Best Personal Loans

Personal loans allow consumers to extend their finances by borrowing additional funds for large purchases. Consumers may choose to take out a loan to cover home repairs, wedding or vacation expenses, or even medical bills. Borrowers also use personal loans to consolidate debt, paying off large balances and taking on a single monthly payment at a fixed interest rate.

Lenders offer a variety of options when it comes to personal loans, so it’s important to compare rates and loan terms before you commit to borrowing the funds. In this article, we explain the important factors that affect your loan and compare some of the most popular lenders.

6 Factors To Consider When Choosing a Personal Loan

Plenty of factors go into determining the right loan amount and terms. Here are the top items to consider when you shop for a personal loan:

1. Interest Rates

Interest rates affect the overall cost of your loan and determine how much you’ll pay to borrow money from lenders. They’re calculated as a percentage based on the total amount of your personal loan.

Finding a loan with a lower interest rate can save you money over the life of the loan. However, it’s also important to calculate the loan’s annual percentage rate (APR). While interest rate refers strictly to the interest paid toward the loan’s total, APR calculates additional costs and fees associated with taking out the funds.

2. Credit Requirements

Most lenders require borrowers to hold a certain credit score before they approve a personal loan. To be eligible, many lenders look for a credit score that’s considered “fair” or “good” by the major credit reporting bureaus. This typically ranges from the mid-600s, with some lenders willing to work with borrowers with low credit or bad credit.

Keep in mind that while you may be able to secure a loan without a strong credit score, you’ll pay a higher APR. On the other hand, higher credit scores make you eligible for lower interest rates. Lenders also look at your income and debt-to-income ratio when considering you for a loan.

Before applying for a loan, It’s a good idea to check your credit score and dispute any errors so your credit history correctly reflects your financial choices. You can also pre-qualify for the loan with your chosen lender.

Here’s a look at how FICO credit scores and ratings can affect your ability to get a personal loan:

3. Loan Terms

The terms of each personal loan dictate the length, total payment, and APR of your agreement with a lender. Credit unions typically offer the lowest loan amounts for shorter periods of time. Most traditional banks offer loans for a period of 24-60 months, with a few lenders offering up to 120 months (10 years).

It’s important to note that the loan total, length, and APR determine your monthly payments. Before signing a loan, consider how long you want to take to repay your lender. You may pay a lower monthly fee for a longer term, but you’ll also pay more in interest. However, shorter loan terms mean higher monthly payments.

Pay attention to fees associated with your personal loan terms, which drive up your APR. You could pay fees for:

• Loan origination
• Credit checks
• Prepayment (paying off the loan early)
• Late payments

4. Loan Amounts

Traditional and online lenders typically offer personal loans starting at $1,000, increasing up to $200,000. Credit unions may offer a smaller loan of around $500-$600, usually with competitive rates.

5. Secured vs. Unsecured Loans

Most personal loans are unsecured, meaning there’s no collateral, such as a car or investment fund, to back the loan if you default. Unsecured loans have higher interest rates because they’re considered riskier for the lender. However, these loans are less of a risk for the borrower because you won’t lose your collateral if you default.

If you want to avoid paying more in interest and know you can pay back the loan without issue, consider taking out a secured personal loan. These loans are less common, and lenders may have strict requirements about what they’ll accept as collateral.

6. Repayment Options

When you set up a personal loan, you can work with your lender to determine your monthly payment and the length of the loan. Before you apply for any funds, it’s important to decide how long you want to take to repay the loan. Your repayment schedule affects your overall interest and APR.

Remember, a shorter term equals a smaller interest payment, while a longer term means more interest fees over the course of the loan. You’ll need to determine if it’s more important to have smaller monthly payments and a longer loan with more interest or larger monthly payments with a shorter loan term and less interest overall.

Best Lenders for Personal Loans

Traditional Banks

Here’s a look at some of the top lenders operating as traditional banks where you can easily walk into a local branch and set up a personal loan:

Truist

Truist offers unsecured personal loans with fixed interest rates. They typically give you a quick turnaround when you apply for a loan, offering same-day approval and funding, with better rates for excellent credit.

Wells Fargo

This major banking chain offers some of the largest personal loan limits with a possible APR as low as 7.49%, which is better than most credit unions. If you’re already a member, you may even save on interest by setting up automatic payments for your loan through your current account.

PNC

PNC Bank charges zero fees for application, origination, or prepayment. They also provide funds for flexible options such as moving expenses, weddings, and financing other major purchases.

Credit Unions

Credit Unions offer competitive rates and flexible options for both loan amounts and terms. Below are some comparative rates from top lenders:

Navy Federal Credit Union

Navy Federal provides loans for U.S. military service members and veterans, from small loans for everyday needs to large funds that help offset major financial burdens. Like the speed and precision of a Navy SEAL, If approved, you’ll likely receive same-day funding for your loan.

PenFed Credit Union

PenFed offers loans with terms of up to 60 months (five years). An effective choice for debt and credit card consolidation, PenFed doesn’t levy charges for balance transfers.

Alliant Credit Union

Funding up to $100,000, Alliant also features terms up to 60 months. In many cases, you’ll get your approval and funds on the same day, with no penalties for prepayment.

Online Lenders

Borrowing money from online lenders can offer more flexibility for consumers with varying financial backgrounds. Here’s a look at what some of the top online lenders offer.

SoFi

One of the leading online lenders, SoFi offers plenty of flexibility for both the size and length of a personal loan. They also offer same-day approval in many cases.

LendingClub

Specializing in personal loans, LendingClub connects consumers with lenders through its online platform. With no prepayment penalties and flexible monthly payment options, LendingClub gives borrowers many options for securing funds.

Upstart

Since Upstart works with credit scores as low as 300, it’s a good solution for building credit. This lender also takes education and employment into account, making it easier for some borrowers to secure funds without a strong credit history or high income.

Conquer Debt for Personal Loan Success

Before you take out a personal loan, it’s a good idea to get your finances in order. Paying off debt is a smart solution to prepare for borrowing large sums. For those with limited income, exploring low-income loans can be a viable option, as they often come with quick funding timelines and flexible repayment terms to make borrowing more manageable.

TurboDebt offers free consultations to determine your best debt relief solution. Our program has helped thousands of consumers pay off unsecured debts to rebuild credit and get a fresh financial start. You’ll find over 15,000 positive TurboDebt reviews across Trustpilot and Google, proving our record for trusted debt relief services.

With no upfront fees and flexible monthly payments, TurboDebt offers a fast track to eliminating debt so you can make big purchases and easily work with lenders. Contact us today to get started!