Did you know that at the time of this writing, the total debt American households owe amounts to a whopping $13.15 trillion? Credit card debts account for about $931 billion of that. And all in all, the average household has a debt of more than $137 thousand.
All these go to show just how most consumers in the country rely on financial services, and why more and more people look for the best personal loan lenders. After all, many cost-influencing factors–such as lower interest rate, discounts, and relaxed qualifying–also depend on the party that’ll issue the loan.
So, if you’ve plans to apply for unsecured loans, it’s best you get the lowdown on how to choose the right lender. Also, the things you can do to boost your chances of qualifying for such loans. And we’ll show you how in this post.
For the Newcomers: What’s a Personal Loan?
Before we get into the nitty-gritty of the whos, wheres, and hows of the best personal loans, it pays to know the basics of these financial services first.
So… What exactly is a personal loan?
The textbook definition of personal loans is that it’s a type of consumer loan used to finance personal expenditures. This covers almost anything that you (or your family) needs to pay for outside of commercial purposes. Here are a few examples:
- Medical fees
- Education or college tuition
- Home improvements, repairs, or renovations (including purchases of home appliances)
You’ll find these financing programs in either the secured or unsecured form. Secured loans are those you need a collateral or guarantor (also known as co-signor) for.
Unsecured loans, which you may have heard others call signature loans, often have less strict standards. Note, however, that most lending institutions, particularly banks and credit unions, require their borrowers to still have good credit history and creditworthiness. Failure to meet such conditions often leads to loan rejections.
Because personal loans often involve a hefty sum of money, paying it back takes time. As such, you’d have to repay them through installments over an agreed-upon term. The term refers to the length of time you need to make the repayments.
The Rise in the Popularity of Personal Loans
In the third quarter of 2015, there were 27.34 million consumers who carried personal loans, according to TransUnion. Back then, the personal loans amounted to a total of $247.98 billion. Unsecured loans accounted for $82.52 billion of this, while secured loans were at $165.46 billion.
Forbes Magazine also reported that as many as 10% of American adults were likely to apply for personal loans back in 2017. At the end of 2017, TransUnion reported that the total amount consumers owe in unsecured loans was $107 billion.
There’s no denying it: Personal loans continue to gain popularity with each passing year–and for many good reasons.
There’s the interest rate comparably lower than many other financing services. They’re also a great option for consumers who need quick access to funds. And for unsecured loans, the lack of needed security or “collateral.”
In fact, as many as 70% of surveyed individuals said that their personal loan helped them become more financially responsible. Another 68% cited that these financing services helped them reach their financial goals.
And don’t forget that personal loans can even serve as a great tool to improve one’s credit score. For people with bad credit, a personal loan can help them regain their reputation and creditworthiness. Creating a better debt consolidation program is another reason behind the continuously-increasing popularity of such loans.
All these said, you can already see why you won’t have a hard time finding providers of unsecured loans. What you need to be more concerned about is how to ensure you find the best place to get a personal loan.
The Hunt for the Best Personal Loan Lenders: Where to Start
How much money do you need?
This is one of the first thing lenders will ask you, so it’s important you’ve already determined how much you need to borrow. Personal loans vary in terms of minimum and maximum amount limits, with some ranging from $1,000 to $15,000.
Keep in mind, though, that just because you can borrow up to $15,000 doesn’t mean you should. There are other conditions you need to meet, such as the maximum allowable monthly repayment. For instance, your monthly payments shouldn’t go beyond 15% of the gross income you make every month.
From here, you can determine whether a secured or unsecured loan is your better option. Secured loans have lower interest rates, but you need a collateral, say your car, for example.
If not, then your next best option is to apply for an unsecured loan. This may have a higher interest rate, but it’s easier to qualify for seeing as you’re not required to provide collateral. You’ll even find the best nonsecured loans having no credit check requirement!
Make a list of what’s more important to you, such as if you prioritize a bigger loan amount or a longer repayment term. This’ll help make things easier once you start comparing personal loan lenders.
Comparing Personal Loan Lenders
The only way you can make certain you’re choosing the best personal loan offer, and provider, is through comparison. And much thanks to online loan comparison websites, you can quickly find and easily compare lending institutions.
You just need to provide details such as the specific type of loan you want. Do you want a secured or unsecured personal loan? Then, indicate the loan amount you need.
From here, you’ll receive a list of the most applicable and relevant offers that may best suit you.
To further simplify things for you, here’s a list of the top-rankers when it comes to the best personal loan lenders.
Marcus by Goldman Sachs
The lower credit score qualifying requirement is one of the main reasons consumers opt for personal loans from this lender. Even if your VantageScore has fallen to 580, you can still qualify for one of the financial services Marcus offers.
The company also caters to consumers from all over the country, with the only exception of Maryland. Also, there’s no need to worry about paying origination or prepayment fees.
You do need to have at least three years’ worth of credit history to qualify. Take note as well that the average estimated annual percentage rate (APR) from Marcus ranges from 11% to 16%.
OneMain Financial doesn’t have a minimum credit score requirement for borrowers. This means that you can still qualify for a personal loan even if you’re only starting to build your credit. This lack of credit score requirement also makes them a good choice if you have bad credit.
You can borrow anywhere from $1,500 to $30,000. For secured loans, the average APR is at 9.99%. For unsecured loans, this goes up to 16.05% to 35.99%.
One of the advantages of OneMain’s personal loans is the same-day funding process. As soon as the lender finishes processing your submitted requirements, you can expect the loan funds within the day.
Is your credit score at 620? If so, then you may want to consider taking out a personal loan from Upgrade. Whether you need a loan of $1,000 or $50,000, this lender can provide you with what you need, and in as little as 24 hours at that!
You do need a free cash flow of at least $1,000 and a debt-to-income ratio not exceeding 40% to qualify. APR also varies, ranging from 5.96% to 35.97%. You may also have to pay an origination fee of anywhere between 1% and 6%.
Upstart is another good personal loan lender option if you have a less-than-stellar credit score of 620. You can borrow starting from $1,000 up to $50,000. And the best part is, the company funds most approved applications within one day.
This lending institution is a good choice if you’re new to credit. Keep in mind, though, that the company requires a minimum yearly income of at least $12,000. There’s also the typical APR, which starts from 7.73% going up to 29.99%.
Avant has a higher loan amount minimum of $2,000 and it caters to people with credit scores having dipped to 580. The minimum gross yearly income requirement is $20,000, but you can borrow up to $35,000.
What’s more, as soon as you qualify for the personal loan, you can expect the funds as soon as the following day.
Choose the Best Personal Loan Lenders That Caters to Your Needs
The best personal loan lenders are the “best” because they deliver top-notch financial services to all kinds of borrowers, whether with outstanding or bad credit. They also make application fast, easy, and hassle-free, to ensure their qualified borrowers get access to the money as quickly as possible.
All these said, you want to choose a personal loan lending institution that offers you the best deal possible, especially in terms of reasonable and competitive rates. Let us help in your search. Connect with us now so we can assist you in finding the personal loan today.