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Chapter 13 Bankruptcy Guide

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The two primary forms of bankruptcy that consumers choose to file are Chapter 7 and Chapter 13. Chapter 7 allows a filer to liquidate nonexempt assets to pay off creditors and discharge their remaining debts. Chapter 13, called a wage earner’s plan, gives filers with regular income the opportunity to create a short repayment plan to pay off their debts.

In 2005, when Congress approved the Bankruptcy Abuse Prevention and Consumer Protection Act, it became more difficult for consumers to qualify for Chapter 7 bankruptcy, pushing more people to use Chapter 13. Since then, of the 12.8 million consumer bankruptcy petitions filed, 4.1 million have been for Chapter 13 bankruptcy.

In this guide, we’ve compiled some of the highlights that consumers should understand about the process, as well as the results and effects of filing Chapter 13 bankruptcy. Reading through may help you prepare for what’s ahead and ensure you better identify whether Chapter 13 is the right choice for you.

How Chapter 13 works

Unlike Chapter 7 bankruptcy, which eliminates a consumer’s debts without a payment plan, Chapter 13 bankruptcy is centered around creating an installment repayment plan that a filer can maintain for several years, which is focused on eliminating secured debts.

The payment amount and duration are not based on what it would take to pay off the full amount of the debt, but are instead based on calculations determined by the income of the filer, their discretionary income, their assets and their debt. Instead of forcing the debtor to tackle the full amount of their current debt at its current interest rates, Chapter 13 gives a debtor the opportunity to pay off a percentage of the debt based on what they can afford to pay over a three- to five-year period.

The amount they can “afford” is based on income calculations and state median statistics as described on the official forms. The focus of the debt repayment is secured debt, which is debt that has underlying collateral. In some cases, however, significant payments may need to be made toward unsecured debts as well.

Chapter 13 is often a good choice for:

  • High-income earners
  • Those who fail the Chapter 7 means test by having too much discretionary income
  • Consumers with assets, such as a home or paid-off car, that they don’t want to lose in a bankruptcy
  • Consumers who are facing foreclosure, lawsuits brought on by debtors and collection notices

Many homeowners are relieved to find out that they may be able to save a home that’s in foreclosure by declaring Chapter 13. But at what point in the foreclosure process must you file before it’s too late? As it turns out, you can file for bankruptcy protection well into the foreclosure process and still save your home, according to Florida attorney Ryan Albaugh.

“A debtor can file a case in the morning and stop a sale for the same day, as long as the debtor complies with all needs,” Albaugh said. “They can file a shell Chapter 13 without all the schedules and get a notice to stop the sale.”

What debts are forgiven or discharged under Chapter 13?

Chapter 13 allows for a broader set of forgivable debts than Chapter 7, including:

  • Debts caused by willful and malicious damage to property
  • Debts due to divorce agreement property settlements
  • Debts for funds borrowed under false pretenses
  • Debts that were taken on to help pay for tax obligations (the tax obligations themselves are not dischargeable)

Other debts that are dischargeable under Chapter 13 include:

  • Medical bills
  • Consumer debt
  • Personal loans

Debts that are not dischargeable under Chapter 13 include:

  • Certain long-term debts, such as a mortgage
  • Alimony and child-support debts
  • Certain tax debts
  • Debts due to DUI
  • Guaranteed or government-funded student loans

Who is eligible?

Chapter 13 bankruptcy provides an accessible way for many individuals, including those who are self-employed, to regain control over their debt, even if they don’t qualify for Chapter 7. But not everyone can declare Chapter 13 bankruptcy since there are still qualifications for eligibility.

The first qualification is that you must be employed. “If a person is unemployed, they won’t qualify for the plan because they won’t have sufficient income,” Albaugh said. Additional requirements include:

  • Unsecured debt must be less than $394,725 (as of 2018)
  • Secured debt must be less than $1,184,200 (as of 2018)

It’s not just the filer’s current situation that determines their eligibility to file for Chapter 13. Some of their actions in the six months leading up to the filing can have a bearing as well. Within 180 days of filing bankruptcy, the filer cannot have:

    • Had another bankruptcy petition dismissed for willful failure to appear before the court
    • Had another bankruptcy dismissed for failure to comply with orders of the court

How to file Chapter 13 bankruptcy

First steps

Credit counseling briefing

Choose an approved provider in the state you’re filing in within the 6 months preceding your filing

Find your court

Depends on the district court in which your state wants you to file

Secure any local forms that are required for your filing

These are forms that are specific to your state and will generally be listed on the website for your local court

Form B2010

Notice Required by 11 U.S.C. § 342(b) for Individuals Filing for Bankruptcy

Forms for the initial petition

Form 101

Voluntary Petition for Individuals Filing for Bankruptcy

Form 121

Your Statement About Your Social Security Numbers

Form 119

Bankruptcy Petition Preparer’s Notice, Declaration and Signature

Form 2800

Disclosure of Compensation of Bankruptcy Petition Preparer

Form 103A (when relevant)

Application for Individuals to Pay the Filing Fee in Installments

Form 101A (when relevant)

Initial Statement About an Eviction Judgment Against You

Form 101B (when relevant)

Statement About Payment of an Eviction Judgment Against You

Certificate from completed credit counseling

A full list of all your creditors

Within 14 days of filing

Form 106Dec

Declaration About an Individual Debtor’s Schedules

Form 106Sum

A Summary of Your Assets and Liabilities and Certain Statistical Information

Forms 106A-J

Schedules to 106 listing property, debtors, income, leases, income, expenses and more

Form 107

Your Statement of Financial Affairs for Individuals Filing for Bankruptcy

Form 2030

Disclosure of Compensation of Attorney For Debtor

Form 122C-1

Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period

Form 122C-2 (when relevant)

Chapter 13 Calculation of Your Disposable Income (for payment of nonpriority, unsecured debt)

Form 113 (unless your local court differs)

Chapter 13 Plan

Copies of all pay stubs and remittances received during the 60 days preceding the filing

First steps

One of the first things consumers need to do before filing bankruptcy is to get a credit counseling briefing from a state-approved provider. It’s required that this is done within the six months before you file. When filing with your spouse, both spouses must have the briefing.

During the briefing, filers will learn alternative options for resolving their debt that can help them avoid filing Chapter 13 bankruptcy. The counseling ranges in price, with online classes offered by some providers for $14.95 per household and one-on-one phone sessions for $50 per person. Lastly, some providers charge an extra fee for the completion certificate sent to the bankruptcy court.

With credit counseling out of the way and a clear decision made to file Chapter 13, the next step is to review the district courts in your state to determine which court should receive your paperwork. After determining the right court, you’ll want to go to their website and download the local forms that the local court requires for your filing, most notably the Chapter 13 Plan, Form 113, which may require the federal form or a local form.

The last step you need to take before petitioning the court is to read Form B2010. This notice gives a brief review of each type of bankruptcy, lists costs associated with filing and lists the debts that cannot be discharged with each type. As of 2018, the cost for Chapter 13 filing and administrative fees totaled $310 (not including attorney fees).

Petitioning the court

After the pre-petition steps are done, it’s time to start completing forms to petition the court and officially file for bankruptcy. For Chapter 13 filers, the process begins with these forms:

  • Form 101: Voluntary Petition for Individuals Filing for Bankruptcy
  • Form 121: Your Statement About Your Social Security Numbers
  • Form 119: Bankruptcy Petition Preparer’s Notice, Declaration and Signature
  • Form 2800: Disclosure of Compensation of Bankruptcy Petition Preparer

You can also include several optional forms, when relevant:

  • Form 103A: Application for Individuals to Pay the Filing Fee in Installments
  • Form 101A: Initial Statement About an Eviction Judgment Against You (individuals)
  • Form 101B: Statement About Payment of an Eviction Judgment Against You (individuals)

Finally, you will be asked to submit a list of all your creditor’s names and addresses. Your local court may have its own requirements for formatting of this list, so check their website for instructions.

No more than 14 days after filing

After filing Form 101, you have 14 days to file the rest of the required forms, which are:

  • Form 106Dec: Declaration About an Individual Debtor’s Schedules
  • Form 106Sum: A Summary of Your Assets and Liabilities and Certain Statistical Information (individuals)
  • Forms 106A-J: Schedules to 106 listing property, debtors, income, leases, income, expenses and more
  • Form 107: Your Statement of Financial Affairs for Individuals Filing for Bankruptcy (individuals)
  • Form 2030: Disclosure of Compensation of Attorney For Debtor
  • Form 122C-1: Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period
  • Form 122C-2 (when required): Chapter 13 Calculation of Your Disposable Income
  • Form 113 (unless your local court differs): Chapter 13 Plan

You will also need to submit copies of all pay stubs and other payment remittances you have received during the 60 days that precede your bankruptcy filing. Check with your court to see if you need to submit these to the court or the trustee.

While it’s not a requirement to file, it should be noted that there is a second financial planning course that must be taken before a filer makes their last payment on the Chapter 13 plan. This course prepares the filer for financial success after the bankruptcy is final, which helps reduce the likelihood that they’ll need to rely on bankruptcy again in the future.

Pros and cons of declaring Chapter 13 bankruptcy

As with any major debt management process, Chapter 13 bankruptcy has both positive and negative aspects to analyze before you proceed. One of the biggest pros for many debtors is that they can usually keep their nonexempt assets when filing a Chapter 13 bankruptcy. Nonexempt assets are generally defined as owned assets that are not necessary to maintain a home or job. These would be property such as a vacation home, a recreational vehicle (RV) or a boat.

Another positive aspect of Chapter 13 is that it stops much of the debt collection, wage garnishment and foreclosure activity against the filer for those debts listed in the bankruptcy. This is especially meaningful for homeowners who want to keep their homes but have fallen behind in payments, including those who currently in foreclosure.

Chapter 13 also makes it easier to repay debt since it effectively consolidates all the listed debt into one payment that can be made to the trustee monthly. In the case of what’s called a “cramdown,” Chapter 13 may even allow a debtor to reduce the amount owed on their secured debt by reducing the balance to match the value of the underlying collateral and effectively reducing the interest.

One of the biggest disadvantages of filing for Chapter 13 is that the value of any nonexempt assets the filer wants to keep can be tallied and used to establish the amount of their responsibility for payment of nonpriority, unsecured debt, such as credit cards and personal loans. The goal here is to ensure that the value of assets that would have been liquidated under a Chapter 7 to pay these unsecured claims are still paid out.

In other words, if you owned a boat valued at $10,000 that would have been sold under a Chapter 7 bankruptcy, then under Chapter 13 you must pay that amount toward nonpriority, unsecured debt. You don’t have to sell the asset to pay that off, but it does increase your overall repayment burden.

For secured debts, the value of the underlying collateral must be paid to those lenders, which can also increase your overall debt burden under the plan. And because the debts take several years to be discharged, the debtor is expected to maintain payments during that time. If they cannot, then they may find their filing dismissed and collections and foreclosure procedures restarting.

“If [a filer] falls behind, then the trustee files a motion to dismiss, which [the filer] would either allow or explain to the judge what happened, and [their] plan for getting back current,” Albaugh said. Without a plan to get back on track, Albaugh said a homeowner could be facing some trouble. “If you were using [Chapter 13] to get caught up on a house, then the foreclosure process starts back up again and you lose that bankruptcy protection,” he said.

Pros

Cons

  • Through Chapter 13, you can save a home from foreclosure
  • Effectively consolidates debt to one payment and reduces the total amount paid
  • During the repayment term, creditors cannot start or continue collection actions
  • Chapter 13 can reduce interest applied to debt
  • In some instances, offers protection to cosigners

  • The value of your nonexempt assets may be added to your debt repayment
  • The bankruptcy case can be dismissed if the filer doesn’t pay for the full duration, if they fail to pay child support or if they fail to file taxes.
  • With Chapter 13, it takes several years for debts to get discharged
  • Lenders with claims secured by collateral must be paid back an amount equal to the collateral’s value
  • Some debts might need to be paid in full, including those purchased within a certain period before the bankruptcy filing

Chapter 13 bankruptcy: FAQs

It will erase any eligible debts that are listed in the bankruptcy and paid according to the plan.

On Form 122C-1, filers work through a calculation that determines their commitment period based on their income and state medians. In addition, they may be required to determine their disposable income through Form 122C-2. These two forms establish the payment and the commitment term. But if the filer has nonexempt assets or assets used to secure some of the debt they are listing in the bankruptcy, the value of those assets might be added to the overall payment expectation.

Generally speaking, Chapter 13 is designed for debtors who have assets that they want to keep while still declaring bankruptcy. But, as noted above, the value of certain nonexempt assets or those used to secure debts listed in the bankruptcy may be added to the overall payment. The debtor can decide whether to then liquidate those assets or find other ways to pay off their value.

As long as the filer continues making payments according to the bankruptcy plan, creditors cannot pursue collection activities.

Life after bankruptcy

One of the biggest considerations people make when deciding whether to file for bankruptcy is the potential impact it will have on their future financial lives. While it can certainly help them clear out massive amounts of debt that they couldn’t handle on their own, it can also restrict their ability to take out loans and credit during the payment term of the bankruptcy by requiring them to get the court’s permission first.

Also, after the payment plan is done, a completed Chapter 13 bankruptcy can show on your credit report for up to seven years. As Albaugh noted, however, a filer will usually have already negatively impacted their credit rating through charge-offs, delinquencies, and repossessions before moving on to bankruptcy. In that case, Chapter 13 can actually help the credit restoration process and limit the amount of damage their score will incur.

One positive note to keep in mind is that the more time that passes after your bankruptcy is completed, the less impact it will have on your FICO Score.

There are ways to rebuild your credit after completing Chapter 13 bankruptcy, including by taking out new loans and credit cards. In some cases, these loans might have higher interest rates and credit cards might be secured by an initial payment until the filer re-establishes themselves and improves their credit.

But the most important step to take when rebuilding your credit after bankruptcy is to incorporate the budgeting and financial planning lessons learned in the second bankruptcy course so that you know you are only taking on debt you can manage.

Alternatives to Chapter 13

Although the number of bankruptcy filings since 2005 seems high, not everyone decides to file bankruptcy to deal with their financial issues. There are other options for consumers who find themselves unable to pay off their debts and facing multiple collections actions, and those other options might be a better choice for some consumers. These options include:

As part of the bankruptcy completion, there are two courses you need to take. The first is the pre-filing credit counseling and the second is the pre-discharge debtor education, which is a financial management course before you make your final bankruptcy plan payment. In taking both courses now, before you file, you can learn about a variety of options for debt consolidation and ways to rework your budget and re-prioritize your spending. It’s possible that this re-education can give you the skills and resources you need to create a personal plan for organizing and tackling your debt without filing for bankruptcy.

Some lenders might be open to renegotiating terms with you to reduce interest rates, create payment plans that get you caught up, remove fees and maybe even forgive portions of balances. Just remember that if this happens, you may have tax consequences since forgiven and canceled debts may be taxable. Additionally, according to Albaugh, sometimes settling with creditors on your own requires a lump-sum payment, whereas bankruptcy allows for installment payments on a lowered amount.

If you have assets that are securing debt, you may want to consider voluntarily surrendering them to your creditors to remove debt. For unsecured debts, you may want to consider liquidating your assets, such as RVs, that you own in full and use the proceeds to pay off the debt.

For consumers who can pass the Chapter 7 means test and have no nonexempt assets to protect, Chapter 7 may be a more cost-effective choice. Through a no-asset Chapter 7 filing, your debts can be discharged without payment or liquidations. This gives you a clean slate much faster and, for those with a lower income, can save a lot of money.

Conclusion

Not only does a Chapter 13 filing require a long-term commitment and an understanding of the impact on your credit, but it also carries an expense, as the filer must pay the court, the trustee and their attorney. Before you consider attempting a Chapter 13 without an attorney, note that the U.S. Bankruptcy Court instruction packet states that it is “… extremely difficult to succeed in a Chapter 11, 12 or 13 case without an attorney.”

While attorney fees can run into the thousands of dollars, they generally have installment plans that make it easier for filers to get the expert help they need on a payment plan they can afford. Attorneys also generally offer a free consultation for the initial meeting, which allows you to get to know several attorneys and find the one that you think will get you the best results at a price you can afford.

To start looking for a bankruptcy attorney, you can check with the American Bar Association, as well as state Bar Associations. You can also look for reviews online to help narrow down your choices.

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How To Know If Your Student Loans Are Private or Federal

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How To Tell If Your Student Loans Are Private or Federal

When you borrowed money to pay for college, you may not have paid much attention to the difference between federal and private student loans. You might not know who your student loan servicer is, or if you do, you may wonder for example whether that loan listed under Nelnet is federal or private.

In fact, it’s completely reasonable to ask why the difference between private and federal student loans matters in the first place.

There are a few ways to see if your student loans are private or federal — here’s how, along with what makes each different, and why knowing which type of loan you have is important.

What makes federal and private student loans different?

Federal student loans are offered through the Department of Education. Typically, these loans are easy to qualify for. For many federal student loans, your credit isn’t even checked.

There are four different federal student loan programs currently available:

  • Direct subsidized loans: These loans are awarded based on your financial need. When you apply for federal financial aid, your eligibility for subsidized loans is also considered. “Subsidized” here means that interest isn’t charged until after you graduate or drop below half time.
  • Directed unsubsidized loans: Anyone can receive an unsubsidized loan — they aren’t based on need. However, unsubsidized loans will put you on the hook for interest charges that accrue while you’re in school.
  • Direct PLUS loans: These loans are specifically for graduate students or for parents of undergraduate students taking out loans on behalf of their child. These loans aren’t based on financial need, and a credit check is required.
  • Direct consolidation loans: This type of loan allows you to combine all your federal student loans into one, giving you one manageable payment each month rather than many. Your new interest rate is the weighted average of all your loans, rounded up to the nearest one-eighth of a percent.

Private student loans, on the other hand, are offered by private lenders and have different repayment requirements compared with federal student loans. For example, private student loans can offer fixed or variable interest rates, while federal student loans only offer fixed rates.

Because the features of private loans vary from lender to lender, eligibility will depend on the bank, credit union or online financial institution that you borrow from.

Most borrowers usually favor federal student loans, given the flexible repayment options and debt-forgiveness programs they come with. But since federal loans also have borrowing limits, students may need to turn to private loans to help fund any remaining costs, and in a few cases, a private loan might have a better interest rate than their federal equivalent.

How to determine if your loans are federal

The first thing you should do to see if you have federal loans is log on to the National Student Loan Data System. The only loans listed here are federal.

If you’ve never used the NSLDS before, you’ll want to click the “Financial Aid Review” button on the homepage, hit “Accept,” and then enter your credentials.

If you have a Federal Student Aid (FSA) ID, you can enter it here. If not, there’s an option to create one. In May 2015, the government redesigned its student loan system, and you can now use your FSA ID to log on to multiple government sites. But if you haven’t visited in a while, you might need to create one.

In the event you forgot your credentials, you can click the “Forgot my username/password” button and have the information emailed to you or answer a challenge question. You’ll just be required to enter your Social Security number, last name and date of birth.

Once you log on, you’ll see a list of all the student loans that were disbursed to you. This page will also show you what your original loan amount was, and how much you currently owe.

Click on the numbered box to the left of your loan to determine your loan servicer. This will display all the information about that particular loan. Your loan servicer will be listed under the “Servicer/Lender/Guaranty Agency/ED Servicer Information” section. The name, address, phone number and website should all be displayed.

Additionally, this page will also inform you of your loan terms. Along with your original loan balance and current outstanding balance, it will tell you what the interest rate is and the current status of the loan.

How to determine if your student loan is private

As discussed, private student loans are loans not made by the government — banking institutions, such as Sallie Mae, Wells Fargo, Citizens Bank and others offer them. As a result, there are more lenders to look out for when it comes to private loans.

Unfortunately, there’s no central reporting system for private loans like there is for federal loans, which makes them slightly more tricky to track down.

Your first stop should still be the NSLDS to at least see if you have any federal loans. In 2015, just 5% of undergraduate borrowers had private student loans, so your student loans are more likely to be federal than private.

But in order to make sure you have no outstanding private student debt, you’ll want to take a look at your credit report. You can view your reports from the three main credit bureaus for free by visiting AnnualCreditReport.com.

Some lenders may not look familiar to you. Searching the lender’s name online may help you find out who the parent company is. Don’t hesitate to call the numbers available on your credit report if you’re still unsure.

If you graduated a while ago, some older loans may look unfamiliar. You might see “federal direct loan,” “federal Perkins,” or “Stafford” on your report — these are federal loans, so ensure they match up with what’s in your NSLDS file.

You might also be able to call your school’s financial aid office to see if they have records of your loans.

What should you do once you find out?

Knowing whether your student loans are private or federal can be important as you repay you college debt.

For example, knowing the difference is crucial if you ever decide to refinance or consolidate your student loans. You can only combine your debt under a direct consolidation loan if you have federal loans. Likewise, refinancing through a private lender will cause you to lose access to federal repayment and forgiveness programs, while private loans would be unaffected.

So, by knowing which type of student loans you have, you’ll get a better idea of what options you have to knock them off.

Customize Student Loan Offers with Magnifymoney tools

Dori Zinn contributed to this report.

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7 Personal Loans for 600 to 700 Credit Scores

Updated May 01, 2019

If you have a less-than-perfect credit and want to pay off credit card debt, fund home improvement projects, or pay for unexpected expenses, then finding a lender that will consider your credit might seem like an uphill battle.

Refinancing high-interest debt with a personal loan can quickly cut down the amount of interest you’re paying, which effectively allows you to pay it off in less time. You particularly want to avoid payday and title loan lenders at all costs.

Many personal loan companies approve people with scores as low as 600. The best way to shop for a loan is to pre-qualify with as many lenders as possible who perform a soft credit pull (which doesn’t harm your credit score). With our first recommendation, LendingTree, simply fill out an online form and obtain up to 5 lender quotes (including all of those on our list below) with one online form and no negative impact to your score.

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Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

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Varies

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on LendingTree’s secure website

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

16.05%-35.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

5.99%-29.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details.

6.95%-35.99%

36 or 60

months

640

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

Consider LendingTree

With LendingTree, you only need to fill out one short online form. A soft pull will be performed – so your credit score will not be harmed. LendingTree has a panel of dozens of lenders who will then compete for your business. You may be able to see how much you can borrow and the interest rate. This is a great place to start – especially for people with credit scores below 700.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

1. LightStream

LightStream offers personal loans for between $5,000 and $100,000. It requires a minimum credit score of 660 and offers APRs between 3.99% and 16.99%. That low 3.99% APY includes a 0.50% rate discount for signing up for automatic payments.

To check rates, you’ll need to submit to a hard credit check. Don’t let that scare you off from this lender, though. LightStream offers a Rate Beat Program, where it’ll outmatch any qualifying rate. And if you’re unhappy with your loan, you can earn $100 for completing a questionnaire that helps LightStream improve its services.

The Fine Print

LightStream doesn’t offer fees, but in order to qualify for a loan, you’ll need to have good credit. On its website, LightStream says it finds borrowers with good credit tend to have the following characteristics:

  • Healthy credit history showing a variety of accounts, such as lines of credit (credit cards) and installment debt (auto loan, mortgage)
  • Solid payment history
  • Evidence that you know how to save and manage money, such as by having retirement savings and balancing revolving debt
  • Good income and assets that show you can repay your outstanding debts and a loan offered to you by LightStream

You can use a LightStream personal loan for a variety of purposes, from buying a car to consolidating debt. However, LightStream personal loans can’t be used for college expenses or to refinance college loans.

Pros

  • Low-interest rates
  • No fees
  • Loans for between $5,000 and $100,000
  • You may receive same-day funding
  • Will beat qualifying competitor rates
  • Offers $100 Guarantee Program

Cons

  • Requires a minimum 660 credit score
  • Hard Pull to check rates
  • You can’t change the payment due date
  • Doesn’t offer preapproval
  • Can’t refinance student loans

LightStream is a solid choice for borrowers with solid credit who want fast funding. LightStream’s Rate Beat Program means you can receive a competitive rate, while its $100 Guarantee Program shows that this lender cares about your satisfaction.

APR

3.99%
To
16.99%

Credit Req.

660

Minimum Credit Score

Terms

24 to 144

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

2. LendingClub

LendingClub offers loans of up to $40,000, for individuals with a minimum credit score of 600. Its APR ranges from 6.95% to 35.89%. LendingClub also uses a soft credit pull to determine your rate, which will not affect your credit.

The Fine Print

In order to qualify for a LendingClub personal loan you must:

  • Not have more than 5 hard credit inquiries in the last 5 months
  • Have at least two active credit accounts open
  • Have a credit history of at least 36 months
  • Debt-to-income ratio of less than 40%
  • Be able to verify employment and income

Once you have met the minimum criteria, LendingClub uses its own scoring system to determine what amount you can borrow as well as your rate.

You can borrow money for 36 or 60 months, but it does charge up-front (origination) fees ranging 1.00% - 6.00% depending on credit worthiness, which come out of the loan amount.

Pros

  • Can see your rate with a soft credit pull
  • Will consider applicants with credit scores as low as 600
  • Offers very competitive interest rates for people with scores below 700
  • The application process only take a few minutes

Cons

  • Missed payments or items in collections will result in your application being rejected
  • Loan processing could take a week or more
  • APR can be as high as 35.89%
  • It does charge origination fees (1.00% - 6.00%)
  • Is not available in Iowa or West Virginia

LendingClub will approve people with credit scores as low as 600. If approved, the interest rates offered can be very competitive and the online application process is easy. This is good first stop for anyone with a score of 600 or higher to find the best deal.

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores as low as 600.... Read More

3. Marcus by Goldman Sachs®

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. With APRs ranging from 5.99% to 28.99% they offer one of the best personal loan options that is available from a traditional lender. While Goldman Sachs Bank USA has been around for over a century, Marcus is a completely online, streamlined experience that lets you complete your application and submit all of the needed documents from your computer.

The Fine Print

There are no specific credit requirements to qualify for a personal loan through Marcus by Goldman Sachs®, though, the company does target those with “prime” credit, which usually includes those with a FICO score higher than 660. While the credit requirements are lower than many other lenders, you will more than likely be rejected if you have missed payments recently or have any other negative marks on your credit report.

Applicants must be over 18 (19 in Alabama and Nebraska, 21 in Mississippi and Puerto Rico) and have a valid U.S. bank account. You are also required to have a Social Security or Individual Tax I.D. Number.

Terms currently range from 36 to 72 months and there is no origination fee. They also will only do a soft pull on your credit if you want to compare your loan options, which won’t affect your credit score. Additional perks of getting a personal loan through Marcus are no late fees (if you miss a payment, your loan will be extended and more interest will be added) and the ability to defer payments after you have made on time payments for a full year.

Pros

  • No origination fee
  • No late fees
  • Ability to defer payments after a year of on time payments
  • Wide range of repayment terms available between 36 to 72 months
  • Can see rates with a soft pull

Cons

  • Currently not available in Maryland
  • Rates up to 28.99% APR
  • No clear qualification information
  • Late payments will accumulate more interest, resulting in a larger final payment.

Marcus is a great option if you have good credit and want to get a personal loan that has a lower rate. It is also a great option for those that want to work with a traditional lender.

Marcus by Goldman Sachs®
APR

5.99%
To
28.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. ... Read More


Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. For New York residents, rates range from 5.99% to 24.99% APR.

4. BestEgg

BestEgg offers personal loans up to $35,000 for people with credit scores as low as 700. APRs range from 5.99% to 29.99%. You can check your rate without hurting your credit score, and BestEgg has an excellent application process (that can result in funding your loan very quickly).

The Fine Print

BestEgg does charge an origination fee, which can be between 0.99% - 5.99%. However, there is no prepayment penalty, and you can pay off your loan early without penalty.

Pros

  • Can see your rate with a soft pull
  • Will consider applicants with credit scores as low as 700
  • Offers very competitive interest rates
  • Fast application process and fast funding

Cons

  • APR can be as high as 29.99%
  • It does charge origination fees

BestEgg offers competitive rates and a quick online process to get your loan. It is an excellent option for people with less than perfect scores.

APR

Up to 29.99%

Credit Req.

700

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

0.99% - 5.99%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

People looking for a process that is fast and straightforward can’t go wrong when applying through Best Egg for a personal loan. ... Read More


*The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99% - 5.99%. Any origination fee on a 5-year loan will be at least 4.99% and is deducted from loan proceeds. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may resulting an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.

Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. "Best Egg" is a trademark of Marlette Funding LLC. All uses of "Best Egg" on this site mean and shall refer to "the Best Egg personal loan" and/or "Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan," as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000.

Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.

5. Avant

Avant offers access to loans from $2,000 to $35,000. There is no prepayment fee. It is possible to get your loan as soon as the next business day. Although every case is unique, we have seen Avant accept people with credit scores as low as 580 be approved.

The Fine Print

APRs range from 9.95% to 35.99%. The Avant platform does charge an up-front origination fee of up to 4.75%, which is lower than most of the competition.

Checking your Loan Options through Avant only requires a soft pull to see your rate, which does not affect your credit score, and there are no prepayment fees.

A personal loan through Avant received an “A” from MagnifyMoney’s Transparency Score.

Pros

  • Approved people with lower credit scores
  • “A” Transparency Score
  • Can see your Loan Options with a soft pull
  • Fixed terms, fixed interest rate, no prepayment fees

Cons

  • Interest rates as high as 35.99%
  • Charges an origination fee
  • Not available in Colorado, Iowa, West Virginia, and Vermont

Avant is a good option for people with less than perfect credit. You can check your Loan Options without hurting your score and it has an “A” transparency score.

APR

9.95%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Up to 4.75%

SEE OFFERS Secured

on LendingTree’s secure website

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

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. ... Read More

6. OneMain

OneMain Financial offers loans up to $30,000 for individuals with credit scores starting at 600. It offers terms of up to 60 months and APR ranges from 16.05% to 35.99%.

The Fine Print

In order to be accepted for a OneMain Loan, you must live near a OneMain branch, as a face-to-face meeting is required to finalize the loan. OneMain personal loans are not available in Alaska, Arkansas, Connecticut, Massachusetts, Nevada, Rhode Island, Vermont, or Washington D.C.

In order to qualify you must have:

  • Verifiable, steady income
  • No bankruptcy filings, ever
  • Be at least 18 years of age
  • Have at least some established credit history
  • Credit score of at least 600

If, at any time during the application process, OneMain becomes aware that you intend to use the personal loan for gambling, your loan application will be cancelled. OneMain personal loans cannot be used for business expenses or tuition.

Pros

  • Credit score as low as 600
  • Fixed Rates
  • No Prepayment penalty
  • Fixed terms

Convenient location, at OneMain branches

Cons

  • APR ranges from 16.05% to 35.99%
  • Loans cannot be used for business expenses or tuition
  • See potential rate with a hard pull
  • Personal loans only available up to $30,000
  • Loans not available in Alaska, Arkansas, Connecticut, Massachusetts, Nevada, Rhode Island, Vermont, or Washington D.C.
  • You must visit a OneMain branch to complete the loan.

The OneMain personal loan caters to people with low credit scores, or who would prefer to complete the personal loan application process at a branch, rather than online.

APR

16.05%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More


Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

7. Freedomplus

FreedomPlus offers loans ranging from $7,500 to $40,000 that can be used for everything from debt consolidation, to unexpected expenses. APR ranges from 5.99% to 29.99%.

Its biggest selling point is the same-day approval and availability of funds within 48 hours, a lifesaver in some circumstances.

The Fine Print

In order to qualify for a Freedomplus loan, you must:

  • Be 18 years or older
  • Be a legal US resident
  • Have a valid ID
  • Minimum credit score of 0
  • At least $25,000 in verifiable income
  • No bankruptcies in the last two years

Freedomplus charges origination fees ranging from 0.00% - 5.00%, which is deducted from the loan amount before you receive the funds. There are no prepayment penalties.

The Freedomplus personal loan scores a “B” Transparency score because its fee structure and much of the fine print is unclear or not covered by the final contract.

You can prequalify with a hard pull, which does not affect your credit score. However, Freedomplus requires a phone screening with each applicant before the loan is approved.

Pros

  • Will approve credit scores as low as 0
  • The phone screening may improve your chances of being approved for the loan
  • Same-day approval and funds within 48 hours
  • No prepayment penalty
  • Can prequalify with a hard pull

Cons

  • APR ranges from 5.99% to 29.99%
  • The fee structure is not readily available for review
  • Origination fee of 0.00% - 5.00% applies

The Freedomplus personal loan is a good option for you if you have less than perfect credit, and need access to funds quickly, without visiting a physical branch.

APR

5.99%
To
29.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

0.00% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

With a personalized application process that includes a phone interview, FreedomPlus gives people with below average credit a shot at getting approved for a personal loan.... Read More

8. Prosper

The Prosper personal loan process is a little different than a traditional lender. It is not a bank, but rather a peer-to-peer lender. Once you have applied, and checked loan terms and rates, you create a loan “listing” that then appears on in the Prosper marketplace.

From these listings, peers (investors) choose which loans they would like to finance. When your loan listing is financed, the money is transferred to your bank account.

Prosper offers loans from $2,000 to $40,000, and APR ranges from 6.95% to 35.99%. It offers loans terms of either 36 or 60 months. Your APR is determined during the application process, and is based on a credit rating score created by Prosper. Your score is then shown with your loan listing to give potential lenders an idea of your creditworthiness.

The Fine Print

Your loan listing will remain active for 14 days. After 14 days, your loan must be at least 70% funded to receive the funds. If you are not 70% funded within 14 days, you must reapply to have your loan re-listed.

Origination fees range from 2.41% - 5.00% and are based on your Prosper score. In order to qualify, you must:

  • Have a bank account
  • Have a social security number
  • No more than 7 inquiries on your credit in the last six months
  • A verifiable, steady income
  • A credit-to-debt ratio of less than 50%
  • At least three open accounts, such as checking, savings, and credit card.
  • No bankruptcies in the last year

A returned payment may result in a $15 fee, and late payments past 15 days are charged a 5% fee, with a minimum of $15.

Prosper’s overall fine print is very clear is its fees are quite minimal, so it scores it an “A” Transparency Score. Also, you can check your Prosper rate with a soft credit pull, which will not affect your credit score.

Pros

  • Minimum credit score of 640
  • Can see your rate with a soft pull
  • No prepayment penalties
  • Paying off a Prosper loan can reduce your APR on future Prosper loans

Cons

  • Only 14 days to secure financing from peer lenders
  • Origination fee of 2.41% - 5.00% applies
  • APR varies from 6.95%– 35.99%

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

APR

6.95%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

2.41% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

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. ... Read More


For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

Shop Around to Find the Best Deal

If you have made past credit mistakes, or have very little credit, there are personal loans out there for you. Many of these lenders offer rates much lower than what you would be paying on a credit card, shaving month and hundred or thousands of dollars off of your debt.

Don’t give up on a personal loan just because of your credit – there are options out there for you. It never hurts to shop around and look for the best rates available, especially if the lender does a soft credit pull to show you your options.

*We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.

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Advertiser Disclosure: The products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

Gretchen Lindow
Gretchen Lindow |

Gretchen Lindow is a writer at MagnifyMoney. You can email Gretchen at [email protected]

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