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Updated on Monday, February 16, 2015
Karrot is a personal loan lender that prides itself on being a quick and simple solution for those that need funding quickly. Its application takes mere minutes to fill out, Karrot provides you with an interest rate within minutes and you can get next day funding.
Karrot compares itself to traditional personal loan lenders such as banks and credit card companies, and according to its website, it beats the competition due to its hassle-free application process, low interest rates, and terms offered. Karrot is also incredibly transparent about the process.
If you haven’t heard of Karrot, you might have heard of its parent company, Kabbage. Kabbage originally started out by offering loans to small businesses, and when it realized consumers could benefit from the streamlined process it was offering, they created Karrot.
Let’s take a look at whether or not quick funding and an easy application process make a Karrot personal loan worth applying for.
Karrot Personal Loan Details
Karrot’s loan amount is a maximum of $35,000 on a 60 month term, and its fixed rates range from 6.44% – 29.27% APR.
According to the website, “Final loan interest rate will be determined by your credit history.” If you want to get a feel for the rates you might qualify for based on your credit, you can view a complete chart of their loan grades on its website.
As an example: if you were to borrow $10,000 on a 3 year term at a 6.44% APR, and you have excellent credit, your minimum payment would be $303.00 per month.
If you borrowed $10,000 on a 5 year term, you’d receive a 6.94% APR with a minimum monthly payment of $192.08.
What Karrot Looks for in a Borrower
Karrot mentions on its website that credit score, credit history, income, and cash flow are taken into consideration when applying. You should have established credit if you’re looking to apply for a personal loan with Karrot – if you don’t have a credit score, you won’t be able to apply.
Borrowers must be 18 years or older and residing in the United States. Borrowers in Nebraska or Alabama need to be 19 years or older to apply for a loan.
Karrot’s personal loans are not available in Iowa or Wisconsin at this time.
The Fine Print – Are There Any Fees?
There are fees associated with a personal loan from Karrot, but the good news is that Karrot is extremely transparent with these fees.
- Origination Fee: Karrot’s origination fees range from 1.05% - 4.75% depending on the loan grade you qualify for.
- Unsuccessful Payment Fee: If your payment fails to go through, you will be responsible for paying a $15 fee.
- Check Processing Fee: If you pay by check, you will be charged a $15 processing fee.
- Late Payment Fee: After your payment is 5 days past due, you will be charged $15 or 5% of the current due amount – whichever is greater.
- Document Request Fee: Karrot is solely based online, and if you need to request paper documentation, they’ll charge you a $15 fee.
If you’re curious as to how the origination fee is applied, Karrot answers this with an example in their FAQ. The origination fee is essentially taken out of the total loan amount you’re approved for. If you borrow $10,000 and your origination fee is 3%, then $9,700 will be deposited into your bank account. Interest is still charged on the total of $10,000.
As specified, they do offer a grace period of 5 days before charging you with a late fee. Karrot states on its website that negative reporting may occur in the event of severe delinquency. They encourage borrowers having difficulty paying to give their customer service team a call.
The Application Process
As mentioned, Karrot’s application process is extremely simple and fast. You’re initially required to answer a few basic questions about yourself (name, address, and type of loan you want), and this initial application doesn’t affect your credit.
Once you submit your application, you should receive an email within minutes from Karrot telling you what your interest rate will be. At this point, you can choose the amount you want to borrow as well as the repayment term. However, depending on the loan grade you qualify for, you might not have a choice with the repayment term.
Assuming you want to proceed with the loan, Karrot will then conduct a hard inquiry on your credit.
Once that process is complete, you’ll be eligible for next-day funding, though Karrot does note that it can take up to 3 business days for the funds to be deposited via ACH.
You should know that offers expire after 7 days; so ideally, you want to be ready to accept or move on after receiving your offer.
Who Benefits the Most from a Personal Loan with Karrot?
Those that need a personal loan quickly and have a decent credit score and history will benefit the most here.
What makes Karrot different, though? Let’s compare Karrot against Earnest, as both lenders place emphasis on their low rates and quick funding process.
Earnest offers similar terms that range from 36 to 60 months, and fixed rates that go from 5.99% to 17.24%. The maximum amount you can borrow is $75,000, and there’s No origination fee to worry about.
By all accounts,Earnest seems to offer a better deal unless you need a longer term or more money (or both). Earnest also takes into account more than just your credit history, so those that get turned away by Karrot due to credit score or history should give them a try.
Aside from that, Karrot’s loan process is appealing when compared with traditional banks and credit card advances. There’s less paperwork, time, and effort involved!
What Can You Do With a Personal Loan from Karrot?
Karrot has an extensive list of uses for its personal loans, which includes:
- Debt consolidation
- Home improvement
- Starting a business
- Medical loan
- Pet loan
- Holiday season loan
- Engagement ring loan
- Vehicle loan
- Baby or adoption loan
Karrot’s term of 60 months and its maximum loan amount of $35,000 makes their loans very flexible and useful for just about anything!
Is Karrot Right for You?
Karrot is a great solution for those looking for speedy funding at lower rates than one would receive through a traditional bank or credit card advance. However, its interest rates aren’t the lowest we’ve seen, which is why it’s worth it to shop around.
Borrowers typically have a 45-day window in which they can apply for loans with multiple lenders and have them counted as one single inquiry. The credit bureaus understand that consumers want to ensure they’re getting the best possible deal, so don’t be afraid to shop around! You’re not obligated to accept any offer that you receive after applying, but do remember that with Karrot, the offer you’re approved for will expire after 7 days.
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