Topics:Personal Loans 101 Financial Advice Personal Loan Industry News Home Improvement Financing Credit Advice Debt Consolidation Personal Finance Basics Personal Finance Retirement Interest and APR Emergency Loans Bad Credit
"There are plenty of fish in the sea." While this might not be true of your dating life, it's certainly true of personal loans. Personal lenders, which nowadays are often offered via peer-to-peer lending sites, occupy a space somewhere between credit cards and traditional mortgage loans, between banks and payday loans. And, yes, there are lots of them. To get an idea of just how many personal lenders there are out there, one need only look to Lending Club, "the world's largest online marketplace connecting borrowers and investors." On this site, the lenders aren't banks but individual investors who take a look at your application and decide if it's a good fit for them. So the number of total investors (or lenders) on Lending Club can number in the thousands. And that's just part of the tens of thousands of personal lenders that are now available to consumers. And then there are all the things you can use personal loans for. Unlike home loans or auto loans, which are pretty straightforward, personal loans can be used for almost anything. On Lending Club, for example, most loans go to debt consolidation or credit card refinancing. People have also been known to take out personal loans to finance a wedding, buy their uncle's car, or just take that dream vacation that has always seemed out of reach. So just to review: thousands of lenders, multiple uses. What could possibly go wrong? Yes, there is a downside. As sites like Lending Club, LendingTree, and Prosper make it easier for dozens of lenders to offer you personal loans, it becomes easy-too easy-to say 'yes' without really considering your options. As with your love life, signing on the dotted line without doing your due diligence can literally ruin your life. So before you fall in love with a personal loan, you need to recognize the warning signs that a particular loan might not be a good match. If you see any of these five signs, you might want to think twice about the personal loan in front of you: 1. The loan is the first and only one you've looked at Nothing against marrying your high school sweetheart, but experience can give you a big advantage when searching for both a soulmate and a personal loan. Let's say you submit your information on a site like Prosper or Lending Club. Before you have even hit 'submit' the phone rings and a lender is assuring you he has a "not-to-be-passed-up" offer for you. You need a loan. He's ready to give you one. You're off to the races, right? Wrong. As mentioned above, the number of peer-to-peer and other personal lenders out there is enormous and their rates and fees vary greatly. For this reason, there's a very strong likelihood that, as good as this first loan offer is, you will find others with even better rates and conditions. "As with any financial product, when it comes to taking out a personal loan it pays to shop around and compare APRs," says Emma Lunn of The Independent. "Your bank may say it offers preferential rates to its current account customers but you might still find there are cheaper loans available elsewhere." Our advice: it's in your best interest (pun intended) to take your time and entertain multiple offers before settling on one. 2. Your credit score is below 640 If you had the impression that personal lenders are easy, let us dispel that right now. Personal lenders are business people looking to invest their money in someone in hopes of making a return on that investment. To put it bluntly, personal lenders are not payday lenders. They won't lend to just anybody. The upside of this is that their interest rates and terms will be more reasonable because they don't need to protect themselves from investments gone bad. The challenge is that their requirements for borrowing from them are more stringent. As with other types of loans, personal lenders will use your credit score, among other factors, to determine if they should loan you money and how much they should charge in interest. According to Harry Langenberg at LoanNow.com, any credit score below 640 will pretty much keep any investors and lenders away from you. Our advice: if your credit score is languishing in the sub-700 realm, you owe it to yourself to get that score up before applying for any loans. 3. You own a home Owning your own home, especially a home with some equity built up in it, could mean that you've overlooked a loan option, possibly with a better rate. Consider, for a moment, that peer-to-peer loans and other personal loans are what is referred to as unsecured debt. This means no one is paying any insurance or guaranteeing repayment, and there is no asset (like a car or a house) to act as collateral if you become unable to pay off the loan. Because this scenario freaks out investors and all lenders, they cover their backs by charging higher interest rates and sometimes requiring that you pay for insurance along with your loan payments. What many homeowners don't know, however, is that the property right under their feet might be their ticket to a better loan with a much lower interest rate than your typical personal loan. "A home equity loan or home equity line of credit can often be cheaper than an unsecured personal loan," explains Claire Tsosie at NerdWallet. "Keep in mind that using your home as collateral means that if you default, you could lose your home." Our advice: check with your bank or local credit union to see if you qualify for a home equity loan or home equity line of credit, which are bound to have lower interest rates than your typical personal loan and with no extra insurance payment. 4. The lender is not state-licensed, has pending lawsuits, and/or has a poor BBB rating You knew this was coming. Some fraudulent lenders have adopted what can only be described as the "one-night stand" of personal loans, promising approval for loans with "too-good-to-be-true" interest. All you have to do is fork out a small fee. As soon as the payment is sent over, the fictional lender goes silent. They don't answer calls. They don't reply to emails. In many cases, weeks later, they do respond but just to tell you that your "pre-approved" loan just didn't shake out. Oh, and that small fee? It's non-refundable. Naturally. Unfortunately, advance fee loan scams and other loan fraud are just a part of the explosion in the number of personal lenders. As personal lending options multiply, this also increases the odds of a few bad apples sneaking in. Our advice: First, run from any lender who requires an advanced fee to determine if you're approved for a loan. Second, make sure any lender you communicate with is licensed in your state, has no past or pending lawsuits, and has a strong rating with the Better Business Bureau (BBB). If they don't pass these checks, move on to the next one. 5. You've seen credit cards with better interest rates To be sure, personal loans (namely those generated by the peer-to-peer lending model) are intended to deliver lower interest rates. After all, the whole peer-to-peer lending process is specifically designed to get the lowest possible rate for borrowers, given their credit history and financial situation. But that doesn't mean they're not sometimes outdone by credit cards. Those zero-percent introductory offers on credit cards, in particular, are your friend. For example, let's say you need to pay for travel to attend your sister's wedding in Botswana. The best offer you can get on Lending Club has a decent interest rate of 15% (which starts to accrue on the day you take out the loan). Sounds pretty good, right? But now let's say you just got a credit card ad in the mail offering 0% APR for 12 months. If you can pay off the loan within the 12 months, the credit card is certainly the smarter option. If not, then do the math and determine which option (the personal loan or the credit card) will be the cheapest when everything is paid off. Our advice: Don't limit your options just to loans, and don't avoid credit cards just because of all the negative press about them. Be objective and strategic about how you use all forms of debt, and you just might end up getting a killer deal. When You Know, You Know Ultimately, finding the perfect personal loan is the end result of lots of research and patience. It's about recognizing all of your options ( which is more than just personal loans) and knowing the right questions to ask about each one. It's setting yourself up for the best possible outcome by making sure you've got your credit score in order. The good news, peer-to-peer lending, and other services are only leveling the playing field and giving you the best shot at really great loans. To see how the various personal lenders measure up, visit our Personal Loans Reviews page today!
Personal loan companies often offer a wide APR range. The rate can vary from 2 percent to over 30 percent, which can be confusing for potential borrowers. What determines the APR? Why is it important? How do I know if I will pay 2 percent, 5 percent or even 30 percent? Many key factors influence the APR of your personal loan and determine if your loan falls on the lower or higher end of the advertised range. What is an APR? An Annual Percentage Rate (APR), is the yearly amount borrowers will pay on a loan, expressed as a percentage. It differs from interest rates because it accounts for additional fees and charges (except compounding); therefore, it is usually a higher percentage than your normal interest rate. APRs are particularly helpful in comparing loans. While many factors determine if a loan is right for your needs, generally you want to look for a lower APR. How is APR calculated? APR is calculated by multiplying the interest rate by the number of periods in a year in which that rate is applied. Investopedia represents this calculation with the following formula: APR = (((fees+interest/principal)/# of days in loan term) x 365) x 100 What factors influence APR? A number of factors influence a loan’s APR. Six of the most influential factors include the following: Credit score and history Debt-to-income ratio Annual income Employment history Loan terms Interest rate type (fixed or variable) Credit score and history Your credit score and history is often the most influential factor on your APR. A variety of factors work together to form your credit score: Payment history Credit utilization ratio Length of credit history New credit — number of accounts, new accounts opened, etc. Credit mix — the different types of debt that you have Typically, the higher your credit score, the lower your loan’s interest rate. Some personal loan companies have a minimum requirement for credit scores. Best Egg FreedomPlus SoFi Upgrade Upstart Min. credit score 600 620 680 600 620 Minimum credit score requirements do not guarantee that you’ll be approved for a loan, and in most cases you will not qualify for the lowest advertised interest rate. To get the lowest rate possible, you’ll need to have an excellent credit score (typically 700+). If your credit score is low and you’d like to improve it to either increase your chances of approval, or qualifying for a lower interest rate, there are some options for improving your credit score: Make on-time payments Keep your credit utilization ratio low Avoid closing credit cards Check and/or monitor your credit score Having a healthy credit score is key for securing a low interest rate, and so it is in your best interest to ensure that it is high and that you’re doing what you can to keep it that way. Compare Personal Loan Lenders Learn more about personal loan products, rates, and terms by looking at the top-rated companies and their offerings. Compare Debt-to-income ratio Your debt-to-income (DTI) ratio is another major factor when qualifying for personal loans. Your ratio is determined by your monthly debt (such as a mortgage, car loan, etc.) divided by your gross monthly income. This number is typically represented as a percentage. A lower percentage indicates less debt relative to your income. Lenders prefer to see a lower DTI ratio smaller than 36 percent, although there might still be room for negotiation. Annual income Annual income affects your debt-to-income ratio and is often taken into consideration when you are offered an APR. Higher incomes typically lead to lower rates. Some lenders may require a minimum annual income. Employment history Lenders want to know that their loans will be paid in full. They may look at your employment status and history to determine if you are a high risk: for example, if you change jobs frequently. Customers who are self-employed may also have to submit additional information to verify their employment status and financial stability. Loan terms Sometimes the length of the loan may impact its APR. A shorter loan length generally has a lower APR. Interest rate type (fixed or variable) Many lenders offer both variable and fixed interest rates, which is directly tied to the APR you will get on a loan. A variable interest rate is an interest rate that will fluctuate throughout your loan term because it is determined by underlying market factors. Typically, variable rates will be lower, at least at the beginning of the life of a loan; however, the rate will likely rise throughout the life of your loan. A fixed interest rate will not change throughout the life of your loan. While this can be helpful since your monthly payments will never change, fixed rates are generally higher than variable rates. Can my APR be negotiated? Depending on your lender — national bank, credit union, or online lender — you may be able to negotiate a lower interest rate on your personal loan. Banks are generally very strict in their lending practices and are less likely to budge on rates. In most cases, if you apply for a loan with a bank and are approved, the approval terms are final and you won’t be able to make any changes to your rate or terms. It is important to note that this is also likely the case with online lenders. Where you might be more able to negotiate a lower interest rate is if you are working with a local credit union. Because credit unions work with members and often have less strict rules, there is a greater chance that you’d be able to negotiate your rates. Overall, it is easier to negotiate rates if you have a history with a bank or credit union. Thus, negotiating rates with an online lender could be difficult because all they know about you is the information you provide — credit score, debt-to-income ratio, etc. However, if you have worked with a lender before or if you can prove that you have a stable job and income, this could put you in a better position for negotiating rates. The bottom line Your annual percentage rate (APR) will be a large defining piece of how much you will pay on your loan each month, and you’ll likely want to keep it as low as possible. And the best place to start is by knowing what an APR is and what affects it. Top Personal Loan Lenders Compare APRs, terms, and fees to find the best lender for you. Compare
A study conducted by WisePiggy.com in 2016 discovered that 15 percent of Americans have no cash savings. About one-third of participants reported having only enough cash savings to cover a mere three months of living expenses. These numbers explain the growing popularity of personal loans and why many companies are advertising this type of loan. Personal loans are unique in offering borrowers flexibility. Some companies set restrictions, such as prohibiting the use of the loan for educational expenses; however, most personal loans may be used at the discretion of the borrower. With this level of freedom, the possibilities are endless. Here are some of the most common uses for a personal loan: 1. Credit Card Debt One of the most common uses for a personal loan is credit card debt consolidation. Americans owe over $1 trillion in credit card debt, creating an average debt of $8,301 per household. Consumers who only pay the minimum balance on their credit cards risk dragging out their debt indefinitely. In addition, many credit cards have higher APRs than personal loans. A personal loan may be especially beneficial for people with multiple credit card bills. Consolidating all your debts into one monthly payment, with a specified term length, can give you more control over your debt. Moreover, opening a new line of credit and paying off current debt can help raise your credit score. 2. Home Repairs and Improvement Life is full of the unexpected. Homeowners cannot predict damage due to the elements. Flooded basements and other major damages demand immediate attention. In addition, consumers may need more space to accommodate a growing family. Upgrades, re-landscaping, and other renovations can add value to your home. Personal loans may be a quick and affordable way to cover these type of expenses, especially for consumers with good credit scores. 3. Educational Expenses There are many great options for student loans; however, every college student knows that educational expenses extend beyond tuition. Depending on the amount and limits of your student loan, you may need additional funds to cover textbooks, housing, and living expenses while at school. Personal loans may help students cover these additional expenses. 4. Starting a Business Many companies and financial institutions provide traditional business loans; however, new entrepreneurs without current revenue may not qualify for this type of loan. Some companies require $50,000 in annual revenue, an impossible task for a new start-up. A personal loan may be a helpful option to finally start your dream business. 5. Medical Expenses Medical bills for both insured and uninsured patients can quickly add up. The average cost for a trip to the emergency room is $1,233. The uninsured face the worry of drowning in medical bills. Even insured patients are not exempt from high bills, especially patients with high deductible plans. In addition, not all medical procedures are covered by insurance companies. A personal loan may allow you to have elective procedures or pay off already accrued bills. These top five uses for a personal loan are just some of the many ways you can use this type of loan. Other common uses include vacations, weddings, and a variety of other major purchases. Personal loans are not right for every consumer or every circumstance. However, if you want to consolidate credit card debt, pay for home repairs or improvements, cover educational expenses, start a business, or pay medical bills, check out our top-rated personal loan companies and get started today.
Personal loans are generally a bit different than other types of loans. You might need a personal loan to meet your everyday expenses, plan a vacation, or even pay for a wedding. When you are in the process of applying for a personal loan, it's important to know what to expect so you can increase your chances of approval. The following tips will help you learn how to qualify for a personal loan that meets your needs in the best way possible. 1. Decide on a Loan Type Make sure that you understand what kind of loan you are applying for. There are a number of different types of personal loans. For example, you have the option to apply for a secure or unsecured personal loan. Unsecured personal loans don't require collateral such as your home, car, or other personal property. Interest rates are typically higher for unsecured loans due to the additional risk to lenders. If you default on an unsecured loan, the lender cannot foreclose your home loan or repossess your vehicle. Secured personal loans, on the other hand, require collateral that secures your loan and can be seized in the event of default. Other personal loan options include fixed-rate and variable rate personal loans, installment loans, lines of credit, and short term loans. 2. Improve Your Credit Score Your credit score will make a significant difference in the interest rate you will be offered on your personal loan. For example, with a subpar credit score, you will likely be paying more than 20 percent in interest. With an excellent credit score, your interest rate could be lower than 5 percent. Credit scores are usually categorized as follows: 760+ Excellent Credit 700 Good Credit 640 Fair Credit Remember, your credit score can always be improved. If your credit score isn't what you'd like it to be, you can raise it by settling your bills on time and never missing a payment. Believe it or not, there is actually a way you can be approved for a loan without any credit history at all. 3. Find the Right Lender Take the time to consider your options and shop for the right personal loan for you and your needs. Available financing sources include banks, credit unions, and online lenders. Loan variety and interest rates vary by institution, so it's a good idea to do your own research first before consulting with company representatives. Furthermore, avoid applying for as many personal loans as possible. This might seem like a good idea at first, but it has the potential to hurt your credit score in the future. 4. Only Take Out What You Can Afford Assess your current financial situation to figure out how much you can afford to borrow with a personal loan. Don’t take on more than you can handle. Some lenders might try to push you into taking out more money than you need, which could leave you in a lot of debt. Make up your mind about the amount you need before meeting with a lender. 5. Read the Fine Print When you do meet with a lender, be sure to ask for a full disclosure of all the loan terms and read the fine print of the contract so you understand all terms, monthly payments, fees, late payments penalties, and repayments options attached to the loan. If you know exactly what you're signing up for, it will make the process much easier and less stressful. You might find it difficult to choose a financial institution that will meet all of the personal loans qualifications you are searching for. BestCompany.com makes this process easier by ranking and reviewing multiple personal loan institutions. Based on the input of industry experts, we’ve developed a ranking criteria that takes interest rates, contract length, time in business, and other important factors to consider when choosing the best personal loan company for you. Most importantly, we’ve aggregated reviews about the financial institutions from real consumers so you can read what they think about the companies you are researching. Click here to see our top ranked personal loan companies.
Did you know that in 2020 20.9 million Americans had personal loans? And it is likely that the number will only keep climbing, just as it did in the past decade. Personal loans can be a good place to turn if you are low on funds, want to consolidate high-interest debt, or make a large purchase. Many people take out loans for home remodeling, new cars, or for student debt. However, there are a few important things that you should know about personal loans before you sign on the dotted line, including the following: Or skip ahead and read about our top personal loan lenders 1. The difference between an unsecured and secured personal loan Before you take out a personal loan it is first important to understand the types of loans available to you, mainly the difference between unsecured and secured personal loans. An unsecured loan is the more common type of personal loan, and is not backed by collateral or protected by a guarantor. This can pose a risk to lenders, as there is no protection for them if you are unable to repay your loan. For this reason, interest rates may be higher for unsecured loans and lenders may heavily rely on creditworthiness to determine your eligibility for a loan. A secured loan is backed by collateral — assets such as a home or a car — which incentivizes borrowers to repay their debt because the lender could seize the collateral if payments aren’t made. In this case, since borrowers are taking a greater risk in putting up collateral, lenders are more likely to accept borrowers with weaker credit scores. The majority of personal loan companies only offer unsecured personal loans, although some lenders may offer both unsecured and secured loans. Therefore, it is important to ensure that your credit score is in good standing and that you’ll be able to afford a higher interest rate. 2. How interest rates work Interest rates on personal loans will either be fixed or variable, which will generally only affect your monthly payment amount. A fixed interest rate means that your rate will stay the same throughout the life of your loan, which means that your monthly payment will never change and you will always know what you owe month to month. A variable interest rate, on the other hand, will fluctuate throughout the life of your loan, because your rate will be based on the market which consistently rises and falls. This means that your monthly payment may vary throughout your loan term, but your initial interest rate may be lower to account for the fact that it will likely rise some as you’re paying off your loan. Many personal loan lenders offer both a fixed and variable interest rate option, allowing you to choose what will best fit your needs. 3. Your credit score When taking on any type of debt, your credit score is a crucial player in determining whether or not you qualify to borrow money, but also decides the rates and terms that you will receive. Although other factors, such as annual income and debt-to-income ratio, may be considered, having a stellar credit score is the key to securing a low interest rate. Minimum credit score requirements will vary by lender, but a FICO score from 670 to 739 or higher would provide you with greater flexibility in choosing a lender, but could also get you better interest rates. However, top lenders, such as Best Egg or SoFi, may accept borrowers with credit scores as low as 600. If you do not have an established credit history, or you just have bad credit, some lenders have an option to apply with a cosigner. Applying for a personal loan with a creditworthy cosigner adds an additional, and higher, credit score to your application which can increase your chances of approval and get you a lower interest rate. If this would be helpful for you, be sure to confirm whether or not your potential lender offers this option. 4. What you’ll be using the loan for Different from a student loan or home loan, a personal loan can be used for a variety of purposes. Thus, when you’re looking into getting a personal loan, it is important to nail down exactly what you are going to use the loan for. The majority of lenders allow borrowers to use a personal loan for whatever purpose they’d like, which can provide some flexibility, but knowing exactly what you need a loan for will help you determine the exact loan amount you will need. Unlike home, car, and student loans, personal loans can be used for a variety of purposes, including debt consolidation, home improvement, major purchases, vacations, car financing, wedding costs, medical bills, and business expenses. Some personal loan companies have stricter loan use stipulations than others, so borrowers who are unsure if they will be allowed to use funds for their desired purpose should talk to the potential lender before applying. One of the more popular uses for a personal loan is debt consolidation, which allows a borrower to combine multiple debts, usually credit card debt, into one in a new loan with better rates and terms. Michael Micheletti freedom debt relief; Industry Expert Consolidating debt with a personal loan: Debt consolidation through a personal loan is popular because it can be so effective. For someone with credit card accounts bearing high interest rates, a personal loan could allow them to take out one loan with a lower interest rate, use the proceeds to pay off all the high-interest accounts, and then have just one payment a month for the personal loan (with a lower interest rate). 5. Possible fees A number of fees may be associated with a personal loan. For example, you could incur application fees, origination fees, check processing fees, late fees, or prepayment fees. It's wise to confirm fees with your potential lender before applying so that you are aware of exactly what additional costs you may have. 6. How to increase your chances of approval If you are rejected for a personal loan or just want to boost your chances of approval upon applying, there are a few steps you can take: Clean up and manage your credit Check your credit report for errors that could be hurting your overall score, and get on top of payments if you haven’t already. Making consistent on-time payments is one surefire way to increase your credit score and bolster your credit history. Boost your income Some personal loan lenders will also take a look at your income when considering you for loan approval. This can be helpful if you have less-than-perfect credit but a steady income; but, if you have a low income, this could make it difficult to qualify for a personal loan. Thus, you could seek to boost your income by taking on a side hustle or another job. Take care of other debt When you are looking to take out a loan, which is essentially more debt, it can be helpful to pay down and manage other debts you may have. Paying down debt combined with increasing your income can increase your debt-to-income (DTI) ratio, which could improve your chances of approval. Apply with a cosigner Another option is to apply for a loan with a cosigner, adding another and stronger credit score to your application. A cosigner provides a lender with greater assurance that payments will be made since the cosigner would be responsible for paying off the debt if the borrower can’t. Applying with a cosigner could improve your chances of approval, but also help you get a lower interest rate. It is important to note that not all lenders accept cosigners. Make sure you check with your lender to see if this is an available option. Find the right lender Not all personal loan lenders are the same. Therefore, it is important to do some research and comparison so that you can find the best lender to fit your needs. Consider your credit score, what loan amount you would need, whether you’ll need to apply with a cosigner, etc. These factors can vary between lenders, and you might have a greater chance of getting approved with one than another. While these aren’t necessarily your only loan approval boosting options, they can be a good place to start. The Importance of Comparing Lenders An important factor in getting a personal loan is taking the time to compare lenders, allowing you to find the best interest possible. Most personal loan lenders have a prequalification process with a soft credit pull which shouldn’t impact your credit score. This can allow you to prequalify with multiple lenders and to compare the rates and terms you receive. The Top Personal Loan Lenders Best Egg search Best Egg Rates & Terms: Loan amounts: $2,000-$5,000 Time to funding: As quick as 1 business day after approval and verification Origination fee: 0.99-5.99% Minimum income: $35,000 Minimum credit score: 600 Loan repayment terms: 36-60 months Rates (fixed): 5.99-29.99% APR On BestCompany.com, Best Egg is a consumer favorite, with 98 percent of reviews awarding the company 4 or 5 stars overall. "This was my second experience with Best Egg, and it was even easier this time around. They were fast, effective, and delivered the results and help I needed. Thank you!" - Eric, July 9, 2020 Best Egg’s personal loan services and options are competitive in the industry, accepting a lower minimum credit score than the majority of other lenders and offering low rates. Customers speak to these features in their reviews but also highlight the speed and simplicity of Best Egg’s application and approval process, in addition to superior customer service. Many customers say that they would recommend Best Egg to their friends and family. Read more Best Egg reviews FreedomPlus search FreedomPlus Rates & Terms: Loan amounts: $7,500-$40,000 Time to funding: Within 48 hours of approval Origination fee: 0-4.99% Minimum income: undisclosed Minimum credit score: 620 Loan repayment terms: 24-60 months Rates: 7.99-29.99% APR With 90 percent of customer reviews awarding FreedomPlus 4 or 5 stars, the company could be a good choice for your personal loan needs. Many reviews highlight great experiences with customer service in which they received the help they needed in a timely and professional manner. On the flip side, some reviews also detail bad experience with customer service in which they were told conflicting information and did not receive the help they wanted and/or expected. Beyond customer service, customers do highlight speed and simplicity in the FreedomPlus application and approval process. "It was easier than I thought it was going to be to get the loan. What a relief to get the help to pay off my credit card debt. Customer service rep, Terrance, was very helpful and informative. FreedomPlus so far so good." - Jessica, October 31, 2019 Read more FreedomPlus reviews SoFi search SoFi Rates & Terms: Loan amounts: $5,000-$100,000 Time to funding: undisclosed Origination fee: none Minimum income: none Minimum credit score: 680 Loan repayment terms: 24-84 months Rates: 5.99-20.69% APR (with AutoPay) SoFi is another top personal loan contender, pulling in 4 and 5 star reviews from 96 percent of customers who have left reviews on BestCompany.com. It is important to note that the majority of reviews are somewhat outdated, but many of these reviews highlight a quick and easy loan process and low rates, in addition to responsive and helpful customer service. "Quick, easy loan process and competitive rate. The customer service throughout the process has been fantastic! Immediately answered my calls and provided solid info. Much easier to navigate than any other loan." - Matt, December 14, 2018 Read more SoFi reviews Compare Personal Loan Lenders Now that you know what to do and look for before taking out a personal loan, read complete reviews and what customers have to say about top personal loan companies. Compare
Earlier this month, Lending Club, a pioneer in the peer-to-peer online lending industry announced its CEO and board chairman Renaud Laplanche had stepped down. Of itself, this resignation may not seem like that big a deal. But throw in an internal investigation, an outside investigation by a New York law firm, subpoena from the Department of Justice, a lawsuit from investors-all amid an increasingly shaky stock valuation-and the story is not quite as simple as it appears at first glance. To put these events into context, let's start at the beginning: 2006: Renaud Laplanche co-founds Lending Club as a Facebook application. 2007: After receiving $10.26 million in Series A funding from Norwest Venture Partners and Canaan Partners, Lending Club becomes a full-scale peer-to-peer lending company. 2008: Investments were paused for six months until Lending Club registered its products with the Securities and Exchange Commission (SEC). 2009: Lending Club receives $12 million in Series B funding led by Morgenthaler Ventures. 2010: Lending Club raises $24.5 million in Series C funding, led by Foundation Capital. 2011: Lending Club raises $25 million in venture capital from Union Square Ventures and Thomvest; receives a $275 million post-money valuation; relocates to downtown San Francisco, CA. 2012: The company expands to 80 employees, averages $1.5 million per day in loan origination; surpasses $1 billion in loans by November. 2013: Lending Club partners with Google and small banks. 2014: Lending Club goes public with an initial public offering of $15. 2015 - 2016: The peer-to-peer lending industry diversifies, and competition increases. Lending Club spends more on marketing, and attracts the attention of financial regulators. Meanwhile, Laplanche turns to Wall Street banks to help him sell Lending Club loans as securities through a process called securitization (despite his public rejection of the process). The Lending Club investor pool expands. Early 2016: Lending Club selects investment groups Goldman Sachs Group and Jeffries LLC to put the deal in motion. March 2016: A Lending Club engineer named Andreas Oesterer informs Laplanche that he (Oesterer) falsified the dates on $3 million of loans bought by Jeffries, in apparent response to Matt Wierman's (senior VP) request. Tim Bogan, Lending Club's compliance chief, conducts an internal investigation, and discovers other loans (in addition to the $3 million) sold to Jeffries contained errors. March 23, 2016: The investigation revealed that the staff had knowingly sold $22 million in loans in March (and as would be later discovered, April) that did not meet buyers' requirements; specifically regarding the language of the "power of attorney" disclosure. Jeffries wanted the disclosure to be more prominently featured, which Lending Club agreed to do, but didn't-violating the terms of the deal. March 31, 2016: Lending Club amasses nearly $19 billion in loans. Mid-April 2016: Lending Club buys back the loans Jeffries didn't want and finds another buyer. By now it is clear that Laplanche knew the loans didn't match Jeffries's criteria, but allowed them to be sold anyway. April 22, 2016: Lending Club becomes the largest online lender in the U.S. (by volume); Laplanche accepts the "Disruptive Innovation" award in New York. April 26, 2016: Lending Club announces in a securities filing it had invested $10 million in a holding company of funds that bought Lending Club loans. An outside investigation by the law firm Arnold & Porter reveals that Laplanche had a 2% interest in that investor, and he failed to disclose this information to the board. May 3, 2016: Laplanche meets with the board, which requires swift action following the law firm's investigation into the Jeffries deal; it wanted to fire Wierman, Jeff Bogan (no relation to Tim Bogan), and Adelina Grozdanova who all were involved in plans to pursue securitization. Days before this meeting, Grozdanova had been pitching to fund managers on buying into the soon-to-be-completed bond deal, while Bogan oversaw the company's efforts to sell loans to investors. May 3 - 5, 2016: Board was presented with evidence that Laplanche knew about the $22 million in incorrect loans. Mr. Morris is named board chairman in Laplanche's stead, though this was not publicly announced. May 6, 2016: Laplanche steps down as CEO and board chairman. May 9, 2016: The Department of Justice files a subpoena against Lending Club regarding the Jeffries case. Meanwhile, the company announces Laplanche's and three other's resignations/firings. By the end of the trading day, Lending Club experiences a 35% stock price drop, subtracting $950 million in market value. May 16, 2016: Lending Club's stock value drops by 55%, as rececession-wary investors become cautious about the peer-to-peer lending industry at large. Lending Club is valued at $1.5 billion. Shareholders file a lawsuit against Lending Club, claiming it misled investors about its lending practices in order to keep stock prices high. May 17, 2016: Lending Club's stock price falls to $3.60. May 19, 2016: Acting CEO Scott Sanborn sends an email to lenders/investors to reassure them of the company's financial standing-$868 million; however, the investors may not receive the full amount of the payment due to them, or could see delayed payments if the company goes out of business. Shares are down 60%. May 20, 2016: Stock price rose 5%. Prosper announces that it has split its businesses into Prosper Funding LLC and Prosper Management to protect investors in the event of a bankruptcy filing. Until this point, Lending Club held the number one overall ranking with BestCompany.com; however, in light of the company's recent history, as well as other developments in the industry, Upstart is now the top-rated personal loans company. See below for more on Upstart: Upstart APR as low as 6.66% 640 Minimum Credit Score Receive Funds in within 24 hours Medium Chance of Approval Available in All 50 States Ideal Debt-to-Income Ratio: 20% or Under Read Full Review >Visit Site
Two of the most popular companies in the online lending industry are LendingClub and Upstart. However, while LendingClub is superior to most personal lending companies, Upstart possesses several advantages over LendingClub, particularly when it comes to offering competitive loans for recent college graduates, and young professionals. To see how LendingClub and Upstart compare across important areas, click on any of the loan features below: APRTime Allotted for Peer-to-Peer Investors to FundLoan Delivery TimeCredit Score RequirementsDebt-to-Income RatioAvailable StatesMax Loan AmountApplication ProcessFeesThe Bottom Line APR LendingClub Upstart LendingClub offers personal loans to applicants with good to great credit. It advertises APRs ranging from 4.99% to 35.96% (4.99% APR for applicants with exceptional credit). On the other hand, Upstart focuses on providing personal loans for applicants with little to no credit history, but have quality education or a high-paying job. Because its application process is tailored to meet the needs of the individual applicant, Upstart offers incredibly low APRs ranging from 4.66% to 29.99%. Back to Top Time Allotted for Investors to Fund LendingClub Upstart LendingClub requires loans to be 60% funded by peer-to-peer investors before they are issued. If the loan does not reach 60% within 30 days, the listing will expire and the applicant will have to reapply; however, less than one percent of LendingClub loans are not completely funded. Upstart does not have a time restriction on how quickly loans must reach a certain percentage of funding. The majority of Upstart loans is funded within 24 hours. Back to Top Loan Delivery Time LendingClub Upstart If approved, the average time it takes for a loan to be delivered to an applicant through LendingClub is seven days. Most Upstart borrowers receive their funds within 24 hours of being approved with the exception of education loans, which can take up to three days to be delivered. Back to Top Credit Score Requirements LendingClub Upstart For LendingClub borrowers, the minimum acceptable credit score is 660; the average credit score is 699, the average credit history is 16 years, and they cannot have any late payments on their report in the past 12 months. Because Upstart targets recent college graduates and young professionals, the minimum credit score is 640 and there is no requirement for open lines of credit or years of credit history; however, the average credit score of Upstart borrowers is 692. Back to Top Debt-to-Income Ratio LendingClub Upstart The average debt-to-income ratio for LendingClub borrowers is 18.12% not including a mortgage. Upstart borrowers have an average debt-to-income ratio of less than 20%. Back to Top Available States LendingClub Upstart Personal loans through LendingClub are available for borrowers in all states except Iowa. Personal loans through Upstart are available for borrowers in all states except West Virginia. Back to Top Max Loan Amount LendingClub Upstart Personal loans through LendingClub range from $1,000 to $35,000. The average Lending Club loan is $14,741. Personal loans through Upstart range from $1,000 to $50,000. Back to Top Application Process LendingClub Upstart LendingClub offers a quick, simple online application that can be completed in minutes: Fill out the initial application: Use the dropdown menus to select the desired loan amount, the purpose of the loan, and your credit score. Get your custom rate: Provide your name, address, employment status, individual yearly income, date of birth, email address, and custom password. Choose your loan: If approved, you will be given different loan options to choose from. Once you have chosen your loan and terms, the loan will be listed for private investors to fund. If your loan has reached 60% funding in 30 days on LendingClub, or 70% funding in 14 days on Prosper, you will be issued the loan. If the loan does not receive sufficient funding within the allotted time period, you will be denied and asked to reapply. Because Upstart's application is tailored to meet the individual applicant, the process requires more information; however, it can still be completed within minutes: Select loan purpose: Choose the purpose of the loan from the dropdown menu and click "Check Your Rate." Check your rate: Input desired loan amount and provide your name, date of birth, address, phone number, credit score, level of education, degree, school, graduation year, income type, industry in which you work, job category, company you work for, start date, annual income, additional compensation, and whether or not you have taken out any new loan in the past three months. Save your information by providing your email and creating a password. Click the checkbox agreeing to the terms and conditions, then click "Agree and See Your Rate." Choose your loan: If approved you will be presented with the different personal loan terms and options available to you, including (but not limited to) max loan amount, max loan term, APR range, and monthly payment. On this page, you will also have the opportunity to change the maximum amount you are looking for and see how the other terms adjust. Once you've selected the loan that best meets your needs, you will receive your funds within one to three business days. Back to Top Fees LendingClub Upstart No Early Payoff Fee No Direct Deposit Fee Unsuccessful Payment Fee: $15 Late Payment Fee (after 15-Day Grace Period): The Greater of 5% of the Unpaid Installment or $15 Origination Fee: 1% - 6% $7 Check Processing Fee Fixed Loan Rate No Early Payoff Fee No Direct Deposit Fee No Unsuccessful Payment Fee Late Payment Fee (after 15-Day Grace Period): The Greater of 5% of the Unpaid Installment or $15 Origination Fee: 1% - 6% Fixed Loan Rate Back to Top The Bottom Line LendingClub is a good option for prime credit applicants with years of credit history who are looking to obtain a personal loan. Upstart, meanwhile, is an excellent choice for applicants with little to no credit history but have a quality education or high-paying job. LendingClub's Advantages Application Process Available States Upstart's Advantages APR Time Allotted for Peer-to-Peer Investors to Fund Loan Delivery Time Credit Score Requirements Debt-to-Income Ratio Available States Max Loan Amount Fees Back to Top See Them for Yourself! Now that you've gotten to know these companies a little better, take a look at our full company reviews for specific information on LendingClub and Upstart, including our expert score, user reviews, and more! Upstart APR as low as 4.66% 640 Minimum Credit Score Receive Funds in within 24 hours Medium Chance of Approval Available in All 50 States Ideal Debt-to-Income Ratio: 20% or Under Read Full ReviewVisit Site LendingClub APR as low as 4.99% 10-Minute Application Process Receive Funds in 7 Days High Chance of Approval No Prepayment Penalty Avg. Loan Size: $14,741 Read Full ReviewVisit Site
Two of the most popular companies in the peer-to-peer personal lending industry are LendingClub and Prosper. On paper, the companies are nearly identical: they employ the same application process, are available almost everywhere, and offer very similar terms. So, when it comes to deciding which company does it better, finding the answer is almost like splitting hairs. To see how Lending Club and Prosper compare across important areas, click on any of the loan features below: APRTime Allotted for Peer-to-Peer Investors to FundLoan Delivery TimeCredit Score RequirementsDebt-to-Income RatioAvailable StatesMax Loan AmountApplication ProcessFeesThe Bottom LineSee Them for Yourself! APR LendingClub Prosper LendingClub's APR ranges from 4.99% to 35.96% (4.99% APR for applicants with exceptional credit). Prosper's advertised APR ranges from approximately 5.99% to 36%. Back to Top Time Allotted for Peer-to-Peer Investors to Fund LendingClub Prosper LendingClub requires loans to be 60% funded before they are issued. If the loan does not reach 60% within 30 days, the listing will expire and the applicant will have to reapply; however, less than one percent of LendingClub loans are not completely funded. Prosper requires loans to be 70% funded within 14 days in order for the applicant to receive the full loan amount. If the loan is not 70% funded within 14 days, the applicant will be declined and invited to reapply if interested. Back to Top Loan Delivery Time LendingClub Prosper If approved, the average time it takes for a loan to be delivered to an applicant through LendingClub is seven days. The average time from start to finish for an approved applicant to receive funds through Prosper is advertised as three-to-five days. Back to Top Credit Score Requirements LendingClub Prosper For LendingClub borrowers, the minimum acceptable credit score is 660; the average credit score is 699, the average credit history is 16 years, and they cannot have any late payments on their report in the past 12 months. For Prosper borrowers,the minimum acceptable credit score is 640; the average credit score is 705, and they must have a minimum of three open lines of credit. Back to Top Debt-to-Income Ratio LendingClub Prosper The average debt-to-income ratio for LendingClub borrowers is 18.12% not including a mortgage. Prosper requires applicants to have a debt-to-income ratio of 5% or less (not including a mortgage) in order to be considered. Back to Top Available States LendingClub Prosper Personal loans through LendingClub are available for borrowers in all states except Iowa. Personal loans through Prosper are available for borrowers in all states except Iowa, Maine, and North Dakota. Back to Top Max Loan Amount LendingClub Prosper The maximum loan amount is the same for both LendingClub and Prosper: Personal loans through LendingClub range from $1,000 to $35,000. The average LendingClub loan is $14,741. Personal loans through Prosper range from $2,000 to $35,000. The average Prosper loan is $10,540. Back to Top Application Process LendingClub Prosper The application processes for LendingClub and Prosper are very similar: they each offer quick, simple online application forms that can be completed in minutes: Fill out the initial application: Use the dropdown menus to select the desired loan amount, the purpose of the loan, and your credit score. Get your custom rate: Provide your name, address, employment status, individual yearly income, date of birth, email address, and custom password. Choose your loan: If approved, you will be given different loan options to choose from. Once you have chosen your loan and terms, the loan will be listed for private investors to fund. If your loan has reached 60% funding in 30 days on LendingClub, or 70% funding in 14 days on Prosper, you will be issued the loan. If the loan does not receive sufficient funding within the allotted time period, you will be denied and asked to reapply. Back to Top Fees LendingClub Prosper No Early Payoff Fee No Direct Deposit Fee Unsuccessful Payment Fee: $15 Late Payment Fee (after 15-Day Grace Period): The Greater of 5% of the Unpaid Installment or $15 Origination Fee: 1% - 6% $7 Check Processing Fee and Fixed Loan Rate No Early Payoff Fee No Direct Deposit Fee Unsuccessful Payment Fee: $15 Late Payment Fee (after 15-Day Grace Period): The Greater of 5% of the Unpaid Installment or $15 Origination Fee: 1% - 6% Loan Rate Changes Month-to-Month Back to Top The Bottom Line Both LendingClub and Prosper are good options for prime credit applicants looking to obtain a personal loan. If you have a low credit score, a high debt-to-income ratio, and would like to receive your loan in three-to-five days, Prosper may be the best choice for you. If, however, you're looking for a low APR rate, a high chance of getting approved, and an affordable fixed rate on your loan, you are probably better off pursuing a personal loan through LendingClub. LendingClub's Advantages APR Rates Time Allotted for Peer-to-Peer Investors to Fund the Loans Chance for Approval State Availability Fees Prosper's Advantages Loan Delivery Time Credit Score Requirement Debt-to-Income Ratio Back to Top See Them for Yourself! Now that you've gotten to know these companies a little better, take a look at our full company reviews for specific information on LendingClub and Prosper, including our expert score, user reviews, and more! LendingClub APR as low as 4.99% 10-Minute Application Process Receive Funds in 7 Days High Chance of Approval No Prepayment Penalty Avg. Loan Size: $14,741 Read Full ReviewVisit Site Prosper APR as low as 5.99% 640 Minimum Credit Score Receive Funds in 3 - 5 Days Medium Chance of Approval No Prepayment Penalty Ideal Debt-to-Income Ratio: 50% or Under Read Full ReviewVisit Site
Anyone who has debt (and that includes just about all of us at one time or another in life), has felt the burden, stress and anxiety associated with this sometimes-crushing load. Credit cards, student loans, auto loans, mortgage loans, business loans, and other forms of debt can linger for years seemingly always knocking at your door. While this is something that can that can gnaw at the back of one's mind throughout life, another burning question people have is what happens to my debt after I die. There is not one cut and dried answer for every situation, but there are a few guidelines that will hopefully provide some comfort and security. A debt does not "die" when a person does. Creditors still want their money. When someone passes away, their debts become part of their estate. An estate is essentially a collection of the person's assets and liabilities-things you owned and things you owed. Your estate will be the responsibility of whoever was deemed in charge. This will be someone known as the executor or personal representative. This person or group will attempt to sell off any assets in order to pay off the debts. However, if more is owed than is owned, don't worry-family members are not obligated to reach into their pockets to pay up. In fact, there is a ruling from the Federal Trade Organization (FTA) that protects surviving family members from having to take care of a deceased's debts. It reads, in part: "Family members typically are not obligated to pay the debts of a deceased relative from their own assets. What's more, family members - and all consumers - are protected by the federal Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to try to collect a debt." In a scenario such as this, creditors are simply out of luck. Of course, if you have a joint account with someone who passes away, it can be a different story. If you also signed the loan agreement, you will likely be responsible for shouldering the debt. This goes for business partners and spouses. The same is usually the case for co-signers-whether or not the co-signer was related to the person who has died. Co-signers are typically left with the debt, expect for in the case of federal student loans, which are discharged at the time of death. As for secured debt such as cars and homes, surviving family members will be responsible for the balance on the loan. So if you are planning on leaving one of these assets to an heir, make sure the debt is paid off or that you leave them with the means to pay them off at the time of your death.