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Personal Loans

P2P Lending: The Complete Guide for Peer-to-Peer Lending

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

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

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Peer-to-peer lending is a modern name for a practice as old as money itself — individuals loaning money among themselves. What’s modern is the scale afforded by technology. Ten years ago, an individual needing a loan to start a business, consolidate debt, or cover unexpected home improvements would have been limited to borrowing from his or her immediate friends, family, and acquaintances outside of a traditional bank loan. Today, online peer-to-peer (P2P) lending platforms connect individuals who need to borrow money with investors willing to lend. Technology now allows perfect strangers to borrow from and lend to each other.

For many people, borrowing from peers can be a great alternative to borrowing from a bank, but it’s not for everyone. We’ll take a look at how peer-to-peer lending works and what you need to know before you apply.

How P2P loans work

The Small Business Administration (SBA) defines P2P lending as, “Individual investors providing small sums to lend personal loans to individuals via internet platforms.” Some of the most popular platforms include LendingClub, Prosper, Upstart and Funding Circle, although there are several others.

Potential borrowers can apply for credit on the platform, and borrower qualifications vary by lender. For example, the interest rate a LendingClub borrower receives depends on an internal score developed by the company, which is one of the largest P2P lenders. “They will give you a grade between A (the best grade, qualifying for the highest amount at the lowest rates) and G (the lowest grade with the highest interest rate),” a LendingClub spokesperson told MagnifyMoney.

LendingClub currently caps its personal loans at $40,000. Prosper caps its loans at $40,000. Typical loan terms range between three and five years.

Who invests in P2P loans

P2P loans may be funded by an individual investor or a group of investors. According to MarketWatch, P2P loans can be a good way to diversify the portfolio of income investors who take time to understand the risks and rewards. Income investing generates a cash income in the form of dividends and interest. In other words, investors don’t buy a stock, bond, or other investment and wait for it to appreciate in value so they can sell it and earn a profit. Simply holding on to the investment generates income.

P2P loans are an income investment because once an investor opens an account and chooses to participate in a loan, principal and interest payments (less fees charged by the platform) are deposited into the investor’s account on a monthly basis.

The investors may be individuals or institutions, such as banks, pension plans, foundations, finance companies, asset managers, insurance companies, broker-dealers, and hedge funds. Individual investors can open an account with Lending Club with an initial investment of $1,000, but other platforms are available only to institutions and accredited investors (those who can demonstrate high-earned income and net worth).

Connor Murphy, a public relations and communications specialist with Funding Circle, says their platform in the U.S. is only open to accredited investors and institutional investors. “We actually use the term ‘marketplace lending’ rather than peer-to-peer lending,” Murphy said, “because investors on our platform globally include large financial institutions and even governments.”

Whether the investor is an individual with $1,000 or an institution looking to invest $250,000, they select loans to invest in and earn monthly returns on. According to Sarah Cain, head of communications at Prosper, borrowers do not know their lenders. “They simply know if their loan has been funded or not,” Cain said.

Why P2P loans?

P2P lending platforms started gaining traction more than a decade ago as a way to bypass banks and use technology to connect investors with money to the borrowers that need it. P2P lenders have claimed their online platforms help them reduce costs, and that, in conjunction with analytics and proprietary algorithms, allow them to offer borrowers lower interest rates or provide loans to individuals who have been refused loans by traditional banks.

LendingClub currently advertises APRs for personal loans from 6.95% to 35.89%. The company surveyed borrowers during the first seven months of 2017 and found that borrowers who received a loan to consolidate existing debt or pay off credit card balances reported that they saved an average of $287 per month. However, that statistic compares high-interest credit card rates with personal loan rates – not P2P personal loan rates to bank personal loan rates.

As of August 2017, the average APR on credit cards carrying a balance was 14.89 percent, but banks may offer much lower rates for personal loans. Of course, whether you choose a P2P loan or a bank loan, having a high credit score can help you get the lowest rate offers, while a lower credit score will likely stick you with higher interest rates, if you are approved for a loan at all.

Some borrowers just prefer the idea of avoiding large, traditional banks. But as with any borrowing decision, you should compare apples to apples when seeking financing for any purpose and shop around for the best rate.

Applying for a peer-to-peer loan

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To apply for a loan, a potential borrower visits a P2P lending website and fills out an application.

The platform leverages online data and technology to assess risk, determine a credit rating and assign an appropriate interest rate. Applicants may receive offers within a few minutes and can evaluate options without impacting their credit score. Once you select a loan offer, you’re required to complete an online application that gathers information about your income and employment as well as identifying information, such as address and Social Security Number.

You may also be required to provide additional documentation to verify your identity, income, and employment. That may include:

  • Tax forms such as W-2s and 1099s
  • Tax returns
  • IRS Form 4506-T, which is used to request a copy of your tax forms or returns directly from the IRS
  • Recent bank statements or pay stubs
  • Proof of income from alimony or child support, pension or annuity income, disability insurance or workers compensation benefits, if applicable
  • Copies of government-issued photo ID
  • Utility bills

Once you’ve completed the application and submitted the necessary documents, your application is reviewed and the platform matches you with investors to fund the loan. Once the loan is approved, the funds are deposited into your bank account. The process can take anywhere from seven to 45 days.

Each P2P site has its own rules and approval criteria, including minimum credit score, so an application declined by one platform doesn’t necessarily mean that you won’t be approved by the others.

The Financial Industry Regulatory Agency (FINRA) reported that P2P lenders tend to be more forgiving than banks when it comes to short credit histories, but if you’re trying to get a P2P loan with less than stellar credit, don’t expect the lowest rates.

Lending Club states that applicants who qualify for the lowest rates have:

  • An excellent credit score
  • A low percentage of total outstanding debt compared with income
  • A long history of credit with significant successful credit lines
APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

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

Upstart looks for borrowers with:

  • A minimum FICO score of 620 (although they do accept borrowers with insufficient credit history to produce a FICO score)
  • No bankruptcies
  • No accounts currently in collections or delinquent
  • Fewer than six inquiries on their credit report in the last six months (other than inquiries for student loans, vehicle loans, or mortgages
APR

7.46%
To
35.99%

Credit Req.

620

Minimum Credit Score

Terms

36 & 60

months

Origination Fee

0.00% - 8.00%

SEE OFFERS Secured

on LendingTree’s secure website

Upstart is an online lender created by ex-Googlers.... Read More

Prosper’s minimum criteria include:

  • A minimum FICO score of 640
  • Debt-to-income ratio below 50%
  • No bankruptcies within the last 12 months
  • Fewer than seven credit inquiries within the last six months
APR

6.95%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

2.41% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. ... Read More


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

While the approval process isn’t without its hurdles, peer-to-peer loans give borrowers another — sometimes less expensive — option for borrowing beyond credit cards and bank loans. Because P2P lenders facilitate borrowing without a bank intermediary, there is less overhead and none of the capital reserve requirements that drive up costs for traditional banks. As a result, the cost of originating and funding loans is lower, providing more competitive rates to borrowers and a faster approval process.

Plus, some borrowers just like the idea of borrowing outside of the traditional banking industry. Cain says although the process is online, P2P lending is not simply a different way of dealing with a faceless lender. “We do have a robust customer service team that is available to help,” Cain said.

What if your loan isn’t funded?

If your loan application is denied, you will receive an adverse action notice that provides the specific reason for the denial.

Cain says it’s hard to say exactly why a loan application would be denied, as every person’s credit profile is unique. However, some common reasons credit applications may be denied even though the borrower has a good credit score include:

  • Problems verifying employment. A stable job and stable income indicate that you’ll be able to pay your lender back. If the lender has trouble verifying your employment history, they may decline your application.
  • Not enough income. If you don’t have enough income in relation to your existing debt obligations to pay back the loan, most lenders will deny credit.
  • Bankruptcy. Lenders are often wary of approving a loan after you’ve declared bankruptcy. A bankruptcy may remain on your credit report for up to seven or 10 years, depending on the type filed.
  • Credit card utilization. If you are using a large percentage of your available credit, you may be seen as a potential risk to lenders.

If your loan application is denied, check your credit report to make sure that there are no inaccuracies that are dragging down your credit score. You can check your credit report with each of the three credit reporting agencies for free once a year at annualcreditreport.com.

Also, review your loan application to ensure you filled it out completely and accurately. If you find any errors in your credit report or application, correct them and apply again. Otherwise, take a look at the adverse action notice and see what you can do to improve your situation.

While there are no quick fixes for a bad credit score, small steps can improve your score over time.

  • Reduce the amount you owe. Stop using credit cards and make a plan to pay down existing balances.
  • Pay your bills on time. Payment history accounts for as much as 35 percent of your FICO score, so set up payment reminders to avoid missed or delinquent payments.
  • Avoid closing unused cards. Part of your credit score depends on the average length of time you’ve been using credit, so closing old accounts can actually hurt your score.
  • Don’t open new accounts too rapidly. A large number of new accounts in a short time frame can make you look risky to lenders, so apply for and open new accounts only as needed.

Shopping around

Each platform has their own lending criteria, loan limits, fees, interest rates, and areas of operation. Take a look at the FAQs and other information on the provider’s website to get an overview of the types of loans they offer, and the rates and fees they charge.

Here are a few to get started:

Lending platform

Loan amount

Terms

Who it’s best for:

Upstart


$1,000-$50,000

36 & 60 months

Borrowers who may not have an
excellent FICO score (or any score
at all) but are good loan candidates
based on other factors such as
education and job history

Prosper


$2,000-$40,000

36 or 60 months

Borrowers interested in a personal
loan to consolidate credit card debt,
fund home improvements, vehicle
purchases or other life events,
or start, or expand a small business

Lending Club


$1,000-$40,000

36 or 60 months

Borrowers interested in a personal
loan for consolidating high-interest
debt, funding home improvements,
or paying for unexpected expenses

Funding Circle


$25,000-$500,000

6 months to 5 years

Borrowers looking for funding to start
or expand their business

Keep in mind that interest rates and other terms can change, so you should compare rates and other terms from a variety of lenders every time you need to borrow.

The P2P lending market is only a little over a decade old, thus P2P platforms have not had the long history of government oversight to which banks and credit unions have been subjected.

And there is reason to be cautious about getting involved in P2P lending. In 2016, the Department of the Treasury released a report, Opportunities and Challenges in Online Marketplace Lending, looking at the opportunities and risks of P2P lending. Their concerns included:

  • The use of data-driven algorithms for making credit decisions has the potential to violate fair lending laws and doesn’t allow applicants to check and correct the data being used.
  • Interest rates may be high. The report acknowledged that the majority of loans are made to borrowers with good credit scores, but some platforms offer loans to borrowers with poor credit (FICO scores as low as 580) at interest rates as high as 36 percent.
  • Borrowers using P2P lending to refinance federal student loans lose the protections available to federal student loan borrowers, including income-driven repayment plans, loan forgiveness, and deferral or forbearance while the borrower returns to school or faces economic hardship or disability.
  • Many borrowers use P2P loans to fund small business development, but it may be difficult to enforce consumer protection laws and regulations, contract law, or fair lending laws with P2P platforms since these platforms are not subject to the same oversight as traditional banks.
  • While many marketplace lenders clearly disclose loan rates and terms, not all platforms are as transparent. The report acknowledged a need for standardized disclosures.
  • Most P2P platforms service loans only until a loan becomes delinquent, at which point collection is outsourced to a collection agency. Not all platforms have plans in place to work with borrowers who are experiencing financial distress or plans to continue servicing loans if the company goes out of business.

However, they are required to follow the same state and federal laws as other lenders. If you encounter any problems with a P2P lender, you should submit a complaint to the Consumer Financial Protection Bureau.

The CFPB began accepting complains about P2P lenders in March of 2016. We reviewed the complaints database in December of 2017 and counted more than 300 complaints about some of the largest P2P lenders. Consumers who submit complaints assign categories themselves and can opt not to have their complaint narrative published, so it’s difficult to parse the top complaints, but they include:

  • Having difficulty getting the loan
  • Problems making payments
  • Problems with the payoff process
  • Being charged interest or fees that aren’t expected
  • Inaccurate information reported to the credit bureau

These problems aren’t unique to P2P lenders, given that borrowers from traditional banks can face similar frustrations. Still, it’s important to know what other borrowers have experienced if you’re thinking of pursuing a P2P loan.

Lending Club and Prosper are the most popular platforms, but experts expect the industry to grow, so it’s worth expanding any comparison shopping beyond the biggest players. Just do your research before providing your personal information.

  • Search for the lender online. Is the platform mentioned in roundups of the best P2P platforms from reputable financial websites? Do your search results include consumer complaints?
  • Check the platform’s rating with the Better Business Bureau.
  • Make sure the platform takes steps to protect your personal data. They should have security and privacy certification from a company like TRUSTe or Symantec.

Alternatives to a P2P loan

It makes sense for anyone interested in a P2P loan to also compare alternatives before committing to a loan:

  • Community banks
  • Credit unions
  • Friends and family

Peer-to-peer lending can be a less expensive alternative to high-interest credit cards and easier to get than a bank loan. But, like all borrowing decisions, it needs to be carefully considered for your individual financial circumstances. The bottom line is that P2P is another option, and more options and increased competition are always good for borrowers.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

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


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

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

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.

Janet Berry-Johnson
Janet Berry-Johnson |

Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here

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Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Personal Loans

Citizens Bank Personal Loan Review

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

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

Citizens Bank (RI)
APR

6.79%
To
20.89%

Credit Req.

Not specified

Minimum Credit Score

Terms

36 to 84

months

Origination Fee

No fees

SEE OFFERS Secured

on LendingTree’s secure website

Citizens Bank personal loan details
 

Fees and penalties

  • Term lengths: 36 to 84 months
  • APR range: 6.79% to 20.89%
  • Loan amounts: $5,000 to $50,000
  • Time to funding: Funds can be in your account in as quickly as 2 business days
  • Credit check: Soft Pull
  • Origination fee: No fees
  • Prepayment fee: None
  • Late payment fee: Not specified

Citizens Bank product details

A Citizens Bank personal loan offers you the ability to lower your interest rate. If you have another qualifying Citizens Bank account when you complete your application, you’ll receive the Citizens Loyalty Discount, entitling you to a 0.25% rate discount. Save another 0.25% by opting to have your monthly loan payments automatically debited through ACH. This allows you to reduce your rate by a total of 0.50%.

In addition, if you’re an active-duty service member or are called into active duty before your Citizens Bank personal loan is repaid, you may qualify for special benefits. Eligibility varies according to a number of factors, so contact customer service for more details.

Eligibility requirements

  • Minimum credit score: Not specified
  • Minimum credit history: “Reasonably strong credit history,” per Citizens Bank’s website.
  • Maximum debt-to-income ratio: Not specified.

To qualify for a Citizens Bank personal loan, you must have a strong credit history and a minimum annual income of at least $24,000. You must also be a U.S. citizen or permanent resident of the U.S. or Puerto Rico and have a valid Social Security number. Additionally, you’ll need to be at least the age of majority in the state where you reside.

Applying for a personal loan from Citizens Bank

You can apply for a Citizens Bank personal loan online. To complete your application, you’ll need to provide your Social Security number, gross annual income — accompanied by your most recent pay stub — and requested loan amount. If applicable, you might also be required to specify the name and phone number of your employer and the name and email address of your co-signer. Do note, though, that if you use a co-signer, they’ll also need to provide all the information listed above.

After submitting your application, you might be asked to supply additional documents to verify the information submitted. If you’re asked to provide proof of Social Security number, this could include a copy of your Social Security card, birth certificate or passport. Documents needed for income verification purposes may vary, according to your unique situation. Submit the documents online for the fastest processing, via email or by standard or overnight mail.

If your personal loan is approved, you’ll need to acknowledge and accept the terms of the offer, review and sign your application and promissory note — along with your co-signer, if applicable. Your promissory note can be signed digitally — the fastest method — or physically. The money will be deposited in your account quickly — possibly within two business days — and your first payment will be due 20 to 50 days from disbursement.

Pros and cons of a Citizens Bank personal loan

Pros:

Cons:

  • No fees: Citizens Bank loans comes with zero fees, including origination fees and prepayment penalties.
  • Flexible terms: Choose a monthly payment that fits your budget, with terms ranging from 36 to 84 months.
  • Fast funding: Funds could be dispersed into your account in as quickly as two business days after approval.
  • Interest rate reductions: Take 0.25% off your rate if you qualify for the Citizens Loyalty Discount and another 0.25% for having your monthly loan payments automatically deducted through ACH. This can allow you to reduce your rate by up to 0.50%.
  • Strong credit requirements: While the Citizens Bank website doesn’t provide a specific baseline credit score, it does note that “reasonably strong credit” is needed for loan approval.
  • Income requirements: To qualify for a personal loan from Citizens Bank, you’ll need a minimum annual income of at least $24,000.

Who’s the best fit for a Citizens Bank personal loan?

If you don’t want to pay fees, the Citizens Bank personal loan might be a good fit. Since no fees are attached to the loan — including origination fees and prepayment penalties — you can save money on its total cost.

Considering loans can often be funded within two business days, this could also be a great choice if you need cash fast. If you already have an account with Citizens Bank, you’ll especially want to check this loan out. You could be eligible for a reduced interest rate of up to 0.50% if you qualify for the Citizens Loyalty Discount and have your monthly loan payments automatically deducted through ACH.

Reading Citizens Bank reviews like this one is an important way to gather the facts, so you can make the best choice for your unique financial situation. It’s also advisable to shop around for other low-fee lenders, before signing any loan paperwork.

Citizens Bank consumer reviews

Citizens Bank has an A+ rating from the Better Business Bureau. On LendingTree, our parent company, 92% of reviewers recommend Citizens Bank.

Positive points in consumer reviews include great rates, knowledgeability and helpfulness of the lender, as well as the rapidity of the process. On the negative side, the lack of bank branches was mentioned.

Avik, from Jericho, N.Y., praised the bank employee he worked with: “As a first-time home buyer, we stumbled upon lot of unknowns especially buying [a] little bit above our budget and affordability. David walked us through the process and made it super easy. The bank also closed the loan in such a short notice. We were able to get our home where we were competing against multiple cash offers.” Vladimir from Pomona, N.Y., found the team “very responsive and easy to deal with.”

On the other hand, while Jared from Croton On Hudson, N.Y., did acknowledge that the team was “pretty great,” he added that “the requirement to open an account with them was a bit more work when I realized how few branches were nearby,” though “likely not an issue in the long-term.”

Citizens Bank FAQ

The company offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens Bank also provides mortgage lending, student lending and commercial banking services.

Citizens Bank will take multiple factors into consideration, including employment history, credit history, assets and debt. There is a soft pull credit for the rate quote and a hard credit pull for the application.

The use of personal loans include debt consolidation, engagements and weddings, kitchen and bath remodel, vacations and timeshares, and recreational vehicles.

While Citizens Bank doesn’t charge late fees, not making your payments on time could affect your credit score.

Alternative personal loan options

Wright-Patt Credit Union

Wright-Patt Credit Union
APR

8.99%
To
17.99%

Credit Req.

710

Minimum Credit Score

Terms

60

months

Origination Fee

No origination fee

APPLY NOW Secured

on Wright-Patt Credit Union’s secure website

With no annual fee, low fixed rates and terms up to 60 months, Wright-Patt Credit Union offers personal loans that are great options for those looking to work with a credit union.... Read More

Wright-Patt Credit Union offers personal loans from $500 to $40,000. Personal loans can be used for anything. One of the perks attached to the loan is the Skip-a-Pay Program, allowing eligible borrowers to skip one payment per calendar year without a late fee. You’ll need to join the credit union to apply for a personal loan: Ohio residents in several central and southwest counties, as well as the cities of Columbus and Cincinnati, are eligible for membership; those outside the region can research other means of joining the credit union. If you qualify for membership, this can be a good choice if you need less than the $5,000 minimum Citizens Bank loan.

PenFed Credit Union

PenFed Credit Union
APR

Starting at 6.49%

Credit Req.

700

Minimum Credit Score

Terms

36 to 60

months

Origination Fee

No origination fee

APPLY NOW Secured

on PenFed Credit Union’s secure website

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

PenFed personal loans are offered from $500 to $25,000. There’s no hidden costs of borrowing and funds are available immediately. Personal loans are exclusive to PenFed members, but you could be eligible to join through your employer, association membership, volunteerism or military affiliation. PenFed’s baseline APR is slightly lower than the starting 6.49% APR offered by Citizens Bank, so taking this route could allow you to score a better rate.

USAA

USAA Bank
APR

As low as 9.49%

Credit Req.

700

Minimum Credit Score

Terms

12 to 84

months

Origination Fee

No origination fee

APPLY NOW Secured

on USAA Bank’s secure website

USAA offers personal loans for members with low, fixed interest and protections to fall back on if you get behind in payments.... Read More

If you’re a member of the U.S. military — or an eligible family member — you might qualify for a USAA personal loan. Borrowing starts at $2,500 and you must be a member to apply for a personal loan. Decisions are typically made immediately and loans are funded the next day. Assuming you qualify for USAA membership, this could be a good fit if your borrowing needs are less than $5,000 minimum for a Citizens Bank personal loan.

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

Laura Woods
Laura Woods |

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

Yael Bizouati
Yael Bizouati |

Yael Bizouati is a writer at MagnifyMoney. You can email Yael here

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Personal Loans

OppLoans Personal Loan Review

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

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

APR

99.00%
To
199.00%

Credit Req.

Varies

Minimum Credit Score

Terms

9 to 24

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

OppLoans personal loan details
 

Fees and penalties

  • Terms: 9 to 24 months
  • APR range: 99.00%-199.00% APR
  • Loan amounts: $1,000-$4,000
  • Time to funding: You can get access to your funds as soon as the business day after approval.
  • Hard pull/soft pull: Soft Pull
  • Origination fee: Varies
  • Prepayment fee: None
  • Late payment fee: Fees may vary by state, but if your payment is more than 15 days late, you will be charged $15.
  • Other fees: These may also vary by state, but you will be charged $15 each time you write OppLoans a bad check. California applicants will also have to pay a $75 administrative fee.

OppLoans’ rates are oppressively high, but there’s a reason they exist. When you find yourself with little money, a mountain of bills and bad credit, it becomes extremely difficult to gain access to low-interest borrowing products.

In these cases, many people turn to payday loans, which can have interest rates of around 400%. Going with a personal loan from OppLoans is a preferable path.

OppLoans makes efforts to help their clientele understand how they can boost their credit scores so they can get back into the traditional marketplace where lower rates can be obtained. They do this through OppU — a collection of free, educational courses that teach you about spending, saving, budgeting, credit and debt. Unless you live in Texas or Ohio, OppLoans also reports your loan activity to the three major credit bureaus, so making on-time payments can help you strengthen your traditional credit file.

Eligibility requirements

Clarity Services, Inc. is a subsidiary of Experian, but is not technically one of the big three credit reporting agencies (Equifax, Experian and TransUnion). Instead, Clarity Services deals with what is known as “alternative credit data.” This data is built by obtaining your credit report from one of the three major credit bureaus and supplementing it with information about recent credit inquiries, potential fraud attempts and your overall financial stability, including income and employment data.

When a lender like OppLoans uses Clarity Services, it’s doing so because it knows that, by traditional credit standards, you might look like a repayment risk, but it also knows that reliable people sometimes go through hard financial times. Clarity’s supplemental information allows OppLoans to make a lending decision on more than just traditional credit data.

If your alternative credit data qualifies you, you will also have to have a steady source of income. If your income is from employment, you have to have been with your employer for at least three months. You must also have a bank account that is at least three months old, where your paychecks are deposited using direct deposit. If you live in New Mexico, you are exempt from the direct deposit requirement.

If you’re active-duty military, you won’t qualify for a loan with OppLoans. That’s because the Military Lending Act protects servicemembers, their spouses and dependents from potentially predatory lenders, and the rates offered by OppLoans are far too high to meet this law’s standards.

Finally, you must be at least 19 years of age to qualify for an OppLoans personal loan if you live in Alabama or Nebraska. Otherwise, you must be 18 and live in one of these states:

  • Alaska
  • Arizona
  • California
  • Delaware
  • District of Columbia
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nevada
  • New Mexico
  • Ohio
  • Oklahoma
  • Oregon
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Virginia
  • Washington
  • Wisconsin
  • Wyoming

Applying for a personal loan from OppLoans

The only way to apply for an OppLoans personal loan is through its online application. Be prepared to enter identifying information such as your name, address and Social Security number, as well as your bank account info and data about your employer or any other way that you bring in income.

At this point in the process, OppLoans will pull your alternative credit data via Clarity Services. If you are approved, you may have to provide supplemental documentation proving you are who you say you are and what you earn.

After approval, many see the money deposited into their bank accounts as soon as the next business day.

Pros and cons of an OppLoans personal loan

Pros:

Cons:

  • Quick funding. With funding available as soon as the first business day following approval, OppLoans often gets its borrowers money fast.
  • Educational initiatives. OppLoans’ OppU educational program is free and online, meaning anyone can access it from anywhere within the confines of their schedule. The effort was launched as a form of advocacy to help consumers improve their financial situation so they don’t have to take out loans with ridiculously high interest rates in the future.
  • Better than payday loans. People who can’t get traditional credit often turn to payday loans to get by. OppLoans can be a good alternative to those payday loans, but it’s not necessarily the best option for getting cash fast.
  • High interest rates. Paying 99.00% to 199.00% interest on your loan is akin to paying over 2-3 times the amount you initially borrowed. For example, if you took out a $3,000 loan at 199.00%, which you needed to repay in three years with monthly payments of $499, you’d end up paying $17,964 total by the time all was said and done.
  • Doesn’t help if you’re in ChexSystems. If your money situation is tumultuous, there’s a chance you may have been put in ChexSystems, a credit reporting agency for checking and savings accounts. When this happens, you won’t be able to open a bank account, and without a bank account which is at least three months old, you’re not going to qualify for an OppLoans personal loan.
  • Direct deposit required. Many employers set direct deposit as the default way to pay employees, and many will oblige if you request this method of payment. If you don’t already have direct deposit set up for your paycheck, you’re not going to be able to get your hands on an OppLoans personal loan quickly until you get that resolved. If your employer doesn’t offer direct deposit, you can’t borrow from OppLoans.

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

OppLoans is not the best option for a lot of people because of its high interest rates. However, if you have poor credit but have a bank account, have recently been denied by other lenders who offer lower interest rates and need money right now, OppLoans may be your most viable solution. Consider OppLoans before you turn to payday loans.

OppLoans consumer reviews

Despite its staggeringly high interest rates, OppLoans receives mostly positive feedback from its customers. Those who have reviewed the company on LendingTree (MagnifyMoney’s parent company) say the application and funding process is quick and easy, and many note that the customer service is very good.

For example, reviewers praise OppLoans for being “professional, secure, and speedy,” as well as “upfront with fees and payment terms,” and “very helpful if you have any questions.” Ninety-six percent say they would recommend OppLoans — plus, the company has an A+ rating from the Better Business Bureau.

Negative reviews for OppLoans are few and far between, but those that did rate their experience poorly say they weren’t approved by the lender or were unhappy with the high rates and fees.

OppLoans FAQ

OppLoans offers both installment loans (what we’ve covered in this piece) and lines of credit. The latter is only available in a few states.

If you’re approved, OppLoans will deposit your funds directly into the account you provided. You could see the money come through as soon as the next business day, though this depends on what time of day (and day of the week) your application is processed and finalized.

OppLoans accepts electronic funds transfers (EFT), which is basically a debit from your checking account to the lender. You can also use your debit card for one-time payments.

You can use your personal loan for nearly anything. Some of the most common uses include debt consolidation, paying off medical bills, and financing a big purchase.

Yes. OppLoans doesn’t charge a prepayment penalty — if you are able to pay off your loan faster, you’ll save on interest.

OppLoans advises customers who expect to pay late or miss a payment to call the company directly at 855-408-5000. Note that there is a late payment fee that varies depending on where you live.

OppLoans specializes in working with bad credit borrowers but has a number of additional eligibility requirements for its personal loans. If you don’t qualify, take a look at alternatives on MagnifyMoney’s personal loan marketplace. You may find other offers that work for you.

Alternative personal loan options

NetCredit

APR

34.00%
To
155.00%

Credit Req.

Varies

Minimum Credit Score

Terms

6 to 60

months

Origination Fee

1.00% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

NetCredit issues personal loans with interest rates up to 155.00%. That’s not great, though it is a bit better than OppLoans’ ceiling of 199.00%. It also has far lower starting rates at 34.00% compared with OppLoans’ 99.00%. You may be able to qualify for a NetCredit personal loan with a credit score as low as 500.

LendingPoint

APR

9.99%
To
35.99%

Credit Req.

585

Minimum Credit Score

Terms

24 to 48

months

Origination Fee

0.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingPoint is an online lender that targets borrowers with fair credit, and allows borrowing up to $25,000.... Read More

If you have a credit history strong enough to merit more traditional interest rates, take advantage of it. LendingPoint works with individuals with credit scores as low as 585 according to CEO Mark Lorimer. Interest rates are far lower than OppLoans, at 9.99%–35.99%.

Finova Financial

Finova Financial
APR

18.00%
To
204.00%

Credit Req.

Varies

Minimum Credit Score

Terms

12 to 24

months

Origination Fee

$30

SEE OFFERS Secured

on Finova Financial ’s secure website

Without a traditional bank account, you’re going to have a hard time getting an unsecured loan. You can instead look at title loans. To get these loans, you have to put up some collateral, like your car, which the lender could repossess should you fail to repay your debt. This is very risky, as losing your car could further complicate an already dire situation, but if you find yourself needing to us this type of financial product, consider Finova Financial, which has personal loan-like interest rates on its title loans, currently sitting at 18.00%–204.00%.

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

Brynne Conroy
Brynne Conroy |

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

Emily Long
Emily Long |

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

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