Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
Founded in 2014, LendingPoint is an online lender based in Kennesaw, Ga., outside Atlanta. It began by offering personal loans only in Georgia, but has since expanded to 34 states and Washington D.C. LendingPoint has originated more than $500 million in loans through its website and loans made through merchants known as point-of-sale loans. The company lends to those with fair credit, borrowers with scores as low as 580 who may not be able to attain a personal loan through more traditional financial lenders.
LendingPoint personal loan highlights
Caters to borrowers with fair credit. LendingPoint works with borrowers who have fair credit or those the company calls “near-prime” consumers.
Quick decisions and distribution of funds. Borrowers may apply online, see an offer within minutes and receive money as soon as 1 to 2 business days.
Soft pull. LendingPoint conducts a soft pull to provide a rate quote that will not impact your credit score.
Refinance option. After six months of paying your personal loan on time, and once you have paid down at least 25% of the principal, you may be able to adjust your payment or get a better deal on your interest rate.
High rates: LendingPoint’s rates are high compared with other lenders who cater to borrowers with fair credit. Read our roundup of personal loans for those with less-than-perfect credit here.
LendingPoint is an online lender that targets borrowers with fair credit, and allows borrowing up to $25,000.... Read More Borrowers must have a minimum annual income of $20,000, and funding can be quick, sometimes as soon as the next business day. One major fallback is the high starting APR.Read Less
LendingPoint personal loan details
Fees and penalties
Terms: 24 to 48 months
APR range: 15.49% to 35.99%
Loan amounts: $2,000 to $25,000
Time to funding: After the final approval, funds may be transferred in up to 1 to 2 business days, though often as soon as the next business day.
Hard pull/soft pull: LendingPoint conducts a soft pull when you first apply for a personal loan quote. After you review the loan offer(s) and select one, a hard pull will then be done to move forward with the final loan approval process.
Origination fee: The Varies, depending on your state of residence and credit history.
Prepayment fee: None
Late payment fee: Varies
Many lenders are strict about how many loans you can have at one time, sometimes maxing out at one per borrower. However, LendingPoint may allow you to take out two loans at once, depending on your current loan’s standing and your overall credit history. Being able to take out another personal loan can be helpful if a new financial issue comes up, such as an unexpected home repair, where you need more funds than your current loan can’t cover.
LendingPoint’s personal loans may be used for many different financial reasons. Whether you need to pay for an upcoming home renovation, you need funds to buy a car or need help paying off a medical bill your insurance won’t cover, a personal loan with LendingPoint can help. These personal loans can also be used to help consolidate your debt and refinance your credit cards.
Eligibility requirements
Minimum credit score: 600
Minimum credit history: LendingPoint looks at your overall financial potential to help determine whether you’re a good candidate for a personal loan, but it will only consider those who can show income of at least $20,000 a year.
Maximum debt-to-income ratio: 35%
All borrowers must be at least 18 years old and reside in one of LendingPoint’s 34 designated states or Washington, D.C. Borrowers are encouraged to show consistent employment history for at least the past 12 months and must have a bank account.
LendingPoint does not offer loans in:
Colorado
Connecticut
Iowa
Louisiana
Maine
Maryland
Massachusetts
Nevada
New York
North Dakota
Rhode Island
South Carolina
Vermont
West Virginia
Wisconsin
Wyoming
Applying for a personal loan from LendingPoint
To begin the application process with LendingPoint, you’ll first need to provide basic background information, such as your name, date of birth, Social Security number, and annual income. This is the pre-approval process which will generate one or more loan offers in just a few minutes.
If you choose one of the offers and agree with the terms and rates, you will then need to provide any additional information and documents LendingPoint may request, including your driver’s license, bank statements (with voided check) and proof of income. Once all documents have been received and reviewed, a final loan approval can happen in a few hours, and your funds can possibly be distributed to your bank account within the next business day.
Pros and cons of a LendingPoint personal loan
Pros:
Cons:
No prepayment penalty. If you decide to pay off your loan before your term is up, LendingPoint will not charge you a prepayment penalty.
Fast approval and funding. Many borrowers are pre-approved for a personal loan within just minutes and approved for the actual loan within hours. Borrowers can possibly receive funds in their bank account the next business day.
Works with borrowers with fair credit. LendingPoint provides personal loans to borrowers with fair credit.
Bankruptcy is not grounds for automatic disqualification. Borrowers with a discharged bankruptcy of 12 months or more can still apply for a personal loan with LendingPoint. Your credit history, income and discharged bankruptcy timeframe will all be determining factors.
No joint or cosigner loans. Some lenders allow you to have a cosigner with a higher credit score in order to qualify for a better personal loan rate. That is not the case with LendingPoint’s personal loans, as they are based only on your individual credit history.
Fluctuating payment schedule. Your monthly due date may change because LendingPoint uses a 28-day payment cycle.
Higher interest rates. LendingPoint may work with borrowers with fair credit, but that can mean higher interest rates when compared with other lenders.
Origination fee. Many lenders don’t charge an origination fee for personal loans, which is why LendingPoint’s possible charge of up to 6.00% can be off-putting.
Who’s the best fit for a LendingPoint personal loan
If you have fair credit and meet the income requirements, LendingPoint could be a good option, especially if you need funds fast. The lack of a prepayment penalty is a plus, but other lenders offer lower rates, even for those with less than ideal credit.
It’s always a good idea to search and compare personal loans before making a final decision. Shop around to find the best personal loans with a rate and term ideal for your financial needs while also keeping an eye out for any fees associated with the loans, including origination fees. LendingPoint may be the best fit for you, but you should take some time to compare with others to know for sure.
Even with a credit score of 600, you still might be able to secure a loan through Peerform. ... Read More This peer-to-peer lender gives you a customized grade based on your credit score, allowing for you to easily see the rate that you can obtain. While Peerform is great for those with less than stellar credit, you more than likely will be able to find better rates elsewhere. Read Less
Peerform offers lower fixed rates ranging from 5.99% to 29.99% with loan amounts starting at $4,000 and maxing out at $25,000; terms are between 36 or 60 months. Similar to LendingPoint, there are no prepayment penalties should you want to pay off your loan in advance, but there may be an origination fee that varies from 1.00% - 5.00%. There are other fees to consider with Peerform as well — these include late fees, unsuccessful payment fees, and check processing fees, all of which can range around $15 each.
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 The loan application process is done online and only takes a few minutes to complete without hurting your credit. The loan processing time can take a while and you might not get approved if you have missed payments in the past.Read Less
While LendingPoint allows borrowers to take up to $25,000, LendingClub offers loans up to $40,000 which is good for those looking to borrow more money. However, you will likely have to wait a little longer to receive the funds — LendingClub’s earliest distribution is within 7 business days. There are no prepayment penalties, but LendingClub charges an origination fee of anywhere from 1.00% - 6.00%, and you could also be charged a check processing fee or late payment fee. Credit history, the loan amount and any other outstanding debt are some of the factors used to determine the APR, which usually ranges from 6.95% to 35.89%.
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 They offer quick turnaround times and you may get your money the same day if you apply before noon with check or prepaid debit card option. ACH transfers take one to two business days. Interest rates are higher than other online lenders, especially for those with excellent credit, and you will need to visit a branch to get your loan.Read Less
Loan approval and actual loan terms depend on your ability to meet our standard credit criteria (including credit history, income and debts) and the availability of collateral. Loan amounts subject to state specific minimum or maximum size restrictions. Collateral offered must meet our criteria. Active duty military, their spouse or dependents covered by the Military Lending Act may not pledge any vehicle as collateral. CA minimum loan amount is $3,000. GA minimum loan amount is $1,500 for present customers and $3,100 for others.
OneMain Financial has issued loans for more than 100 years and, similar to LendingPoint, can have money in your hands within the next business day after final approval. Loan amounts are from $1,500 to $30,000 with an APR range of 16.05% to 35.99%. Borrowers are eligible for terms of 24 to 60 months, depending on your credit and financial history and any other debts you may have. Credit score requirements vary and all personal loans have fixed rates and payments without any prepayment penalties. You may be able to get a loan offer within minutes when you apply online but will need to meet with a loan specialist in person for final approval.
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.
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.
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
Most people know their credit score is a three-digit number that represents their credit health, but that doesn’t mean they know how their credit score is determined or why it’s so important. Many consumers also fail to realize they have some power over their credit scores, including the ability to improve their score time.
If you’re wondering about the credit score needed for a personal loan, it’s crucial to understand the inner workings of your credit score and how it might impact your ability to qualify for the cash you need.
In this guide, we offer up information on the minimum credit score required for a personal loan, along with additional details on credit scores and where you can get yours for free.
While the term “credit score” is used widely to describe the score you’re assigned based on your creditworthiness, there are several different types of credit scores available. The most popular credit score is the FICO Score, which was created by the Fair Isaac Corporation. This score, measured on a scale from 300 to 850, is used by 90% of lenders who are making credit-related decisions each year, according to FICO.
VantageScore is the biggest competitor to FICO and its most current version, V3, uses the same 300-850 range of scores to describe consumer creditworthiness. Other credit scores include TransRisk, Experian’s National Equivalency Score, CreditXpert Credit Score, CE Credit Score, and Insurance Score.
While each type of credit score works differently, they all consider a similar set of information to determine where you stand. The big differences between them are based on how much weight they give each factor they compare.
As an example, the FICO scoring model uses the following criteria to determine your credit score:
Payment history: 35%
Debts/amounts owed: 30%
Age of credit history: 15%
New credit: 10%
Credit mix: 10%
With Vantage Score, on the other hand, different factors play a larger role in the score you’re assigned. Look how Vantage Score is determined, and you’ll see what we mean:
6 factors in your VantageScore
Factor
Weight
Age and type of credit
Extreme
Credit utilization (amounts owed)
Extreme
Payment history
High
Total balances
Medium
Recent behavior
Low
Available credit
Extremely low
If you don’t know your credit score but want to find out what it is right now, you can get your free credit score using My LendingTree. The services help you monitor your credit and find ways to improve it.
Some credit cards, like the Discover it® Cash Back, provide a free FICO® score on your monthly statement as a cardholder perk. You can also get your FICO® score for free with a service called Credit Scorecard. This service is available to you whether you are a Discover customer or not.
How do banks use credit scores?
When you apply for a personal loan, your lender will pull one of your credit scores from at least one of the credit reporting agencies — Experian, Equifax, or TransUnion. At that point, they will take a close look at your score to determine your creditworthiness.
“Credit scores are used to determine the risk of doing business with an applicant,” said credit expert John Ulzheimer. “If your score or scores are good enough and you have a sufficient income, then you’re likely to be approved.”
Keep in mind, however, that your credit score is only one factor a lender will consider when deciding whether to approve you for a personal loan.
“Banks also look at your entire credit report, your debt-to-income ratio (DTI), employment history, any items you own that can be used as collateral, and so on,” said Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.
In summary, you will likely need to have more than a sufficient credit score for a personal loan if you hope to qualify. You will also need to have a proof of income and employment, an acceptable debt-to-income ratio (a DTI below 35 percent is a good goal to shoot for), and a solid credit history that shows you have used credit responsibly in the past.
What credit score is needed for a personal loan?
When it comes to minimum credit score requirements for personal loans, there is no hard and fast rule. According to myFICO.com, a credit score of 670 or above is generally considered “good” and acceptable. This means that an applicant who applies for a personal loan with a score of 670 may qualify, but they may or may not receive the best interest rate or terms.
But that doesn’t mean a consumer with a credit score of 620 can’t get a loan, said Harzog; “it just means that the interest rate will be high.”
That’s because, generally speaking, those with low credit scores usually pay much higher interest rates if they can qualify for a loan. However, the opposite is also true since a high credit score will usually get you a loan with the lowest interest rates and best terms.
How much will your interest rate vary based on your credit score? That depends on your lender, where you live, and other factors. For example, at Wells Fargo, a $5,000 personal loan with a repayment period of sixty months offers the following rates based on a calculator they offer on their website as of November 14, 2018:
Excellent credit (score of 760 or above): 11.49% to 13.74%
Good credit (score of 700 to 759): 11.49% to 18.49%
Fair credit (score of 621 to 699): 18.49% to 24.49%
Poor credit (score of 620 or below): 19.99% to 24.49%
In terms of transparency, not all lenders offer the type of detail Wells Fargo does with their loan payment calculator. While some lenders list their credit score requirements online, others remain vague or refuse to commit to a minimum credit score cutoff altogether.
For example, Goldman Sachs Bank USA lists that only consumers with “excellent credit” qualify for their personal loans with the lowest rates, but they don’t list a minimum credit score requirement or explain their minimum cutoff for a great credit score. On the other hand, student loan refinance company and personal loan lender Earnest lists directly on their website a minimum credit score requirement of 680.
If you’d like to explore personal loan options, you can use this tool from LendingTree to see offers from up to five different lenders. You’ll input information about yourself and what you want out of a loan. If you qualify, the tool with spit out lender offers you can review.
As you begin comparing lenders for a personal loan, it’s important to keep in mind that credit score requirements, interest rates and transparency about internal processes will vary greatly. Ulzheimer also said that requirements also vary by lender since some “target a higher risk population.”
What can you do if your credit score is too low for a loan?
If you can’t qualify for the personal loan you want, it’s crucial to be aware of some of the risks that come with personal loan alternatives. Payday loans and title loans may make it easy to access cash, but they do so at an exorbitant cost. Interest rates on payday loans can surge up to 780% when you factor in fees, and title loans can lead to you having your car repossessed if you don’t pay them back in full when they’re due.
Consequently, it’s smart to avoid borrowing money unless you absolutely must.
“If you’re in a position where you need to rebuild your credit, it’s not a good idea to take on more debt,” said Harzog. “Instead, you should take some steps to improve your credit score over time, such as paying down debt to decrease your utilization, making sure all your bills are paid early or on time, and refraining from opening or closing accounts while you try to boost your score.
Harzog also noted that you should check your credit report for free with all three credit reporting agencies on AnnualCreditReport.com. If you find a negative note on your report that is inaccurate and take the time to dispute it, this could help your credit score tremendously.
In lieu of taking the time to improve your credit score before you apply for a loan, here are a few additional options to consider:
Get quotes from bad credit lenders. While lenders who focus on people with bad credit should be an option of last resort, you can consider them. Just remember that you may pay an extremely high interest rate if your credit is poor. With NetCredit Personal Loans, for example, your APR could be as high as 179.00%.
Get a cosigner. If you’re able to convince a family member or trusted friend with great credit to cosign on your loan, you could have a better chance at qualifying with a lower interest rate.
Apply for a secured loan. Secured loans require you to put down collateral, but they tend to offer lower rates and may be easier to qualify for. If you have home equity you can borrow against, a car that is paid off, or a retirement account with a healthy balance, for example, you may be able to take out a secured loan.
Borrow from family and friends. If a lender won’t give you the time of day or you want to avoid high interest rates, you can also try borrowing money from family or friends. Just make sure you have the means to pay your loan back — if you default and blow them off, you risk jeopardizing your relationship.
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.
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.
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.
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
Personal loans are the fastest-growing consumer debt in America, according to Experian.
Where a mortgage goes toward buying a home and an auto loan goes toward the purchase of a car, a personal loan can be used in myriad ways. This article will define small personal loans and walk you through a variety of ways to use and get them.
A small personal loan is defined as anything between $1,000 and $5,000, according to LendingTree, which owns MagnifyMoney. Because small personal loans usually have low interest rates for those with good credit and can be paid back over a relatively short amount of time (two to three years), they allow borrowers quick access to money that can be used at their discretion, unless otherwise specified.
When used wisely and paid back on time, small personal loans can reduce stress, help solve financial problems and build credit. If you’re in need of a few thousand dollars to cover an expense, a small personal loan is worth considering.
“When you have little to no credit history, a small, unsecured loan with a short term that is quickly repaid can help build a positive credit history,” said Tricia Cook, branch manager for First Utah Bank.
Small personal loans are commonly used to help consolidate debt into one manageable payment, but can also be used to pay for medical, dental or veterinary bills, remodels or home repairs, weddings or funeral costs and unexpected expenses, to name a few.
“Usually, small personal loans are applied for in emergency situations, for example, your roof is leaking and you need $5,000 to replace it before winter,” Cook said. “My experience at the bank has shown that small personal loan applications rarely feel like they are planned for and the applicant is desperate for money right now.”
LendingTree’s small personal loan comparison tool can point you in the right direction. Using it, you’ll input basic information about yourself and what you’re looking for in a loan. The tool may then spit out lenders and loan offers for you to consider.
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.
As you begin your search, consider these online lenders:
Upstart offers loans with interest rates low as 8.89% and terms of up to five years. Upstart can be a good choice for small personal loans because it can lend as little as $1,000, depending on the state in which you live. Upstart can also be a good choice because it assesses more than credit score and credit history when determining a rate. It looks at the borrower’s education, area of study and work history for a more holistic picture of the borrower and their ability to repay. If you have a strong education and work history, you’ll likely benefit from a loan with Upstart. Upstart also allows you to pay off your loan on your terms without penalizing you.
Upstart is an online lender created by ex-Googlers.... Read More Unlike some other competitors, it takes your education and work experience into consideration when determining your rate. However, it also looks at your credit history and has strict guidelines for approval.Read Less
Avant
Avant can be a smart option for those with a low credit score looking for a quick loan. If you qualify, funds can be accessed in as little as one business day. The minimum credit score required for an Avant loan is 580. If your credit score is hindering you from receiving a loan elsewhere, Avant may a good option for you. The minimum loan available is $2,000, with interest rates starting at 9.95% and terms up to 60 months.
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 While most borrowers have an average credit score of 600-700, approval can vary. However, rates are higher than some competitors, and there is an administrative fee to consider.Read Less
LendingClub
LendingClub can offer small loans starting at $1,000 with interest rates as low as 6.95%. LendingClub offers loans to borrowers whose credit scores vary, but the minimum credit score is 600. If you’re looking for a small loan and have a strong credit history, this may be a smart option for you as you’ll likely get lower interest rates. But if you’re looking to receive your funds almost immediately, LendingClub may not be the best option as it takes about a week to receive your money.
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 The loan application process is done online and only takes a few minutes to complete without hurting your credit. The loan processing time can take a while and you might not get approved if you have missed payments in the past.Read Less
Best Egg
Best Egg may be the lender for you if you’re looking for a fast and easy loan application process. Funds are deposited in as little as a day, and Best Egg offers interest rates as low as 5.99% to those who qualify. Best Egg analyzes three years’ worth of credit history and requires a 660 minimum credit score, so it may not be the best option for those with poor credit. Best Egg offers terms for up to five years and will loan as little as $2,000.
People looking for a process that is fast and straightforward can’t go wrong when applying through Best Egg for a personal loan. ... Read MoreThe great features of Best Egg are their simple terms and competitive interest rates for those with a strong, positive credit history. While keeping things simple, they only offer payback terms of 36 or 60 months, which may not be the best fit for everyone.Read Less
*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.
Small loans from credit unions
Getting a small loan from a credit union is another option besides shopping for one online. Credit unions are regulated and insured nonprofits. They are often community-focused.
A credit union is a good place to get a small loan because you can become part of the credit union community, build relationships with the members and potentially get lower interests rates on your small loan.
When applying for a loan, credit unions will assess many factors, such as your credit report and ability to pay back the loan. When obtaining a loan from a credit union, come prepared with your Social Security number, proof of income and personal identification.
Small loans can ease financial stress when used wisely. Working with a bank to get a small personal loan is a smart idea because the federal government heavily regulates banks. These regulations aim to protect the borrower from getting in too much debt.
Before granting you a loan, the bank will look at your financial history to assess how much money they can reasonably lend you. This will help ensure you are not in over your head when you get the money.
“The ability-to-repay rule [under the Truth in Lending Act] ensures that banks have looked at your current income and your current debt and are able to prove that you have the ability to repay the full balance, not just the monthly minimum payments,” Cook said. “A bank cannot lend to you in a way that would make you overextended.”
When shopping for a small loan from a major bank, you may consider local options such as Citibank or Wells Fargo. But you can review the best personal loans here.
Alternatives to a small personal loan
When you need to borrow money and do not wish to obtain a personal loan or cannot get one due to poor credit, there are a variety of other ways to get a loan. Here are four alternatives to a small personal loan from a bank or credit union.
1. Credit card
Using a credit card to make a purchase or pay off an expense is a viable option if you’re able to pay back the amount charged in full (and on time).
“Credit cards can be smart to have when you are smart with your spending and paying your bill to a zero balance each month,” Cook said. “People get into trouble when they use a credit card and buy things they truly can’t afford, even when the payments are split up over a few months.”
Most credit cards offer at least a 21-day grace period and will not charge interest in that time frame. After that period, if the balance is not paid in full, the cardholder will be charged interest on the remaining statement balance. Credit card interest averages 15%, so if you cannot pay it back quickly, a small personal loan is a better option as the interest rate is much lower and the monthly payment is fixed.
Pawnshop loans allow the borrower to take an item — often jewelry or electronics — to a pawnshop to be evaluated as collateral in exchange for quick cash.
“A pawnshop is a good choice if you want to sell something quickly and take the cash,” Cook said. “But if you truly intend to get your merchandise back, you’re in essence paying for that item twice. Ask yourself: ‘How much will I have paid for my belonging when I’m done?’”
The borrower typically has up to 90 days to repay a pawnshop loan — plus fees and interest, which can be upward of 200%. Pawnshop loans do not require a credit check, can be obtained quickly and do not negatively impact a borrower’s credit score if they are not paid back on time. While pawnshops are regulated by 15 federal laws, keep in mind that the interest rates incredibly high and you will likely lose your collateral should you default on the pawnshop loan.
3. Advance on paycheck
A payroll advance is a type of unsecured loan that allows an employer to release the employee’s pay ahead of time. Paycheck advances are usually used to cover an unexpected expense that must be paid immediately. If you can cover an expense with your upcoming paycheck but need it early, asking about an advance on the paycheck is worth considering.
Policies around paycheck advances differ by company, so it’s best to discuss terms with your HR department to see what options are available. But if using your entire advanced paycheck to cover an unexpected expense will disrupt your monthly budget, a small personal loan may still be your best option.
4. Borrowing from friends
Borrowing money from friends or family has its pros and cons. The upside of borrowing from a friend is you can set your own terms, negotiate interest rates (if any) and determine the repayment schedule. Friends or family who act as a lender may be more lenient with borrowing terms compared to a bank or credit union.
But asking someone close to you to borrow money can be awkward and potentially cause a strain on that relationship. Money can be a sensitive subject. When borrowing from a friend, ensure that both parties agree to the loan terms and are comfortable with the situation.
Avoid payday loans
Payday loans are short-term loans with incredibly high interest rates. Interest rates vary by state but can be upwards of 700% in some instances. Unless paid off in full on time, payday loans should be a last resort and avoided in most cases.
“The advice I’d give anyone is to stay away from a payday loan,” Cook said. “There is no one watching out for the borrower’s best interest. For example, you’ll see an ad that quotes their interest rate of 5%, which sounds good compared to the bank at 13%, but they fail to explain what’s in the fine print — that it’s 5% a month, not 5% APR (annual percentage rate).”
When you’re in need of a small personal loan, know that you have many options available to you.
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.
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.
Secured vs. Unsecured Personal Loans: Understanding the Difference
Thursday, November 15, 2018
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
At one point or another, most people will need to borrow money for a large expense such as college tuition, purchasing or remodeling a home, or buying a vehicle. Although it’s possible to save up enough cash to pay for these big expenses, many choose to finance their purchase and pay it back over a period of time using either a secured or an unsecured personal loan.
Unfortunately, it’s not always easy to determine which type of debt is best for your unique financial situation. For new borrowers, the differences between the two can be confusing. What’s required of a borrower when they take out a secure or an unsecured loan? When might it make sense to use one versus the other?
Secured vs. unsecured personal loans
Secured loans and unsecured loans have several differences, but the most important to remember is that secured loans are literally “secured” against items owned by the person needing the loan, while unsecured loans are not. This collateral could be anything that holds equity and is owned by the borrower.
For example, you might use your car, boat, home or property you own as collateral on a secured loan. Unsecured loans, on the other hand, only look at a borrower’s ability to repay their loan based on their income, current debts and credit score.
However, this isn’t the only way that these two loan types differ. Let’s do a side-by-side comparison to get a better idea of what each of these loans requires from borrowers, and how they work.
Secured personal loans
Unsecured personal loans
Credit check needed?
Sometimes. Secured loans don’t have as strict credit requirements because the lender is already using something of monetary value to secure the loan. So, if you don’t have fantastic credit, but you own a car, lenders may be more lenient.
Yes. Unsecured loans don’t use any collateral to secure the loan. Typically, lenders require a credit check to ascertain your ability to repay the loan.
Typical interest rates
Interest rates will vary on secured loans, but are often relatively low – around 5%. However, some secured loans (like title or payday loans) have much higher interest rates associated with them (often hitting, or exceeding, double digits).
Interest rates can range from 4% to 36% APR. This large range in interest rates is dependent on the type of loan (for example, interest rates for federal student loans are lower than personal loans or lines of credit), down payment made by the borrower and ability for the borrower to pay off the loan (judged by their credit score).
Examples
Secured credit card
Mortgage
Auto loan
HEL/HELOC (for home repairs and improvements)
Payday loan
Title loan
Personal loan
Business loan
Student loan
Credit card
Collateral required?
Yes. The collateral provided by the borrower “secures” the loan.
No. Unsecured loans are based entirely on your credit history and ability to repay the loan.
Best for?
Secured loans can help you to complete expensive and necessary purchases if you have poor credit history. However, some secured loans (like payday loans) are predatory in nature, and have high interest rates that could further hurt your credit if you’re unable to repay them.
Borrowers who have good credit and the ability to pay back their loan on a purchase.
What are secured personal loans?
Secured personal loans are offered by a wide range of lenders, and are intended to help borrowers who may or may not have a solid credit history make necessary big-ticket purchases or rebuild their credit. This debt works in a relatively straightforward way. A borrower applies for a secured personal loan through a bank, credit union or a nonbank lender. The lender then assesses what the borrower has to offer as collateral for the loan. Based on the value of the borrower’s collateral, the lender will approve them to borrow a set amount of money. However, if the borrower fails to keep up with payments on their secured personal loan, the lender is permitted to repossess the borrower’s collateral at any point in time.
For example, if you take out a secured personal loan to pay for a home renovation using the car you own as collateral, your lender can come and take possession of your car if you fail to make payments. If you’re a borrower who can be counted on to make payments on time and to pay the loan off in full within the set time frame, this may not be intimidating.
However, many people seek out secured loans because their credit score alone isn’t enough to obtain an unsecured personal loan from a lender. This might be through no fault of their own, or it could mean they have had trouble repaying their debt in the past for a wide range of reasons. Be cautious when offering collateral for your secured personal loan, and make sure that you’ll be able to afford the loan’s repayment terms (including interest).
One of the benefits of a secured personal loan is that it can be used for nearly anything. Many people, for example, use the equity they already have in their home to finance a home repair loan (HELOC). Others use secured loans to finance vehicle purchases or to fund the launch of a business.
Regardless of what you’re using your secured personal loan for, it’s important to read through your loan terms carefully. Secured personal loans are notorious for being charging high interest rates and can sometimes have predatory rates or practices.
If you’re pursuing a secured personal loan, keep a few things in mind:
Whatever you choose to put up for collateral for your loan can be taken by your lender if you fail to make payments.
You may be able to get a lower interest rate with a secured personal loan because the lender is taking on less risk when you offer up collateral.
Some secured personal loans are predatory, and they come with hefty fees and high interest rates – make sure to shop around and do your research before signing on the dotted line.
What are unsecured personal loans?
Unsecured personal loans are different. They don’t require any collateral from the borrower. However, because there’s nothing to “secure” them, or to protect the lender should you default on payments, they tend to be harder to obtain.
Unsecured personal loans usually require a credit check, and the interest rates associated with the loan are largely dependent on whether or not you have decent credit. If the lender feels they can trust you to repay the loan based on your current finances and you have a history of paying back your debt on time and in full, you may qualify for a lower interest rate. However, if you don’t have a good history of repaying your debt, or you don’t have income available that would support the loan repayment, you could get stuck with a higher interest rate.
That being said, unsecured personal loans certainly serve a purpose. Student loans, for example, are a form of unsecured personal loans. They require no down payment or collateral, often have reasonable interest rates and help students to fund their education. A variety of lenders including banks, credit unions and nonbank lenders (typically found online) offer unsecured personal loans.
It can be frustrating for borrowers to try and obtain an unsecured loan because restrictions (like a minimum credit score, a high income or a cosigner) are often more strict than those associated with secured personal loans. It can be helpful to keep in mind that for a lender, an unsecured loan is a notably higher risk than a secured personal loan. Essentially, they’re taking a chance on the fact that you’ll pay the loan back in full with interest, and have no real way of knowing for sure that you’ll be able to do so. This is also why interest rates for unsecured personal loans are significantly higher than those you can find with secured personal loans.
If you’re pursuing an unsecured personal loan, you should keep a few things in mind:
You’ll need to budget for potentially higher monthly payments than a secured loan.
You will need to have good credit to obtain an unsecured personal loan.
You may not qualify for the loan unless you have a cosigner who can help lessen the amount of risk a lender takes on by lending to you.
If you’re unsure about where to find a personal loan, you can see offers from LendingTree. With it, you’ll input basic personal information and what you’re looking for out of a loan. If you qualify, you’ll get to review personal loan offers from various lenders.
Should you get a secured or unsecured personal loan?
The actual question on most borrowers’ minds is: Which loan is right for me? The truth is, both secured and unsecured personal loans pose some risk for you as a borrower. However, there are several things to take into consideration when deciding which is best for you.
Ability to repay
Consider everything that could impact your ability to repay this loan. Is your job secure? Do you have upcoming expenses that will tighten your budget? If you’re concerned about repayment, putting up something you own that’s necessary for day-to-day survival (like a home or a vehicle) for a secured personal loan may not be in your best interest. Of course, if you’re worried about your ability to repay a loan, there’s a good chance that you should reconsider the loan amount – or whether you should apply at all.
Total interest and fees
Although unsecured loans often have higher interest rates, secured loans may have notable hidden fees if they’re predatory, like a payday loan. Weigh your ability to repay loans each month, taking note of the interest amounts. It usually serves borrowers to shop around before committing, and that may mean looking at both unsecured and secured loans to determine what works best for you.
Future financial goals
Do you plan to pay this loan off quickly? Do you have other financial goals in the near or distant future that this loan could impact? If you want to pay a loan off quickly and are confident in your ability to repay, locking in low interest rates with a secured loan might make the most sense.
Worst-case scenario planning
It always helps to consider the worst-case scenario when applying for a loan. If you fail to repay your loan, what’s going to happen? Whether you apply for a secured or unsecured loan, your credit will take a hit.
If you have a secured loan, you could potentially lose your house, your car or other assets you’ve put up as collateral for the loan. You may also need to take out another loan to cover this debt and end up in a vicious debt cycle. If you can afford to lose what you’ve put up as collateral, this may not be the end of the world. However, if you can’t – it’s likely not worth the risk.
Final thoughts
Applying for a loan can be challenging, but it’s important to know that you have options available to you. Researching the difference between secured and unsecured loans can help you determine which is best for you based on what you can afford, and which loan type fits best into your long-term financial plans. Your relationships with some financial institutions could also positively impact the loan terms you receive.
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.
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.
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.
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
Dealing with multiple loan payments can be a hassle. Even worse is having to pay high interest rates on one or more of your loans. A debt consolidation loan can be a great way to fix those problems by refinancing all your loans into one with a new rate and term.
Make payments simple: If you owe a lot of lenders and are having a tough time keeping track of all the payments, then consolidating will make your life easier. You’ll only owe one lender and have to keep track of one due date. There’s less of a chance of anything falling through the tracks.
Lower your interest rate: This is where you have to run the numbers to see if debt consolidation makes sense for you. What’s the average interest rate you’re paying on your debt? If it’s quite high (which is likely if you have a lot of consumer debt), you may benefit from consolidating under better terms. Just remember to only use a personal loan if the interest rate is lower than the one you are already paying.
Improve your credit score: If your credit cards are currently maxed out, your credit score will suffer. When you pay off your credit card debt with a personal loan, you will often receive a boost to your credit score, so long as you don’t start using your cards again.
But not all lenders will work with just anyone. Generally, you need to have a good credit score to qualify for the best interest rates on debt consolidation loans. Even then, some lenders offer better terms than others.
We searched through MagnifyMoney’s personal loan marketplace to identify the best lenders for you depending on whether you have excellent (700 and above), good (640-699), average (600-639) or poor (below 600) credit. To compare lenders evenly across the board, we assumed that you’re looking for a $10,000 loan and that you have a college degree. For each credit category, we picked the top two lenders who had the lowest APRs.
Here are the results from our analysis. If you’re in the market for a debt consolidation loan, it’s a good idea to customize your debt consolidation loan search so that you can find the best loan to help you get out of debt faster.
At LendingTree, you can make dozens of personal loan companies compete for your business with a single online form. When you fill out the form, LendingTree will do a soft pull – which means your score will not be negatively impacted. Dozens of lenders will compete and you may be matched with lenders who want your business. You may be able to compare and save in just a few minutes. We recommend starting here. You can always apply directly to other lenders – but many of the lenders we recommend already participate in the LendingTree personal loan online tool.
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.
Best debt consolidation loans for excellent credit
LightStream is the online lending division of SunTrust Bank.... Read More They offer competitive rates and terms, and their max loan amount and terms are often higher than what other lenders can offer. LightStream is strict with approvals, but they offer an online process, great terms and no fees. The one downside is that they do perform a hard pull when checking your credit.Read Less
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 3.34% APR with a term of 3 years would result in 36 monthly payments of $292.31.
What we like
If you’ve managed your credit well and have the credit score to prove it, LightStream can be a great option to consolidate your debt. It has some of the lowest interest rates out there — as low as 3.34% APR (that’s with a 0.50% auto-pay discount).
Going along with those low interest rates are low fees. LightStream doesn’t charge any fees at all, including origination fees or prepayment fees. The company offers loan terms from 24 to 144 months. While it’s generally best to pay off your debt as quickly as possible, sometimes having a longer-term loan makes sense, and many other lenders don’t offer loans for as long as 12 years.
The final thing we like about LightStream is that it’s quick to fund your loan. If you are approved for a loan on a business day before 2:30 p.m. Eastern time and provide the company with your bank account details, you can have your loan funded on the same day you are approved.
What could be better
If you’re trying to take advantage of the 0.50% auto-pay discount, you’ll need to set this up before your loan is funded. You won’t qualify for this interest rate discount if you do it after the fact.
Additionally, the company makes it a bit difficult if you’re trying to pay your loan off early. If you want any extra payments to go toward the principal (and not interest), you’ll have to schedule your extra payment to occur on the same day as your normal monthly payment. There’s no other way to specify that you want extra payments to go toward your principal balance.
Credit history required
LightStream doesn’t say what kind of credit history you need to qualify for a loan. But the company does describe those with excellent credit (and thus the best odds for approval at the lowest rates) as people with five or more years of credit history.
Fees and fine print
LightStream is a great option for folks who qualify for these loans because the company does not charge any fees at all. This means no origination fees or prepayment penalties. If you miss a payment, it’s not totally free because the company could report that to the credit bureaus, which could harm your credit score.
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 You can get approved within a day and receive your loan within just about 48 hours. They do charge an origination fee, but there are no fees or penalties for prepayment.Read Less
What we like
FreedomPlus also offers some of the lowest personal loan rates in our marketplace. Those rates are running as low as 4.99% APR.
Another thing we like about FreedomPlus is that it offers multiple different interest rate discounts. The lender doesn’t specify the amounts, but you can get discounts for three things:
If you have a co-applicant for your loan
If you use at least half of your loan to pay off high-interest credit card debt (FreedomPlus will pay it for you)
If you have at least $40,000 in retirement savings
These discounts may (or may not) make your interest rate better than what you could get with other lenders. But at least the company is rewarding customers for good financial behavior, such as paying off high-interest debt and saving for retirement.
What could be better
Unfortunately, FreedomPlus doesn’t operate in all states. Even in some of the states in which it does operate, there are state-specific minimums: $6,500 in Massachusetts, $5,500 in Ohio, $10,500 in Arizona and $3,500 in Georgia.
We also don’t like that FreedomPlus has a narrower range of terms than LightStream. You can only choose from a term length between 24 and 60 months.
Further, FreedomPlus doesn’t provide a lot of information on its website. Rather, the company directs you to contact it for more details. That could be inconvenient if you’re shopping lenders. It also puts you in a high-pressure sales situation since you must speak with someone to get the relevant details unless you’re comfortable blindly applying for a loan.
Credit history required
FreedomPlus generally requires you to have about three years worth of credit history to stand a good chance of being approved for a loan.
Fees and fine print
The company has a variable origination fee — between 0.00% - 5.00% — depending on your loan’s APR. If you make a late payment, you’ll pay either a flat $15 fee, or 5% of your payment amount, depending on whichever is greater. If the company processes a personal check, that’s another $15. If your monthly payment is returned, it’s yet another $15 fee.
Rocketloans is a digital finance business that is part of the Quicken Loans family. ... Read More It offers funds anywhere from $2,000 to $35,000, which can possibly be received the same day upon approval. Ohio residents should know that they are required to borrow more than $5,001. Everything is completed online, which makes for a quick and easy application process done in real time. However, there are fees to consider, including an origination fee that is deducted from your loan sum.Read Less
What we like
Even if you don’t have stellar credit, the interest rate that RocketLoans charges isn’t bad (assuming you are offered a low-end rate). RocketLoans is charging between 5.98% and 29.99% APR. The high end is the same rate you may find on a high-interest credit card. If you fall into that interest rate band, it may be worth reassessing this lender.
RocketLoans is also fast at funding your loan. If everything matches up correctly among you, RocketLoans and the bank, you may be able to receive the money the same day.
What could be better
RocketLoans isn’t available in every state. If you live in Nevada, Iowa or West Virginia, you can’t use the company to consolidate your debt.
The company only offers two different term lengths — 36 or 60 months. You can pay it off sooner, of course, and there’s no penalty for doing so. But this means you’ll only get a maximum of two different options for a given loan amount, which may not fit your budget.
Credit history required
The company does not say what sort of credit history is required to get a debt consolidation loan.
People looking for a process that is fast and straightforward can’t go wrong when applying through Best Egg for a personal loan. ... Read MoreThe great features of Best Egg are their simple terms and competitive interest rates for those with a strong, positive credit history. While keeping things simple, they only offer payback terms of 36 or 60 months, which may not be the best fit for everyone.Read Less
*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.
What we like
BestEgg has similar interest rates to RocketLoans, ranging from up to 5.99% to 29.99% APR. You can also take out loan amounts as small as $2,000 to consolidate your debt, which is a lot less than the minimum requirement for other lenders. Also, there are no prepayment penalties for paying off the loan early.
Heads-up, though: The minimum loan amount does vary by state, so it may be different depending on where you live. Georgia residents can’t take out loans of less than $3,000, Massachusetts residents must borrow at least $6,000, and New Mexico and Ohio residents must borrow at least $5,000.
What could be better
If you live in Iowa, Vermont or West Virginia, you’re out of luck when it comes to getting a BestEgg loan. That’s because the company doesn’t operate in those states.
You can take out a loan of up to $35,000 to consolidate your debt through BestEgg. That may sound like a good thing at first, but consider this: The company only offers you the choice of a three- or five-year term. If you take out a large amount of money, you’ll also need an equally high income to make those whopping payments. Instead, if you’re facing a large amount of debt, it’s worthwhile to also consider a lender that offers more options.
We also don’t like that BestEgg charges a $7 monthly payment fee unless you’re signed up for automatic payments. Signing up for auto-pay simplifies things for both you and the lender, but you shouldn’t be penalized if you’re not able to do that for some reason.
Credit history required
Unfortunately, BestEgg does not disclose this information.
Fees and fine print
Here’s a quick summary of the fees that BestEgg charges:
Origination fee: 0.99% - 5.99%
Late payment fee: $15
Returned payment fee: $15
Payment processing fee for people not enrolled in auto-pay: $7
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 They offer quick turnaround times and you may get your money the same day if you apply before noon with check or prepaid debit card option. ACH transfers take one to two business days. Interest rates are higher than other online lenders, especially for those with excellent credit, and you will need to visit a branch to get your loan.Read Less
Loan approval and actual loan terms depend on your ability to meet our standard credit criteria (including credit history, income and debts) and the availability of collateral. Loan amounts subject to state specific minimum or maximum size restrictions. Collateral offered must meet our criteria. Active duty military, their spouse or dependents covered by the Military Lending Act may not pledge any vehicle as collateral. CA minimum loan amount is $3,000. GA minimum loan amount is $1,500 for present customers and $3,100 for others.
What we like
If you like working with bankers in person, this might be a better option for you since you’ll be required to visit a OneMain Financial branch to get your money. This means that if you are approved by noon and can make it to a branch, you could get your money that day.
What could be better
On the flip side, visiting a local branch to complete the loan application process could be inconvenient if you live in a suburban or rural area and there aren’t any locations close to you. These loans are also very expensive.
We also don’t like that the company’s loan policies vary across the country depending on your state of residence. This makes it difficult to easily compare lenders without contacting OneMain Financial to get the most accurate information for your situation.
Credit history required
Your credit history is important to OneMain Financial. But the company itself doesn’t have any listed requirements. Rather, your credit history is taken into account along with your debt-to-income ratio and your ability to make the loan payments on time.
Fees and fine print
There are no prepayment penalties with a OneMain Financial loan. The cost of origination or late fees varies depending on the state in which you live. You’ll need to contact OneMain Financial to get this information.
Even with a credit score of 600, you still might be able to secure a loan through Peerform. ... Read More This peer-to-peer lender gives you a customized grade based on your credit score, allowing for you to easily see the rate that you can obtain. While Peerform is great for those with less than stellar credit, you more than likely will be able to find better rates elsewhere. Read Less
What we like
These loans come with low rates, starting at 5.99% APR. Peerform is also open with its pricing scheme, listing in detail the APR and origination fees that come along with each credit grade, which you can see here.
What could be better
Peerform is a peer-to-peer lender, which means that the company relies on regular everyday investors to fund your loan. You could view this as a good thing since it’s not some mega-corporation that’s getting rich off funding personal loans, but it also means that it could take a while (up to two weeks) for your loan to be fully funded by investors. It’s even possible that your loan listing could end without enough investors to fund your loan, which means you may be offered less money than what you sought — or you may not even receive a loan at all.
These loans are also a bit on the fee-heavy side. For example, the company is trying to push you toward digital payments, because it will charge you a $15 fee per payment if you choose to send in a check.
Credit history required
Like many lenders, Peerform does not detail exactly what type of credit history is required to get a loan. Rather, the company takes into account other factors — such as whether your credit score is above 600 — when deciding whether to create a listing for your loan.
Fees and fine print
Here is a summary of fees that Peerform charges on its personal loans:
Origination fee: 1.00% - 5.00%
Unsuccessful payment fee: $15
Late payment fee: $15 or 5% of the amount due, whichever is more
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 While most borrowers have an average credit score of 600-700, approval can vary. However, rates are higher than some competitors, and there is an administrative fee to consider.Read Less
What we like
Avant does offer smaller loans than many other lenders. You can take out a loan starting at $2,000, ranging up to $35,000, depending on the state in which you live. That’s helpful if you’re trying to work your way out of just a few thousand dollars of debt.
You can also get your money relatively quickly if you are approved for a debt consolidation loan with Avant. If you finish the application process and are approved for a loan before 4:30 p.m. Central time on a weekday, you could have your money the next day.
What could be better
Avant’s rates, fees, loan amounts and loan terms are dependent upon the state in which you live, so you’ll need to check for yourself on its website. But for Illinois (where Avant is headquartered), we noticed that these loans do come with higher fees than normal. They also come with high interest rates, starting at 9.95% APR.
This isn’t unusual since Avant is willing to work with people with less-than-stellar credit scores. It does make it inconvenient for you because you’ll need to assess whether it’s cheaper to consolidate your debt with a personal loan rather than paying it off as is.
Once you add on the upfront administrative fee to the high interest rate, you may find that this loan isn’t a deal at all in the long run compared to what you’re currently paying. The only way to know is to do the math.
Credit history required
Again, Avant doesn’t disclose how long your credit history needs to be to get a loan with the company.
Fees and fine print
In Illinois, where Avant is based, you can expect to pay the following fees if you take out a debt consolidation loan:
Administrative fee: Up to 4.75% of the loan amount
Tower Federal Credit Union offers both personal lines of credit and more common signature loans that feature a fixed term. ... Read MoreTheir signature loans and personal lines of credit can be used to purchase anything and their lines of credit can even be used as overdraft protection to protect your Tower checking accounts from overdraft fees.Read Less
What we like
We like that there is a wide range of options for term lengths at Tower Federal Credit Union. You can choose from six different term lengths, ranging from one to six years. Having a wide range of options is good for you as a consumer because this effectively offers you up to six different monthly payment amounts that you can choose from to fit into your budget.
Rates for these loans are also relatively low. For example, if you opt for a one-year loan, rates start at 8.74% APR. Be warned: The longer your term length, the higher the minimum APR. If you instead opt for a six-year loan, rates instead start at 11.74% APR. At some point, you may need to reassess whether the interest rate you’re receiving is really lower than your current debts’ interest rate.
What could be better
Since this is a credit union, you’ll have a different working relationship. It’s not as simple as applying with any old online lender, getting the money, paying it back and having everything be all right.
First, you’ll need to join Tower Federal Credit Union. There are pretty strict membership requirements, but you can always join by making a minimum $35 donation to the TowerCares Foundation. You’ll need to deposit at least $15 in a savings account to establish your membership. Then, after you’ve applied and established your membership, you can apply for this loan.
You’ll also need to maintain your bank account if you’re older than 22. If more than a year passes without any activity in the account and if your balance is less than $100, you’ll pay a $3 quarterly inactivity fee. So, you can see, going with a credit union may boost your odds of approval if you have a low credit score, but it’s certainly not without a great deal of work compared to a regular online lender.
Another downside of getting a personal loan with Tower Federal Credit Union is that there’s no way to know how much money you can take out without applying for the loan first. That’s because the credit union will offer you a range of borrowing limits based on your credit score and ability to pay, which it determines after you apply for a loan. This could be inconvenient if you go through all the hassle of applying for a loan only to find out the loan amount won’t work for you.
Credit history required
Tower Federal Credit Union will look at your credit when deciding whether to approve you for a loan. But it doesn’t detail what sort of credit history is required to be approved for a loan. Besides your credit history, it’ll also look at your ability to repay the loan.
Fees and fine print
If you make a late payment, you’ll pay a $20 fee. That’s just a touch higher than with other lenders. Additionally, you can make your monthly payment over the phone, but if you do so, there’ll be another $9 processing fee. &nbsq;
3 reasons to use a personal loan to pay off debt
How to choose the right debt consolidation loan
To help ensure you select the best debt consolidation loan for your financial situation, consider these four tips:
Do the math: See what a debt consolidation loan will cost you in the long run compared to your current debts. A debt consolidation loan may give you a lower payment or a lower interest rate, but if you choose a long-term loan, you may end up paying more in interest charges by the time your term ends. LendingTree, MagnifyMoney’s parent company, has a debt consolidation calculator so that you can run the numbers.
Consider which types of debt you want to consolidate: Generally speaking, student loan debt is consolidated separately from your other types of debt, such as credit card debt, medical debt and auto loan debt.
Consider whether other types of loans are right for you: Home equity lines of credit, home equity loans, personal lines of credit and 0% introductory APR credit cards are also reasonable options for debt consolidation.
Check whether you’re applying for a secured or an unsecured loan: If it’s a secured loan (backed by an asset such as your car) and you fail to make your payments, the lender can repossess the item. Unsecured loans, on the other hand, aren’t backed by this kind of collateral, but often come with higher interest rates. Make sure you consider the trade-offs before you apply for the loan.
This article contains links to LendingTree, our parent company.
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.
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.
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
Noah Bouillon, a 27-year-old travel blogger, paid less than $400 for a honeymoon to Fiji and New Zealand that was valued at around $14,000. (Photo courtesy of Noah Bouillon)
Getting engaged is a momentous occasion. You pose for the perfect photo. The congratulations phone calls and social media comments come pouring in. You and your fiance are on cloud nine. Then you start looking for wedding venues, caterers, DJs, honeymoon airfare and hotel accommodations. Dollar signs begin adding up as reality sets in —things are about to get expensive.
According to WeddingWire’s 2017 Wedding Report, the average cost of a wedding in 2016 was $28,000 — we’re talking enough to cover a down payment on a house here. And this figure doesn’t even include the cost of the honeymoon, which costs couples a whopping $4,000, according to the same report.
If these numbers are making your head spin, you can rest easy knowing your dreams of a luxury vacation aren’t down the toilet just yet. Planning smart can get you to a beautiful destination after you exchange vows.
Noah Bouillon, a 27-year-old travel blogger, is an example of a honeymooner who paid less than $400 for a trip to Fiji and New Zealand that was valued at around $14,000. Bouillon and his fiancee (now wife) got crafty with credit card points and miles to make their dream trip a reality. They signed up for multiple credit cards with huge sign-on bonuses to stockpile 435,000 points and miles.
Aside from amassing points and miles, there are multiple ways you can get the money you need to have the vacation you want. We’ve put together an all encompassing resource on affording your dream honeymoon to help you review options.
Honeymoons don’t have to be a debt trap. Ideally, you want to avoid debt on travel altogether, and it’s possible if you plan ahead. Here are a few unique ways to pay for your honeymoon:
Honeymoon registries
You’ve probably heard of gift registries related to home goods and furnishings before. You may be less familiar with honeymoon registries. Starting a registry for your honeymoon can potentially save you quite a bit of money. Honeymoon registries like Honeyfund, The Newlywed Fund™ and Traveler’s Joy let you create registries where guests give you money toward your trip.
Rebecca Forst, a 31-year-old administrative professional of Towson, Md., is one bride who’s using the Honeyfund website to afford a once-in-a-lifetime trip with her fiance. “My favorite movie is ‘Lord of the Rings’ so New Zealand is a bucket-list destination,” said Forst. “We noticed the cost of our wedding going up and were scared that we wouldn’t be able to afford our trip.”
To foot part of the bill, Forst and her fiance created a Honeyfund account. Close family members were concerned at first that the fund wouldn’t go over well with some wedding guests. “We also decided to put some traditional gifts on our registry for those who wanted to give that sort of gift,” Forst explained.
Honeymoon registries through Honeyfund are simple to set up. You list airfare, accommodations and excursions that you want as a gift. You can split the expenses into smaller gifts as well. For example, airline tickets to New Zealand for Forst and her fiance will cost over $1,000 each. She broke down gifts into smaller $25 to $100 options to make it manageable for guests.
Crowdfunding
Honeymoon registries work like a gift registry except they are for a travel experience. You share the registry with wedding guests and they buy experiences on your list as your wedding gift.
A crowdfunding campaign is different — it’s fundraising. You create a campaign and ask people to donate money so you can get where you want to go. FundMyTravel, GoFundMe and Plumfund are examples of sites that can help you campaign for travel expenses.
Understand that fundraising for your honeymoon may be difficult if you don’t have a highly compelling reason for someone to donate money. With that said, it’s still an option that you can consider to make your dream honeymoon less of a strain on your purse strings. It may be specifically worthwhile if you’re interested in ecotourism or voluntourism.
Credit card points
If you want to fund the trip on your own without asking for help, credit card points or miles can help you avoid having to pay completely out of pocket. Bonus points or miles that can be used for travel are offered by some credit card companies when you get a new card. But they may require meeting a minimum spending requirement before you can qualify.
Keep in mind, you should be a highly responsible credit card user before signing up for new cards. It makes zero sense to rack up credit to get points, and then turn around and get slapped with tons of interest charges on your unpaid balance.
Bouillon strategically gained the amount of points needed to pay less than $400 for an estimated $14,000 trip by signing up for multiple new credit cards that were all giving him a sign-up bonus.
“The biggest concern people have about [opening new cards] is thinking that it will be bad for their credit,” said Bouillon, but according to him, opening credit cards for points in this way has actually been positive for his and his wife’s credit scores. They increase their credit limits by opening new cards, keep their credit utilization low and pay bills on time. This formula can do great things for your credit score.
Bouillon suggests strategizing a good 12 months or more out to amass the points you need for your dream honeymoon. This will give you time to get approved for cards and have the bonus points added to your account. From there, you can use the points for travel and accommodation. Check out our top cards with sign-up bonuses here.
Sign up for a home-exchange program
House exchanging is when you swap houses with someone who wants to visit your area. You list your home and look through other home listings as well. Check out IVHE, HomeExchange and Love Home Swap for home-exchange opportunities. Contact residents of homes that you’re interested in and see if you can strike up an agreement.
Housesitting is another way to lower the cost of accomodation. You stay at someone’s home for free in your desired location and take care of household tasks while they’re out traveling. Housesitting placement sites like TrustedHousesitters can connect you with people looking to form an arrangement.
Photo courtesy of Todra Payne
Todra Payne, a 50-year-old copywriter, has a home based in Los Angeles, but is soon going to be location independent with her fiance thanks to her house sitting hustle. She stays in homes across the world and does small jobs for the homeowner.
“[Housesitting] tasks can run the gamut from staying in the home so it’s not empty, watching farm animals, or managing a B&B,” said Payne. She adds that often a pet is involved or there’s a garden to water.
Payne suggests that honeymooners should be flexible in their travel dates or the location to make the most of housesitting opportunities. There are listings all over the world, including luxury homes. To learn the ropes, Payne recommends doing it locally first. Always talk to the homeowner before committing so you can ask questions about their home and neighborhood. Create a written agreement so you both know what to expect.
Don’t take a home assignment that gives you a lot of responsibilities if you really just want to relax on your honeymoon. Housesitting can even turn into a long-term adventure. Payne and her fiance plan to housesit across Europe and Australia for the next year.
Work in hospitality to get the perks
Connections can be your very best friend. Check to see if you have any friends or family that work for airlines or hotels because they may be able to offer you a nice friends and family discount.
For example, at the time of writing this article, the standard rate starts at $410 for a room at the luxury Marriott Scrub Island Resort in St. Thomas for dates Aug. 3, 2018 to Aug. 10, 2018. The starting rate drops to $269 when you use the Marriott employee discount. That’s a possible savings of over $100 per night.
Don’t know anyone in the hospitality industry? Consider taking on a part-time job to snag the travel benefits. You can get paid while possibly saving a nice chunk of money on your honeymoon and other travel.
Have a destination wedding
Before signing up for a Honeyfund account, Forst considered having a very small destination wedding. This would have made it easier to afford the nuptials and New Zealand trip on their own. However, Forst’s destination wedding idea was ruled out when she chose to have a larger shindig for family reasons.
A smaller affair or destination wedding may still be a good plan for some couples. It can give you some leeway to sock away savings for the honeymoon if a trip is what’s most important to you. Another option is making your destination double as a wedding location and honeymoon spot. You can find more frugal wedding tips here.
Borrowing money for your honeymoon — The pros and cons
We’ve covered several creative ways to fund your honeymoon, but you still may be considering taking on some debt to make your dream trip happen. Before borrowing a whole bunch of money, think about whether your money is better spent on starting a new life together. Also be careful about stretching yourself thin if you both have lingering student loans. Money trouble can bring strain to a marriage. You don’t want to your happily ever after to begin on shaky financial footing.
It can make sense to finance your honeymoon if you have a sound plan for repayment, and you’ve exhausted all other options beforehand.
Here are a few of the financing methods you can consider for your honeymoon:
Personal loans
Personal loans offer a fixed payment over a fixed period of time. Quite a few online lenders offer personal loans you can use for practically any reason.
Pros. The best part of a personal loan is that you have one predictable payment each month and a predetermined payoff date. The interest rate is also fixed, which means you can calculate the total cost of your loan at the very beginning. With a decent credit score, you may be able to qualify for a remarkably low interest rate.
Cons. At the end of the day, an affordable personal loan is still a loan and increases your debt balance. The money you spend on the loan and interest may be better spent on a mortgage down payment, furniture, household goods and other items you need as a new couple.
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.
Credit cards
Using a credit card may be the first thing you think of doing to fund your trip.
Pros. Smart use of a credit card can make your dream trip come true at an affordable price. Instead of using existing credit cards, you can find and open a new credit card that offers a 0% interest introductory deal. Just be sure to pay it off before the promo period ends and interest starts to accrue. Check out our list of credit cards with the longest 0% purchase offers here. Opening credit cards with high points or mile bonuses can also help you fund a trip.
Cons. Unlike a personal loan, your credit cards can have variable interest. The no-interest period on credit cards with introductory deals will expire eventually. The cost of borrowing with a credit card can be less predictable, especially if you pay just the minimum amount each month. Have a plan to pay off your credit card debt in a timely manner to avoid an array of interest charges.
Planning on using credit card points to finance your honeymoon? Bouillon suggests strategizing at least 12 months or more from the date you plan to travel to give yourself enough time to earn points.
Home equity loans
You may qualify for a home equity loan if you have enough equity in your home and a decent credit score. A home equity loan is sometimes called a second mortgage. It’s basically taking out a loan from the equity that you have in your home.
Pros. The benefit of a home equity loan is it’s a fixed-rate loan that can be less expensive and volatile than credit card debt.
Cons. Think long term before taking equity out of your house. Will you want to make home renovations in the future? Your equity can be valuable in a pinch when you need to do maintenance or home improvements. Also, you won’t be able to deduct the interest on your home equity loan unless you use it to substantially improve your home in some way.
LendingTree, which owns MagnifyMoney, has a more detailed walk-through of home equity loan pros and cons. Check it out here to see if it’s the right move for your honeymoon.
Cash-out refinances
A cash-out refinance is when you refinance your mortgage for a higher amount and take cash out of the transaction.
Pros. With a cash-out refinance, the payment for the cash you borrow is lumped in with your regular mortgage payment so it’s a simple one to keep up with.
Cons. A mortgage refinance costs you money. You need to think about application, origination and appraisal fees, and more. Be sure to factor in these costs against the cost of your honeymoon to see if a cash-out refinance makes sense.
The balance sitting in your retirement account may look enticing when you’re planning your wedding and honeymoon. An employee plan may let you take out a loan from your 401(k) so check with your employer for details first.
Pros. Borrowing money from your 401(k) can give you access to the cash you need without repercussions if you follow the rules. According to the IRS, money you borrow may not be taxable if you borrow up to 50% of your vested balance (up to a $50,000 max) and repay the loan within five years.
Cons. Money put away in your 401(k) is there for a purpose — retirement. Make sure you can adhere to the rules to avoid having the money borrowed from your 401(k) taxed. This scenario would be a double whammy. You may have to pay out of pocket to cover the income tax and you lose a portion of your retirement savings. Not good.
How to plan an affordable honeymoon
Here are a few more ways to cut costs and save up money for your dream honeymoon:
Pump the breaks. You don’t need to drive straight from your wedding to the airport with empty soup cans jingling at the back of your car. You have a lifetime together, so what’s the rush? Consider putting off the big trip until you can save enough money for the honeymoon you want. It may take you several months or several years to save enough cash or reward points, but the experience (and not struggling to pay for it) can last a lifetime.
Put on that thinking cap. If you’re not set on a specific location, choose a location that will be budget-friendly. A local spa will save you money on airfare. This means you’ll have more to spend for luxury accommodations, meals, drinks and entertainment. You can also eliminate airfare costs by driving to your destination. A cross-country trip can be a romantic experience in and of itself. Another option is reaching out to family and friends who may have a timeshare that you can use. The bottom line is, use your resources.
Go where it’s cheap. Two honeymooners we interviewed for this article cite New Zealand as their dream trip. Let’s be honest, New Zealand isn’t a cheap place to visit. Some places are cheaper to visit than others. Go to a place where your money will go far. Always look at the exchange rate before you travel. Dominican Republic, Jamaica and Mexico are a few affordable travel locations to think about visiting.
Test the waters with Airbnbs and hostels. A luxury hotel may not be in the budget, and that’s okay. Try Airbnb or hostels if you and your partner like exploring. You may not be in the room you rent often anyway. Plus, crashing at a place with the owner and other travelers means you can meet new people and even have a built-in tour guide.
Scroll through your contact list. Ask to visit people you know who live in unique places. You can even stay in a hotel for a few days to get some personal time, and bunk up with your contact for the rest of the stay to cut costs.
Go all-inclusive. Vacation packages may offer you a cheaper rate than booking each individual arrangement for your own trip. Pros. Travel aggregators like Expedia and Priceline may offer a discount for booking a package all in one. In some cases, food and drinks are also included in your stay. The beauty of this is you don’t have to worry about budgeting cash for spending money. Cons. A low-budget, all-inclusive resort can also mean low quality. Beware if this is a deal breaker for you. If you do find a decent all-inclusive deal (one that includes airfare, hotel, food etc.), compare the cost of the trip booked separately to be sure it’s cost-effective.
Bring in the professionals. Sometimes travel agents have a hookup on deals that you wouldn’t be able to find on your own. Look for an agent that gets paid solely on commision. You won’t need to fork over cash if they don’t find any worthwhile vacation specials.
Get airline deal notifications. Having open travel dates can make booking airfare less expensive. The Flight Deal and Fare Deal Alert are two sites that regularly post specials and flight glitches. Be warned — you need to book these deals fast whenever they come up because they can disappear. You snooze, you lose.
Peruse deal sites regularly. Groupon and LivingSocial are two examples of places where you can snag travel package deals. Again, having open travel dates will often help you book the most affordable trips. You may also find some opportunity in last minute deals.
Save without effort. Automatic saving apps can help you save without you even having to think about it. Digit and Rize are accounts that can help you automate money to travel savings. Cash that these apps save on your behalf can add up quite a bit before you know it.
Traveling can get expensive. But you can still make the honeymoon of your dreams happen without going broke before your first or second wedding anniversary. Run through these tips and be thoughtful with your cash.
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.
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.
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
If you need some extra cash or want to pay off debt, taking out a personal loan can be a smart way to get the money you need. Personal loan interest rates can be lower than credit cards if you have decent credit and a personal loan can help you raise your credit score. In addition, there are dozens of online lenders to choose from, some of which offer an easy application process and funding in just one business day.
Along with the pros, of course, come cons. Personal loan scams are not uncommon, so it’s important to proceed with caution when vetting personal loan companies. Find out how to protect yourself from falling victim to fraud.
Personal loan scams typically come with at least one red flag that should signal something isn’t right. Jeramy E. Genaway, a financial advisor from Pittsburgh, Penn., shared these six warning signs of a personal loan scam:
1. Unsolicited loan offers
Traditionally, when you want a personal loan, you seek out a lender. Scammers, however, often turn the tables by approaching consumers with bogus offers.
“Oftentimes, personal loan scams start in a very similar manner as phishing — email — or phone scams,” Genaway said. “If you receive an email with an offer for a personal loan and the message contains spelling, punctuation or grammar errors, it can be an immediate red flag.”
2. Pressure to make a decision quickly
“If you receive a phone call with an offer for a personal loan and the caller is rushing you to make a quick decision or you ‘risk the offer being rescinded,’ it’s often a red flag as well,” Genaway said.
Taking out a personal loan is a big decision that you shouldn’t make quickly. Legitimate financial institutions want you to feel comfortable with your choice, so you’ll never be pressured to make a move before you’re ready.
3. Guaranteed approval
If you have no credit or a less-than-stellar credit score, a personal loan with a guaranteed approval is bound to catch your eye. Don’t get too excited though, because it’s likely too good to be true. Legitimate lenders never promise your application will be approved. Extending a personal loan is a risk, so trustworthy lenders always review background information on consumers before offering money. If you have poor credit, check out list of the best personal loans for bad credit here.
4. Money transfer requested prior to receiving the loan
When you take out a personal loan, you should be the one receiving the funds. If you’re asked to pay money out of your pocket for your loan, that’s a problem.
You should never make payments for a loan directly to an individual, according to the FTC. The agency also advises against using a wire transfer service or sending money orders to pay for a loan, because a legitimate lender wouldn’t make a request like that.
5. No credit check required
Beware if the lender loans money to those with a poor credit histories, Genaway said. If your credit is poor, a lender not interested in your creditworthiness might seem like a dream come true, but it’s likely a scam.
The FTC notes that advertisements containing wording such as “Bad credit? No problem” or “Get money fast,” are often telltale signs the lender is trying to swindle you. It might not be what you want to hear, but legitimate lenders typically verify credit information prior to approving a loan.
6. Hidden fees required to obtain the loan
Legitimate lenders are open and honest about any fees associated with your loan. If you’re immediately hit with charges before getting your funds, something isn’t right.
Application, appraisal and credit report fees are standard, but the lender usually deducts the fees from the amount you borrow. If a lender asks you to pay upfront fees for services like insurance, processing or paperwork, don’t move forward with it.
“It’s important to remain diligent in an uncertain situation where these red flags may be present,” Genaway said. “Most importantly, keep in mind, the scammer is not only trying to potentially obtain money from you, they could also be attempting to obtain personal information such as social security numbers, bank account numbers, address or any other confidential personal information, which could be used for fraudulent purposes.”
Is applying for a personal loan online safe?
The possibility of falling victim to a scam might make you hesitant to apply for a personal loan online, but it’s actually very safe if you exercise proper due diligence. Jeffrey Brown, a financial advisor in the St. Louis area, said applying for a personal loan online is common practice these days, but he advises consumers to do it the right way.
“People get panicked and they make poor decisions because they’re trying to deal with the short term, but they get themselves in trouble in the long term because they haven’t made a wise decision with their loan,” Brown said.
“It has become almost commonplace to skip working directly with a banker or visiting a local branch in lieu of obtaining financing online,” Genaway said.
Consumers can identify potentially fraudulent websites a couple different ways, according to Genaway. First, make sure a lender’s site is secure — the URL on secure sites start with “https” — and look for a padlock symbol in the address bar on any page you’re asked to provide personal information.
“If the perceived lender’s website is not secure or does not have a padlock symbol, do not enter any additional information” said Genaway. “There is no reason a legitimate lender would not have a secure website, meaning the site you are on is unsecured and could potentially be a fraudulent website.”
Brown reiterated the importance of entering personal information only on a secured website, and also suggested checking with the Better Business Bureau to review the lender’s ratings.
What to look for when searching for a lender online
Beyond looking for a secure website, make sure the lender has a physical address.
“If there’s an address listed on the website, double check the address via your favorite online map service to see if there is a building there, and preferably, with their name on or around the building,” Genaway said. “Often times, fraudulent lenders will have addresses that are actually vacant lots or buildings that would not normally contain operating businesses.” He also said online lenders are required to register in the states where they do business, so see if you can verify that the proper licenses are in place.
“The lender’s website should list any states in which it is allowed to conduct business, and if it doesn’t, the lender might be fraudulent,” Genaway said.
He also advises researching a lender’s online reviews and ratings to learn more about other customers’ experiences.
Brown emphasized the importance of researching the lender you’re dealing with, and recommended covering all the bases by specifically searching for unfavorable information on the lender. Do a Google search and include the lender’s name and key terms associated with a negative personal loan experience.
What if you’ve been scammed?
If you’re conned into a personal loan scam, Genaway said to contact your local police department. He also advised reporting it to your State Consumer Protection Office and the Federal Bureau of Investigation Internet Crime Complaint Center.
Speaking up promptly can help authorities catch the scammer quickly. The faster they’re shut down, the less time they’ll have to target innocent consumers.
Where to find the best personal loans online
Shopping around is the key to locating the best personal loans online. LendingTree, which owns MagnifyMoney, has a personal loan comparison tool that connects dozens of reputable lenders with consumers in need of financing. By completing one online form, you could receive multiple personal loan offers in a matter of minutes. This is an easy way to find lenders you can trust, without your credit taking a hit — LendingTree performs a soft credit pull that won’t impact your score. Find your loan today with our table below.
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.
When you do it correctly, finding a personal loan online is a safe way to get a competitive rate. Now that you’ve learned about personal loan scams, be on the lookout for red flags. In some cases, they’ll be obvious, but sometimes the signals are harder to spot. Always trust your instincts and never proceed with a lender that doesn’t feel quite right.
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.
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.
Personal Loans vs. Payday Loans: What’s the Difference?
Thursday, November 8, 2018
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
If you need cash in a pinch to pay a medical bill, fund an urgent home repair or keep food on the table while between jobs, you might consider taking out a loan. This can be a good way to get the money you need — and fast — but the type of loan you choose is important. The terms attached to the loan can have a significant impact on your finances, so before signing any papers, it’s important to know exactly what you’re getting into.
Here’s a look at the difference between personal loans and payday loans to help you make an informed decision.
An unsecured loan that typically comes with a fixed interest rate and a term of one to five years
A loan obtained by paying a borrowing fee that usually needs to be repaid in two weeks
Typical interest rates*
Interest rates range from about 6% to 35%
Many states have laws limiting fees to $10 to $30 per $100 borrowed, but APRs can reach nearly 400%, according to the Consumer Financial Protection Bureau (CFPB)
Common eligibility requirements
Credit check, proof of income, bank account, identification
Proof of income, bank account, identification
Typical amount borrowed
$1,000 to $50,000
$500
*Loan and interest rate amounts vary by individual borrower and lender.
What are personal loans?
If you need money quickly, a personal loan could be the answer. Since this form of financing is unsecured, underwriting typically only takes a few days. And if you default, the lender cannot repossess your property. Most personal loans come with a fixed interest rate and a set payment schedule so that you always know exactly how much you owe each month.
Who should take out a personal loan?
Personal loans can be used for a variety of purposes, including debt consolidation,paying for a wedding,medical bills, car repairs or almost any other reason you need cash. But it’s important to use common sense since taking out a personal loan that doesn’t offer a long-term benefit — say, using a personal loan to buy a new wardrobe or pay for a vacation or lavish wedding — can set you back financially for years. Think of it this way: Making payments on a personal loan leaves less room in your budget to put money aside for the future or save for retirement.
If you’re trying to raise your credit score, a personal loan can also be a useful tool. Credit scoring systems consider installment debt preferable to revolving debt, such as credit cards. Your monthly payment activity will be reported to the three credit bureaus — Equifax, Experian and TransUnion — so making consistent, on-time payments will eventually boost your score.
How do personal loan rates and terms compare to other forms of borrowing?
Personal loans pose a greater risk to the lender than a loan that requires borrowers to provide a security deposit or collateral. So personal loans tend to come with higher interest rates than secured debt.
But your credit score is a factor in determining your interest rate, so if it’s high, you might be offered a low rate. You might also be charged an origination fee or other borrowing fees, so it’s always wise to shop around for the best personal loan offer.
Do note that personal loans typically come with lower interest rates than credit cards. Since most rates are fixed, they’re usually the better option when you need funding that you can’t pay off immediately.
Where can you get a personal loan?
Banks and credit unions offer personal loans, but don’t stop there. Cover all the bases by checking with online lenders, as many offer competitive rates and terms that can’t be beaten by traditional financial institutions. Comparison shopping is essential. One lender might offer better rates, but lower costs and fees at a different financial institution could make it a better choice.
You’ll likely be paying off your personal loan for one to five years, so take the time to find the right fit. If you go with the first offer you receive, you won’t know if you’re making the best choice for your unique situation.
The LendingTree online marketplace makes it easy to find the best personal loan for your needs. Complete a quick online form to connect with one of the largest lender networks in the country. This one-stop tool could allow you to receive offers from up to five lenders without impacting your credit score.
Compare Personal Loans
Note: LendingTree is a parent company of MagnifyMoney.
Approved borrowers with subprime credit might receive higher interest rates
Many come with origination or other borrowing fees
Interest rates are typically higher than secured loans
Payments could take away from other savings opportunities
What are payday loans?
As it sounds, a payday loan is typically a short-term, high-cost loan due on your next payday, according to the CFPB. Most payday loans are granted for sums of $500 or less, but they can vary in size. Many states have regulated the dollar amount of payday loans.
Most payday loans are based on the size of your paycheck. When you choose this type of financing, you either write the lender a postdated check for the full balance of the loan and the borrowing fee or authorize them to access the funds electronically from your bank account. In most cases, the loan will need to be repaid in two to four weeks, but if you still don’t have the money, most lenders will allow you to roll the loan over — which, if you’re not careful, can create a cycle of debt.
Who should take out a payday loan?
If you need money to tide you over until your next paycheck but your credit isn’t the best, you’ll likely be approved for a payday loan. Generally a quick and easy process, most payday lenders don’t run a credit check or otherwise dig into your financial history before granting the loan. The only things needed to get a payday loan are a bank account, steady income and a form of identification, making the barriers to approval notably low.
But just because payday loans are easy to get doesn’t mean they’re the right solution. Payday loans are considered a last resort. If you have bills to pay and nowhere else to get the money, payday lenders offer immediate access to cash, which makes them an attractive offer for borrowers with poor credit. But the high cost and short repayment period of this debt is a slippery slope. If you’re unable to make a payment, your debt could quickly balloon out of control.
How do payday loan rates and terms compare to other forms of borrowing?
The biggest drawback of payday loans is the costs associated with them. Fast and convenient financing comes at a high price that can add up very quickly. Both the fees and APR attached to a payday loan are notably higher than those charged for personal loans by traditional lenders.
Many states have laws in place limiting payday loan fees to a maximum of $10 to $30 for every $100 borrowed, according to the CFPB. A standard two-week payday loan with a $15 per $100 fee comes with an APR equivalent of nearly 400%. In comparison, the CFPB notes that APRs on credit cards typically range from about 12% to 30%.
Fees can add up fast during one payment cycle, but according to the CFPB, many borrowers ultimately roll over or refinance their loans. This adds a new round of charges to their total, making it even more difficult to catch up on payments.
In total, more than 4 in 5 payday loans are re-borrowed within a month, according to the CFPB. Most of the time, this occurs when payment for the loan is due or not too long afterward. Even worse, nearly 1 in 4 original payday loans are re-borrowed at least nine times, causing the borrower to pay more in fees than the actual loan balance.
The federal Military Lending Act offers special protections from payday loans to active-duty service members and their dependents, according to the CFPB. This includes a 36% cap on the Military Annual Percentage Rate and other restrictions on the fees that lenders can tack onto payday loans and other consumer loans.
Where can you get a payday loan?
Most payday loans are granted by check cashers, finance companies and other nonbank institutions. If permitted by your state’s laws, you might also be able to get a payday loan online.
It’s important to note that payday loans are not available in every state. Some states have outlawed this form of borrowing, and regulations in other states have caused payday lenders to decide not to do business there at all, according to the CFPB.
Payday loan pros
No credit check makes it easy to qualify
Upon approval, money is immediately distributed
Some lenders offer cash, prepaid debit cards or direct deposit
You might be able to roll the loan over if you can’t repay it immediately
Easy access to cash can ease the stress of financial woes
Payday loan cons
Loans are typically limited to $500 or less
Fees generally range from $10 to $30 for every $100 borrowed
APRs can reach nearly 400%
They’re not available in every state
Repeatedly rolling over payday loans can exceed the original loan balance
Which should you get?
If you need money right now, you’re probably ready to accept a loan from the first available source, but don’t act in haste. Take the time to weigh your options to make the best possible decision for you.
Get started by asking yourself these questions:
How much money do I need?
How quickly can I repay the loan?
Is my credit score attractive to lenders?
If you need a large amount of money — $1,000 to $50,000 — apply for a personal loan. Interest rates generally range from 5.99% to 35% and repayment terms are usually one to five years. This gives you the flexibility to negotiate a monthly payment that comfortably fits your budget. Even if your credit isn’t perfect, some lenders might be willing to work with you.
But if you have poor credit or otherwise can’t qualify for other loans, payday loans may be your only option. Before you borrow, be sure you can repay the loan at its due date, since APRs can reach almost 400%. The last thing you want is to have to roll your payday loan over, which could quickly cause the fees to exceed the original balance.
The bottom line
Being in desperate need of cash isn’t a good feeling. When you needed money yesterday, it’s easy to panic and go with the first available form of financing, but don’t make this mistake. Choosing the wrong type of loan for your situation can be detrimental to your finances for years to come.
Take the time to weigh the advantages and disadvantages of personal loans and payday loans, as applied to your unique circumstances. When you decide which option is best, comparison shop to make sure you get the best possible deal. Being savvy with your finances is a decision you’ll never regret.
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.
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.
Can I Get a Personal Loan With No Income? Yes, Here’s How
Wednesday, November 7, 2018
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
According to the Bureau of Labor Statistics, America’s unemployment rate was 3.7% in September 2018. Although this number may seem relatively small in the grand scheme of things, this hasn’t historically been the case. During the market crash of 2008-2009, America’s unemployment rate swung from 4.7% to 10.1% in a matter of months.Long-term unemployment can be emotionally and financially challenging. Although most people actively work to avoid getting into debt, especially while they’re unemployed, sometimes their financial situation leaves them with no other course of action but to take out a personal loan.
Unfortunately, many lenders require that borrowers have some proof of income before they’re willing to pass out personal loans. However, in some cases, you may be able to secure a loan – even without the proof. Let’s walk through the steps you’ll need to take to get a loan when you’re unemployed.
Can I get a personal loan with no income?
Yes, you can get a personal loan without income. At the end of the day, lenders are looking for borrowers who can prove that they’ll make repayments. It’s true that having a consistent source of income certainly helps prove that you’re eligible for a loan, but it’s also true that you can “prove” your worthiness as a borrower in other ways.
If you don’t have a full-time job that’s providing you with a consistent income that would be used to repay your personal loan, you’ll need to meet the lender’s alternative eligibility requirements.
These might include:
Proof of alternate income. Any of the following may qualify when you apply for a loan: Social Security benefits, a pension, child support, funds from your retirement account distributions, unemployment benefits, disability, employment offers for a job that starts in the future, housing income, capital gains from your investments, income from a spouse or partner, trust income, savings or cash that you’ve built up, VA benefits or a government annuity.
Automatic payments. Your lender might require that you have payments automatically deducted from your bank account to help ensure that you’re always paying in full and on time.
Security. If you’re struggling to get a loan while unemployed, your lender might ask for you to provide collateral for the loan. This would mean taking out a secured personal loan. Lenders often accept cars (as long as they’re paid in full), property or any other assets that you own outright as security.
Find a cosigner. To get a personal loan while you’re unemployed, you may need to find a cosigner. A cosigner is essentially a third party who applies with you for your loan. If you fail to make your payments, the lender may turn to them for the money they’re owed. A cosigner isn’t always a perfect solution, and asking family or close friends to cosign a loan could potentially cause some tension if you can’t repay it. However, if you’re confident that you have the funds set aside to repay your loan, or that you’ll find employment soon, this may be an option worth considering.
Remember that lenders don’t just look at your current income during the loan approval process. They’re also looking at your credit history and your credit score. If you’ve always been consistent with repaying your debts in the past, you have a good (or better) credit score and you’re not utilizing very much credit in comparison with your current income, you may be able to secure a personal loan with fewer issues – even if you’re unemployed.
Beware these risks of borrowing with no income
Although it’s possible to receive a personal loan when you’re unemployed, that doesn’t always mean it’s in your best interest to do so. Lenders are taking a risk by lending you money that you technically don’t have (and may not have for the foreseeable future). As a result, they’re likely to give you a less attractive loan offer.
Here are a few downsides to loan offers you may see while you’re unemployed and taking out a loan:
Shorter repayment terms. Typically, if you don’t have income to prove your ability to repay a loan over a long period of time, your lender will want to lower their risk. One way they do this is by offering loans to the unemployed with shorter repayment terms. This means you’ll get the funds you need, but you’ll be required to pay them back much faster than had taken out a traditional loan while you were gainfully employed.
High interest rates. Again, lenders aren’t out to get you if you’re unemployed – they just need to protect themselves against the risk of lending to someone who may not be able to repay the loan they’re offering. One way they do this is by offering you a personal loan with higher interest rates. High rates combined with a shorter term means that you’ll be paying a significant amount of money back to your lender over a short period of time. This ensures that they’ll get the amount they gave back from you (with interest), and they’ll receive it quickly.
Automatic payments. Many lenders require that automatic payments be set up when a borrower is unemployed. This could mean that they take funds directly from your bank account every month for payment, but it could also mean that they take funds directly from your other income sources (like your pension) each “pay period” to ensure that they get paid first. If you have the funds to repay your loan and cover your bills, this may not be an issue. But as things get tighter the longer you stay unemployed, this becomes a bigger issue.
Hefty fees. Although many lenders already have notable fees attached their personal loan offerings, it’s even more important to look at the fees in your loan offer if you’re unemployed. Fees are another way that a lender can protect themselves against the risk of lending to someone without an income. If you’re not careful, you could end up paying back a high interest loan over a short time period, with extra fees to boot – hardly an ideal situation for someone who’s lacking cash flow.
Predatory lending. As much as you may not want to believe it’s true, there are plenty of lenders out there who take advantage of the unemployed. By offering personal loans with egregious repayment terms, interest rates and fees, they could potentially drive you so deeply into debt that you’re unable to pay your monthly bills. Thinking long term, these types of predatory loans could also have a dramatically negative impact on your credit score.
Getting a loan when you’re unemployed isn’t always easy, but it doesn’t have to be a terrifying journey either. As long as you keep a watchful eye out for these non-ideal repayment terms and know what you’re getting into, you’re off to a good start.
Alternative options to a personal loan
Although it’s possible to qualify for a personal loan with no income, that doesn’t mean it’s a given. Many borrowers may run into a situation where they don’t qualify for a personal loan while they’re unemployed, which can be incredibly challenging if their situation is dire and they need cash now.
There are several reasons you may not qualify for a personal loan while you’re unemployed:
You have no source of alternate income to show the ability to repay
You have no assets (like a well-padded savings account, or a paid-in-full vehicle) to offer as collateral for the loan
You’re already utilizing a large portion of the total credit you have available to you
Although it’s impossible to guarantee whether you’ll get approved or denied a personal loan while you’re unemployed, these factors will play a large role in the lender’s final decision. If you aren’t approved for a personal loan, you’re not entirely out of options. First, you can look into alternative lending services that can help give you the boost of cash you need rather quickly:
Home equity line of credit (HELOC). A HELOC allows you to essentially borrow against the equity you have built up in your home. If you’ve already paid down a significant chunk of your mortgage, this might be an option for you to look into. Typically, you can borrow up to 85% of your home’s value minus what you owe on your mortgage.
Secured loan. A secured loan is one where you offer up collateral for loan funds. You may put up your car or other property for this type of loan.
Short-term loan from a family member. Borrowing money from family can be uncomfortable and potentially damaging to both your personal and financial life. However, if you’re confident in your ability to repay the loan, and your relative is willing to offer you favorable terms, this may be a path you pursue. You’ll need to discuss the total amount of the loan, what interest rate they’ll charge you (if any) and what the length of the loan’s repayment term will be. It’s wise to draw up a formal contract to protect both of your interests.
Conclusion
You have several options for borrowing funds, even when you don’t have an income to rely on for repayment. However, there are several other options to consider before you seek out a personal loan or alternate lending option.
Going into debt should never be your first course of action. Although you can get a loan without an income, pursuing these other ideas first until you’re able to secure another full-time, well-paying job is usually in your best interest.
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.
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.
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.
Marcus by Goldman Sachs Review: GS Bank Takes on Online Savings, CDs, and Personal Loans
Friday, November 2, 2018
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews 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.
LEARN MORE on Goldman Sachs Bank USA’s secure websiteMember FDIC
Most Americans probably think of fancy white-collar stock traders on Wall Street when they think of Goldman Sachs, a global investment firm that’s been around since the late 19th century.
In recent years, Goldman made a major pivot, launching a new arm of the company called GS Bank, which would provide internet-only savings accounts to the masses.
They also launched Marcus by Goldman Sachs®, a line of personal loans. Eventually, they decided to rebrand their savings account business, putting it under the Marcus umbrella as well.
Today, through Marcus, you’ll find three product offerings: personal loans, savings accounts, and CDs.
In this article, we’ll take a deep dive into all three products. We’ll tell you what you need to know before opening an account, including what rates they are offering.
A very high interest rate and no fees make this one of the best savings accounts out there.
APY
Minimum Balance Amount
2.05%
None
Minimum opening deposit: None. However, you’ll need to deposit at least $1.00 if you want to earn any interest
Monthly account maintenance fee: None
ATM fee: N/A
ATM fee refund: N/A
Overdraft fee: None
This is a great account for almost anyone. However, before you click that “Learn More” button below, there are a couple of things to know.
No ATMs. First, Marcus by Goldman Sachs doesn’t offer ATM access to your savings account. You’ll either need to deposit or withdraw money by sending in a physical check, setting up direct deposits, or by moving the money to and from your other bank accounts via ACH or wire transfer.
No checking account. Second, Marcus does’t offer a corresponding checking account. That means you can only use this account as an external place to park your cash from your everyday money flow.
Keeping a separate savings account does have its benefits. For example, it’s harder to tempt yourself to withdraw the cash if you’re a chronic over-spender. But, it also means that there might be a delay of a few days if you need to transfer the money out of your Goldman Sachs online savings account and into your other checking account.
How to open a Goldman Sachs online savings account
It’s really easy to open an online savings account with Marcus by Goldman Sachs. You can do it online or over the phone as long as you’re 18 years or older, have a physical street address, and a Social Security Number or Individual Taxpayer Identification Number.
You’ll be required to sign a form which you can do online, or by mail if you’re opening the account over the phone.
Marcus’ online savings account can easily be described with one word: outstanding.
You’ll get a relatively high interest rate with this account, which is among the best online savings account rates you’ll find today. In fact, these rates are currently over seven times higher than the average savings account interest rate.
Even better, this account won’t charge you any fees for the privilege of keeping your money stashed there. It’s a tall order to find another bank that offers these high interest rates with terms this good.
Sky-high CD rates, but watch out for early withdrawal limitations.
Term
APY
Minimum Deposit Amount
6 months
0.60%
$500
9 months
0.70%
$500
12 months
2.55%
$500
18 months
2.55%
$500
24 months
2.60%
$500
3 years
2.65%
$500
4 years
2.70%
$500
5 years
3.10%
$500
6 years
3.15%
$500
Minimum opening deposit: $500
Minimum balance amount to earn APY: $500
Early withdrawal penalty:
For CDs under 12 months, 90 days’ worth of interest
For CDs of 12 months to 5 years, 270 days’ worth of interest
For CDs of 5 years or over, 365 days’ worth of interest
Marcus’ CDs work a little differently from other CDs. Rather than having to set up and fund your account all at once, Goldman Sachs will give you 30 days to fully fund your account.
Once open, your interest will be tallied up and credited to your CD account each month. You can withdraw the interest earned at any time without paying an early withdrawal penalty, but heads up: If you withdraw the interest, your returns will be lower than the stated APY when you opened your account.
If you need to withdraw the money from your CD, you can only do so by pulling out the entire CD balance and paying the required early withdrawal penalty. There is no option for partial withdrawals of your cash.
Finally, once your CD has fully matured, you’ll have a 10-day grace period to withdraw the money, add more funds, and/or switch to a different CD term. If you don’t do anything, Marcus will automatically roll over your CD into another one of the same type, but with the current interest rate of the day.
How to open a Goldman Sachs CD
Marcus has made it super simple to open up a CD. First, you’ll need to be at least 18 years old, and have either a Social Security Number or an Individual Taxpayer Identification Number.
You can open an account easily online, or call them up by phone. You’ll need to sign an account opening form, which you can do online or via a hard-copy mailed form. Then, simply fund your CD account within 30 days, and you’re all set.
If you’re interested in pursuing a CD ladder approach, Marcus is one of our top picks because each of their CD terms offer above-average rates. This means you can rest easy that you’ll get the best rates for your CD ladder without having to complicate things by spreading out all of your CDs among a handful of different banks.
The only downside to these CDs compared with many other banks is that you can’t withdraw a portion of your cash if you need it. It’s either all-in, or all-out. However, once out, you’re still free to open a new CD with the surplus cash, as long as it’s at least the $500 minimum deposit size.
Personal loans offered by Marcus have low APRs, flexible terms, and no fees.
Terms
APR
Credit Required
Fees
Max Loan Amount
36 to 72 months
6.99%-24.99%
Varies
None
$40,000
Marcus by Goldman Sachs® personal loans can be used for just about anything, from consolidating debt to financing a large home improvement project. They offer some of the best rates available, with APRs as low as 6.99%, and you’ll not only be able to choose between a range of loan terms, but you can also choose the specific day of the month when you want to make your loan payments.
While there are no specific credit requirements to get a loan through Marcus, the company does try to target those that have “prime” credit, which is usually those with a FICO score higher than 660. Even with a less than excellent credit score, you may be able to qualify for a personal loan from Marcus, though, those that have recent, negative marks on their credit report, such as missed payments, will likely be rejected.
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.
No fees. Marcus charges no extra fees for their personal loans. There is No origination fee associated with getting a loan, but there are also no late fees associated with missing payments. Those missed payments simply accrue more interest and your loan will be extended.
Defer payments. Once you have made on-time payments for a full year, you will have the ability to defer a payment. This means that if an unexpected expense or lost job hurts your budget one month, you can push that payment back by a month without negatively impacting your credit report.
How to apply for a Marcus personal loan
Marcus by Goldman Sachs offers a process that is completely online, allowing you to apply, choose the loan you want, submit all of your documents, and get approved without having to leave home. Here are the steps that you will complete to get a personal loan from Marcus:
Fill out the information that is required in the online application, including your basic personal and financial information, as well as how much you would like to borrow and what you will use the money for.
After a soft pull on your credit, and if you qualify, you will be presented a list of different loan options that may include different rates and terms.
Once you have chosen the loan you want, you will need to provide additional information to verify your identity. You may also be asked for information that can be used to verify your income and you will need to provide your bank account information so that the money can be distributed.
You will receive your funds 1 – 4 business days after your loan has been approved.
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.
Marcus offers low APRs and flexible terms with their personal loans, but their main feature is that they have no fees. If you are looking for a straightforward lending experience with no hidden fees or costs, Marcus will be perfect for you since you won’t even have to worry about late fees if you happen to miss a payment.
While Marcus offers some great perks, you may be able to get a lower rate if you choose to go with another lender, such as LightStream or SoFi. Both of these lenders offer lower APR ranges and they don’t charge origination fees, though, LightStreamwill do a hard pull on your credit to preapprove you.
LendingClub and Peerform both have lower credit requirements than Marcus, but they also charge origination fees and, being P2P lending platforms, you will need to wait for your loan to be funded and you run the risk that other users might not fund your loan.
Overall review of Marcus by Goldman Sachs‘ products
Marcus has really hit it out of the park with their personal loans, online savings, and CD accounts. Each of these accounts offers some of the best features available on the market, while shrinking the fees down to a minuscule, or even nonexistent, amount. Their website is also slick and easy to use for online-savvy people.
The only thing we can find to complain about with Marcus is that they don’t offer an equally-awesome checking account to accompany their other deposit products. Indeed, it seems like Marcus has turned their former hoity-toity image around: Today, they’re a bank that we’d recommend to anyone, even blue-collar folks.
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.
1. Unsolicited loan offers
