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Personal Loans

How Personal Loans Work and Common Traps to Avoid

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

how a personal loan works

Need money to pay for a kitchen renovation? Maybe you’d like a chunk of cash to pay off your high-interest credit card debt? An unsecured personal loan can help you accomplish these goals.

Because personal loans aren’t typically backed by any form of collateral, such as a home or car, you don’t need home equity or a vehicle to qualify for one. You do, however, need to do your research before applying for a personal loan. Here’s what you need to know and consider.

How personal loans work

You can apply for personal loans at banks, credit unions or through online lenders. And you often don’t have to put up any collateral to do so.

Unsecured personal loans are different from other types of loans, such as mortgages and auto loans. Those loans are backed by collateral. When you take out a mortgage, your home acts as the collateral, providing a safety net for your lender. If you stop making payments, your lender can take your home through a foreclosure process.

With an unsecured personal loan, there is nothing for a lender to take back should you stop making your payments. Because of this, this type of loan is riskier for lenders.

You can use the funds from a personal loan to pay for a variety of things, such as:

Personal loans come with terms that are usually pretty simple:

  1. There is a fixed term. You know when the debt is paid off, and it is almost always less than 5 years. (Pay the minimum due on your credit card, and you could still be paying 30 years from now). There usually aren’t pre-payment penalties, but some loans do have them, and you should check for that before you accept the loan.

  2. There is a fixed interest rate. Your monthly payment and interest rate stays the same for the life of your loan. Credit cards will increase the interest rate on your existing balance if you become 60 days past due. And they can increase your interest rate on future purchases at any time.

It’s important to compare multiple offers when signing up for a personal loan. Click “see offers” below to compare up to five personal loan lenders to find the best for your needs!

LendingTree
APR

5.99%
To
35.99%

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

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.

Applying for a personal loan: What factors lenders consider

Because personal loans often don’t require collateral, lenders are taking on more of a risk by lending you money. Because of this, lenders will look closely at your credit score and other factors when determining your eligibility for loan funds and what interest rate they will offer you.

Credit score

The higher your credit score, the more likely you are to qualify for a personal loan at a lower interest rate. That’s because borrowers with higher credit scores tend to have a history of making on-time payments each month.

How high should your credit score be? That varies from lender to lender. In MagnifyMoney’s personal loan marketplace, you’ll find lenders who require a minimum score as low as 525. Other lenders require a minimum 710 credit score.

When lenders check your credit score, chances are they will look at your FICO Score. This score ranges between 300 and 850, with 850 being the highest score possible. Here’s a breakdown of the FICO Score ranges:

  • 800+: Exceptional
  • 740-799: Very good
  • 670-739: Good
  • 580-669: Fair
  • 579 and below: Poor

You can view your credit score for free at the three major credit bureaus once per year or you can sign up for free credit monitoring services with MyLendingTree (LendingTree is the parent company to MagnifyMoney).  If you find that you have a low score, try following these steps to improve your score.

Debt-to-income ratio

Lenders will also look at your debt-to-income ratio. Different lenders will have different standards for debt-to-income ratios. Most lenders, though, want your total monthly debts to consume no more than 43% of your gross monthly income.

View our video below to get a better understanding of how personal loans work and what factors lenders consider!

How much can you borrow with a personal loan?

Banks and lenders have limits to how much you can borrow with a personal loan. These will vary by institution, so you’ll need to do your research before you apply, especially if you need to borrow a significant amount of money.

At Pentagon Federal Credit Union, for example, you can borrow $500 and $25,000. At Discover Bank,  you can borrow between $2,500 and $35,000. Other lenders, however, will let you borrow up to $100,000.

How long do you have to pay back a personal loan?

Once you’re approved for a personal loan, your lender will provide you with a schedule of payments. This will spell out how much you pay each month, and how many payments you’ll make. It will also list your interest rate and annual percentage rate (APR). APR is the best measure of how much your loan will cost you. APR includes your loan’s interest rate and any additional charges levied by your lender.

How long it takes you to repay your personal loan depends on your lender and the loan term you sign up for. Most banks, though, offer personal loans that you pay back over one to five years.

For example, USAA Bank offers loan terms for 12 to 84 months. Discover offers terms between 36 to 84 months.

How much do personal loans cost?

Banks and financial institutions make their money with personal loans through the interest they charge you for borrowing money. You want to make sure when applying for a personal loan that you know exactly how much you will pay each month in interest.

The interest rate your lender charges will depend largely on your credit score and debt-to-income ratio.

Rates with personal loans, though, tend to be higher than they are with mortgages, auto or home equity loans. That’s because personal loans don’t require collateral, so they are riskier for lenders. To make up for that risk, lenders tend to charge higher interest rates.

What rates can you expect to pay? LightStream offers APRs between 3.99% and 16.99% with autopay, while Upstart has rates between 7.74% and 35.99%.

Some lenders will charge an origination fee to draft your personal loan. It’s not uncommon to see fees ranging from 1% to 6% or more of your loan amount. Many others, though, will not. In general, you should avoid paying an origination fee.

Click here to view the best options for a no fee personal loan.

Personal loan pitfalls to avoid

Personal loans do come with some advantages over, say, using your credit card. The interest rates are lower and you’ll have a fixed monthly payment, so you can more easily budget your payments.

But there are some potential traps you should avoid when signing up for a personal loan.

Insurance

We all want to protect our families from the unexpected and insurance is a great way to do just that.  Similar to how we recommend planning in advance for your debt (and looking for the best deal), you should do the same with insurance. However, many personal loan providers will try to add an insurance sales pitch at the end of a loan closing.  The two most typical types of insurance are life insurance and unemployment insurance.

For life insurance, a typical sales pitch would sound like this: “for just the cost of a can of soda a day, you can make sure your children never have to worry about this debt if you die.” Beware these high-pressure sales tactics.  The value of these add-on policies is almost always outrageously bad.

To protect your family, you should think about a good term life insurance policy that covers not just your personal loan, but all of your needs.  Do this search separate from the loan transaction.

Unemployment insurance could be a bit more compelling (because, unlike term life insurance, it is difficult to buy a policy separately that would make loan payments on your behalf if you lose your job).  I have seen people benefit from these policies.  But you need to do the math.  How much does it cost per month?  So long as you don’t have a high risk of losing your job in the next 6-12 months, you are almost always better off saving the money (rather than paying the premium).  There are also a ton of limitations to the amount of the loan payment that can be made (and the length of time that it will be paid).  You should ask them the following questions:

  1. How much does this cost a month?

  2. What are the requirements for me to be able to claim?

  3. How much would it pay and for how long?

When you ask those questions, you will likely see that the policy being offered is poor value, and you are better to just save the money yourself.

High interest rates

Depending on your credit score and lender, you could face high interest rates when taking out a personal loan. A high interest rate will result in a higher monthly payment.

In fact, if you qualify for an interest rate as high as 35.99% — which some lenders charge to customers with poor credit — you might not save any money over using a credit card if you have one.

Precomputed interest

Ask lenders how your interest is computed. What you don’t want to hear — and a situation that you want to avoid — is that your interest is calculated on a precomputed basis. The essence here? Precomputed interest is not a good deal for customers who might pay off their personal loans early.

The Consumer Financial Protection Bureau does a good job of explaining how precomputed interest works. At its most basic, though, when lenders precompute your interest, you will pay a greater amount of interest from earlier months and years of your personal loan. This won’t happen if your interest is computed using the simple interest method.

If you take the full term to pay off your personal loan, there is no difference between the simple and precomputed methods. You’ll pay the same no matter what. But if you pay off your personal loan before its term ends — say you pay off a five-year loan in just three years — you will pay more in interest under the precomputed method. That’s because you’ll be paying more interest in the earlier months of your loan than you would under the simple interest method.

In short, if you plan to pay off your loan early, avoid precomputed interest.

Origination fees

As mentioned earlier, there are plenty of lenders that don’t levy origination fees, the charge filed by lenders for originating your loan. If you can’t qualify for a personal loan with a lender that doesn’t charge an origination fee, you might consider skipping out on such a loan altogether.

That’s because origination fees can be costly.

Lenders that do charge origination fees vary in how high they are. Online lender LendingClub provides a good example. The lender says its origination fees range from 1.00% - 6.00% of your total loan amount, depending on your credit score.

For example, if you take out a $6,000 personal loan with an origination fee of 3.5%, you’d have to pay $210. This amount may reduce the amount of money you receive. LendingClub says that it subtracts your origination fee from your loan. This means that the money you receive will be less than what you were approved for.

Here’s an example provided by LendingClub: If you take out a $6,000 personal loan with 3.5% origination fee with their ongoing interest rate, you’d receive a total of $5,790 in your bank account. That equals $6,000 minus the $210 origination fee.

Prepayment penalties

Another way lenders can hit your finances is with prepayment penalties. As the name suggests, these are fees borrowers must pay if they pay off a loan too early.

Say you take out a personal loan with a term of five years. Your lender might charge you a prepayment penalty — usually a percentage of your remaining balance — if you pay ahead and pay off your personal loan in just two years.

The good news is that most lenders don’t charge prepayment penalties on personal loans, meaning that you should be able to avoid them. Just make sure you ask any lender with which you work if they do charge these fees.

Personal loans are great, if you do the research

With a personal loan, you can have a fixed interest rate, fixed payment, and fixed term.

If you compare APRs, then you will be making the right decision. Don’t just jump into picking a personal loan and end up taking out a pre-computed loan, with three add-on insurance policies and a big origination fee – only to refinance the loan three months later.  These are sub-prime tricks that can dramatically increase the costs.

If you borrow for 36 months and pay it off in 36 months, then you are in good shape.

promo-personalloan-wide

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.

Nick Clements
Nick Clements |

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

Dan Rafter
Dan Rafter |

Dan Rafter is a writer at MagnifyMoney. You can email Dan here

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Get A Pre-Approved Personal Loan

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Won’t impact your credit score

Advertiser Disclosure

Personal Loans

American Express Personal Loan Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

American Express
APR

6.98%
To
18.99%

Credit Req.

Fair to excellent

Minimum Credit Score

Terms

12 to 36

months

Origination Fee

None

APPLY NOW Secured

on American Express’s secure website

American Express Personal Loan Details
 

Fees and Penalties

  • Term lengths: 12 to 36 months
  • APR range: 6.98% to 18.99%
  • Loan amounts: $3,500 to $40,000
  • Time to funding: Typically 3 to 5 business days after you sign the loan agreement
  • Credit check: Soft Pull
  • Origination fee: None
  • Prepayment fee: None
  • Late payment fee: $39

American Express product details

Personal loans do not come with perks attached to American Express card products, such as Membership Rewards, cash back or insurance benefits. However, the only fee associated with personal loans is a late fee — $39 if your payment is late or not made in full, which can result in major savings. To help you avoid late payments, the company offers an autopay feature.

If you’re using a personal loan for debt consolidation, American Express makes the process easy by sending your funds directly to the issuer. Payments can be disbursed to up to four personal credit card accounts held by most major credit card issuers. You’ll find out if your credit card account is eligible during the application process.

Eligibility requirements

  • Minimum credit score: Fair to excellent
  • Minimum credit history: Not specified
  • Maximum debt-to-income ratio: Not specified

To be preapproved for an American Express personal loan, you must meet the lender’s minimum eligibility requirements. This includes being:

  • A U.S. citizen or resident of the U.S. or its territories
  • At least 18 years old
  • A basic card member with an eligible consumer American Express card in good standing at time of application submission

Applying for a personal loan from American Express

Only preapproved American Express card members are eligible to apply for a personal loan. During the preapproval process, you’ll be asked to provide basic information, such as the amount of money you’d like to borrow, desired repayment period, loan purpose, contact information and income. Keep in mind, however, that some card members may only be preapproved to use their personal loan for credit card debt consolidation.

All personal loan applications must be submitted online. You’ll need an American Express online account and valid email address, and you must agree to receive electronic communications and other online documents. Do note, however, that preapproval is not a guarantee that you’ll be granted a loan — but if your application is approved, you’ll have the opportunity to review and accept the terms.

If your personal loan was approved to pay down credit card debt, the funds will be sent directly to the accounts designated on your application. Otherwise, the money will be sent to an eligible bank account on file with American Express. If you don’t have an eligible bank account on file, you have three days from the date you sign your loan agreement to add a personal checking account in your name or your loan agreement will be deemed void and unenforceable.

Pros and Cons of an American Express Personal Loan

Pros:

Cons:

  • Minimal-to-no fees: The sole fee associated with an American Express personal loan is a $39 late fee, assessed only on late payments and those not made in full.
  • Loan amount: American Express personal loans are available in increments from $3,500 to $40,000. The amount granted is based on creditworthiness and other factors.
  • Repayment period: Specific terms aren’t noted, but you’re able to choose from three repayment periods. This allows you to secure a monthly payment that doesn’t put a strain on your budget.
  • Soft pulls: Applying for an American Express personal loan will not impact your credit score. But if you’re approved, loan details will be sent to credit reporting agencies, which could affect your credit score.
  • American Express credit card required: Only preapproved American Express card members are eligible to apply for a personal loan through the company.

  • No perks: Personal loans do not come with perks offered on American Express cards, such as Membership Rewards, cash back or insurance benefits.

  • Not for bad credit: Only cardholders with fair to excellent credit are encouraged to apply. American Express recommends that applicants with a credit score of 659 or less improve their credit before submitting an application.

Who’s the best fit for an American Express personal loan?

An American Express personal loan can be a great choice for cardholders who don’t want to pay fees. Since the only fee associated with the loan is a $39 late fee — assessed only on late payments and those not made in full — you won’t pay any fees if you satisfy your monthly financial obligation.

The three available repayment periods can also be a helpful option. This gives you the opportunity to choose a monthly payment that works best with your budget.

Considering the loan is offered in increments of $3,500 to $40,000, this product is clearly geared toward borrowers who need a higher loan amount. It’s also a better choice for cardholders with higher credit scores, as loan offers — including APR and maximum borrowing power — are based on creditworthiness and other factors.

Before choosing a personal loan, it’s always wise to comparison shop.  Here’s a look at a few other possible alternatives that might meet your needs.

Alternative personal loan options

LightStream

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.

LightStream is an online lending division of SunTrust Bank. It offers personal loans for between $5,000 and $100,000 with rates as low as 3.99% with autopay. Note that lender rates vary based on the loan purpose. LightStream doesn’t charge origination fees, plus it offers loans with terms from 24 to 144 months, it is a low-cost and flexible option for borrowers.

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

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

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

With no origination or late fees, Marcus by Goldman Sachs may be an affordable option for a personal loan. The lender offers loans for up to $40,000 with rates as low as 6.99%. Further, you can see rates with a soft credit pull.

LendingClub

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

LendingClub may be a great option for borrowers with less-than-stellar credit. It has a minimum credit score requirement of 600. Its personal loans come with rates as low as 6.95% and as high as 35.89%. You can expect an origination fee between 1.00% - 6.00%.

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.

Laura Woods
Laura Woods |

Laura Woods is a writer at MagnifyMoney. You can email Laura here

TAGS:

Get A Pre-Approved Personal Loan

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Won’t impact your credit score

Advertiser Disclosure

Personal Loans

Citibank Personal Loan Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

Citibank
APR

7.99%
To
17.99%

Credit Req.

Not specified

Minimum Credit Score

Terms

12 to 60

months

Origination Fee

Not specified

APPLY NOW Secured

on Citibank’s secure website

Citibank personal loan details
 

Fees and penalties

  • Term lengths: 12 to 60 months
  • APR range: 7.99%-17.99%
  • Loan amounts: $2,000-$50,000
  • Time to funding: Checks are sent within five business days of approval.
  • Credit check: Hard Pull
  • Origination fee: Not specified
  • Prepayment fee: No
  • Late payment fee: Not specified
  • Other fees: Not specified

Citibank product details

Perks offered to Citibank personal loan customers aren’t largely advertised online. However, linking a personal loan account to an eligible checking account enrolled in Citi ThankYou Rewards can help earn points on a monthly basis. Points never expire and can be redeemed for gift cards, travel rewards, cash and more. This can allow customers to save money while repaying their loan.

Eligibility requirements

  • Minimum credit score: Not specified
  • Minimum credit history: While a minimum credit score isn’t listed, Citibank does specify that the lowest quoted personal loan rate requires the borrower to have excellent credit.
  • Maximum debt-to-income ratio: Not specified

Citibank personal loans are only available to borrowers with a maximum of one existing personal loan account with the financial institution. If consumers have another Citibank personal loan account, it cannot have been opened within the past six months. Qualified applicants are also required to have a minimum annual income of $10,500.

It’s also worth noting that anyone who wants to apply for a personal loan online must either be a current Citi checking or savings account customer registered for Citibank online or have received a Citi Personal Loan offer with an invitation number. Without an invitation, current customers who don’t have online account and non-customers must apply in person at a Citibank branch or call a

Applying for a personal loan from Citibank

Personal loans are available in increments from $2,000 to $50,000, but applications cannot be submitted online for amounts exceeding $30,000. Applicants who wish to borrow up to $50,000 must call 1-877-362-9100 or visit a Citibank branch location.

Depending on the requested loan amount, prospective borrowers with a current Citi checking or savings account who are registered for Citibank online and anyone who has received a Citi Personal Loan offer with an invitation number can submit a personal loan application online. Everyone else must apply in person at a Citi branch or call 1-877-362-9100.

To begin the online application process, current Citibank customers registered for online access will need to enter their user ID and password. Non-Citibank customers who have received a Citi Personal Loan offer with an invitation number will be directed to an application site and asked to enter the invitation code, their last name and zip code. Do note, credit scores are not impacted for viewing the personal loan offer. Upon approval, a check for the full amount of the loan will be mailed within five business days.

Pros and cons of a Citibank personal loan

Pros:

Cons:

  • Fixed rate: Citibank personal loans come at a fixed rate, allowing borrowers to enjoy fixed monthly payments. Do note, defaulting on the loan may come at the cost of a 2% APR increase.
  • No hidden fees or prepayment penalties: Borrowers don’t have to worry about being hit with added costs attached to the loan.
  • Competitive rates: Fixed rates range from 7.99% APR to 17.99% APR.
  • Flexible terms: Borrowers can choose from a variety of repayment terms, consisting of 12 to 60 months.
  • Fast cash: Checks for the full amount of the approved loan are mailed within five business days.
  • Limited online application access: To apply online, prospective borrowers must either be a current Citi checking or savings account customer registered for Citibank online or have received a Citi Personal Loan offer with an invitation number. Without an invitation, current customers who don’t have an online account and non-customers must apply in person or by phone.
  • Loan amount constraints: To receive the lowest quoted rate, borrowers must use Citibank Auto Deduct to repay the loan, have excellent credit, borrow at least $10,000, have a loan term of 36 months or less and sufficient relationship balances.

Who’s the best fit for a Citibank personal loan?

A Citibank personal loan can be a great option for consumers with a one-time need to borrow money. Specifically, Citibank customers willing to repay their loan with Citi Auto Deduct, who have excellent credit, need to borrow at least $10,000, can repay the loan within 36 months and have sufficient relationship balances are eligible for the most competitive rates.

Loan amounts range up to $50,000, so this product can also be a good fit for consumers who need a higher loan amount. The ability to lock in a fixed rate and face no hidden fees or prepayment penalties can make it good choice for those looking for peace of mind in a fixed monthly payment.

Alternative personal loan options

LightStream

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.


LightStream, a division of SunTrust Bank, offers personal loans from $5,000 to $100,000. Rates are fixed and vary by loan purpose. There are no fees attached to the loan, including prepayment penalties, making it a good choice for consumers who might want to pay the loan off early. Loans can be funded as quickly as one day of approval, so this isn’t the best option for anyone who needs cash fast.

PenFed Credit Union

PenFed Credit Union
APR

Starting at 6.49%

Credit Req.

700

Minimum Credit Score

Terms

60

months

Origination Fee

No origination fee

APPLY NOW Secured

on PenFed Credit Union’s secure website

Pentagon Federal Credit Union (PenFed) offers personal loans with terms up to five years and maximum loan amounts of $25,000.... Read More


PenFed grants personal loans from $500 to $25,000. Along with no origination fee, there’s also no other hidden costs, making it a great choice for borrowers looking to avoid additional expenses. Funds are available immediately, which is advantageous for consumers who need cash now. Do note, personal loans are only available to PenFed members.

SoFi

SoFi
APR

6.79%
To
15.49%

Credit Req.

680

Minimum Credit Score

Terms

12 to 84

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

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


Fixed rates from 6.79% APR to 15.49% APR (with AutoPay). Variable rates from 6.54% APR to 14.60% APR (with AutoPay). SoFi rate ranges are current as of January 4, 2019 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 6.54% APR assumes current 1-month LIBOR rate of 2.51% plus 4.28% 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. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.

See Consumer Licenses.

SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of AK and WY is 9.99% APR, for residents of IL with loans over $40,000 is 8.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, VA, 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, TX, VA, WY, or for residents of IL for loans greater than $40,000.

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 provides personal loans ranging in value from $5,000 to $50,000, making it a good choice for borrowers who need a significant amount of money. Rates are fixed and loans are completely free of fees. Funds are typically deposited in consumers’ accounts a few days after approval and the successful completion of required paperwork. An added bonus, SoFi’s unemployment protection benefit offers an additional layer of security by allowing borrowers to temporarily pause payments and helping them find a new job if they become unemployed.

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Laura Woods
Laura Woods |

Laura Woods is a writer at MagnifyMoney. You can email Laura here

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