When faced with the need to consolidate debt or finance significant expenses like a long-distance move or home improvements, personal loans emerge as a viable solution. This borrowing option has gained considerable popularity, as evidenced by the $22 billion increase in auto loan balances reported in the third quarter of the previous year, according to the Household Debt and Credit Report data from The Federal Reserve Bank of New York in Quarter 3 2022.
Personal loans fall under the category of installment loans, where borrowers receive a lump sum of money and repay it through fixed monthly installments determined by the interest rate agreed upon. These loans often offer lower interest rates compared to credit cards, and the application process is typically swift, with funds disbursed within days of approval. Therefore, if you are considering a personal loan, it is advisable to compare lenders based on interest rates, fees, and terms to identify the most suitable product for your individual circumstances.
Exploring Personal Loan Sources
Personal loans can be obtained from various financial institutions, including online lenders, banks, and credit unions.
Online lenders: Online lenders provide a convenient option for researching, prequalification, and application processes as they allow you to complete every step online. Due to their lack of physical locations, online lenders often offer competitive interest rates. If you require prompt funding, online lenders can be a suitable choice as they can typically disburse loans within a few business days after approval, with some even offering next-business-day funding.
Banks and credit unions: If you prefer an in-person application experience, banks and credit unions are viable options. Generally, qualifying for the best rates at traditional financial institutions requires a good to excellent credit score. However, if you hold an existing account with a bank or credit union, they may offer discounted rates as an added benefit.
Before committing to a personal loan, it is crucial to explore options from multiple lenders. Obtaining at least three quotes is recommended. Credible provides a user-friendly platform for comparing personal loan rates from various lenders without impacting your credit score.
Top Personal Loan Lenders
To streamline your search for the best personal loan lenders, utilizing platforms like Credible can assist in quickly narrowing down your options. The following 18 lenders, partnered with Credible, offer personal loans:
- Achieve:
For those seeking debt consolidation, Achieve (formerly FreedomPlus) may be a suitable choice. The lender may offer a better interest rate if at least 85% of the loan funds are allocated towards existing debt repayment.
- Loan amounts: $10,000 to $50,000
- Minimum credit score: Not disclosed
- Loan terms: 2 to 5 years
- Time to receive funds: Within 2 to 3 days if approved
- First-time user promotions: None, but a cosigner discount is available.
Achieve’s notable advantage is the potential for same-day funding. However, loans from Achieve are not available in Nevada, and there may be origination fees of up to 6.99%.
- Avant:
With a minimum income requirement of $1,200 per month and a minimum credit score of 550, Avant is a viable option for borrowers with poor credit.
- Loan amounts: $2,000 to $35,000
- Minimum credit score: 550
- Loan terms: 2 to 5 years
- Time to receive funds: As soon as the next business day if approved by 4:30 p.m. Central time on a weekday
- First-time user promotions: Promotional codes provided to those who have received general “Join us” offers via mail.
While Avant may be an attractive choice for individuals with low credit scores, it does have limitations. For instance, Avant loans are not available in Colorado, Hawaii, Iowa, Nevada, New York, Vermont, or West Virginia. Additionally, the lender imposes an administrative fee of 4.75%.
- Axos Bank:
For borrowers with good credit, Axos Bank presents a potential option.
- Loan amounts: $10,000 to $50,000
- Minimum credit score: 700
- Loan terms: 3 to 6 years
- Time to receive funds: Next business day
- First-time user promotions: None
Axos Bank’s notable advantage is the ability to borrow a relatively substantial amount. However, it is essential to note that the bank charges various fees, including origination fees of up to 2%, late payment fees, and insufficient funds fees.