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Personal Loans

USAA Personal Loan Review

Wednesday, August 15, 2018

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

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

David RodeckDavid Rodeck

What is USAA?

USAA Bank, or the United Services Automobile Association, started in 1922 when 25 Army officers decided to pool resources and insure each other’s vehicles. From this humble beginning, USAA expanded into a Fortune 500 company that serves nearly 12 million members and offers a wide range of financial services including banking, insurance and personal loans. They are based out of San Antonio, Texas, but their accounts are available nationwide.

USAA’s key mission is to provide financial services for military members, veterans and their family members. As a result, not everyone is eligible to apply for a USAA personal loan. In this review, we look at USAA personal loan eligibility requirements and how they compare with other personal loans available today.

USAA personal loan highlights

Taking out a loan with USAA comes with many perks, such as their excellent customer service and programs and assistance offered to customers. Below are a few highlights of USAA personal loans:

  • Fast decision and payments – USAA makes an instant decision on most applications and funds the loan the day after approval.
  • No application, origination or prepayment penalties – You don’t pay anything to apply for or to receive a loan started with USAA. There is also no penalty for paying the money back ahead of schedule.
  • Competitive interest rates – USAA offers competitive interest rates on their personal loans, especially for applicants with excellent credit scores.
  • Only available for servicemembers and their families — Not everyone can take out a USAA personal loan. You must qualify for a USAA membership by meeting their service requirements. Read below to find a list of eligibility requirements.
USAA Bank
APR

Starting at 8.99%

Credit Req.

700

Minimum Credit Score

Terms

12 to 84

months

Origination Fee

No origination fee

APPLY NOW Secured

on USAA Bank’s secure website

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

USAA personal loan details

USAA loan terms range from 12 to 84 months; however, longer terms are not available for smaller loans. Loan amounts range from $2,500 to more than $20,000 with APRs starting at 8.99%, and funds are available the next day after you qualify.

USAA personal loans have no origination or prepayment fees, although they do charge a late fee of 5% of the total amount due.

 

Fees and penalties

  • Terms: 12 to 84 months
  • APR Range: Rates start at 8.99%
  • Loan amounts: $2,500 to $20,000
  • Time to funding: Day after approval
  • Soft-pull/hard-pull: Hard Pull
  • Origination fee: None.
  • Prepayment fee: None.
  • Late payment fee: 5% of the amount due

Eligibility requirements

Applying for a USAA personal loan will show up as a hard pull on your credit report. USAA does not have a minimum credit score requirement or debt-to-income cap, but will consider your credit score as part of their lending decision.

In addition to the financial requirements, you must also qualify for USAA membership under their military service requirements. You are eligible if you are in the following categories:

  • Active military: You are currently serving in the U.S. Air Force, Army, Coast Guard, Marines or Navy.
  • Former military: If you have retired or separated from the military with an honorable discharge.
  • Family members of servicemembers: If you are the child, spouse, widow, widower, or unmarried former spouse of a USAA member.
  • Cadets and midshipmen: Cadets and midshipmen at U.S. service academies or involved in ROTC and officer candidates with 24 months of commissioning are eligible for membership.

Apply for a personal loan with USAA

Before you can apply for a USAA personal loan, first you’ll need to set up your USAA membership online or by phone. The membership application will ask for your personal information, along with other qualifying USAA membership questions. You will need to submit documents to verify your status, like a discharge certificate, your military orders (if you’re actively serving) or the name of a family member who is also a member, so USAA can look up their account.

Once you have a membership with USAA, you can sign into your online account to start the personal loan application process. The loan application will ask for your name, address and will use your Social Security number to check your credit report. You will also need to list your income and employer.

USAA states that their online personal application makes an instant decision in most cases; however, applicants will be alerted at the end of this if additional time or documents are necessary.

If USAA approves the loan, the funds will be available the next day, or it can be immediately deposited into your USAA bank account. If you don’t have a USAA account, they will send you a check, as they do not support the option of direct depositing the loan in a bank account at another bank.

Pros and cons

Like all lending products, there are both pros and cons to a particular loan product.

Pros:

Cons:

  • Quick application and decision – The online application takes a few minutes, and in most cases, provides an immediate loan decision.
  • Fast payment – USAA makes the loan funds available one day after the loan is approved.
  • Competitive interest rate with autopay discount – USAA personal loan interest rates are competitive to other personal loans, especially if you have excellent credit. They also offer a 0.25% rate discount if you set up recurring, automatic payments for the loan.
  • No prepayment, origination or application fees — You do not pay anything to apply for a USAA personal loan. There is also no penalty for paying the money back ahead of schedule.
  • Only available for those who meet USAA membership requirements – Not everyone can bank at USAA. You must quality for USAA membership through your own military service or by being the child or a former or current spouse of a USAA member.
  • Hard Pull on your credit – A hard pull will show up on your credit report when you apply for a personal loan with USAA. A hard credit pull is used to determine your financial risk and loan rate.
  • No direct deposit for non-USAA bank accounts – Loan funds will be sent in the form of a check if you don’t have a bank account with USAA.

Alternatives to a USAA personal loan

If you meet the USAA membership requirements, their personal loan could be a solid choice. USAA offers competitive interest rates especially for applicants with excellent credit scores. They don’t charge application or origination fees, so you can set up a personal loan without paying anything besides the interest. Funds are usually available by the next business day, an important feature for someone who needs fast cash.

If you want a long-term personal loan, USAA’s terms go all the way up to 84 months, provided you borrow at least $20,000 —you won’t see terms of this length with many lenders.

If you don’t meet the eligibility requirements to be a USAA member, consider the following three alternatives for a personal loan:

LendingClub

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

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


If you’d like to compare your options before applying for USAA, LendingClub is a solid alternative. They use a peer-to-peer system where you submit your financial information online and get matched with a financial institution that can fund your loan. If you have strong credit and high income, you may qualify for an even lower interest rate through LendingClub; however, it takes about seven days to fund your loan.They also charge an origination fee of 1.00% - 6.00% to set up your loan, a fee USAA does not charge.

OneMain Financial

APR

16.05%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More

All loans subject to OneMain’s normal credit policies. Loan approval and actual loan terms depend on your ability to meet OneMain’s standard credit criteria (including credit history, income and debts) and the availability of collateral. Collateral requirements would include a first lien on a motor vehicle that meets our value requirements, titled in your name with valid insurance. Collateral offered must meet our criteria. The lowest annual percentage rate (APR) shown represents APRs for top 10% of loans closed. Maximum APR is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Residents in the following states are subject to the following loan size restrictions: Alabama residents: $2,100 minimum loan amount. California residents: $3,000 minimum loan amount. Florida residents: Unless you are a present customer, $8,000 maximum loan amount for unsecured loans. Georgia residents: Unless you are a present customer, $3,100 minimum loan amount. Iowa residents: Unless you are a present customer, $8,500 maximum loan amount for unsecured loans. Maine residents: Unless you are a present customer, $7,000 maximum loan amount for unsecured loans. Mississippi residents: Unless you are a present customer, $7,500 maximum loan amount for unsecured loans. North Carolina residents: Unless you are a present customer, $7,500 maximum loan amount for unsecured loans. New York residents: Unless you are a present customer, $20,000 maximum loan amount for unsecured loans. Ohio residents: $2,000 minimum loan amount. Texas residents: Unless you are a present customer, $8,000 maximum loan amount for unsecured loans. Virginia residents: $2,600 minimum loan amount. West Virginia residents: Unless you are a present customer, $7,500 maximum loan amount for unsecured loans. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.


OneMain Financial could be a solid alternative option, especially if you need money quickly, because they approve and pay out loan funds within one day. They also accept borrowers with fair credit and could be an option if you cannot qualify for a USAA loan. However, their interest rates are higher than USAA and the application process can’t be entirely completed online— you must go to a physical branch to close your loan.

LendingPoint

APR

9.99%
To
35.99%

Credit Req.

600

Minimum Credit Score

Terms

24 to 48

months

Origination Fee

0.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

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


LendingPoint offers medium-term loans through a quick online application. Their personal loans only last between 24 to 60 months, so they don’t offer as many options as USAA. Their interest rates are relatively high, but funds could be received within two days, as early as the next business day, and look at factors beyond your credit score to make a lending decision.

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

David Rodeck
David Rodeck |

David Rodeck is a writer at MagnifyMoney. You can email David here

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Personal Loans

Here’s Why You Should Avoid Cosigning a Loan for a Friend

Friday, February 22, 2019

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

Chaunie BrusieChaunie Brusie
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You’re in a tricky situation: your friend, who you love and care about deeply, has come to you asking for your help getting a loan that they desperately need. You know the loan could benefit your friend, but you’re also unsure of the risks behind cosigning a loan.

The most important step you can take is to learn why cosigning a loan for a friend is rarely a good idea. That way, you can understand why you probably should avoid it.

In this guide, we’ll cover

Should you cosign a loan for a friend?

Reasons why you may or may not choose to cosign a loan

How to protect yourself when cosigning a loan

Other ways of helping your friend

The bottom line

Should you cosign a loan for a friend?

In general, you may want to avoid cosign a loan for a friend. Here’s why:

  • You become legally responsible for the loan. In the eyes of the lender, the full loan amount is 100% yours. That means if your friend doesn’t make payments, the two of you will be held responsible.
  • Your credit score could be affected. Should your friend miss even one payment, your credit score could be negatively impacted since the loan is considered to be in your name too. And if the borrower defaults on the loan completely, it could impact your credit score even more.
  • You could damage your friendship. Consider the risks to the relationship with the person you are cosigning a loan for if they are unable to pay back the loan. Is the risk of ruining your friendship worth it?
  • You could lose personal property. If a loan — such as a personal loan — requires any collateral, such as your car, house or other personal asset, you are at risk of losing your property should your friend default on the loan.

Reasons why you may or may not choose to cosign a loan

Here’s a more comprehensive look at reasons why you might choose not to cosign a loan:

  • You can’t afford the loan. You should not take the risk on of cosigning a loan unless you can afford to pay the loan in its entirety. Otherwise, you could liable in court or even have your assets seized as part of your state’s collection practices.
  • You need a loan for yourself. If you know you will need your own loan soon, cosigning a friend’s loan could prevent you from being eligible for a loan for yourself.
  • You’re concerned about your credit score. If you’ve had a history of bad credit, are trying to build up your own credit or just don’t want to see your credit score negatively affected, you need to be aware that cosigning a loan could hurt your own credit score if your friend misses payments or defaults on the loan all together.
  • Your friend has a history of bad financial decisions. You should know why your friend needs a loan. It’s within your right to decide that you won’t cosign a loan if you don’t agree with how they’ll use loan funds. If your friend tends to rack up debt, you’re also free to explain to your friend that you don’t feel confident they need the added debt.

That being said, there may be a few circumstances where it is acceptable to cosign a loan for a friend. For example:

  • You can afford to pay the loan completely. If you cosign a loan, you are agreeing to be responsible for the loan amount in the event that your friend is unable to pay it. So, if you can afford to pay off the entire loan amount and are willing to do so, you could cosign a loan with less risk of hurting your own finances. Aside from the money you’d be out for the loan amount, of course.
  • The loan is for both of you. If you are purchasing something together, cosigning a loan might be a logical move, as you will both be utilizing the item or asset. For family members, a parent might choose to cosign a loan so their child could potentially consolidate student loan debt at a lower interest rate.
  • You’re willing to take on the risk. Maybe you feel like your friend has no other options, this is a necessary step and you are fully aware of the risks involved. In that case, cosigning a loan is a personal decision that only you can make.

How to protect yourself when cosigning a loan

If you do decide to cosign a loan with a friend or someone else, you should also take steps to protect yourself as much as possible before the loan is enacted. You can minimize your risk by taking actions such as:

  • Don’t put down personal assets as collateral. If you’re willing to cosign on a loan, you shouldn’t wager more than that. Using your home, car or other personal asset as collateral only increases your risk.
  • Establish expectations in advance. You should sit down with your friend to establish expectations for the loan and repayment. It’s helpful if you can set out a plan in writing about the consequences if your friend misses payments or is unable to fully repay the loan.
  • Stay on top of the loan. Although it is recommended that you keep close tabs on the borrower to ensure that they are repaying the loan on time each month, you could also ask the creditor to inform you of any missed or late payments automatically. If the lender has an online system, you and your friend could also share the account information. That way, you could easily log into your account to review payment information.
  • Try negotiating loan terms. Rules will vary by lender and state, but you may be able to negotiate what you’re responsible for as a cosigner, such as limiting your liability to the loan principal balance instead of the full principal and interest amount. You can also try to negotiate responsibility for late fees, attorney fees or accrued court costs.

Other ways of helping your friend

Outside of cosigning a loan for your friend, there may be other ways that you can help, such as:

  • Assisting with a down payment. Perhaps you can’t afford to take on the risk of cosigning an entire loan for your friend, but you may be able to help them put together a down payment so that they may qualify for a conventional loan.
  • Lend them the money directly. To ensure that you would not be legally responsible for your friend’s debt and to avoid possible damage to your own credit score, you could consider lending your friend the money they need directly, either as a lump sum or in installments. It is advisable to get all loan terms in writing and to have the loan contract notarized if you do choose to DIY a loan.

The bottom line

Although you may want to cosign a loan with a friend to help them, taking on the legal responsibility of someone else’s debt is usually not a good idea for most people. Agreeing to become a cosigner means you run the risk of being liable for the loan amount and the possibility of your own credit score taking a negative impact.

You should carefully consider the risks you are willing to take and take steps to minimize them before agreeing to cosign a loan for a friend. In most cases, unless you can fully afford and are willing to pay off the entire loan amount, the cons do outweigh the risk of cosigning on a loan for a friend.

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

Chaunie Brusie
Chaunie Brusie |

Chaunie Brusie is a writer at MagnifyMoney. You can email Chaunie here

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Personal Loans

Should You Use a Personal Loan to Build Credit? What to Consider

Thursday, February 21, 2019

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

Barbara BalfourBarbara Balfour
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If you’ve been trying to build up your personal credit, you may have considered using a personal loan. Taking out a personal loan could show creditors that you can responsibly handle different kinds of debt and follow the terms to which you and your lender have agreed.

But how successful you are depends on your ability to pay the loan back within the given term limits. Here’s what you should consider before taking out a personal loan to build credit.

Pros vs. cons: Using a personal loan to build credit

There are both pros and cons to taking out a personal loan in an attempt to increase your credit score:

Pros

  • Add to your credit mix: A personal loan could help you diversify your credit mix, which accounts for 10% of your FICO score.
  • Stay current on payments: You could use a personal loan to refinance a debt or consolidate debts to a lower interest rate. Doing so could help ensure you stay current on payments, which positively impacts your credit.
  • May not have to put down collateral: An unsecured personal loan doesn’t require you to put up collateral to secure the loan. That means your house or other assets can’t be taken away if you default.
  • Lower your credit utilization ratio: A personal loan can also lower your credit utilization ratio if you pay off your credit card balance with your loan and keep the card open. Credit utilization is important factor in your FICO score, and it is basically the amount you owe divided by the total amount you have available to you. Personal loans don’t count toward it.

Cons

  • Fees, fees, fees: Depending on your credit score, you could be paying hefty interest fees over the length of the loan, in addition to any other fees your lender charges, such as prepayment penalties, late fees and origination fees.
  • Could increase your debt-to-income ratio: Taking out a personal loan could change your debt-to-income ratio. This could make future lenders less likely to let you borrow funds until some, or even most, of your personal loan is paid off.
  • Strict payment schedule: Personal loans are often issued for a period of between 24 to 60 months and offer little flexibility when it comes to adjusting payments. So if you lose your job or face other financial struggles, your lender may be unwilling to work with you to reduce or delay payments.

Is using a personal loan to build credit right for you?

A personal loan might make sense for you if your goal is to diversify your credit mix or lower your credit utilization ratio by paying off a credit card. It’s also a good option if you plan to use the funds at a lower interest rate to pay off other debt that’s charging you a higher interest rate.

A personal loan to build credit might not be a good option if you’re already struggling with paying off debt, if you have no prior credit history or if you could get a credit card with a lower rate of interest instead. If you can’t get a reasonable interest rate, a personal loan might not be a good choice, said David Gokhshtein, a New York-based member of the Forbes Finance Council.

“In most cases, people in this scenario already have lower credit scores, leading to very high interest rates they could be paying off indefinitely,” he said. “If the debt gets sent to a collection agency, it will further damage the person’s credit score.”

That said, it’s important you have a clear picture of your financial situation. Consider the following questions:

  • Is your credit score good enough to qualify for competitive interest rates?
  • Can you afford the cost of a personal loan?
  • Is taking out debt and repaying it with interest worth it to build your credit?
  • Do you have a good use for the funds?

Answering these questions could help you decide whether or not to move forward with this option.

How to take out a personal loan

The first thing you should do if you decide to get a personal loan is to check your credit score. A FICO score of 700, on a range that spans 300 to 850, indicates you have good credit and would be likely eligible for a variety of loan offers, including a personal loan at a reasonable rate of interest. Because FICO scores are seen as an accurate reflection of your creditworthiness, lenders rely on them in 90% of all decisions.

You’ll want to research your options for lenders before committing to a loan, as well. You can use MagnifyMoney’s personal loan marketplace to compare lenders. You may also look to local banks or credit unions.

If possible, apply for preapproval from your top lenders of choice. Preapproval will allow you to see rates and terms you might qualify for with a soft credit check, which won’t affect your credit score.

Consider the following when weighing your loan options:

  • Rates
  • Fees
  • Conditions
  • Lender perks, such as support in case of job loss

Once you decide on a lender, you can submit to a hard credit check to see your final rates and terms. Depending on the lender, you could get loan funds within a few business days.

Others strategies to improving your credit

Consider the following ways to build credit without accumulating any additional debt:

Get a credit builder loan. With this type of loan, the money you borrow is deposited into an interest-bearing account. As you make payments on the debt, your payments are reported to the credit bureaus. Once you pay off your debt, the loan funds and the interest they earned are released to you.

Charge only what you can pay in full each month. If you have a credit card, you could use to work on your credit. Just make sure you pay off the card in full each month. “It is imperative to create and use a simple budget to make sure you follow this rule,” said Freddie Huynh, the San Francisco-based vice president of credit risk analytics at Freedom Financial Network. “Being able to pay your bills on time is the most important factor in the calculation of your credit score, accounting for 35 percent.”

Review your credit reports regularly for accuracy and correct any errors you find. You can access credit reports from each of the three main credit reporting agencies once a year for free at www.annualcreditreport.com. “If any report shows any inaccuracy, follow the directions on each agency’s website to correct it,” Huynh said.

The bottom line

Carefully consider your options before taking out a personal loan. You should have a clear idea of how you’ll use the loan funds and what the total cost of the loan will be. Most importantly, if your credit has been damaged by poor financial habits in the past, you need to consider whether or not a personal loan is only a temporary solution to a larger problem.

“My biggest concern with anyone considering a personal loan to pay off high interest credit cards is that they are focusing on the symptom, not the cause,” said Todd Christensen, the Boise, Idaho-based education manager at Money Fit by DRS. “If the borrower is disciplined, it might make sense; otherwise, debt management through a nonprofit credit counseling agency could make more sense.”

While a personal loan can be one part of the credit building or repairing process, it’s not your only possible solution. In fact, Christensen said taking out a personal loan could be part of a multi-pronged strategy to boosting your credit. Still, a personal loan on its own could help depending on your finances — given that you properly research lenders, stay disciplined during repayment and take extra care of your money throughout the process.

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

Barbara Balfour
Barbara Balfour |

Barbara Balfour is a writer at MagnifyMoney. You can email Barbara here

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