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Personal Loans

The Ultimate Guide to Personal Loans

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


Part I: Personal Loans 101

Personal loans are among the easiest financial tools to understand. When you take out a personal loan, a bank lends you money for a fixed interest rate and a fixed period of time.

This means you’ll be expected to make a fixed monthly payment for the life of the loan, but it also means you’ll face less uncertainty than with a credit card. With a personal loan, you’ll know exactly how much you borrowed, how much you’ll pay every month and when your debt will be paid in full.

This isn’t to suggest that personal loans are perfect. Like anything else in life, they come with risks and drawbacks. Most of the downsides depend on how responsible you are with credit and what interest rate you’ll pay.

Keep reading to learn more about how personal loans work, which pitfalls to avoid and how to get the most out of the loan you choose.

How personal loans work

As we mentioned, a personal loan is easy to grasp. You borrow money at a fixed interest rate, over a fixed amount of time, then you pay a fixed monthly payment until your loan is paid off.

While the terms of your personal loan can depend on an array of factors, these loans are typically offered in amounts up to $35,000. You may be able to borrow this amount for any length of time from 12 months to 20 years.

In addition to the interest rate you’ll pay, personal loans may also come with an origination fee which can range from 1 percent to as high as 8 percent at some lenders, according to a review of personal loan terms on On the bright side, it’s a competitive business and many lenders charge no origination fee or any other fees upfront.The real costs to worry about with personal loans involve the APR. Interest rates charged through personal loans can vary quite a bit, and they are typically higher than you see with secured loans such as home equity or auto loans. That’s because personal loans are unsecured debts. Whereas a secured loan — think home or auto loan — is secured by an underlying investment (in these cases, a home or car), unsecured loans aren’t secured by an investment. The banks are taking on a greater risk lending without any collateral, so they charge higher fees and APRs as a result.

How to qualify for one

If you’re considering a personal loan, here’s what you’ll need to qualify:

  • Good or excellent creditSome personal loan companies will approve you with a credit score as low as 580, according to MagnifyMoney’s parent company, LendingTree. But having very good credit (a FICO score over 740) will put you in a position to qualify for a personal loan with the best interest rate and terms.
  • Proof of ability to repay – You need to be able to show your ability to repay your loan, usually with pay stubs or other evidence of employment.
  • Low debt-to-income ratio – Lenders may be hesitant to lend you money if your debt-to-income ratio is high. This ratio is determined by taking your total monthly recurring debt and dividing it by your monthly income. Discover Personal Loans notes that borrowers with a debt-to-income ratio below 36 percent may qualify for the best terms and rates on loans and mortgages.
  • Co-signer – If your credit score is poor, you may need a co-signer with good credit to help you qualify for a personal loan.

How to pick the best personal loan

When it comes to personal loans, there is no one-size-fits-all option. The best loan for your needs depends on factors such as how much you need to borrow and whether you have good credit scores.

Here are some tips that can help you identify a loan that fits your goals:

  • Shop around with different lenders. Thanks to the internet, it’s easier than ever to shop around and compare rates and loan terms. Our parent company, LendingTree, is an excellent place to start because you can easily explore options from different lenders in one place. Start by filling out an online form.
  • Read the fine print. Make sure you understand each loan’s terms, conditions and interest rate, along with your monthly payment.
  • Look for a low-cost loan. Ideally, you should look for a personal loan with the lowest rate and fees (or no fees) you can find.
  • Read reviews. The internet is a treasure trove for reviews of various lenders. Reading product reviews can help you gauge the quality of each lender and what your experience might be like.

Part II: Common Uses for a Personal Loan

While borrowing money and paying it back slowly can be ideal no matter what your goals might be, you might be surprised to find out just how many uses personal loans can have.

“I’ve found that personal loans can be helpful when looking to consolidate higher interest debt, pay for a major expense or quickly get funds when needed for an emergency,” says Jeff Rose, founder of Good Financial Cents and partner of Discover Personal Loans.

Rose also pointed to a new survey from Discover Personal Loans, which showed that 26 percent of respondents cited a major medical expense as the most popular potential use for a personal loan, followed by 22 percent saying debt consolidation, and 13 percent using it to fund a small business.

Take note: That doesn’t mean personal loans are ideal for all uses. Here are some potential uses for personal loans, along with some pros and cons to consider:

Debt consolidation

If you have several types of debt and you’re struggling to keep up, consolidation can be a smart way to tackle the problem. When you consolidate debt, you take out a new loan, use it to pay off your existing debts and are left with just one loan to repay.

The real benefit of using a personal loan for debt consolidation is knowing exactly how much you pay each month and precisely how long you have until you’re debt-free.

“You don’t get that with a credit card,” says Gerri Detweiler, a writer, educator and authority on credit and loans.

You’ll have to decide when a personal loan makes sense as a debt consolidation tool over other options — such as a balance transfer credit card. It will likely come down to your credit score and which option will cost you the least over time. For example, a debt consolidation loan may have a higher interest rate than a balance transfer credit card, many of which come with a 0 percent APR for 12 to 21 months.

You can find 0% balance transfer offers at, another LendingTree site.

Medical expenses

Taking a personal loan to cover medical expenses “can be very helpful, especially if it keeps you out of collections,” Detweiler says.

Before you take this step, however, you should speak to your provider to see if it offers a payment plan. If so, you may be able to make payments on your outstanding medical debts without paying interest.

Car purchase

You can take out a personal loan to buy a car, but should you? Detweiler says it depends on the type of car you’re buying and how much it costs.

“You would probably get a better interest rate through a car dealership since personal loans are unsecured but car loans use the car as collateral,” she says.

On the flip side, a personal loan might work better if you’re buying an older used car from an individual instead of a dealership.

Home improvement

Detweiler notes that, while a lot of people use a home equity loan or HELOC, or home equity line of credit, to remodel their home, not everyone has enough equity to qualify. A personal loan could be ideal since you may qualify no matter how much equity you have in your home.

Not only that, but you won’t lose your home if you fall behind on payments with a personal loan. A home equity loan uses your home as collateral.

Moving expenses

Moving can be expensive, but you should try to save up the cash before your move, if you can. If you’re short on funds, a personal loan or a credit card can work well. The best option for your needs depends on the interest rate you qualify for and how long repayment might take you.

Starting a business

Detweiler says she’s a big fan of trying to separate personal and business credit, but there are still times when using a personal loan to finance a business could be beneficial.

If you’re a startup that’s not yet earning money, for example, you might not yet qualify for a business loan.

“In that case, a personal loan could help you get your business off the ground,” she says.

Boosting your credit

“A personal loan can help you improve your credit mix, and that can boost your score,” says Detweiler. “But you shouldn’t get into debt just to build credit.”

If you want to build credit without getting into debt, signing up for a secured credit card and using it regularly can also help. Read more about how secured cards work.


When it comes to the unexpected, personal loans can be a better option than some other types of borrowing, like payday loans. Not only are interest rates typically low, but you can figure out an exact payment plan to pay the debt off before you sign up.

But first, you should “really think about whether you need to borrow or whether you could come up with the money another way,” says Detweiler.

When to avoid using a personal loan

While a personal loan can be a valuable financial tool, there are plenty of times where you might be better off borrowing money a different way – or not borrowing at all.

Joseph Toms, president of the nonbank consumer lender Freedom Financial Asset Management, says these instances really depend on individuals and their situation, although there are many telltale signs a personal loan is not for you.s

One of the biggest signs, he says, is when you can’t afford to keep up with the monthly payments for the loan you plan to take out.

“Not being able to keep up with the monthly payments means you won’t pay your loan on time,” he says. “If you pay your bills late or not at all, your credit will take a hit. That can lead to higher interest rates and cause your debt to spiral out of control.”

Before you take out a personal loan, you should write out a budget and make sure you can truly afford the monthly payments, he says.

Another time you shouldn’t take out a personal loan is when you don’t truly need what you’re borrowing for – or if you should probably live without it.

“A personal loan can be like a candy store,” says Toms.

The temptation of being able to borrow money can be too much for some people. It can inspire crazy actions, like financing purchases that can leave the borrower in financial peril, Toms says.

Another instance where you may not want to get a personal loan? “If you’re going to buy a house in the near future, you should think twice about taking out a personal loan,” Detweiler says.

This is because the amount you owe can affect how much you can borrow for a home.

Lastly, you should probably avoid a personal loan if you’re on shaky financial ground, says Detweiler.

“If you aren’t in a very stable financial situation, a personal loan could make your problems worse,” she says. “It’s risky because if you don’t make the payments, you could wind up hurting your credit and could end up in default or collections.”

Using personal loans for a vacation might be tempting, but it’s not the wisest choice. However, the truth is, some people do this anyway. In a recent survey, we found that 16 percent of people who said they are going into debt for vacation are using personal loans.

“Don’t borrow money and go into debt for a vacation,” Detweiler urges. “You’ll come back from vacation in debt. Save the money instead, or have a staycation.”

Like vacations, a wedding financed with debt is rarely a good idea.

“Don’t start your marriage in debt,” says Detweiler. If you have to use a personal loan for your wedding, make sure you shop around for a loan with the lowest interest rate and best terms.

If you believe you could pay the balance off in a short amount of time, you may also be better off with a 0 percent APR credit card.

The risks of using a personal loan

Taking out a personal loan can help you borrow the money you need to achieve any goal, but that doesn’t mean these loans are without risk. Some of the perils you’ll face when taking out any loan include:

  • Overspending – A personal loan can be the answer to your prayers, but some experts say they’re almost too easy. “No one is going to question what you’re spending the money on, so you might use this loan to justify things you shouldn’t really buy,” says Detweiler. “If you go overboard, you can end up with debt that takes years to pay off and a lifetime of regret.”
  • Damage to your credit if you don’t repay the loan – Obviously, your personal loan may go off without a hitch if you don’t borrow too much and can always afford your payments. “But if you can’t afford your payments due to job loss or another issue, your credit will see damage,” Detweiler explains. That damage can ruin your credit, or even lead to collections or bankruptcy.
  • Bad financial habits – Getting into the habit of constantly borrowing money can make your life more difficult, she adds. While personal loans can be easy to get, relying on credit over and over can leave you short on cash to reach other financial goals.

And the benefits?

There are times to avoid a personal loan, without doubt, but these loans aren’t all bad. In the real world, there are plenty of instances where a personal loan can help you get what you want or even improve your financial life.

If you take out a personal loan – and do it in a financially responsible way – there are plenty of benefits to look forward to. These loans can:

  • Simplify your financial life – “A personal loan can be a great tool for people looking to simplify and save by consolidating higher interest debt into one fixed monthly payment,” says Rose, of Discover Personal Loans. “If you have multiple credit cards or store card bills, and are having difficulty keeping track of them all, a personal loan can be a smart tool to streamline your payments and potentially save thousands of dollars on interest.”
  • Help with emergencies – If you are hit with an unexpected expense you can’t cover, “personal loans can provide the funds fairly quickly to help manage through the situation,” says Rose. In that sense, a personal loan could actually save you from financial peril.
  • Offer you predictable payments and interest – Because of the way personal loans are set up, you’ll never wonder how much you’ll pay each month or how much interest you owe. “Compared to higher-interest financial tools, having a fixed interest rate and monthly payment could save you money in the long run,” Rose explains.

Part III: Personal Loan Traps and Scams to Avoid

While there are plenty of reputable lenders in the personal loan space, that doesn’t mean it’s scam-free. Like most other areas of personal finance, there are plenty of fraudsters who will use personal loans to extract money from you or perpetrate fraud in some other way.

As you explore the world of personal loans, here are some traps to be aware of:

Advance loan fees

Occasionally, a fraudulent loan company will offer outrageous loans and loan terms with a catch: You have to pay the first few months of payments to qualify.

“They usually ask for these funds via Western Union or Moneygram,” says Detweiler. “But it’s a complete scam.”

No reputable lender would ask you to pay money upfront. “Do not pay money upfront for a personal loan under any circumstances,” she says.

Loan insurance

Another one from Detweiler: the fraudulent lender who will offer you a personal loan, only to say you need to buy “insurance” to cover the loan in case you default.

This is also a scam because personal loans are unsecured – and because no reputable lender would require you to buy insurance to insure your own loan.

‘No credit check’ loans

According to the Consumer Financial Protection Bureau (CFPB), a lender who isn’t interested in checking your credit should set off alarms.

Ads that say: “Bad credit? No problem” or “We don’t care about your past” should be particularly worrisome, notes the CFPB. These slogans are usually suggestive of a scam.

Pre-compute interest

Some personal loans might come with the caveat of pre-compute interest, interest that is stacked so you pay the bulk of it near the beginning of your loan term.

This is a bad deal, since you’ll wind up paying extra interest – even if you pay your loan off early. Before you take out a personal loan, make sure you know how interest is accrued and how it will impact the total costs of your loan.

Prepayment penalties

Some personal loans will tack on a prepayment penalty if you pay your loan off early. Since this fee isn’t that common and is totally unnecessary, you should avoid loans that charge this fee altogether.

Make sure you read through your loans terms to check for a prepayment penalty. If you find one, look for another lender and loan.

Part IV: Alternatives to a Personal Loan

A personal loan might be ideal for helping you reach your financial goals, but it’s also possible a different financial product might work better. As you consider the prospect of a personal loan, don’t forget to explore your other options.

Here are some alternatives to consider, along with some instances where they may represent a better deal:

Personal loans versus credit cards

According to Paul Gentile, president of Cooperative Credit Union Association, there are definitely times where a credit card may be better than a personal loan.

“A credit card can be used to purchase something, so that can offer more flexibility,” he says. Credit cards can also be a great deal if you pay them off monthly, he notes, since you have the potential to earn rewards. Lastly, credit cards can be beneficial for certain short-term purchases since many offer 0 percent APR for 12 to 21 months.

On the flip side, “a personal loan may be better for someone who wants to make a large, intentional purchase that they planned for.”

Personal loans also offer the benefit of a fixed payment and payoff date, whereas credit cards can literally tether you to payments indefinitely if you keep using them for purchases.

Personal loans versus HELOCs

As Gentile notes, HELOCs come with the advantage of interest deductions (similar to how you deduct mortgage interest) if you itemize your taxes. In contrast, interest paid on your personal loan is not tax-deductible. Rates on HELOCs may also be lower than those on personal loans, he notes.

A possible downside with HELOCs is the fact that some only require you to pay interest for years. “This means you may not be paying anything toward the principal,” Gentile says.

Some HELOCs also come with balloon payments at the end, and those big payments may be hard to handle. On the other hand, personal loans come with predictable, fixed monthly payments and no surprises.

Personal loans versus peer-to-peer loans

Gentile notes that peer-to-peer lending is really similar to a personal loan. Both things allow you to borrow a fixed rate of cash and repay it over a predetermined length of time.

But since peer-to-peer lending isn’t regulated as heavily, this could be worrisome, says Gentile.

Before you choose among personal loans and peer-to-peer loans, make sure you compare all related fees, all total costs and interest rates.

Personal Loans versus cash-out refinancing

Gentile believes that opting for a cash-out refinance is the best option for people committed to their properties in the long term, whereas personal loans are better for short-term financial needs.

There are risks to getting cash out of your home as well, he notes. “If home prices drop, you could end up underwater.”

On the other hand, refinancing your home to get access to your home equity could help you qualify for a lower interest rate than a personal loan. “You also get to write off your mortgage interest, so you get a tax deduction,” notes Gentile.

Check out this cash-out refi calculator from MagnifyMoney’s parent company, LendingTree.

Frequently Asked Questions

According to the CFPB, lenders and loan brokers are required to be registered in all states where they conduct business. To check registration, they suggest calling your state attorney general’s office, or your state’s Department of Banking or Financial Regulation.

Yes, if you use it to consolidate high interest debts from credit cards or other loans. To get out of debt faster, make sure your new personal loan comes with a lower interest rate than you’re already paying, along with no or few fees. Paying more than your minimum payment is another great way to pay down debt faster.

Your interest rate will be determined based on the type of loan you apply for, how much you want to borrow and the quality of your credit. Getting the best loan terms and the best interest rate typically requires a credit score of 740 or more, or very good or exceptional credit.

If you were denied a personal loan due to poor credit, the best thing you can do is take a few simple steps to improve your credit rating over time. Pay all of your bills on time, pay off debt to reduce your credit utilization, and avoid opening or closing too many accounts.

Thanks to the internet, you can apply for a personal loan online and from the comfort of your own home. You can also compare lenders, fees, and interest rates by visiting this page.

Because personal loans are unsecured, you don’t need collateral. What you do need is the ability to illustrate how you’ll repay your loan, along with a good credit score.

You can absolutely pay your loan off early; very few loans will charge a prepayment penalty. Before you take out a personal loan, you should make sure you won’t be charged a prepayment penalty if you’re able to repay your loan early.

While applying for a personal loan will result in a hard inquiry being placed on your credit report, any negative hit your score takes will be short-lived. Borrowing too much in relation to your credit limits can hurt your utilization, however, and yes, that could hurt your credit score.

On the other hand, repaying your personal loan on time, and ultimately in full, can actually help your score in the long run.

Depending on your lender, you may receive funds from your new personal loan as early as the next business day. However, it could take up to seven business days (or longer) if you apply for a loan on a weekend, have errors in your application, or your loan takes longer to process for any reason.

The best part about personal loans is that you can use the funds however you want. You can use the cash to pay off high interest debt, remodel your kitchen or buy a newer car, for example.

Just keep in mind that borrowing is never free. In addition to the interest you pay on your loan, you may also incur additional costs, such as origination or application fees.

Advertiser Disclosure: The card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Holly Johnson
Holly Johnson |

Holly Johnson is a writer at MagnifyMoney. You can email Holly here


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Featured, Personal Loans, Reviews

Marcus by Goldman Sachs Review: GS Bank Takes on Online Savings, CDs, and Personal Loans

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Marcus by Goldman Sachs

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.

All rates are current as of April 9, 2018.

Marcus by Goldman Sachs savings account

A very high interest rate and no fees make this one of the best savings accounts out there.


Minimum Balance Amount



  • 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.
  • 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.

on Goldman Sachs Bank USA’s secure website

Member FDIC

How their online savings account compares

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.

Marcus by Goldman Sachs CD rates

Sky-high CD rates, but watch out for early withdrawal limitations.



Minimum Deposit Amount

6 months



9 months



12 months



18 months



24 months



3 years



4 years



5 years



6 years



  • Minimum amount to open account: $500
  • Minimum 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.

on Goldman Sachs Bank USA’s secure website

Member FDIC

How their CDs compare

The interest rates that Marcus offers on their CDs are top-notch. In fact, a few of their CD terms are among the current contenders for the best CD rates.

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.

Marcus by Goldman Sachs personal loan

Personal loans offered by Marcus have low APRs, flexible terms, and no fees.



Credit Required


Max Loan Amount

36-72 months





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 are no origination fees 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:

  1. 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.
  2. 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.
  3. 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.
  4. You will receive your funds 1 – 4 business days after your loan has been approved.


on Marcus By Goldman Sachs®’s secure website

How their personal loans compare

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 card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here


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Personal Loans

iLoan Personal Loan Review

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

If you’re looking for a personal loan, no matter what your reason, one of the first places you may start to look is online. These days, there are plenty of online personal loan lenders to choose from so you can get approved for a personal loan without having to step into a brick-and-mortar institution.

Online personal loan lending makes it faster and easier than ever before to apply, qualify and receive funds in as little as a day or two. Online lender iLoan, for example, says its application takes five minutes, and you may receive funds in your checking account by the next business day.



Credit Req.


Minimum Credit Score


36 to 60





on ILoan’s secure website

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 in certain states. Loan amounts subject to state specific minimum or maximum size restrictions. Collateral offered must meet our criteria. Loans through the iLoan website are made and serviced by OneMain Consumer Loan, Inc., a Delaware corporation.

iLoan personal loan details

Fees and penalties

  • Terms: 36-60 months
  • APR range: 17.60%-35.99%
  • Loan amounts: $2,550-$25,000
  • Time to funding: Funds are usually deposited the next business day by ACH, if you sign the loan agreement by 4 p.m. CST.
  • Hard pull/soft pull: Hard
  • Origination fee: Varies by state
  • Prepayment fee: None
  • Late payment fee: Varies by state

If you have an existing loan with iLoan or OneMain, you won’t be able to take out another loan until the first one is repaid. Then, you must wait 10 days before applying for a new personal loan.

One of the reasons people take out personal loans is to consolidate high interest credit card debt into one monthly payment, hopefully with a lower interest rate. However, the high interest rates on iLoan personal loans may not result in much interest savings.

Plus, iLoan doesn’t offer any special features or tools to help make it easy to consolidate debt like some personal loan lenders do. With iLoan, you’d be responsible for disbursing the funds from your checking account to pay off your other existing loans if you want to consolidate your debt. This may be a tough barrier if you’re not yet disciplined when it comes to paying off debt.

Eligibility requirements

  • Minimum credit score: Not provided
  • Minimum credit history: Not provided
  • Maximum debt-to-income ratio: Not provided

iLoan’s website doesn’t get into specifics about the eligibility requirements needed to qualify for a personal loan.

An iLoans customer service representative told MagnifyMoney that the majority of the loan-making decision is based on your repayment history, rather than a specific credit score, and your ability to repay the loan, based on income. iLoan representatives also said that a credit history of about six months to one year is needed to establish a payment history to qualify for a loan.

However, like most personal loan applications, you will have to provide proof of identity, proof of income and proof of residence. You also need to supply your checking account number and routing information in order to receive the funds if your application is approved.

In order to be approved for a personal loan with iLoan, you must also live in one of the 13 states in which they operate.

Applying for a personal loan from iLoan

iLoan offers a simple personal loan application process. You can start your application on the iLoan website.

To apply, you will need to enter your requested loan amount, the purpose of the loan and your personal details, including a valid ID, proof of income, proof of residence and checking account information.

iLoan offers personal loans for lots of different purposes, including debt consolidation, medical and dental bills, auto repair, major purchases, moving and relocation, vacation, special events, monthly bills and more.

During the application process, you will be asked a series of questions to help verify your identity. You can also choose to use Instant Income Verification, which is a free service that can help speed up your loan application. With Instant Income Verification, iLoan will be able to access a summary of your bank account in order to see your income deposits. If your bank supports iLoan’s Instant Income Verification process, it serves as an alternative to providing W-2 tax forms for income verification purposes.

After you complete the application, iLoan says it normally delivers a loan decision in an hour or less during business hours. If your application is approved, the funds may be available in your checking account the next business day.

If your application is denied, you will receive a Notice of Adverse Action within three days informing you about the reasons the lender rejected your application, per the Fair Credit Reporting Act.

Pros and cons of an iLoan personal loan



  • Fast decisions. iLoan says it generally makes credit decisions within an hour of receiving applications.
  • Quick access to funds. If your application is approved, iLoan disburses funds quickly to your checking account.
  • High interest rates. High interest rates mean you won’t be saving any money with an iLoan personal loan.
  • No specific eligibility requirements listed. iLoan doesn’t list specific eligibility requirements on their website, which can make it difficult to know if you can qualify.
  • Hard credit pull. Applying for a personal loan from iLoan will create a hard inquiry on your credit report and may lower your credit score, even if you don’t qualify and take out a personal loan. There is no soft-pull option to see if you pre-qualify.

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

If you have good credit, you should definitely shop around for better interest rates than those offered by iLoan. Although there are no specific credit requirements listed on iLoan’s website, the high interest rates seem to indicate that they are willing to work with borrowers who have low credit scores.

If you need money quickly and you have less-than-stellar credit, iLoan may be an option to help you get the money you need as soon as the next day.

Alternative personal loan options

There are lots of other online personal loan lenders to choose from. Here are a few to consider.

Lending Club

Lending Club


Credit Req.


Minimum Credit Score


36 or 60



1.00% - 6.00%


on Lending Club’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores in the mid-600s. The loan application process is online and only takes a few minutes to complete and you can check your interest rate 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.LendingClub is not available in Iowa and West Virginia

Lending Club is a peer-to-peer lending platform, which means the funds you receive come from from individual or institutional investors who fund the loans for borrowers. Interest rates range from 5.98% and 35.89% APR, which may be lower than you can qualify for with iLoan. You can also check your rate without harming your credit score if you want to shop around to see what you can qualify for.

OneMain Financial

OneMain Financial


Credit Req.


Minimum Credit Score





No origination fee


on OneMain Financial’s secure website

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. They offer quick turnaround times and you can get your money the same day if you apply before noon. 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.

OneMain Financial is the parent company of iLoan, but it should be considered as an alternative as well, because it has more flexibility. OneMain Financial offers both personal loans and auto loans with terms between 24 and 60 months, which means you may be able to pay off your loan faster than with iLoan. They also offer lower amounts, too, with a minimum loan of $1,500. Like iLoan, the maximum is $25,000. You can still apply online and you may be able to receive funds the same day your application is approved.




Credit Req.


Minimum Credit Score


24 to 48



Fee Varies


on LendingPoint’s secure website

LendingPoint offers personal loans for a wide variety of reasons, including paying for home repairs, consolidating credit card debt, or to make a large purchase. Their online process can help you to quickly apply for a personal loan, get qualified, and receive funding. While their interest rates can be higher than others, they do offer fast approval and can transfer funds to your bank account in 24 hours.

LendingPoint may be a good option to consider if your credit score is low — in the 600s — it looks at more than just your credit score when considering your application. Like iLoan, you can apply online and receive your funds the next business day.

Advertiser Disclosure: The card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here


Advertiser Disclosure

Personal Loans

Best Debt Consolidation Personal Loans

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Best Debt Consolidation Personal Loans

Are you stuck under an overwhelming pile of consumer debt? Do you feel like it might be impossible to get out? Fortunately there are tools that can help you get out of debt faster.

A debt consolidation personal loan could be a good answer. With a personal loan, you would use the loan proceeds to pay off credit card debt, medical debt or any other form of debt. You would then have a loan at a fixed interest rate and a fixed term.

Note: If you have a credit score less than 640, struggling to make monthly debt payments and would like to explore your options to reduce your debt by up to 50%, then please click here.

Debt consolidation provides three benefits:

  1. 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.
  2. 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.
  3. 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. LendingClub did a study and determined that there is an average score increase of 21 points within three months for people who use loans to eliminate credit card debt.

If you think debt consolidation makes sense for your situation, we have a list of the best debt consolidation loans you can use to refinance your consumer debt. Read on for our recommendations.

Personal Loans to Consolidate Credit Card Debt

Start Shopping Here – LendingTree

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 credit 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 application tool. (Note: LendingTree owns MagnifyMoney)



Below are some leading lenders you could also consider:

SoFi – Excellent Credit Required

You can borrow between $5,000 and $100,000, which is the most out of the personal loans recommended here. The fixed APR ranges from 5.49% – 13.49% if enrolled in autopay. You can choose a term of up to 7 years. Variable interest rates range from 5.37% – 13.37% APR. Although SoFi does not use FICO, you need to be “prime” or “super-prime” to qualify. That means you must be current on all of your obligations and must never have filed for bankruptcy. There is no origination fee or prepayment penalty associated with a personal loan from SoFi.



on SoFi’s secure website

Advertiser Disclosure

Some of the leading lenders for people with less than perfect credit include:

LendingClub – Minimum FICO of 600

This is a peer-to-peer platform, which means individual investors are contributing to your loan. You can borrow between $1,000 and $40,000 with LendingClub, and its APR ranges from 5.98% – 35.89%, depending on the type of loan grade you’re eligible for. Be aware there are origination fees (ranging from 1% – 6%) associated with this personal loan, but there are no prepayment penalties. You can borrow on terms up to 5 years. The minimum credit score needed is 600. LendingClub is not available in Iowa or West Virginia.

Lending Club


on Lending Club’s secure website

Prosper – Minimum FICO of 640

Prosper offers loans from $2,000 to $35,000, and APR ranges from 5.99% to 35.99%. It offers loans terms of either 36 or 60 months. Your APR is determined during the application process, and is based on a credit rating score created by Prosper. Your score is then shown with your loan listing to give potential lenders an idea of your creditworthiness. Origination fees range from 1% to 5% and are based on your Prosper score. In order to qualify, you must:

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



on Prosper’s secure website

[Check out other Personal Loans on Our Comparison Table Here]

A Loan or a Credit Card to Consolidate Debt?

Personal loans can be an excellent way to consolidate your debt. Personal loans are best when you have a lot of debt or your credit score isn’t perfect. However, if you have a smaller amount of debt and a great credit score, you can get rates as low as 0% with a balance transfer. If you do have a good credit score, you should apply for a 0% interest balance transfer credit card.

Wait: I Have Student Loan Debt

If you’re thinking about refinancing or consolidating your student loans, there are a couple of things to know.

First, what’s the difference between refinancing and consolidating?

  • Private Loan Consolidation: This involves combining all your loans into one loan so you only owe one lender and have to make one simple payment.
  • Federal Loan Consolidation (Direct Consolidation Loan): Only have Federal student loans? You can combine them through a Direct Consolidation Loan with the government. According to, “The fixed rate is based on the weighted average of the interest rates on the loans being consolidated.” This doesn’t save you much money, but your payments will be more manageable. For a complete list of Federal loans that can be consolidated, check here.
  • Refinancing: This is when you apply to a completely new lender for new terms – you’ll have a new loan, and your new lender will pay off your old loan.

The difference isn’t all that big – when you consolidate private (or private and Federal) student loans, you’re essentially going through the refinancing process.

If you currently have Federal loans, you need to be aware refinancing or consolidating means giving up certain benefits that come with federal student loans.

That means income based repayment, deferment, forgiveness, and forbearance options disappear. A few of these benefits are forfeited even with the Direct Consolidation Loan. These benefits could get you through an otherwise rough time, so make sure refinancing makes sense beforehand.

If you do have federal student loans, and you’re thinking of refinancing or consolidating, first see if you’re eligible for deferment or forbearance. There’s no reason to go through the process of having your credit checked if you can lessen your student loan burden another way.

If you have private student loans, you can also check with your lender to see if it offers payment assistance. Many lenders are making improvements to their student loan refinance programs and including forbearance and deferment options.

Also, once you consolidate or refinance your student loans, there’s no going back. This applies to the Direct Consolidation Loan as well.

Okay, still think refinancing or consolidating is right for you? You can shop for the best lender to refinance your student loans here.

Shopping Around is a Must When Consolidating or Refinancing

The goal of refinancing or consolidating is to ultimately make your debt less of a burden on you. That means getting the best rates and terms offered. The easiest way to accomplish this is to shop around with different lenders. If you do so within a 45-day window, FICO will not punish you for shopping around. All of your student loan inquiries in the 45-day period will only count as one inquiry. Plus, there are many lenders out there who will give you rates with just a soft credit inquiry (though a hard inquiry is required to move forward with a loan). Always put yourself first, as you’re never obligated to sign for a loan you’re approved for.


Advertiser Disclosure: The card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at

TAGS: , ,

Advertiser Disclosure

Personal Loans

Where to Get the Best Personal Loan Rates Online

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Where to Get the Best Personal Loan Rates Online

Updated April 02, 2018

If you want a personal loan to pay off credit card or other debt, the absolute fastest and most effective way to lower the interest you pay is to apply for a balance transfer, with a 0% rate. You can read our guide to balance transfers to learn about their pros and cons.

But a balance transfer isn’t for everyone, especially if your credit score isn’t perfect or if you need to borrow cash.

A personal loan with a set payoff period a few years from now is often the next best thing with these advantages:

  • One monthly payment
  • A set rate
  • You don’t need absolutely perfect credit
  • You can check your rate without touching your score

There are more attractive deals than ever thanks to some new online lenders and you can see sample rates below for excellent credit and good credit.

Tip: Apply for several loans to check rates. Every lender has different approval criteria and different pricing models – and the difference in rate between lenders (even for people with excellent credit) can be significant. So long as you shop with lenders that use a soft credit pull, you can check your rate without negatively impacting your credit score.

Start Here – Multiple Lenders at Once




Credit Req.

Minimum 500 FICO

Minimum Credit Score


24 to 60





on LendingTree’s secure website

LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, personal loan offers within minutes. Everything is done online and you can have your loan pre-approved without impacting your credit score. LendingTree is not a lender, but their service connects you with up to five offers from personal loan lenders.

Dozens of lenders participate in LendingTree‘s personal loan shopping tool – including all of the lenders listed on this page. (Full disclosure, LendingTree is our parent company.) With one online form, LendingTree will perform a soft credit pull (with no impact to your score) and match you with multiple loan offers. This is our favorite (because it is easy) way to get multiple offers from lenders in minutes. For people with excellent credit, you could get an interest rate below 6%. For people with less than perfect credit, there are many lenders participating with more liberal acceptance criteria.

Why is this a good way to save?

Banks don’t care much for personal loans because the lower rates earn them less profit than credit cards.

Fortunately, some new companies believe you should be able to get a competitive rate without dealing with credit card intro offers, even if your credit isn’t perfect.

They’re doing it by lending online only without the overhead of branches.

They pass the savings on to you through better rates, and you can check up on them below.

Personal loans for Excellent Credit

The following providers are for you if you want the absolute lowest possible rates that reward a record of no late payments and good income, even though you have some high rate debt you want to clean up.

Unless you get a rate of 5% or less, you’re probably better off with balance transfer deals, but the convenience of a fixed payment and walking away from credit cards makes personal loans appealing.




Credit Req.

No Minimum FICO Score

Minimum Credit Score





No origination fee


on SoFi’s secure website

Advertiser Disclosure

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

Fixed rates from 5.49% APR (with AutoPay) to 13.74% (without AutoPay). Variable rates from 5.365% APR (with AutoPay) to 13.615% (without AutoPay). SoFi rate ranges are current as of January 1, 2018 and are subject to change without notice. Interest rates on variable rate loans are capped at 14.95%. See APR examples and terms. Lowest variable rate of 5.365% APR assumes current 1-month LIBOR rate of 1.88% plus 3.485% margin minus 0.25% for AutoPay. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have excellent credit and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including credit score, credit usage and history, years of experience, our ability to verify your income and employment and other factors. For the SoFi variable rate loan, the 1-month LIBOR index may adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction applies if you make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. AutoPay is not required to obtain a loan.

State Eligibility: SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of IL is 8.99% APR, for residents of AK, OK, and WY is 9.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, KS, SC, VA is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Variable rates not available to residents of AK, IL, OK, TX, WY.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (

Sofi’s believes if you’ve graduated college or went to grad school you’ll be a more responsible borrower, so they may be more likely to give you a better rate, even if your credit history is limited.

For example, if you have $10,000 in credit card debt, good income, and great credit, their best rate could save you as much as 0% balance transfer deals once you factor in the fees for each.

What we like best about Sofi is that they offer no origination fee and no prepayment penalty. If you think you may be able to pay off your loan earlier (or want the flexibility to do that), Sofi is the only lender we reviewed that charges no fee at all. Given their very low rates, we think anyone with good credit should start with Sofi first, and then compare their offer to the rest of the providers.

Amount: $5,000 – $100,000

Available states: Alabama, California, Delaware, Washington D.C., Idaho, Indiana, Iowa, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nevada, North Dakota, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Washington (terms and limitations apply).

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®


Credit Req.


Minimum Credit Score


36 to 72



No origination fee


on Marcus By Goldman Sachs®’s secure website

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information.... Read More

If you want to work with a traditional bank, Marcus by Goldman Sachs® can be a great option. With rates as low as 6.99% APR and flexible terms ranging between 36 to 72 months, they offer a competitive personal loan option that is backed by the security and peace of mind that comes with using a bank that has been in business for 148 years.

While Marcus does not state a required minimum credit score, they do seek out people with prime credit, which usually falls above 660 or higher on the FICO scale. Those that meet the requirements will be able to borrow up to $40,000 for debt consolidation and credit consolidation loans.




Credit Req.


Minimum Credit Score


36 or 60



0.99% - 5.99%


on BestEgg’s secure website

People looking for a process that is fast and simple can’t go wrong when applying through Best Egg for a personal loan. The best 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 3 or 5 years, which may not be the best fit for everyone.

BestEgg is an online personal loan company that offers low interest rates and quick funding. BestEgg is one of the fastest growing personal loan companies in the country, largely because it has been able to provide one of the best combinations of interest rate and loan amount in the market.

You can check to see your interest rate without hurting your score, and they do approve people with scores as low as the mid-600s. If you have an excellent credit score, BestEgg will be very competitive on terms.

Amount: up to $35,000




Credit Req.


Minimum Credit Score


24 to 84



No origination fee


on LightStream’s secure website

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

Lightstream is a great choice for people with excellent credit. It is actually part of a bank you might have heard of, SunTrust Bank. They were recently set up to offer some of the best personal loan rates available, and they are delivering. The interest rate you are charged depends upon the purpose of the loan. Interest rates can be as low as 3.09% for a new car purchase (and Lightstream does not put their name on your title. They just put the cash in your bank account, and you can shop around and pay cash for the car). Home improvement loans start at 4.99% APR with AutoPay , making them cheaper and easier than a home equity loan.

They’ll also approve and deposit your money fast, often the same day, and give extra consideration if you have money in your 401K or equity in your home.

Lightstream has created an exclusive offer, just for MagnifyMoney readers. (This offer went live in January 2016). Credit card consolidation loans for MagnifyMoney readers are now as low as 5.49% fixed. The highest fixed rate is 14.69%. Just beware: LightStream does a hard credit pull.

Amount: $5,000 – $100,000

Available states: All

Personal Loans for Good Credit

These providers may be able to help you out if you’re not approved for the very best rates or a 0% balance transfer offer. Check those deals first, there’s no real harm to do that, but if they fall through, give these a try.


Lending Club


Credit Req.


Minimum Credit Score


36 or 60



1.00% - 6.00%


on Lending Club’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores in the mid-600s. The loan application process is online and only takes a few minutes to complete and you can check your interest rate 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.LendingClub is not available in Iowa and West Virginia

You might not have heard of LendingClub yet, but they are a big player in online loans. And they offer a wide range of rates and terms based on your credit profile and needs. Generally you’ll need a score of about 600 or higher to get approved.

Amount: up to $40,000

Available states: All except Iowa and West Virginia




Credit Req.


Minimum Credit Score


36 or 60



0.99% - 5.99%


on BestEgg’s secure website

People looking for a process that is fast and simple can’t go wrong when applying through Best Egg for a personal loan. The best 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 3 or 5 years, which may not be the best fit for everyone.

BestEgg (reviewed earlier in this post) will approve people with credit scores as low as the mid-600s. If you have good credit and are looking for a loan, you should consider BestEgg.




Credit Req.


Minimum Credit Score





0.00% - 8.00%


on Upstart’s secure website

Upstart’s initial focus was to help recent graduates that were struggling with debt, but they have expanded to provide options for those with strong credit profiles as well. They have a unique algorithm that takes into account things such as education, career, job history, and standardized test scores, but you will still need a minimum FICO score of 640.

Upstart offers loans that look a lot like the ones from the bigger online lenders like LendingClub or Prosper.

They’ll let you borrow up to $50,000 for 3-5 years. But the key is they will take into account the schools you attended, your area of study, the grades you earned in school, and your work history to see if you can get a better rate.

So while the range of rates Upstart offers is similar to the bigger guys, if you did well in school, you might find the rate you actually get is lower than what the others will offer you, so it’s worth trying.

You’ll need a 640 or better FICO and your monthly payments can’t be more than 55% of your monthly income.

Amount: $1,000 – $50,000

Available states: All


PenFed Credit Union


Credit Req.


Minimum Credit Score





No origination fee


on PenFed Credit Union’s secure website

Pentagon Federal Credit Union (PenFed) offers personal loans with terms up to 5 years and maximum loan amounts of $25,000. The loan requires no collateral and they don’t have any origination fees, application fees, or early prepayment penalties. You will need to join Pentagon Federal Credit Union before you are able to apply for a personal loan.

Previously, PenFed offers a fixed rate of 9.99% interest rate for 5 years. Veterans get extra special attention so it’s worth checking this online only offer. You have to be a member of the PenFed credit union, but that’s easy and anyone can do that online as part of the process.

Available states: All

Personal Loans for Bad or Minimal Credit




Credit Req.


Minimum Credit Score


24 to 60





on Avant’s secure website

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

If you want a speedy process with your personal loan, you can’t go wrong with Avant, who could get you your loan as soon as the next business day. In terms of rates, qualifications, and repayment terms, Avant keeps things the same as most other lending options, though, it is important to shop around to secure the best offer. Avant is available in all states except: Colorado, Iowa, West Virginia, and Vermont.For Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33."

There is no prepayment fee. Checking your Loan Options will not affect your credit score. Just one warning: if you are willing to borrow money at 35.99%, then you really need to step back and think about building a longer term financial plan. You can download our free Debt Guide, which will help you put together a plan so that you never have to pay interest rates this high again.

Avant‘s platform offers access to loans from $2,000 to $35,000, with terms from 2 to 5 years. The minimum credit score varies, but we have seen people with scores as low as 580 get approved.

The good thing about Avant is that these loans are amortizing. That means it is a real installment loan, and you will be reducing your principal balance with every payment.

Amount: up to $35,000

Available states: All except: Colorado, Iowa, West Virginia, and Vermont.

For Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

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

OneMain Financial

OneMain Financial


Credit Req.


Minimum Credit Score





No origination fee


on OneMain Financial’s secure website

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. They offer quick turnaround times and you can get your money the same day if you apply before noon. 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.

OneMain Financial offers personal loans through its branch network to people with less than perfect credit. You can start your application online. If you qualify, you will have to visit a branch to complete the application. Once in the branch, if you have all of the required documents, you can receive you loan proceeds immediately via check.

You can borrow from $1,500 to $30,000. The interest rates are not low, and can go up to 35.99%. They will also charge an up-front origination fee that is not refundable. You should definitely shop around at other lenders first, given the high cost of the loan and the need to visit a branch.

Amount: Up to $30,000


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Brian Karimzad
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Brian Karimzad is a writer at MagnifyMoney. You can email Brian at


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Personal Loans

Creative Ways to Pay for Your Honeymoon

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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.

Creative ways to pay for your honeymoon

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.


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.

You can find a roundup of our top personal loan suggestions here.

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.

LendingTree has another detailed overview of how a cash-out refinance works.

Take a loan from your 401(k)

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 card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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Personal Loans

A Guide to Secured Loans

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


In this guide, we’ll talk about several different secured loans, and the pros and cons of each so you know exactly what to expect before you borrow.

Part I: Secured Loans 101

A secured loan is backed by an asset that you own outright, like a paid-off vehicle or the equity in your home. You put up that property as collateral, and a lender uses that collateral as assurance that they’ll get their money back if you don’t pay. In some cases, secured loans can be allotted for any purpose the borrower chooses.

Home equity loans (HELs) and home equity lines of credit (HELOCs), for example, use the equity a borrower already has in his or her home as collateral. These loans might go toward home improvements and repairs, but consumers also use them to pay for education or debt consolidation.

Each lender has different requirements for the type of collateral they will accept, though it’s most often some form of tangible property with substantial value: a home, car or boat, for example. Auto title loans allow you to put up your vehicle title, and payday lenders take future income — hence the term “payday” — and sometimes even small home appliances as collateral. If you are applying for a secured credit card, your own cash is used as collateral. You can even use a savings or investment account to secure a loan.

For some secured loans, like high-fee payday or title loans, the barrier to entry is very low. Lenders may not require a credit check, and you can walk out with cash in just a few minutes. These usually fall under the category of predatory loans, and although they are easy to obtain and have short loan terms, they are difficult to pay back and escape.

For home and auto loans, borrowers usually have to demonstrate a minimum level of creditworthiness. Secured credit cards are a unique type of secured loan in that they don’t usually require a good credit history and instead are used primarily to build or repair credit on a low-limit card.

The different types of secured loans

Secured card

A secured credit card is often used to build credit, either for consumers who don’t have a history, or those who are trying to recover from dings like bankruptcy or accounts sent to collections.

To obtain a secured card, the borrower must put down a minimum deposit as collateral. The line of credit available for use is usually equal to the deposit amount, though in some cases it can be higher.

The borrower can use their secured card just like a normal credit card — and in order to build credit and avoid interest, he or she should manage the balance and payments responsibly. Minimum deposits for secured cards range widely from $49 to $750, and some carry annual fees up to $50 or more.


With a home equity loan or home equity line of credit, the borrower puts up the equity in his home as collateral — essentially, this means borrowing against the amount your home is worth minus your current mortgage balance.

HELs, like a traditional installment loan, are made in a set dollar amount with fixed payments over the life of the loan.

HELOCs, on the other hand, operate like credit cards. The borrower is approved for a dollar amount that he can draw against and pay off with a variable interest rate. These loans are often spent on home repairs but can be used for other major expenses like education, weddings, debt consolidation or in case of emergency.

In some cases, borrowers carry a zero balance for most of the life of their HELOC but feel secure knowing it’s available if the need arises. If the borrower defaults on a HEL or HELOC, the lender has the right to repossess and sell the home.

Payday loan

Payday loans are a form of lending in which a cash-strapped borrower receives cash with the promise of repaying the loan plus a fee on their next payday.

In this case, a postdated check for the total of the loan amount and fees or authorization to access the funds in your bank or prepaid account serves as collateral for the loan.

These small-dollar loans usually run on two- or four-week terms and although they are often for $500 or less, they carry an average 391% APR. This often traps borrowers in a debt cycle. According to recent research from the Pew Charitable Trusts, 12 million Americans take out these loans every year and spend $9 billion on fees alone.

Title loan

Title loans require the borrower to turn over their car title in exchange for fast cash.

Most lenders don’t require a credit check, and though terms and requirements vary widely, these loans come with hefty fees and interest rates. If the borrower fails to pay back the loan, he or she can either take out another loan with additional fees, or risk having the lender repossess the car.

The Consumer Financial Protection Bureau found that between 2010 and 2013, 20% of borrowers had their vehicles seized by lenders, and more than half of borrowers took out four or more consecutive loans to repay their initial amount.


A mortgage is used to purchase a home, which in turn serves as the collateral to secure the loan. Unlike some other types of secured loans, existing — and healthy — credit is important for securing a mortgage.

If you have poor credit, you’ll see higher interest rates and monthly payments, which means you could owe tens of thousands of dollars more over time than if you had a higher score. Lenders also consider your debt-to-income ratio, the size of your down payment, employment history and the size of the loan. If you fail to make mortgage payments, the lender has grounds to repossess your home.

Auto loan

Like a mortgage, with an auto loan the borrower uses the property they are buying — a vehicle — as collateral to secure the loan.

The lender, usually a bank, credit union or dealership, holds a lien on the car until the loan is paid in full. Monthly payments vary widely depending on the price of the car, the length of the loan contract and the APR you receive.

Similar to a mortgage, if you are late on auto loan payments, the lien holder can repossess your car and, in some states, do so without going to court.

Part II: Secured loans vs. unsecured loans

Whereas a secured loan is made using collateral a borrower already owns, an unsecured loan is offered based on a lender’s trust that you’ll pay back what you owe. The lender takes a bigger risk with an unsecured loan because they don’t have any collateral to claim if the borrower defaults. As a result, unsecured loans may come with higher interest rates and fees.

This isn’t always the case, however — rates and terms vary widely depending on the lender and type of loan as well as the borrower’s credit history. For some, an unsecured loan may not even be an option, as lenders may offer only a secured loan to a consumer who is considered high risk. Borrowers may also prefer to put up collateral and get more favorable terms offered with a secured loan over an unsecured loan.

Unsecured loans include credit cards and student loans as well as personal loans. Like cash from some secured loans, personal loans can generally be used for any purpose — according to data from LendingTree, MagnifyMoney’s parent company, nearly 34% of personal loans are intended for debt consolidation and just under 33% are targeted toward credit card refinancing.

With both secured and unsecured loans, it’s important to know that nonpayment has serious consequences for your financial well-being. In addition to seizing collateral put up for a secured loan, lenders can send your unsecured loan debt to a collections agency and take legal action to recoup losses. Default puts your credit rating and access to future loans in jeopardy.





  • Secured card

  • Mortgage

  • Auto loan


  • Payday loan

  • Title loan

  • Personal loan

  • Student loan

  • Credit card

Collateral required?



Credit required

Varies. Title lenders may not require a credit check, while an auto loan or mortgage lender will

Yes — history and score vary by product and lender. Most federal student loans don’t require a credit check, however.

Cost of loan (APR, fees etc.)

Varies with loan type. Interest rates for auto loans go as low as 5.2%, while rates for title and payday loans can hit triple digits. These also come with fees for rolling over to another loan at the end of a term. Secured cards have APRs ranging from 9% to 21.99% and annual fees of $0-50

Personal: Around 4%-35.99% APR with origination fees ranging from zero to 8%
Student: Federal interest rates range from 4.45% to 7% plus fees between just over 1% and just over 4%. Private loans have variable rates, some high as 14.24%.
Credit: APRs start around 6% and hit upward of 25%. May also have annual fees


Opportunity to build credit and to borrow more than you might be approved for with an unsecured loan

Don’t have to put up collateral, helpful in emergencies, can be used for any purpose — especially to consolidate higher interest debt


Risk of default and loss of collateral plus additional money and property, negative impact on credit

Higher APR and fees, risk of overspending and creating loan dependency, damage to credit if you can’t afford payments

Best for (what type of consumer)

Depends on loan. Secured cards help build (or rebuild) credit history, while payday and title (predatory) loans are not recommended

Consumers looking to consolidate high-interest debt or purchase big-ticket items they’ve planned for IF they can afford the monthly payments

Learn more

The pros and cons of secured loans

Secured loans — aside from predatory payday and title loans — are available from a variety of lenders. If you already hold accounts at a bank, this would be the first place to look. Credit unions also offer secured loan services, though you must be a member to access their products. Finally, look at online, nonbank lenders who focus on loans without offering traditional banking products. No matter what type of loan you’re looking for, shop around to ensure you get the best rates and terms.

When it comes to choosing a secured loan over an unsecured loan, there are some benefits and risks to weigh.


Secured loans may allow you to get more money with less credit.
Lenders are often more willing to lend higher sums to consumers if the loan is secured by collateral because they have something tangible to repossess or foreclose on if the borrower defaults, according to Andrew Chan, a financial adviser at Locker Financial Services, LLC in Little Falls, N.J. Because this is a lower risk for lenders, they may also be more willing to forgive lower credit scores.

Secured loans often have lower interest rates and fees than unsecured loans.
Because secured loans pose less risk to the lender, the borrower may be offered lower rates, fees and payments, says Chan. This may give you access to the cash or credit that you need but may not otherwise get — if you use it responsibly.


The collateral you put up is always at risk.
Even with the best-laid plans, taking on a secured loan means that your personal property may be repossessed. If you default, your lender can take your collateral, sell it and repay the loan with the proceeds. As the borrower, you lose amount you already put into the loan plus valuable property that may be difficult to replace.

Lenders may trap you with prepayment penalties and other fees.
Even if you want to get out of your secured loan and have the ability to pay off what you owe, you may get hit with prepayment penalties — fees that lenders charge borrowers who repay loans before they are due. If you do pay off a loan early, the lender makes less in interest, so they may try to keep you in a costly loan by making it too expensive to leave. With predatory lending, loan fees can quickly add up each time the borrower tries to extend the loan.

Under the Truth in Lending Act, lenders must disclose all charges and fees associated with a loan, so you should know ahead of time if prepayment penalties will apply.

Staying safe with a secured loan

An important part of taking on any loan or form of credit, secured or not, is knowing that you can handle the payments over the life of the loan and continue to afford other financial obligations. Here are five factors that may impact your ability to manage your loan:

Job security. Some secured loans, like HEL and mortgages, are long-term commitments (20 to 30 years) . Even if you have the income to cover your loan payments and still live comfortably now, think about whether your current career and employer offer enough stability to do so down the line, as well as whether you have marketable skills to find other opportunities next month, next year, or far in the future if necessary.

Cash flow. Just because you are able to put up property as collateral doesn’t mean you’ll be comfortable making payments on your secured loan. Look carefully at your income and expenses to determine if the monthly payments, interest and fees on your loan are actually within your budget, both now and (as much as possible) in the future.

Lifestyle. Even if you have the cash, the burden of taking on a loan could impact your ability to live the way you want to, says Johnna Camarillo, assistant vice president of equity processing and closing at Navy Federal Credit Union.

“Make sure that you don’t put yourself in a situation that according to the numbers, I can comfortably make my payments, but I can’t take a vacation or I can’t go out with my family as much as I’d like,” she told MagnifyMoney. “People should really look at their total lifestyle and look at how much disposable income they want.”

Future expenses. If you have kids (or plan to) and want to pay for college, aspire to buy a home or are close to retirement, this may impact your ability to continue to make loan payments. Plus, if you default on a secured loan, lose your property and damage your credit, it will likely be difficult to restore your financial situation to the point where you can afford these investments.

Total interest and fees. When you shop around for a secured loan, look at the total cost you’re on the hook for over the life of the loan — especially when you put up collateral you don’t want to lose.

“Sometimes people get attracted to a low monthly payment, and they’ll stretch it out over 15 to 20 years, but they don’t realize the impact that has on the amount of interest that they pay,” Camarillo said. She recommends looking carefully at interest rates, transaction and maintenance fees, as well as any fees associated with entering and exiting your loan.

MagnifyMoney has a personal loan comparison tool that compares rates and requirements for unsecured loans and a calculator to show monthly payments and interest paid over the life of a loan to help you understand the commitment you are taking on.

When it comes to managing a secured loan, having all the information and planning carefully for the long term is key. Don’t jump on what seems like a good deal without shopping around and budgeting, and don’t sign for a loan without understanding the risk to your property and your overall financial health.

What happens if you can’t pay?

If you get in over your head with any kind of loan, the first thing to do is talk to your lender. If you are a member at a credit union or a long-time customer at your bank, your loan officer may be able to help you with a plan to get back on track. Even payday lenders may be willing to work out an Extended Payment Plan (EPP), which allows borrowers extra time to cover their outstanding debt without added fees or risk of being sent to collections. You can also find ways to free up funds in your budget by cutting expenses large and small.

If you aren’t able to make payments and your loan goes into default, however, there are serious consequences.

Your credit takes a hit.
Payment history is the single most important factor in your FICO credit score — it accounts for 35% of the total. It is also considered “extremely influential” in the VantageScore model. Scoring models take into account bankruptcies, foreclosures and missed/halted payments, and having any of these in your credit history can have a long-lasting impact on your ability to apply for credit in the future. Even secured cards, which are primarily used to build and improve credit, can backfire if not managed properly.

“A lot of people fail at secured cards,” said Lauren Saunders, associate director of the National Consumer Law Center in Washington, D.C. “A lot of people end up defaulting, and their credit score is worse than when they started.”

You end up on a debt spiral.
Defaulting on a loan can quickly put you into a cycle of debt that is difficult to break, especially if you are caught in a predatory lending situation. These lenders operate by charging interest rates and fees so high that the borrower is unable to make a dent in the loan principal and continues to take out additional loans just to pay the excess that accrues.

Auto title loans are “incredibly dangerous” because borrowers continue to pay fees to extend and end up paying out far more than they expected or planned for, says Saunders. “They’re not getting out of debt, and eventually many people not only lose all that money they paid but they lose their car.”

In 2017, the CFPB issued a rule requiring payday and auto title lenders to verify a borrower’s income, expenses and ability to repay before issuing a loan, a move that in theory would protect consumers from entering an endless cycle of payday and title loan debt.

You lose your collateral—and possibly more of your assets.
If you default on a secured loan made with physical property as collateral, there’s a good chance you’ll lose that item at the very least. A lender may repossess your car, foreclose on your home or come after the boat, motorcycle or other valuable property you put up. If it’s something that diminishes in value, what the lender sells it for may not cover the full amount of the loan, in which case they may come after you for the difference, says Chan.

“Although the lender may be willing to offer higher loan amounts with a secured loan, consumers still need to make sure that they can afford the monthly payments associated with the higher loan amount,” he added.

Experts agree that the biggest risk with a secured loan is losing property you already own. When you put your home, car, paycheck or savings on the line, you must understand the consequences of default — especially if you are already in a difficult financial situation.

“The overarching theme is, ‘Can you afford to lose the collateral?’” said Saunders. “How catastrophic would it be for you if you lose the collateral? You shouldn’t put it at risk if you can’t afford it. You shouldn’t pawn your wedding ring, but you might be willing to pawn a TV.”

Advertiser Disclosure: The card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Emily Long
Emily Long |

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


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Pay Down My Debt, Personal Loans

Personal Loans for People with Bad Credit

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


Can I get a personal loan with bad credit?

If you have bad credit, it can be difficult but not impossible to get a personal loan. For some, it’s a situation full of painful irony: You have bad credit because you’re in debt; refinancing or consolidating that debt would help improve your credit but you have trouble qualifying for a good loan because you have bad credit.

Fortunately, there are lenders out there who will extend financing to those with less-than-stellar credit. You may not get the lowest interest rate, but you won’t be disqualified simply because your credit score is less than stellar. Lenders will consider other information as well as your credit, such as your income level and whether or not you have a cosigner with strong credit.

One of the most versatile ways to get funding is through a personal loan. Personal loans are unsecured installment loans, which means you’ll get a lump sum upfront to pay off your debts, and you’ll be left with just one fixed loan payment that will be due over a set period of time. Because the loan is unsecured, you won’t have to put up any collateral.

How does a bad credit score affect my loan?

A bad credit score indicates to lenders that you aren’t a reliable borrower. For whatever reason, you have struggled to make on-time payments in the past, or you have taken on a large amount of debt relative to your income.

Because you look risky, they may be more reluctant to lend you money at all. When you are offered a loan, it’s likely to be for a smaller amount with higher interest rates.

Where to shop for a personal loan

When you’re shopping for a personal loan, it’s important to comparison shop. You want to be sure you are getting the best rates and terms before signing your name on the dotted line.

MagnifyMoney’s parent company, LendingTree, can potentially connect you with numerous lenders who offer personal loans to those with less-than-perfect credit. Their personal loan tool will ask you some basic questions, weeding out lenders who aren’t a good match, and saving you time and unfruitful hard inquiries on your credit report.


Learn More Secured

on LendingTree’s secure website

Credit Unions and community banks

In your search for a lender, don’t overlook credit unions and community banks. Rachael Bator, CFP at Lake Street Advisors, says these institutions tend to have lower minimum credit score requirements on top of lower interest rates. And they are often willing to work with people with low credit scores.

Find a credit union in your area here. Look for a community bank here.


Most LendingClub borrowers have a credit score of at least 600. All loans are issued at a fixed APR between 5.99% and 35.89%. Your credit score, current debt burden and the amount you want to borrow will all affect where you fall in that range. LendingClub issues personal loans up to $40,000.

LendingClub personal loans do come with some fees:

  • Origination fees. This will be 1%-6% of the amount you’re borrowing. You will not have to pay it upfront; it will be rolled into your loan, and included in your APR.
  • Late payment fees. If your monthly payment is more than 15 days late, LendingClub may charge you a late payment fee. This fee will be the greater of $15 or 5% of the unpaid payment.
  • Check processing fees. If you choose to pay your loan via paper check, you will be charged a $7 check processing fee.

The application process happens online and will require information about your employment history and income, on top of identifying information like your address and Social Security number. If you’re not confident you’ll qualify with your credit history, you can add a co-borrower with a better history to your application to increase your odds of approval.

“If you’re considering your options and want to talk through your unique situation, don’t hesitate to reach out to us,” said Alia Dudum, spokeswoman for LendingClub.


on Lending Club’s secure website


LendingPoint is on a mission to provide access to financing for those without good credit.
“Most of our competitors have started to deny anyone below a 660-680 [credit score], running up the credit rankings,” said Mark Lorimer, LendingPoint’s CMO. “We’ve started trying to provide access to more — the way down to a 590 [credit score].”

LendingPoint recently launched a program called Step Into More, which helps those with a lower credit score and other negative aspects of their credit rating get personal loans and improve their score at the same time.

The program starts with a $2,000-$3,000 loan which is to be repaid over the course of two years at 34.99% APR. If you make on-time payments for the first three months, your interest rate drops by one percentage point. If you continue making on-time payments up to the six-month mark, your interest rate will drop by yet another percentage point. At the twelve-month mark, your interest rate will go down at least two percentage points more if you have consistently made on-time payments.

You may qualify for a personal loan from LendingPoint independent of the Step Into More program — even with a credit score of 590. Your score alone isn’t enough to get you approved; your income, debt and other factors will be a part of the decision process. But Lorimer says that with a 590 credit score, most applicants could expect to be offered an interest rate of 23.99% to 34.99% APR. Loan amounts vary from $2,000-$25,000.

There is an origination fee ranging anywhere from 0%-6% depending on your state of residence. This origination fee will already be accounted for in your APR.

You can apply online and will need to provide basic identifying information such as name, address and Social Security number. You will also need to verify your bank account with the routing and account number. If you need help with the process, the company has telephone support; a live human being can help walk you through the process.


on LendingPoint’s secure website


Read our full review of SoFi’s personal loans here.

SoFi doesn’t publish any specifics about its credit score requirements. It is a unique lender in that they focus more heavily on things like education, employment and income potential. Those with higher income or income potential are more likely to be approved. To this end, SoFi’s personal loans come with unemployment protection — which defers payment and helps you find a new job should you find yourself unemployed.

SoFi grants personal loans from $5,000-$100,000 with interest rates between 5.49% and 13.49% APR after a 0.25% discount for setting up autopay. They do not charge origination fees, and the terms on these loans can be anywhere between three and seven years. If you’re 15 days or more late with your payment, you may be assessed a fee 4% or $5 — whichever is less.

You can apply online. Come armed with your basic contact information, education history and employment information. You may have a hard time getting approved with a bad credit history, but SoFi does a soft pull on your credit report — which does not negatively affect your score. If you have a solid education and earn a decent income, it’s worth seeing if they will take you on.


Read our full review of Avant’s personal loans here.

In some cases, online lender Avant will issue personal loans to those with credit scores of 580. Their personal loans range from $2,000 to $35,000, and have terms between two and five years. Interest rates are between 9.95% and 35.99% APR.

There is an administration fee of 1.50%-4.75%. Other fees include a $25 late fee after your payment is 10+ days delinquent, and a $15 fee if your payment is returned.

You can apply online with your name, address, Social Security number and income information. If you are approved, you could have funds in your bank account the very next day.


on Avant’s secure website

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

Alternatives to personal loans

Bator says that while a personal loan may be a good option in certain situations, in others you may be served by a different product.

First, she says you can ask family members if they’d be willing to give you a loan. She does note that in order for this money to be considered a loan and not a potentially taxable gift, your family member will have to charge you the applicable federal rate, which is usually much lower than the interest rate you would get with a lender — especially if you have bad credit.

Another area for examination is a home equity line of credit (HELOC). Bator says because your home is put up as collateral, the interest rate on this product tends to be lower than that of a personal loan.

One source of funding she does not recommend is payday loans.

“The repayment periods are incredibly short,” said Bator. “You can expect to pay outrageous interest rates — they’re illegal in many states for good reason. It’s proven that they don’t help people get out of debt, but rather the debt snowballs into an uncontrollable situation which profits the lender — not the borrower.”

How to rebuild your credit score

Just because you have a bad credit score now doesn’t mean you will forever. There are steps you can take to rebuild it.

The two best things you can do to improve your credit score are making on-time payments and lowering your utilization rate (you can do that by paying down your balances). Your utilization rate is calculated by dividing the total amount of all your statement balances by your credit limits. If you do get a personal loan, be sure to make your payments on time every month to fulfill the first course of action. Be sure you’re paying other bills on time, too, like rent and your cellphone bill.

If you are consolidating debt with a personal loan, making on-time monthly payments may slowly help improve your credit score as you will be eliminating debt.

Other financial options

How your score is calculated: Your credit score is calculated after reviewing your credit report, which includes a record of loans and other accounts in your name and your history of payments. Think of it like your grade point average in school. It’s a score calculated on your overall credit performance over time.

The same way a failed exam would hurt your GPA, a missed credit card payment or significant negative event like a bankruptcy or foreclosure could hurt your score. Vice versa, if you failed that one exam in the early part of the year but score A’s on every other exam moving forward, that new positive information will be factored into your score as well and can boost it.

After a lender looks at your credit report, they will take the information and plug it into a scoring model. There are two main models: FICO and Vantage. Ninety percent of lenders use FICO models, so for our purposes, we’ll assume your credit score is calculated using a FICO model.

Credit scores fall into five different categories:

  • 750+ – Excellent Credit
  • 680-749 – Good Credit
  • 620- 679 – Average Credit
  • 550-619 – Sub-Prime Credit
  • Below 550 – Poor Credit

If you fall into the sub-prime or poor credit categories, you have are going to have a harder time borrowing money — especially with low interest rates.

How to get your credit score: Check your credit cards. Many offer customers access a free FICO score once per month. Otherwise, use a free tool, such as through Discover, which you can access even if you don’t have any accounts with the company.

How to prepare your personal loan application

Before you apply for a personal loan, make sure you take advantage of your free credit report. Check it for accuracy, and if you find any errors, take measures to fix them.

After you’ve made sure your credit report contains only accurate information, you’ll want to get your paperwork together. Many lenders will ask you to provide:

  • Your full name
  • Address
  • Social Security number
  • Residency status
  • Proof of income
  • Information regarding your debts — especially if you are consolidating

Advertiser Disclosure: The card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Brynne Conroy
Brynne Conroy |

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

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Personal Loans

Are Long-Term Personal Loans Ever a Good Idea?

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


The importance of having a rainy day fund can’t be overstated — you’re sure to encounter a storm at some point. While our insiders suggest setting your target at a minimum of three to six months’ worth of expenses, actually doing so can be a slow climb. This is especially true if you’re splitting your efforts between paying off debt. For many, a trip to the emergency room or a stint of unemployment is enough to seriously rock the financial boat.

That’s where long-term personal loans come in. Like any type of financing, they come with both benefits and risks. But if used wisely, they could potentially rescue you from a financial nightmare.

What is a long-term loan?

Personal loans are doled out by lenders and, unlike credit cards, are not revolving lines of credit. When we say “long-term” personal loans, we’re referring to loans that stretch beyond the one-year mark. Some may last only 12 months, while others can take a decade or more to pay off.

The most important thing to remember about personal loans is that the interest rate, monthly payment and payoff timeline are all fixed, meaning there’s virtually no wiggle room when it comes to how much you have to pay every month. In other words, when you sign on, you’re committing to this bill for the long haul. This could be taken as either a pro or a con, depending on how you look at it.

On the one hand, the fixed payment keeps the finish line in sight. Credit cards, on the other hand, give you the oh-so-tempting option of just paying the minimum, which stretches out the life of the loan, resulting in you paying more in interest over the long term. On the flip side, if you stumble upon financial hard times, having the ability to make lower monthly payments can be a godsend.

That said, long-term personal loans can be used for just about anything — from consolidating debt to seeing you through a financial emergency. Since the money is typically deposited straight into your bank account, you can use it however you wish. Of course, they don’t come without some strings attached.

Let’s break down the fees and rates for personal loans

For starters, personal loans are considered unsecured debt.

“Unlike your mortgage or an auto loan where you’re leveraging an asset (your home or your car) as collateral, personal loans are attached to no such security,” Pamela Capalad, certified financial planner and founder of Brunch & Budget, tells MagnifyMoney.

“As such, lenders understandably see them as being inherently riskier,” she added.
“This is precisely why you can expect strict repayment terms and potentially higher interest rates.”

The APR may not stand alone. In some cases, you could be hit with an origination fee to the tune of 1% to 6%. Some companies will also try and sell you insurance or other expensive, unnecessary products with these loans, says Lynn Ballou, certified financial planner and CFP Board ambassador.

“And if they’ve front-loaded that loan with extra interest or charged you an origination fee, that’s actually costing you quite a bit more than if you’d just looked for a less expensive option,” she added.

In other words, borrowers beware. Before signing on the dotted line, be sure to read carefully through the terms and fees. Ballou then suggests running the numbers through an independent loan calculator to make sure it’s actually a good deal for you. After factoring in the interest rate and potentially an origination fee, would it be less expensive to go with a different financing option? (We’ll explore this shortly.) Also, is the monthly payment within your budget? These are make-or-break questions to ask yourself before pulling the trigger.

When a long-term personal loan makes sense

Now that we’ve picked apart the nitty-gritty details, let’s explore when a long-term personal loan might be a good idea. A personal loan can be a powerful consolidation tool for those struggling to eliminate high-interest debts — assuming you snag a better APR. In addition to saving money, you’ll have a clear timeline in place and the convenience having just one monthly payment.

When it’s the cheapest borrowing option

“Personal loans actually have some great interest rates, especially now since the market has gotten really competitive over the last few years,” said Capalad. “With a long-term loan, you’ll probably end up paying off your debt faster, or at least about the same time as doing some sort of debt snowball method.” The debt snowball method involves ordering debts from smallest to largest balances and tackling the smallest debts first.

As far as rates go, the better your credit score and higher your income is, the better chances you’ll secure a good rate. If you have poor credit, however, you should expect to see a higher rate. Personal loan rates can eclipse credit card rates, getting as high as 35.99%.

Capalad does offer another word of warning. If you’re using a personal loan to consolidate debt, you have to be really disciplined to put those credit cards away. When people use the loan to get their cards down to what Capalad calls “that nice $0 balance,” it can be extremely tempting to run up the balances again. That said, if you’re disciplined and committed to using a long-term personal loan to get on stronger financial footing, it can represent a great solution.

Debt consolidation aside, sometimes it simply works out better from a dollar-and-cents perspective. If you find a personal loan with no origination fee and a reasonable APR, it may very well be less expensive than getting a cash advance via a credit card, especially since many financial institutions charge a 1% to 5% cash advance fee.

“Sometimes a personal loan is actually the least expensive option available, but sometimes it’s also the only option available,” added Ballou. “Not everyone has something to collateralize, like equity in their home to unlock a home equity loan.”

When a long-term personal loan doesn’t make sense

If you’re stuck between a financial rock and a hard place, being hit with costly fees or high interest rates is certainly better than filing for bankruptcy or defaulting on your bills. The good news is that doing some light research might reveal a different option that’s a better fit than a personal loan.

Begin by asking yourself what you need this loan for. Is it to see you through a financial emergency that’s unlikely to happen again? Or is it to take a last-minute vacation? That may sound obvious, but it’s a legit question to ask because it’s all about trade-offs here.

Let’s say you take out a five-year $5,000 personal loan at 19.5% APR. If you crunch the numbers using our personal loan calculator, it translates to a $131 monthly payment — you’ll also spend an additional $2,865 on interest. Is that really worth it for a family vacation? Perhaps not.

You might, on the other hand, feel like it’s your best option if you’re swimming in credit debt with higher interest rates and need a debt consolidation loan.

The scenario plays out better if you have a fully-funded emergency savings.

“If you have a steady job and you’re at that three- to six-month level, and the trip is extremely important to you because it’s for, let’s say, your best friend’s wedding, you’re better off dipping into your emergency fund and then paying yourself back — but you have to be extremely committed to topping it back off as soon as possible,” said Capalad.

When your cash reserves are running low and a long-term personal loan isn’t your best option, it’s time to explore the financial alternatives. (We’ll dive deeper into your options below.)

Getting a long-term personal loan

Ready to move forward with a long-term personal loan? Here’s what should be on your radar:

Checking your credit score

Whenever you’re seeking new financing, your credit score is perhaps the most important factor. This number basically sums up how creditworthy you are, which is what lenders care about. The higher your score, the better interest rates and financing options you’ll get. Here’s how FICO, America’s leading credit reporting agency, breaks down this all-important three-digit number. (There are a number of ways to access your credit score for free.)

This number is actually a reflection of what’s on your credit report, which sums up your credit history. Experian, TransUnion and Equifax (the three major credit bureaus) each generate their own report, which you can pull for free once a year at Doing so is vital to maintain a healthy credit score. What’s more, finding and disputing an error on your report may give your score a significant boost.

Where to get a long-term personal loan

Applying for a long-term personal loan isn’t all that different from locking down one with a shorter term. The internet has certainly streamlined the process. LendingTree, which is MagnifyMoney’s parent company, offers a way to compare loans from top lenders like BestEgg, Avant, LendingClub and more. Here, you can plug in a few pieces of information and possibly get quotes in a matter of seconds based on your credit score. It’s a soft credit pull, which won’t hurt your credit, but just know that when you officially apply with a lender, it will count as a hard inquiry.

Just be sure to compare rates as no two lenders are the same. Let’s say, for instance, your credit score sits at 660 and you’re looking to remodel your kitchen for $20,000. Short of a hard credit pull, here are some instant quotes:

Apply Now Secured

on Discover Personal Loans’s secure website

Discover Personal Loans

Loan Amount
up to $35,000
36 to 84 Months
APR Range
Origination Fee
No origination fee
Credit Required

Apply Now Secured

on Payoff’s secure website


Loan Amount
$5,000 – $35,000
up to 60 Months
APR Range
Origination Fee
Credit Required
Soft Pull
You can get your rate without hurting your score.

Advertiser Disclosure :

All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

Apply Now Secured

on BestEgg’s secure website


Loan Amount
$2,000 – $35,000
36 or 60 Months
APR Range
Origination Fee
Credit Required
Soft Pull
You can get your rate without hurting your score.

As you can see, there’s a pretty wide gap when it comes to interest rates. The good news is that the longer the term, the shorter the monthly payment — but you’ll ultimately pay more in interest over the long haul. For example, let’s pretend you lock down that $20,000 loan with no origination fee and an APR of 16%. Now let’s compare what happens when we tweak the repayment timeline:

Payoff Timeline

Monthly Payment

Total Interest Paid

60 months



40 months



24 months



There are a lot of moving parts here, which is why reading the fine print is vital. Before we jump into that, let’s talk about getting pre-qualified.

Getting pre-qualified for a personal loan

It’s probably a term you’ve heard before, but let’s unpack what it actually means. Pre-qualification utilizes what’s known as soft credit pulls as opposed to hard inquiries. Doing this does not impact your credit, making it much easier to shop around for the best deals. Soft inquiries essentially give lenders a little sneak peek of your credit. Once you pull the trigger on a loan, the bank will then do a deep dive by pulling your full credit report. (FYI, hard credit inquiries typically only shave a few points off your score, depending on your overall credit health, and you’ll bounce back relatively quickly if you keep up with on-time payments.)

Applying for a personal loan

Once you’re ready to formally apply for a long-term personal loan, you’ll need to gather up some documents. According to Ballou, this typically includes:

  • Photo ID
  • Proof of income and employment
  • Bank statements
  • Possibly a copy of a W-2 or tax return as proof of past income

Once the application process is in motion, the next step is approval, but Ballou says you could be denied if the lender sees you as a credit risk. Having bad credit, a short credit history, unreliable income or unsteady employment could all work against you.

Read the fine print

Before making the commitment, thoroughly read through all the terms and fine print. Here are some helpful questions to ask yourself:

  • Do you really need this loan? If it’s a true financial emergency, the answer might be yes. Otherwise, think long and hard before going all in.
  • Can your budget comfortably absorb the monthly payment? Remember, personal loans are locked in; you’re on the hook for that payment every month.
  • Is there an origination fee? Run the numbers and also factor in the APR. How much will your loan actually cost you when all is said and done? Is there a cheaper alternative? (We’ll jump into this in the next section.)
  • Are you okay with the repayment timeline? Think about your long-term financial goals. If, say, you’d love to save for a down payment on a house within the next five years, will this loan impede your ability to do so?
  • Is a prepayment penalty hiding in the contract? This could make it costly to pay off your loan ahead of schedule.

Alternatives to a long-term personal loan

Depending on your situation, a personal loan may very well be your cheapest option. If not, you’re not out of luck. Here are some alternatives worth exploring:

Home equity loans & lines of credit

Home equity loans (HELs) and home equity lines of credit (HELOCs) both use your home as collateral. You’re basically borrowing against the equity you have in your home by way of a secured loan or credit line. To get the best rates, you’ll need a decent credit score (ideally 660 and up) and at least 15% equity in your home. You also don’t want your debt-to-income ratio to exceed the 43% mark. One other crucial point: if you default on your payments, the bank could seize your home, so make sure you’re really comfortable moving forward.

Cash-out mortgage refinancing

A cash-out refinance lets you borrow additional cash to use as you wish. You could also tweak the terms, like extending to a longer-term loan, to lower your monthly payment and give your budget some breathing room. This, of course, will keep your mortgage debt alive and well for a longer period of time, and there may be fees, but in the short term, it may be your least expensive option.

Balance transfer credit cards

Seeking a personal loan to consolidate debt? Utilizing balance transfer offers may be a more strategic way to go. This is when you jump on low- or no-interest promotional APR offers to pay off your existing balances. Then you knock out the new balance before that teaser introductory period ends.

“If you can aggressively pay down the debt, then you can save a lot of money, especially if you have a lot of debt,” said Capalad.

Just be sure to read the fine print. There’s usually an initial fee that could be as high as 4%. And once the promotional period ends, your APR may skyrocket. This option really only makes sense if you can eliminate the balance within that time. Also, most banks won’t let you transfer debt from one card to another within the same bank.

Traditional credit cards

Your financial emergency may cost you less if you finance it with a traditional credit card, especially if the interest rate is reasonable and you’re able to accelerate your payments. While some personal loans will hit you with a prepayment penalty, you’re more than welcome to pay more than the minimum balance on a credit card. Here’s a simple credit card debt calculator to help bring the numbers into focus.

Borrowing from family or friends

It may bruise your pride, but borrowing cash from loved ones just might save you from financial ruin. (According to LendingTree research, 94.5% of people surveyed said they wouldn’t charge interest on a loan to a family member.) If you’re face-to-face with a true emergency, tap into your personal network to see what options may be available. You can work together to determine the terms and even draw up a contract if it gives your benefactor some peace of mind.

The Pros and Cons of Long-Term Personal Loans

Let’s recap, shall we?


  • Long-term personal loans translate to on-the-spot cash that’s typically deposited right into your bank account, which you can then use for whatever you want.
  • If you routinely make on-time payments, you’ll end up boosting your credit score in the long term.
  • Using personal loans to consolidate debt could save you big time in interest.
  • They’re good for folks who don’t have something to collateralize, like home equity or a car.


  • The monthly payment and payoff timeline are fixed, and there’s no wiggle room. If you miss it, you’re in default, which could do a number on your credit score.
  • Depending on your credit score, you may not be eligible for a reasonable APR. This could cost you.
  • Your loan may come with a prepayment penalty.
  • Making this monthly payment over a long period of time could impact your ability to save for other financial goals.
  • Opting for a long-term loan over a short-term one means you’ll ultimately shell out more in interest payments.

The bottom line

Moving forward with a long-term personal loan really comes down to your individual situation. The big idea here is to choose the least expensive financing option.

Using credit to live beyond your means is one thing, but debt that gets you to a better place and adds value to your life is another. If a long-term personal loan can help see you through a financial emergency relatively unscathed, it might be worth taking on some new debt.

As Ballou aptly put it: “The cost may be worth what it’s giving you.”

Advertiser Disclosure: The card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here


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Personal Loans

Requirements to Get Your Personal Loan Approved

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


For the right consumers, personal loans can be a quick way to get much-needed cash for anything from a home repair to a college tuition. With the right qualifications, you can be approved for a personal loan in the morning and have the cash deposited into your account in as little as one day depending on the lender.

While applying is easy, qualifying for a personal loan may be more difficult. Here’s what you need to know about personal loans and how to get approved for one.

What is a personal loan?

A personal loan allows a consumer to borrow a lump sum of money for personal use and pay it back in fixed monthly payments over a set amount of time.

One significant difference between unsecured personal loans and other types of loans is that they don’t require collateral. When you buy a car, for example, the car serves as collateral and the lender can repossess it if you fall behind on your mortgage payments. To get an unsecured personal loan, you just have to qualify.

Personal loans come in a wide range of amounts and interest rates. The terms of personal loans vary by lender and range from six months to 84 months as of Feb. 2, 2018. They can be for as little as $2,000 and as much as $100,000, although the majority of personal loans are for much less. Best Eggs’ loans average between $13,000 and $14,000, according to Bobby Ritterbeck, chief marketing officer for the company.

What are personal loans used for?


Unlike a mortgage, which is a loan for a house, or an auto loan, which must be spent on a vehicle, personal loans can be used for almost anything.

“People use it for a ton of reasons, from home repairs to medical [expenses] to all kinds of major purchases,” Ritterbeck said. People most commonly take out personal loans, however, for debt consolidation. In this process, borrowers use a personal loan to pay off other high-interest debts, which can simplify and reduce their monthly debt payments.

Alia Dudum, millennial money expert at LendingClub, said that LendingClub encourages anyone who needs credit to think about personal loans as “a responsible way to pay for something expensive,” whether the expense is planned or unexpected.

“You can’t always control when you have a major expense, but you can make good decisions,” she said. LendingClub’s borrowers primarily use personal loans to pay off high-interest debt, unexpected expenses such as medical bills or car repairs or a planned expense such as a vacation or home remodel.

How do I qualify for a personal loan?

Most lenders will look at two factors when you apply for unsecured personal loans: your credit history and your ability to repay the loan. Borrowers don’t have to provide collateral, such as a house or car to back their loan, nor do they need a cosigner (unless a cosigner is needed to strengthen your odds of getting approved).

Instead, lenders will look at your personal credit history and other factors, such as your income.

“That makes it easier for us to provide you quicker and easier access to your loan in comparison, to say, a mortgage loan that requires an appraisal of your home,” Dudum said.

Here’s a breakdown of how lenders determine whether you qualify for a loan.

Credit score

Each lender will determine its minimum credit score for receiving a personal loan, and some are more lenient than others regarding what scores they will accept. For Best Egg, for example, the average credit score for qualified applicants is 710. Ritterbeck said that most conservative financial institutions are comfortable issuing personal loans to applicants with scores around 680 and above.

Your credit score matters because it is a reflection of your ability to repay a loan. The score is compiled from information gleaned about how you handle credit, which could include:

  • Types of credit or loans you’ve carried (revolving, like credit, or non-revolving, like a mortgage)
  • The amount of each loan or the credit limit for each credit card you own vs. how much of that balance you are using from month to month
  • Whether you paid on time
  • Collections activity, bankruptcies, foreclosures or other negative marks

There are three federal credit reporting agencies that compete to compile American consumers’ credit histories: Equifax, Experian and Transunion. While each agency collects about the same information on each consumer, their credit score calculations may differ because the agency may not have collected the exact same information or it may store or display the information differently than the other agencies.

It’s important to note that your credit score will change over time as credit reporting agencies collect more information and tweak their calculation models. That means your score could be different from one month to the next.

Get your credit report and score for free

Each of the three reporting agencies will provide one free credit report a year, which you can get by visiting or calling 1-877-322-8228.

There are lots of ways to get your credit score or credit score estimate for free these days. The Discover Scorecard, for example, offers a free FICO score.
Here’s our guide on getting your free credit score >

How to improve your credit score to get better loan terms


First, look for errors on your credit report, where you may find information that is inaccurate or wrong. If you find errors that could have lowered your credit score, dispute the error with the appropriate credit bureau. Check all three reports.

Then, take a look at your financial situation and make some changes.

  • Lower your debt: Stop spending on credit cards and come up with a strategy for paying down your balances.
  • Pay your bills on time: As much as 35 percent of your credit score could be based on your payment history, so make sure you pay all of your bills on time. If you are forgetful, set up automatic payments or monthly reminders.
  • Don’t close your unused credit card accounts: Unless your credit cards carry expensive annual fees, there’s no real benefit to closing them even if you aren’t using them. Your credit score will take into account the average length of time you’ve been using credit, so holding an account for a long time could actually benefit your score.
  • Don’t open new credit: As you rein back your spending, avoid the temptation to apply for more credit cards. Lenders may consider you risky if you open a lot of new accounts in a short amount of time.

The length of time it takes to improve your credit score depends on why your credit score is low in the first place. In any case, the personal financial discipline you develop as you work to improve your score will leave you with better spending and saving habits.

Debt-to-income ratio (DTI)

Your DTI is the amount of monthly debt obligations you have, including credit card payments, auto loans and student loans, divided by your monthly gross income. The calculation shows lenders the percentage of your income that you use to pay off debts.

“Lenders see this as an indicator of your ability to comfortably take on and pay off more debt,” Dudum said.

Wells Fargo lists a DTI of 35 percent as “looking good” and indicating that your debt is manageable in relation to your income, and that you likely have spending money left over after you pay your bills.

If you have a DTI between 36 and 49 percent, you may want to improve your financial situation so that you are in better shape to handle extra expenses. If your DTI is in this range, lenders
may look at additional eligibility criteria, like your income or whether you have a cosigner.

Credit utilization rate: This rate is calculated by dividing how much credit you’re using (the statement balance for each of your accounts) by the amount of credit you have
access to. “If it’s higher than about 30 percent, many financial companies see this as an indicator that you might not be as responsible as you could be,” Dudum said.

Credit history: How you’ve managed debt in the past can be a good determinant for how likely you are to pay back a personal loan. That means if you have little or no credit history, lenders may not approve your personal loan application.

“If you don’t have a track record with credit, it’s difficult for lenders to guess how you might handle paying your debts,” Dudum said.

Cosigner: If you have trouble meeting personal loan requirements, which could happen if you have a low credit score, no credit history or a bankruptcy in your past, you may need a cosigner.

Typically, cosigners are trusted friends or family members with good credit who will agree to take responsibility for the loan if you can’t make the payments. Lenders will factor in your cosigner’s credit history and credit score rather than yours when determining whether you qualify for the loan, which will up your chances of qualifying and securing a good interest rate.

Proceed with caution when considering a cosigner. If you don’t make your loan payments, you could ruin your cosigner’s credit history, stick them with the balance of the loan, and wreck your relationship with your cosigner.

How to apply for a personal loan

The application process for an unsecured personal loan is simple and fast.

“The old way is you’d walk into your local bank, wait in line to speak with a loan officer and apply that way,” Ritterbeck said. “In a lot of cases today you can still do that, but you also can go online, and in some cases call, and get a decision in a couple of minutes of what options are available to you.”

Online lending platforms will first ask you to fill out an application to check your credit rate. The personal loan industry can often show you your personal loan options without running a “hard” credit inquiry that would impact your credit score. These are typically called pre-approvals or prequalification checks but they aren’t final. When you are ready to apply for the loan, it will result in a hard credit inquiry. You may be able to get free quotes from LendingTree’s personal loan marketplace by filling out a short online form. LendingTree is the parent company of MagnifyMoney.

After you receive options for a personal loan, including the amount you qualify for and the interest rate, you can choose one to apply. “Generally speaking, the better your credit profile, the lower the rate of interest you’ll be charged in exchange for borrowing,” Dudum said. “That said, there are many other factors we take into consideration. One number couldn’t tell your whole financial story.”

Interest rates vary, but they can be as high as each state allows. OneMain, for example, can offer interest rates as high as almost 36% on personal loans, and Best Egg’s highest rate is 29.99%.

Once you decide which loan to apply for, you’ll need to submit proof of employment and income, such as a pay stub, said Kim Wijkstrom, chief marketing officer for OneMain Financial. Decisions on the loan can come within the hour, and the money could be deposited in your account the same day.

Lenders with alternative qualifications

Not all lenders follow the typical formula for personal loan requirements. OneMain, for example, uses credit scores as a guideline that gives a picture of a consumer’s credit history and focuses more on the applicant’s income and debt obligations, Wijkstrom said.
Here are others:

SoFi: SoFi is strict about approvals, as it prefers applicants with a good job and a history of on-time payments. It also does not allow cosigners or joint applicants. SoFi is unique in that it does not charge origination fees and has additional perks like loan forbearance if a borrower loses a job through no fault of his or her own. Interest will continue to accrue and is added to the loan balance, and SoFi will not report your payments to a credit bureau as being overdue.
Read our review of SoFi here.

Upstart: While Upstart initially focused on helping graduate students with significant debt, it now also offers loans to consumers with a strong credit history. Upstart’s formula for calculating approval is unique and considers an applicant’s career, education, job history and standardized test scores.
Read our review of Upstart here.



on Upstart’s secure website

Earnest: Unlike most lenders, Earnest uses a merit-based system for determining who qualifies for a loan. Recent graduates and others who are starting to build credit history may qualify for these loans, which offer some of the most flexible terms along with customized loan and repayment plans.



on Earnest’s secure website

What if you are rejected for a personal loan?

You may not qualify for a personal loan the first time you apply, but it is possible to improve your financial position and successfully qualify later.

“People are of course usually very disappointed if they don’t get a loan, and the first thing to address is the emotional response,” Wijkstrom said. “Don’t be defeated when rejected.”

At OneMain, financial advisers will talk with clients about why they were not approved and what they can change. Sometimes that means fixing their credit history, such as paying bills on time for a set period. Others may find errors on their credit report that hurt their chances of qualifying for a personal loan.

You may also want to look into other options for credit, such as equity in your home that could help you get a different kind of loan, Ritterbeck said.

When used wisely, personal loans can help you get out of debt and manage large expenses. Regardless of when you need a personal loan, it’s never too early to integrate good habits into your financial life to ensure that when you do apply for a personal loan, you will qualify for the amount you need.


Advertiser Disclosure: The card offers that appear on this site are 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 card companies or all card offers available in the marketplace.

Marty Minchin
Marty Minchin |

Marty Minchin is a writer at MagnifyMoney. You can email Marty here