When you need cash to cover unexpected expenses or to pay off high-interest credit card debt, a personal loan may be a good option. These unsecured loans typically come with lower interest rates than credit cards and don’t require collateral like your home or car. However, it’s important to know the pros and cons of personal loans before you apply. The best personal loans have low to no fees, a variety of repayment terms and flexible credit score requirements. You should also consider the lender’s reputation for customer service and whether or not it reports to all three credit bureaus.
If you’re in the market for a personal loan, there are many lenders to choose from, including traditional banks, credit unions and online lenders. Most lenders have an online prequalification tool that allows you to check your rate without hurting your credit score. You can also compare rates by using WalletHub’s personal loan calculator to see which lender offers the lowest interest rate for your specific circumstances.
Once you find a lender that meets your needs, you’ll need to complete a full loan application. During this process, you’ll likely need to provide proof of identity (a government-issued photo I.D.), proof of income (recent paystubs or tax returns) and finances (recent bank statements). Once you’re approved, the lender will send your funds to your bank account or by check, depending on its policies.
Some of the best personal loans have no origination fees and offer large dollar amounts, as well as a range of repayment term lengths. These include Marcus by Goldman Sachs, which has a credit score requirement of 720 or higher and charges no prepayment penalties. The lender also allows borrowers to choose their own repayment schedule and doesn’t charge any origination or late payment fees.
Another lender to consider is SoFi, which has a maximum loan amount of $100,000 and a credit score requirement of about 680. Its personal loan products are designed specifically for debt consolidation and offer the ability to pay off your credit card debt directly with the lender, which can save you money on interest payments. USAA is another lender to consider for debt consolidation, but its maximum loan amount is $50,000 and it only provides loans to military members and their families.
Other lenders to consider include Lending Club, which offers a range of loan sizes and terms and doesn’t charge origination or prepayment fees. Its minimum loan amount is $5,000 and its maximum loan limit is $40,000, which is less than the maximum loan amounts of other lenders we evaluated. It also has a competitive credit score range and an easy-to-use mobile app. A final lender to consider is Prosper, which has a lower credit score requirement than some other peer-to-peer lenders and allows you to add cosigners to your personal loan application. The lender, which has been in business since 2006, also offers an excellent mobile app and has a great customer experience.