means no origination fee, no prepayment penalties, and no late fees — even if you miss a payment. Rates are slightly more favorable than those offered at Prosper and terms go up to 72 months, which gives you more flexibility to pay over time. However, you are more likely to be approved for a Marcus by Goldman Sachs loan and get the best rates with a credit score of 660 or above, so this alternative is best for those with higher credit.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Emily Long
Emily Long |

Emily Long is a writer at MagnifyMoney. You can email Emily here

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Personal Loans

Santander Personal Loan Review

Editorial Note: 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 prior to publication.

Santander
APR

6.99%
To
16.99%

Credit Req.

680

Minimum Credit Score

Terms

24 to 60

months

Fees

No origination fee

APPLY NOW Secured

on Santander’s secure website

Santander’s personal loan might be a great option for you if you want to work with a traditional brick-and-mortar bank. In order to get your personal loan, you actually need to sign your loan documents at a local branch. While this gives you the familiarity and security of working with a traditional bank, these loans are only available in select areas where branches are located.

Santander Personal Loan Details
 

Fees and penalties

  • Terms: Terms range from 24 months to 60 months.
  • APR Range: Loan APRs range from 6.99% to 16.99%. If you do not elect ePay, your APR will increase by 0.25%.
  • Loan amounts: You can borrow a minimum of $5,000 and a maximum of $35,000.

  • Origination fee: There is no origination fee for Santander personal loans.
  • Prepayment fee: Santander has no prepayment penalties for personal loans.
  • Other fees: There are no application or annual fees.

Eligibility requirements

Although Santander doesn’t provide explicit credit requirements to qualify for its personal loans, it does state that borrowers must meet their “highest credit standards” — however, there is no specific credit score requirement listed. At many traditional financial institutions, you need a credit score of 680 or above to be considered for a loan and a 740 or higher to get the best loan rates.

When you apply, Santander will review your score and your debt-to-income ratio, among other factors, and your APR will vary according to your credit worthiness. You do not have to have a Santander checking account to be eligible for a personal loan, but without one you won’t qualify for the APR discount.

Santander also requires that you live in one of the following states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Washington, D.C.

Applying for a personal loan from Santander

You can apply for a Santander personal loan at your local Santander bank branch or online. If you choose the latter, expect the process to take 10 to 15 minutes. You’ll need the following information to complete your application:

  • Social security number
  • Employment history
  • Income information

Santander does allow co-applicants on personal loans — you’ll be asked to provide that person’s information as well.

Pros and cons of a Santander personal loan

Pros:

Cons:

  • Low rates. Santander has lower starting rates than many lenders, although those rates are reserved for borrowers with the highest credit scores.
  • Minimal fees. There are no origination, application, or annual fees for personal loans. In addition, Santander doesn’t penalize you for paying off your loan early.
  • Term options. With terms ranging from two to five years, you have the option to pay your loan off quickly or over a longer period.
  • Limited to borrowers in certain states. Santander only serves personal loan customers in states that have — or are near — brick-and-mortar branches. If you live outside of the Northeast or Mid-Atlantic, you likely won’t qualify.

Who’s the best fit for a Santander personal loan

If you are looking for a lender you can meet with face-to-face, Santander is one to consider. Thanks to the residency requirement to apply for a personal loan, you won’t be far from a bank branch if you’re actually eligible for their services.

Santander’s loan terms (24 to 60 months) give borrowers a lot of flexibility to pay off their loans quickly or reduce their monthly payments by extending the term out longer. Many personal loans have terms of 36 or 60 months, so if you’re looking to minimize the time you carry this debt, Santander might be a good option for you.

Santander has reasonable rates compared to other lenders — their highest APR is set at 16.99% with the ePay discount — though you will need a good credit history to qualify. These loans are also good for those who want to avoid fees, as Santander doesn’t charge origination, application, or annual fees or assess prepayment penalties. Assuming you make your payments on time, you are unlikely to owe anything extra.

Alternative personal loan options

Here are several alternatives to Santander personal loans:

Upgrade

Upgrade
APR

5.96%
To
35.97%

Credit Req.

620

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 6.00%

APPLY NOW Secured

on Upgrade’s secure website

Loans made through Upgrade feature APRs of 5.96%-35.97%. All loans have a 1% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay. For example, a $10,000 loan with a 36 month term and a 17.97% APR (which includes a 5% origination fee) has a required monthly payment of $343.28. Upgrade is available in all states except: Connecticut, Colorado, Iowa, Massachusetts, Vermont, West Virginia.

If you need your loan quickly, want to check rates without impacting your credit, or need to borrow less than Santander’s minimum loan amount, online lender Upgrade is a good option. Fill out an online form to apply for personal loans between $1,000 and $50,000 — you’ll receive a decision almost immediately and your money within four business days of approval. Loan APRs range from 5.96% to 35.97%, higher than many other lenders, and terms are set at 36 or 60 months. To be eligible for the best rates, you’ll need to sign up for autopay. Upgrade does charge an origination fee of 1% to 6%, and may assess other charges and fees over the life of your loan.

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®
APR

6.99%
To
24.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Fees

No origination fee

APPLY NOW Secured

on Marcus By Goldman Sachs®’s secure website

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information.... Read More

The Marcus by Goldman Sachs loan is a no-fee personal loan — that means all you’ll pay is your loan principal and interest, even if you pay late or miss a payment. Rates range from 6.99% to 24.99% APR and terms from 36 to 72 months, and you can borrow up to $40,000. If your credit is lower or you choose a longer term, you will generally pay a higher rate. While there is no explicit minimum credit score, you’re more likely to qualify with a score above 660. If working with a traditional bank appeals to you, this may be a good alternative to Santander. Marcus does not currently allow applicants from Maryland

SoFi

SoFi
APR

5.95%
To
14.74%

Credit Req.

No Minimum FICO Score

Minimum Credit Score

Terms

36 to 84

months

Fees

No origination fee

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on SoFi’s secure website

Advertiser Disclosure

SoFi offers some of the best rates and terms on the market. ... Read More


Fixed rates from 5.950% APR to 14.740% APR (with AutoPay). Variable rates from 5.825% APR to 14.365% APR (with AutoPay). SoFi rate ranges are current as of May 18, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.825% APR assumes current 1-month LIBOR rate of 1.90% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account.

SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of IL is 8.99% APR, for residents of AK, OK, and WY is 9.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, KS, SC is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Residents of PA have a minimum loan amount of $25,001. Variable rates not available to residents of AK, IL, OK, TX, VA, WY.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

SoFi has lower rates, longer terms, and higher loan amounts than many other lenders, and they don’t charge any fees. APRs range from 5.95% to 14.74%, and terms are set at 3, 4, 5, 6, or 7 years for loans of $5,000 to $100,000. Like many lenders, SoFi offers the best rates to borrowers who sign up for automatic payments. SoFi will only do a soft credit pull when you check your rates with their online form, and you’ll never encounter origination fees or prepayment penalties. Another advantage to borrowing from SoFi: if you lose your job and apply for their unemployment protection program, they will suspend your payments without penalty and provide job placement assistance.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Emily Long
Emily Long |

Emily Long is a writer at MagnifyMoney. You can email Emily here

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Personal Loans

Upstart Loan Review

Editorial Note: 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 prior to publication.

 

Upstart
APR

8.92%
To
29.99%

Credit Req.

640

Minimum Credit Score

Terms

36 to 60

months

Fees

0.00% - 8.00%

APPLY NOW Secured

on Upstart’s secure website

Upstart’s initial focus was to help recent graduates that were struggling with debt, but they have expanded to provide options for those with strong credit profiles as well. They have a unique algorithm that takes into account things such as education, career, job history, and standardized test scores, but you will still need a minimum FICO score of 640.

Upstart personal loan details
 

Fees and penalties

  • Terms: 3- and 5-year terms
  • APR range: 8.92% and 29.99% APR
  • Loan amounts:$1,000 - $50,000
  • Time to funding: If you accept your loan before 5 p.m. EST Monday-Friday, you should receive your loan proceeds the next business day. If accepted after 5 p.m. EST Monday-Friday, you should receive your loan proceeds two business days later.
  • Hard pull/soft pull: Soft pull for your quote rate, but a hard pull once you accept your rate and proceed with the loan application
  • Origination fee: 0% to 8% of the target amount (deducted from the loan before it’s delivered)
  • Prepayment fee: None.
  • Late payment fee:The greater of 5% monthly past due amount or $15 (per occurrence)
  • Other fees:Return check and paper copy fees

Upstart offers fixed-rate loans, but the loan interest rate depends on the borrower’s education, credentials, work history and credit score. Your loan can be used for a wide variety of purposes including (but not limited to) paying off credit card debt, paying off student loan debt, medical bills, travel, starting a business or paying for college or grad school.

Borrowers can even use Upstart loan funds to attend a coding boot camp. Upstart supports funding for a few coding boot camps (see the full list here) so if the applicant is accepted, they won’t need to possess a 4-year degree or have a job offer.

If you already have an Upstart loan and you’d like to apply for an additional loan, you’ll need to meet the following qualifications:

  • Made on-time and consecutive monthly payments for the past six months
  • Have no more than one outstanding loan through Upstart at the time of application
  • Have no more than $50,000 of outstanding principal at the time the loan originates

In order to receive your loan funds, you must add and verify a personal bank account in your name. From there, you need to disburse the funds from your checking account so you can spend as needed. This may be an inconvenience for people looking to consolidate their debt by applying loan funds directly to the creditor or business owners looking to deposit the funds automatically to their business account.

For example, if you’re receiving a large lump-sum loan to cover the cost of college tuition for the semester, you have to have the discipline to make sure the payment goes directly to the school and you avoid spending part of the money on another expense.

Speaking of Upstart loans that are being used for educational purposes only, keep in mind that there is an additional three-day business period between when you accept your loan and when you will receive the funds.

For loans intended for other funding purposes, Upstart will usually grant funds by the following business day.

Eligibility requirements

  • Minimum credit score: 620 FICO or Vantage score
  • Minimum credit history: Not provided
  • Maximum debt-to-income ratio: Not provided

While Upstart’s website doesn’t get into too much detail about the debt-to-income ratio or minimum credit history requirements, we do know that the company does check how much debt you have in relation to the income you receive.

You must not have any bankruptcies or public records on your report in order to qualify for a loan. You also can’t have any accounts currently in collections or delinquent. You must have fewer than six inquiries on your credit report in the last six months not including inquiries related to student loans, vehicle loans or mortgages. You must also not be residing in West Virginia.

Other qualifications include:

  • Minimum age of 18
  • U.S. citizen or permanent resident
  • Valid email account
  • Able to verify name, date or birth, Social Security number
  • Have a full-time job, full-time job offer starting within 6 months, a steady part-time job or other source of regular income
  • Have a U.S. bank account

While Upstart’s website states clearly that you can borrow between $1,000 and $50,000, when you read the fine print, you’ll notice there are a few state-specific minimum loan amounts. The three state limitations are shown below.

  1. Georgia: $3,100 minimum
  2. Massachusetts: $7,000 minimum
  3. Ohio: $6,000 minimum

Applying for a personal loan from Upstart

Upstart’s personal loan application process is set up to be simple and quick. You’ll start by submitting a rate inquiry on Upstart’s website. Just click on the “Check Your Rate” button in the center of the page. This takes only a few minutes and you’ll answer some basic questions.

If you accept your rate, you’ll be prompted to complete an online application which includes verifying your bank account and uploading some supporting documents. Some documents may include verifying your employment and work experience or your academic credentials. Your credit information will also need to be verified during the application process.

Once your application is approved, you will be asked to review final disclosures and sign a promissory note.

From there, you can receive your loan funds the following business day if you accept your loan before 5 p.m. EST Monday – Friday. If you accept your loan after 5 p.m. EST Monday – Friday, you will receive your loan funds two business days later.

Borrowers can set up easy and automatic monthly payments, and even pay their loan off early without penalty.

Pros and cons of an Upstart personal loan

Pros:

Cons:

  • Lower fixed rates: Upstart offers loan rates as low as 8.92%, meaning borrowers who qualify for low rates could save money when consolidating credit card debt with a personal loan
  • Quick access to funds: Borrowers can receive funds in as little as one business day after loan approval
  • Unique selection process: Upstart considers applicants on a variety of factors including credit score, credit history, employment status, academic history and area of study
  • Starts with a soft credit pull: Upstart determines eligibility and offers you a loan rate with a soft credit pull.
  • Origination fee: Loan origination fees can be as high as 8% that will be deducted from the loan prior to delivery
  • Two repayment terms:While you can choose to pay off your loan early, you can only choose from a 3-year or 5-year term.

Who’s the best fit for an Upstart personal loan?

Upstart is a reasonable solution for those in their 20s or college grads who are having a difficult time obtaining a personal loan elsewhere. The process is convenient and can be solely completed online. Upstart can also be a solid option for borrowers who haven’t developed a strong credit history.

You’ll need a minimum credit score of 620 to meet the credit qualification, but you can also strengthen your application with your employment status, job history and academics. While Upstart’s interest rates are competitive with other peer-to-peer lending companies, other competitors rely heavily on credit to approve applicants while Upstart doesn’t.

Upstart would also be the best option if you’re looking for funding to attend a coding bootcamp since eligibility requirements are very lenient.

Lastly, if you meet the eligibility requirements and need a loan quickly, you can have funds in your personal account by the next day. If you need funds to help you pay off debt or finance a large purchase, and can comfortably pay back the loan within five years or less, Upstart’s personal loan is a good fit.

Alternative Personal Loan Options

Not quite sure about Upstart, or just want to check out some alternatives before making your decision? MagnifyMoney, a LendingTree company, is a great place to shop for offers from several personal loan lenders at once. Check out our guide to getting the best personal loan rates. While shopping around and comparing other loan options, be sure to consider these alternatives.

LendingClub

LendingClub is a peer-to-peer lending platform, which means borrowers receive funds from individual or institutional investors. Interest rates range from 5.98% and 35.89% APR and you can borrow up to $40,000. If you have good credit, you may be able to qualify for a lower interest rate that Upstart can’t offer. You can also check your rate without adding a hard inquiry to your credit profile so you can see what you’d qualify for.

Lending Club
APR

5.98%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 6.00%

APPLY NOW Secured

on Lending Club’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores in the mid-600s. The loan application process is online and only takes a few minutes to complete and you can check your interest rate without hurting your credit. The loan processing time can take a while and you might not get approved if you have missed payments in the past. LendingClub is not available in Iowa and West Virginia

Earnest

Earnest is a personal loan lender offering fixed-rate loans starting at 5.49% APR. With Earnest, you can borrow between $5,000 and $75,000 on a 3-, 4- or 5-year term. There are no hidden fees associated with this personal loan and it’s offered in most states except Nevada, Kentucky, Rhode Island, Delaware and Alabama. Similar to Upstart, Earnest considers your employment history, education, and salary when considering you for a loan. You will need a minimum credit score of 660 to qualify but again, a good credit score could qualify you for a lower interest rate that Upstart doesn’t offer.

Earnest
APR

5.49%
To
18.24%

Credit Req.

660

Minimum Credit Score

Terms

36 to 60

months

Fees

No origination fee

APPLY NOW Secured

on Earnest’s secure website

Instead of offering credit-based loans, Earnest has taken a very non-traditional approach and used a merit-based system. This is great for recent graduates and those that are just beginning to establish credit. In addition, they offer some of the most flexible terms among all personal loan lenders, allowing for borrowers to get a customized loan and repayment plan that fits their financial situation.

Peerform

Peerform offers personal loans to borrowers with a minimum credit score of 600. This could be a worthy alternative if you don’t think you’ll meet the credit score requirements to qualify for a loan with Upstart. Peerform’s interest rates range from 5.99% to 29.99%, and you can borrow up to $25,000. The maximum repayment terms are 3 or 5 years, and loans have a 1% to 5% origination fee.

Peerform
APR

5.99%
To
29.99%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 5.00%

APPLY NOW Secured

on Peerform’s secure website

Even with a credit score of 600, you still might be able to secure a loan through Peerform. This peer-to-peer lender gives you a customized grade based on your credit score, allowing for you to easily see the rate that you can obtain. While Peerform is great for those with less than stellar credit, you more than likely will be able to find better rates elsewhere.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Chonce Maddox
Chonce Maddox |

Chonce Maddox is a writer at MagnifyMoney. You can email Chonce at chonce@magnifymoney.com

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Personal Loans

Avant Personal Loan Review

Editorial Note: 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 prior to publication.

Avant
APR

9.95%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Fees

1.50% - 4.75%

APPLY NOW Secured

on Avant’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

If you want a speedy process with your personal loan, you can’t go wrong with Avant, who could get you your loan as soon as the next business day. In terms of rates, qualifications, and repayment terms, Avant keeps things the same as most other lending options, though, it is important to shop around to secure the best offer. Avant is available in all states except: Colorado, Iowa, West Virginia, and Vermont. For Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33."

Avant personal loan details
 

Fees and penalties

  • Terms: 24-60 months
  • APR Range: 9.95%-35.99%
  • Loan amounts: $2,000-$35,000
  • Time to funding: As soon as the next business day.
  • Hard pull/soft pull: A soft pull will be done initially to provide you with potential loan options. After you select your rate, a hard pull will be done on your credit as you officially apply.
  • Origination fee: Administrative fee of 1.50%-4.75%
  • Prepayment fee: None
  • Late payment fee: $25 if your payment is 10+ days late
  • Other fees: $15 fee if your payment is returned

You can qualify for an Avant personal loan if you’re self-employed. Instead of providing your W-2 paperwork as proof of income, you will have to provide two years of full tax returns so Avant can verify how much money you bring in per year.

Eligibility requirements

  • Minimum credit score: 580
  • Minimum credit history: Avant judges each application on a variety of different credit criteria, though the average borrower has a credit score between 600-700.

You must have a checking or savings account in order to qualify for a loan with Avant. This account must allow you to do automatic payments. This account must be a personal account; Avant cannot currently lend to you if you’re using a business account.

Applying for a personal loan from Avant

Definitely take advantage of Avant’s soft pull option, where you can get a sense of your loan options before you officially apply and let them perform a hard credit inquiry. When you apply for a loan with Avant, you will want to come armed with some basic information like your name, address and Social Security number. If you’re someone’s employee, you’ll want to know where your pay stubs are from the past 30 days. If you’re self-employed, expect to be asked for your tax returns from the past two years.

Regardless of if you’re a W-2 or 1099 worker, you will have to provide your bank account information, including routing number and account number. Sometimes, Avant can use this information alone to verify your income, saving you the hassle of scanning in your taxes or pay stubs. You won’t know until you apply, though.

After you apply, you’ll be offered a rate. If you accept, Avant will do a hard pull on your credit, confirming the final details. If you are approved, you could see money in your account as soon as the next day.

Pros and cons of an Avant personal loan

Pros:

Cons:

  • Competitive interest rates for lower credit scores. Among lenders that extend credit to those with lower credit scores, Avant’s interest rates are about average. Keep in mind that if your credit score is low, though, you’re more likely to fall into the higher end of the interest rate range anyway.
  • Fast access to your money. You may be able to get your loan disbursed as soon as the next day.
  • No prepayment penalty. You can pay off your Avant personal loan early — saving you interest — without incurring a fee for prepayment.
  • Better options for higher credit scores. If you do have a higher credit score, Avant’s starting rates of 9.95% pale in comparison with lenders who target borrowers with a better credit history.
  • Origination fee. While Avant’s origination fee is lower than some of their competitors, the fact that they have a fee at all is still a negative. If you have poor credit, however, it can be tricky to find a lender that doesn’t charge such a fee.
  • You have to link up your bank account. Linking your bank account is a pretty standard way to pay your bills, and most marketplace lenders will prefer you do it this way. But if you’re uncomfortable linking your checking or savings to Avant for automatic payments, this could be a negative as it is required to qualify for one of their personal loans.

Who’s the best fit for an Avant personal loan

Among lenders who issue personal loans in this credit score range, Avant’s starting interest rates are near average. If you have a lower credit score, you should make Avant one of the companies you look at first, along with credit unions that allow you to apply online.

However, if you have a good or great credit score, you’ll likely be able to get a better interest rate elsewhere. Whichever category you fall into, you should be sure to shop around before you commit.

Alternative personal loan options

Lending Club

Lending Club
APR

5.98%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 6.00%

APPLY NOW Secured

on Lending Club’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores in the mid-600s. The loan application process is online and only takes a few minutes to complete and you can check your interest rate without hurting your credit. The loan processing time can take a while and you might not get approved if you have missed payments in the past. LendingClub is not available in Iowa and West Virginia

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®
APR

6.99%
To
24.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Fees

No origination fee

APPLY NOW Secured

on Marcus By Goldman Sachs®’s secure website

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information.... Read More

If your budget is stretched thin, the fact that Marcus by Goldman Sachs offers a 72-month term may be exciting news for you as it generally means lower monthly payments. Just remember that when you stretch a loan out over a longer period of time, you end up paying more in interest over the life of your loan — even if you’re paying less per month.

Earnest

Earnest
APR

5.49%
To
18.24%

Credit Req.

660

Minimum Credit Score

Terms

36 to 60

months

Fees

No origination fee

APPLY NOW Secured

on Earnest’s secure website

Instead of offering credit-based loans, Earnest has taken a very non-traditional approach and used a merit-based system. This is great for recent graduates and those that are just beginning to establish credit. In addition, they offer some of the most flexible terms among all personal loan lenders, allowing for borrowers to get a customized loan and repayment plan that fits their financial situation.

Earnest is a better option if you have a higher credit score. Their interest rate range is lower, and there are no origination or administrative fees. The minimum credit score requirement of 650 is significantly higher than Avant’s minimum of 580, though.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne here

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Earning Interest

Top Jumbo CD Rates for May 2018

Editorial Note: 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 prior to publication.

Jumbo CD rates
iStock

In the banking world, CD stands for certificate of deposit. This is a type of savings account where you agree to put a certain amount of money in for a set period of time. In return, the bank agrees to pay you interest. You may have to pay early-withdrawal penalties if you access your money before the CD term ends.

There is a type of CD called a jumbo CD, in which you generally have to put in a minimum deposit of $100,000. Sometimes these jumbo CDs have higher interest rates than CDs where you deposit less than $100,000.

Best CD Rate Currently Available: Goldman Sachs Bank USA – 12-Month CD – 2.20% APY

Marcus by Goldman Sachs® is currently offering one of the highest CD rates available on a 12-month CD. While this CD is technically not a jumbo CD, it offers a rate that is too good to pass up. You can earn the 2.20% APY with a minimum of $500 and lock in that rate for the duration of the term once the account is funded.

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Member FDIC

Your deposit is FDIC-insured up to the maximum limit.

The top jumbo CD rates

To compile a list of the top jumbo CD rates, we used information from DepositAccounts.com, which, like MagnifyMoney, is a LendingTree company. We sorted products by APY. Then, we excluded any institutions with a health rating below a B, as well as any credit unions with very restrictive membership requirements. If there was a tie between APYs, we chose the CD with a minimum deposit of $100,000. All products on this list are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), but with jumbo CDs, it’s especially important to remember that only deposits up to $250,000 are insured.

Keep in mind that other banks might offer a CD with a better APY and a lower minimum deposit than $100,000. However, the chart below reflects the true definition of a jumbo CD, which involves a deposit of $100,000 or more.

This table is updated as of April 25, 2018, but it’s always a good idea to double-check the annual percentage yield (APY) before making your choice of where to invest. Some banks on the list offer promotional APYs, so be sure to check that the rates below are still available since rates can change day to day.

Institution

CD Term

APY

Minimum Deposit Amount

M.Y. Safra Bank

3 months

1.15%

$100,000

My eBanc

6 months

1.85%

$100,000

My eBanc

1 year

2.25%

$100,000

My eBanc

18 months

2.36%

$100,000

Veridian Credit Union

2 years

2.65%

$100,000

Veridian Credit Union

3 years

2.85%

$100,000

K.S. StateBank

4 years

2.90%

$100,000

K.S. StateBank

5 years

3.00%

$100,000

As of May 21, 2018

Banks that offer the best jumbo CD rates

M.Y. Safra Bank

M.Y. Safra Bank
M.Y. Safra Bank holds three spots on this list. When you go to its homepage, you’ll notice the banner shows “Special CD Offers.” This means that it’s important to keep track of these interest rates to make sure you get one that is current. This page has asterisks next to online promotions, so you know which ones might not be offered for a long time.

One downside to M.Y. Safra Bank is that the website is hard to navigate and is slow to load. This could be difficult for sophisticated investors who are used to banking with ease.

For a three-month jumbo CD, the APY is 1.15%. Keep in mind there might be other banks that offer 35- or 38-month CDs for slightly better rates, but they were not factored into this chart since this category was specifically for a three-year offering.

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on M.Y. Safra Bank’s secure website

My eBanc

My eBanc
My eBanc is an online-only bank. It’s a division of BAC Florida Bank. Unlike M.Y. Safra Bank’s, the eBanc website is much easier to navigate and has clear instructions on how to open a jumbo CD.

According to the site, My eBanc has no maintenance fees and compounds interest daily. When your jumbo CD matures, withdrawing your money is simple, although there is an early-withdrawal fee.

For a six-month jumbo CD, their APY is 1.85%. Their one-year jumbo CD has an APY of 2.25%. Their 18-month jumbo CD has a 2.36% APY.

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on My EBanc’s secure website

Veridian Credit Union

Veridian Credit Union
Veridian Credit Union is headquartered in Waterloo, Iowa, has 30 locations and over 700 employees. You can become a member of the credit union if you live in the area or if you’re a registered user of Dwolla, an e-commerce company which is available to anyone.

You can see current rates on jumbo CDs on the Veridian rate sheet. Keep in mind that several of the rates listed are current specials and might not be available long term. At the time of this writing, Veridian Credit Union has a special on an 24-month jumbo CD with an APY of 2.65% and a 36-month jumbo CD with a 2.85% APY. This credit union also has various specials on 7, 9, and 15 month jumbo CDs.

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on Veridian Credit Union’s secure website

KS StateBank

KS StateBank

KS StateBank currently has internet-only specials on their 1, 2, 3, 4, and 5-year jumbo CDs. However, their best rates are with their 4 and 5-year jumbo CDs, which currently have a 2.90% APY and a 3.00% APY respectively.

Although KS StateBank is mainly located in Kansas, they do have the option to bank online or through their mobile banking app. This allows them to reach customers nationwide.

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on KS StateBank’s secure website

 

The difference between jumbo and regular CDs

As mentioned previously, you can open a CD with less than $100,000. You can even get CD rates comparable to the ones above, with a lower minimum deposit requirement. Of course, the more money you put in a CD, the more interest you can earn, but if you don’t have $100,000 to open a jumbo CD, it’s important to know you do have other options with lower minimums.

Withdrawal penalties on jumbo CDs

According to a recent BankRate survey, the penalties for withdrawing your money from your CD early could be serious. Some banks will even take part of your principal as a penalty.

Below are the most common penalties, according to the survey:

  • 3 month CD: Three months of interest
  • 6 month CD: Three months of interest
  • 1 year CD: Six months of interest
  • 2 year CD: Six months of interest
  • 5 year CD: A year’s worth of interest

So, it’s important to be confident that you want to put your money in a CD. When you do this, you’re making an agreement with the bank to leave it there for a set period of time. If you’re unsure if you want to tie up your money for a long period of time, consider a high-yield savings account instead.

How jumbo CDs are taxed

It’s important to know that the interest you earn on your jumbo CD will be taxed as interest income, not as capital gains income.

This means that your bank or credit union will send you a 1099-INT form at the end of the year to show how much interest you earned in your jumbo CD and you will be taxed on that.

Are jumbo CDs safe?

According to the U.S. Securities and Exchange Commission: “Certificates of deposit are considered to be one of the safest savings options. A CD bought through a federally insured bank is insured up to $250,000.”

Some people prefer investing in the stock market over CDs because you can often get higher rates of returns; however, the stock market is a riskier bet, and returns are not guaranteed like those associated with CDs.

CDs are not affected by the whims of the stock market. The interest rate you agree on with your bank is the rate you will get. That interest rate, however, may not outpace inflation, meaning you may not really earn much, if anything, over time.

Final thoughts

If you have over $100,000 and want to invest it in a jumbo CD, you have several options. Like the chart above shows, you can choose many different terms and durations for your jumbo CD. Just be sure to research the bank you invest with so you know you’re putting your money with a top-rated institution. Also, be sure that you’re comfortable with putting your money in a CD long-term because there are often penalties for withdrawing your money early.

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Cat Alford
Cat Alford |

Cat Alford is a writer at MagnifyMoney. You can email Catherine at cat@magnifymoney.com

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