Personal Loan Interest Rates – What To Look For
Personal loan interest rates are sometimes lower than credit card interest rates, making personal loans an attractive way to borrow money.
The amount you can borrow is based on your income, creditworthiness and sometimes other factors such as your educational background or line of work.
In some cases, you don’t even need any collateral to secure the loan.
You can use a personal loan for many purposes: to consolidate debt, take a vacation, pay for a wedding, pay for medical expenses, or even start a business.
Their potential flexibility is part of their appeal.
You might prefer a personal loan over a credit card if you need to pay for something you can’t use a credit card for.
Even if you can use a credit card, you might prefer a personal loan if you want to make sure you will repay the loan within a certain number of months.
With a credit card, you can drag out repayment indefinitely, and the interest can be costly.
Personal loans, by contrast, impose repayment discipline.
They also require the same payment each month, making them easy to budget for.
And they’re a far superior alternative to payday loans, which are very short term loans and have some of the highest interest rates around.
If you need a few years to repay a loan — not just a few weeks — a personal loan is the better option.
Interest rates change from time to time as market interest rates and the lending business change.
All loans described below have fixed rates and don’t require collateral.
Rates shown are interest rates, not annual percentage rates (APR); APR factors in not just the loan’s interest rate but also the associated fees.
We’ve displayed the associated fees separately.
Loan minimums may be higher than those listed below in three states: Georgia, Massachusetts, and Ohio.
Some lenders don’t issue loans in all 50 states.
With those caveats out of the way, here’s what’s available from some personal lenders in today’s market.
Online-Only Lenders
Online-only lenders may be able to offer you a lower interest rate than a brick-and-mortar bank since they don’t have the overhead associated with physical branches.
Making a loan request is also incredibly convenient since you can manage the entire process from home and since these lenders tend to use the latest technology and the most streamlined procedures — they’re innovators that aren’t set in their ways.
And sometimes, they qualify applicants using criteria that traditional lenders won’t consider. SoFi is one example.
SoFi
Rates:
5.49% to 14.24% after 0.25% autopay discount
Repayment Period:
3 to 7 years
Origination Fee:
None
Prepayment Penalty:
None
Perks:
- College graduates have an advantage in getting approved.
- If you lose your job, SoFi will temporarily pause your payments and help you find a new job.
- Maximum loan amount is $100,000.
- Late fee is 4% of the payment due or $5, whichever is less, after 15-day grace period.
- Choose your own repayment date.
- Variable rates available.
Drawbacks:
- Minimum loan amount is $5,000.
Upstart
Rates:
7.37% to 29.99%
Repayment Period:
3 or 5 years
Origination Fee:
0% to 8%, deducted from loan proceeds
Prepayment Penalty:
None
Perks:
- Upstart factors your education and work experience into its loan decisions.
- Borrow as little as $1,000 and as much as $50,000.
- Considers borrowers with no credit score. Otherwise, minimum credit score is 620.
- Loan funds available within 1 business day of loan approval.
Drawbacks:
- Late fee of $15 or 5% of the amount due, whichever is higher, after 10-day grace period.
- Applicants with a history of bankruptcy, collections, charge-offs, or delinquent payments are not eligible.
FreedomPlus
Rates:
4.99% to 26.99%
Repayment Period:
2 to 5 years
Origination Fee:
0% to 5%
Prepayment Penalty:
None
Perks:
- Borrow as much as $35,000.
- Fast funding with same-day approvals and money in your account within 48 hours.
Drawbacks:
- Minimum loan amount is $10,000.
- Best rate applies to borrowers with at least two of the following:
- wants to borrow $15,000 for two years with a co-borrower,
- has at least $40,000 in retirement savings,
- or uses at least 50% of the proceeds to repay existing debt.
Avant
Rates:
9.95% to 35.99%
Repayment Period:
2 to 5 years
Administration Fee:
1.50% to 4.75%
Prepayment Penalty:
None
Perks:
- Borrow as little as $2,000 and as much as $35,000.
- Funds available as quickly as the next business day.
- Works with borrowers who have lower credit scores; the typical borrower’s score is 600 to 700.
Drawbacks:
- $25 late fee after 10-day grace period.
Lending Point
Rates:
15.49% to 34.99%
Repayment Period:
2 to 4 years
Origination Fee:
0% to 6%
Prepayment Penalty:
None
Perks:
- Works with customers who have credit in the 600s.
- Borrow $3,500 to $25,000 and get funds as soon as the next business day.
- Origination fee can be added to rather than subtracted from your loan amount.
- Customers who have been at their current job for at least 12 months, who have a responsible banking history, and who have a recent history of responsible credit use can get favorable consideration without a great credit score.
- Twice-monthly payment schedule available.
Drawbacks:
- Higher interest rates than other online lenders.
- Loans not available in 18 states.
If none of these lenders seems like the right match or if you want to shop around more, other online lenders to consider include BestEgg, Earnest, LendingClub, Prosper, and LightStream.
Banks
Depending on the bank, a bank loan can be as streamlined as an online loan or as plodding as writing a research paper before the internet existed.
Applying with a bank may give you the option to apply in person if you need extra help, and it might appeal to you if you already have a relationship with a bank you like.
Two of the nation’s largest banks, Chase and Bank of America, do not offer personal loans at all.
Marcus by Goldman Sachs
Rates:
6.99% to 23.99%
Repayment Period:
3 to 6 years
Origination Fee:
None
Prepayment Penalty:
None
Perks:
- Borrow as much as $40,000.
- High level of transparency about fees and other loan details.
- No late fees, though your credit report will still reflect late payments and unpaid loan balances continue to accumulate interest.
- Change your monthly payment date up to three times over your loan term.
- Choose to defer one payment after 12 months of consecutive payments and no interest will be charged during the deferral month.
- Customized payment options available.
- Funds available within two days of application approval.
- Apply online or on paper.
Drawbacks:
- Smallest loan amount is $3,500.
Wells Fargo
Rates:
6.99% to 19.99%
Repayment Period:
1 to 5 years
Origination Fee:
None
Prepayment Penalty:
None
Perks:
- Borrow up to $100,000.
- Discount your rate by 0.25% if you have a qualifying Wells Fargo checking account and make automatic payments from a Wells Fargo deposit account.
Drawbacks:
- Smallest loan amount is $3,000.
- Wells Fargo only gives personal loans to borrowers with excellent credit.
Citibank
Rates:
7.99% to 17.99% APR on a $10,000 loan; rates vary by loan amount
Repayment Period:
1 to 5 years
Origination fee:
None
Prepayment Penalty:
Unknown
Perks:
- Qualify with an annual income as low as $10,500.
- Borrow as little as $2,000 and as much as $50,000 if you’re a Citibank customer.
- Lower rate available if you make automatic payments from a Citibank account.
- Customers with a large Citibank account balance may qualify for a lower rate.
- Joint applications are allowed.
Drawbacks:
- You must call and can’t apply online if you want to borrow $30,001 to $50,000.
- APR may increase by 2% if you default.
- Website transparency regarding interest rates and fees is poor.
- Non-Citibank customers can’t borrow more than $12,500 and must visit a branch to apply.
- Loans can take 5 business days to fund.
Personal Loan Interest Rates – The Bottom Line
A personal loan can be a great way to save money compared to charging purchases to a credit card or getting a payday loan.
Regardless of where you go, you’ll get better personal loan interest rates if you have very good to excellent credit than if you have average, bad, or poor credit.
Rates may be lower the shorter the loan term is and higher the longer your loan term gets.
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