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Personal Loans

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Representative Examples of APR, Total Loan Costs & Fee

Loan Amount $1,000 $2,000 $2,500 $5,000
Interest Rate 24.00% 19.00% 16.00% 13.00%
Loan Term 12 months 24 months 36 months 48 months
Fee 3.00% 5.00% 10.00% 12.00%
Monthly Payment $94.56 $100.82 $87.89 $131.67
APR 29.82% 24.12% 22.93% 18.23%
Total Payments $1,134.72 $2,419.68 $3,164.13 $6,320.12
Total Cost $164.72 $519.68 $914.13 $1,920.12

For example: the $2,000 representative loan above with a 24-month term and a 5% origination fee would have a total cost, including the 5% origination fee ($100) plus interest, of $519.68 and a total payback amount of $2,419.68.

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Personal Loan Calculator

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Your Questions and Answers

  • How does it work?

    1. Submit Your Information Securely

      We'll ask you a few questions in order for you to find a lender that meets your needs.

    2. Accept Your Loan

      If a lender chooses to work with you, you will be taken to the lender's website to review and accept your loan.

    3. Use Your Funds

      After accepting, your funds could be deposited into your account in as little as 24 hours. Money transfer times may vary between lenders and may depend on your individual financial institution.

  • What is a personal loan?

    A personal loan is an unsecured loan that any U.S. citizen over 18 with a bank account and income source can apply for. Personal loans up to $5,000 are offered by banks, credit unions and online lenders.

  • Does it cost anything to apply?

    No. There is no cost to apply.

  • Can I get approved today?

    If you apply today, you will receive a quick response. If approved, your funds could be in your account in as little as 24 hours. Money transfer times may vary between lenders and may depend on your individual financial institution.

  • When will my funds be available?

    Your funds will be deposited into your account in as little as 24 hours. Please note that money transfer times vary by lender and may depend on your individual financial institution.

  • How will I know if I'm approved?

    After the application is submitted, we try to match you with a lender in our network. If successful, you'll be taken to an electronic signature page to complete the process.

  • I have no bank account. Can I still get approved?

    No. The amount borrowed will be direct deposited into your bank account. If you do not have a bank account, you will not be able to submit your application.

  • What can I use this amount for?

    They are useful for many needs, including one-time special events (weddings, celebrations and holidays), unexpected expenses (car or home issues, emergency medical expenses) or almost anything else that requires extra funds.

  • What is my interest rate and repayment period?

    This varies and depends on the lender. Once approved and matched with a lender, you'll be transferred to their website where you can review their terms and repayment schedule.

  • I just got denied, what can I do?

    People can be denied for many reasons, including a high debt-to-income ratio, bad credit history or low credit score. However, there may be solutions if you need finances right away and know why you were denied. You may consider debt consolidation if debt is an issue. There are many other steps you can take as well that can improve your credit score and reduce your debt.

  • The form doesn't let me finish. What should I do?

    Look at your screen — if there is a message such as "required field", you need to complete the area on the form. If you do not have a bank account, you will not be able to submit your application.

  • I'm not from the United States. Can I still get approved?

    No. You must be a U.S. citizen to qualify.

  • What is a personal line of credit from a bank?

    A personal line of credit represents funds available to an individual that are generally tied to a checking account. All or some of this amount can be used when needed, with funds becoming available as the balance is paid. Credit cards are an example of this type of credit.

  • What is a line of credit loan?

    This is an amount of available credit based on a secured asset, such as a house. Home Equity Lines of Credit (HELOCs) are the most common and have an expiration date. Lines of credit secured with cash, CD's or savings generally have no expiration date.

  • What's the difference between a secured and unsecured loan?

    Secured loans requires collateral, such as a car or some sort of property, while unsecured do not.

  • Can I apply with a co-signer?

    No, the application process does not allow for co-signing.

  • What is an origination fee?

    An origination fee is one that is charged by lenders to enter into an agreement, typically covering processing costs.

Beginner's Guide to Personal Loans

Introduction

Introduction

Find your way in the world of personal loans

When a financial emergency strikes, do you automatically depend on your credit cards to get you through?

Using credit cards for large amounts of money can send you deep into debt, fast. With revolving credit—credit amounts that renew as you pay them off—interest adds up, and if you're scraping by making minimum monthly payments, your original debt can mushroom into a much darker money cloud before you know it.

How you handle financial emergencies can make or break your financial health for many years. Bad credit decisions can compound themselves and cripple your spending power far into the future. They rob you of extra cash you could be investing, so you lose opportunity as well.

For those who use revolving credit and don't pay their card balances in full every month, a study by the Federal Reserve Bank in Boston shows that it only gets worse. A 10% increase in credit is followed by a 1.3% increase in debt within one quarter (three months) and a 9.99% increase in debt over the long term, the study found.

It's crucial to get your finances on track in order to build wealth. A pit of debt can leave you struggling financially for years or even decades.

A personal loan might actually be a better option for you

How much do you know about personal loans?

If you're like most people, probably not a lot. Student loans and car loans are well known but when it comes to finances, personal loans are still neither well known or widely used by consumers—though the market is growing fast.

Many people who are struggling to get out of credit card debt and better manage their finances have considered consolidating their debts with a low-interest personal loan. If you have unexpected emergency expenses (such as a major car repair) and do not have a "rainy day" savings fund, getting a personal loan might be a better financial option than getting another credit card.

Typically, personal loans are fixed, interest rates are lower, and can be used for all kinds of purposes, which makes them great for people looking for someone who prefers a consistent payment schedule and is in it for the long haul.

Even if you have been turned down for other forms of credit, a personal loan could very well still be within reach.

Advantages and Common Terms

Advantages and Common Terms

One advantage of a personal loan is that it can be used however you want. Unlike a mortgage or student loan, it's your decision and a private matter how you choose to use the set amount of money.

Personal loans have several attributes that set them apart from credit cards:

Fixed payments. Fixed interest rates are the typical way these are structured. That means you'll make the same monthly payment until the balance is paid off—no ballooning payments or sliding interest rates.

Length of term. The term can be as short as a couple of months and range as long as five years (60 months). Lenders frequently charge lower interest rates for longer terms.

Amount. Many lending institutions will loan up to $10,000 without requiring any collateral. At banks like Capital One, amounts can go as high as $30,000. One lender, Wells Fargo, offers amounts as high as $100,000 for people who qualify.

Average interest rates. Interest rates depend on how good your credit is. That's how lenders determine how likely you are to repay them. If you pledge assets (like your home or car), lenders are typically more willing to lend and lend to you at better rates.

Because these are unsecured (you don't use any of your belongings to back the amount), interest rates are typically higher than what you would pay for a mortgage or car. That's because a lender is taking on more risk. A borrower with good credit can expect to pay from 8.48 to 14.49% for a five-year term.

The average borrower pays 10.64% on a 24-month term given by a commercial bank.

Personal loans can include any type of secured or unsecured loan that is issued by a bank, credit union, peer-to-peer lender, or another source.

Mortgages and home equity loans are secured loans backed by your house – if you fail to repay your loan, the lender can repossess your house. Unsecured personal loans function in the same way as a credit card – the debt is not backed by any financially valuable asset, and so to manage its risk, the lender can require you to pay higher interest rates.

Things to Know Before Applying

Things to Know Before Applying

Getting a new floor

Know your credit score. And learn about what is a credit check before you go looking for a loan agreement. It's free! A report will tell you if you have any late payment issues that are dragging down your credit score.

Get what you owe on debt to below 40% of what you earn. Lenders call this your debt-utilization ratio. It'll help with long and short term loans, as well as online personal loan applications.

Familiarize yourself with this personal loan language.

  • Peer-to-peer lending. These online services offer loan services like banks. As mentioned, peer-to-peer lenders can be easier, savvier, friendlier, and more affordable.
  • Origination fee. A fee that lenders apply simply to handle your loan. A good origination fee should range between .5% and 1% of the loan amount. So if you have a $10,000 loan and a 1% origination fee, you'll pay $100 in fees.
  • Prepayment fee. A fee you'll pay if you pay back your loan too early. Yes, this happens. Lenders plan to make money on you paying your loan over a long period of time (sometimes, too long). Some will charge you if you pay it all back too early, which is why you want to shop around.
  • Pre-computed interest. A method, like simple interest, to calculate your interest due. With this method, the original payment schedule is used to figure interest, even if you make payments early. Banks and credit unions generally use simple, rather than pre-computed interest.
  • Insurance within the loan. This insurance protects you from defaulting on your loan in the case of a death, injury, or job loss. Be careful though! The fine print often leaves the lender too many outs for the extra cost to be worth your while.
  • Secured loans. This type of loan makes lenders i.e. banks and peer-to-peer feel more comfortable loaning you money because you've promised something to help pay off the amount if you don't pay it back i.e. your car. Generally, you get a better rate with a secured loan.
  • Unsecured loans. Because you're not promising anything to help pay off the amount you've borrowed (like your car), you can pay a higher rate for an unsecured loan. You may need to have good to excellent credit to qualify.

Shop around and don't cut corners. Don't over look peer-to-peer lending. Companies like Lending Club provide loan services with much better terms than payday loans or cash advances. Whatever you do, be very wary of these, which can cost a fortune in interest payments.

While you're shopping, inquire from the lender whether an application will result in a "hard pull" on your credit report, and count against you.

The final step is to gather your paperwork together and apply.

Lenders Are Not Just Banks

Lenders Are Not Just Banks

There are many benefits to personal loans

Banks aren't the only one lending people money these days. Technology has enabled other financial services like peer-to-peer lending to pool money from many small investors to create "super funds." These large blocks of money are chopped up and distributed to qualified applicants.

Because they are new on the block and don't have the same brick n' mortar costs as traditional banks, peer-to-peer lenders can be easier, savvier, friendlier, and more affordable.

Here's a list of popular peer-to-peer lenders. Remember to always shop around and check if the lender's inquiry on your credit score will impact the score or not (in what's known as a "hard" credit check):

What you want to avoid are payday loan providers that promise cash advances with no credit check. These loans appear great on the surface, but with interest rates as high as 400%+, you'll be putting yourself in a world of hurt if you can't pay them off on their terms, which are numerous and complicated.

When considering a loan, be mindful that there are more than just banks out there to help. You'll possibly be rewarded with lower rates and better terms by going with a non-traditional provider.

Most Common Uses

Most Common Uses

For those who do have experience and knowledge of personal loans, they most often use them for the same situations. Managing debt is a popular use, as is paying for sudden, large expenses.

Pay off a one-time emergency expense. Emergency expenses such as major car repairs or home improvements are good examples. You can often get a lower interest rate by taking out a personal loan for a specific amount of money, rather than borrowing more money on your credit card.

To get a loan without collateral. It's not always possible to qualify for other types of financing. You can take out a personal loan with a poor credit rating, below 620. Lenders have been known to loan to consumers with 600 credit ratings, or little credit history.

Plus there is no need to put up collateral. Unsecured loans don't require collateral, so you don't need to pledge your car or house to borrow money. Your income is enough.

When you apply for a loan that is unsecured, you will be subject to higher interest rates, said Jeff Rose of Good Financial Cents, a financial blog.

Consolidate credit card debt. Personal loans for debt consolidation can be a good deal if they help you get a lower interest rate than you were paying before, and/or if they lower your monthly payment.

Taking out a low-interest personal loan can be a better financial move than adding more credit card debt to your credit history. If you have five revolving credit card accounts and they all have big balances, applying for a sixth won't reflect well on your credit report. Lenders will see you as overextended, and question how well you handle your money.

However—if you choose to consolidate your credit card debt with a personal loan, keep in mind that this does not make the credit card debt "go away." It just moves the credit card debt into a new form—and you will still need to keep making your monthly payments.

Other reasons a personal loan might be right for you include:

Paying tuition. Many people use personal loans to fund part of their education when student loans don't cover it all.

Starting a small business. Borrowing can be a useful source of capital for small businesses.

Help fund a wedding. Unexpected wedding expenses come up all the time—sometimes a personal loan is the quickest way to meet these without using a credit card.

Relocating. These loans can help you keep your stress down by providing cash for moving expenses, such as truck rentals, storage, and supplies when moving.

Less Risky Than Credit Cards?

Less Risky Than Credit Cards?

The difference between unsecured personal loans and credit cards is that personal loans give you a definite repayment period where you have to repay the money that you have borrowed.

Credit cards, on the other hand, give you a "credit limit" from which you can borrow as much or as little as you want – and there is no definite deadline for repaying the money after you borrow it.

You can pay just the minimum balance on your credit card each month, or you can pay off the entire amount that you owe. So if you're one of those spenders who can't trust yourself with a credit card, a personal loan creates a barrier between you and your wild spending.

“The danger with credit cards, of course, is that you can always charge more at any time up to your credit limit, keeping you stuck in debt," said David Weliver of MoneyUnder30.com. “With a personal loan, you know when your debt will be repaid and that you can't borrow more money without completing a new loan application."

If you're the type of person who likes being given a set schedule or has a tough time sticking to your own, a personal loan might be the perfect remedy.

Many personal loan interest rates are lower than credit cards

Remember, many loan lenders offer interest rates that are generally lower than a credit card.

Often, you can get a lower interest rate on a personal loan than you are paying on your credit card debt.

Personal loans often offer slightly lower interest rates than credit cards, depending on your credit score. Rates on personal loans can be as low as 3%, all the way up to 35%, so they represent the full range of other types of borrowing, such as car loans and student loans. But with excellent credit, personal loan interest rates hover around 10%, whereas credit card interest rates are higher, at about 15%.

Personal loans for debt consolidation can be a good deal if they help you get a lower interest rate than you were paying before, and/or if they lower your monthly payment.

Basics of Borrowing

Basics of Borrowing

Bad credit isn't a dealbreaker

While the application process is simple, there are a few things that determine if you'll be approved and what the interest rate will be.

Credit score. Make yourself familiar with your credit history and know your credit score.

Proof of income. To get comfortable lending you money, a lender may request to see how much money you make. With this information, the lender can determine how likely you are to make your monthly payments. A lender may ask for a few payment stubs or a recent tax filing.

Co-signers (optional). Lenders sometimes require a person to find a co-signer. Co-signers commit to paying back another person's debt if he fails to do so. It's just a way for a lender to help ensure a debt gets paid back.

You can still qualify when you have bad credit, even with a credit score in the 600s. With poor credit, fewer lenders may be willing to lend to you and you'll probably have to pay a higher interest rate. You may want to look beyond unsecured loans and pledge some assets to secure a new one. You can use your car as collateral, but you risk losing it if you don't pay the amount back.

Or, maybe you have a family member or friend who can co-sign. If your co-signer is better-off financially and has better credit, this could help you get approved. The co-signer assumes responsibility if you don't make your payments and may be on the line to paying off your debt if you don't.

You don't always get to have your choice when you have bad credit. It's important to cure poor financial habits and replace them with better, more healthy ones. Sometimes, though, you just have to make due.

Research Your Loan Options

Research Your Loan Options

One additional disadvantage of personal loans, depending on the terms of the loan you take out, is that there might be a prepayment penalty.

A prepayment penalty is an extra fee that the lender charges you if you pay off your loan sooner than planned. Not all personal loans have prepayment penalties, but be sure to ask and read the fine print before you sign.

This sample Truth in Lending disclosure form from the Center for Responsible Lending shows the contract language for a mortgage that indicates whether or not the loan includes a prepayment penalty. Watch for similar language in your loan contract before you sign.

Prepayment fees aren't the only hidden costs to personal loans. Watch out for other charges, such as pre-computed interest, insurance within the loan, and origination fees, (what the lender charges you simply to process and manage the loan), according to Nick Clement of the blog MagnifyMoney.com.

“Oddly enough, these tricks might not be buried in fine print," Clement said. A lender may try to sell you additional products you won't need, so be aware of the extra costs and decide if they are right for your loan.

Improving Your Credit Score

Improving Your Credit Score

For those with several credit cards, taking out a personal loan can be a better financial move than simply adding more credit card debt.

However – if you choose to consolidate your credit card debt with a personal loan, keep in mind that this does not make the credit card debt "go away." It just moves the credit card debt into a new form – and you will still need to keep making your monthly payments.

If you pay your personal loan back on time, it can raise your credit score, because it is a new form of financing (installment, versus revolving credit) and you prove you can keep your commitments.

“When it comes to improving credit scores, a personal loan may be a viable option for re-establishing creditworthiness when the proper steps are taken," Marco Carbajo, Founder of BusinessCreditBlogger.com, said. “For a personal loan to have maximum impact on an individual's credit scores, you should focus on three key things: maintaining a positive payment history, paying more than the minimum amount due each month and reaching a low balance owing (below 30%) as soon as possible."

Dangers of Missed Payments

Dangers of Missed Payments

Personal loans have low-interest rates, and fixed payment terms, but are not always easy to obtain. It takes time to research the accuracy of your own credit reports, research lenders, and examine loan offers before choosing the right loan.

If you don't make payments on time, in full, your credit score and finances will suffer.

For most people, repayment is simple thanks to the easy-to-manage payments described in your lending agreement. But what happens if you stop making the payments?

Sometimes life happens and can make paying your loan back really hard. When you don't pay back the amount due, you're said to have defaulted.

Here's what you can expect if this happens to you:

Your credit rating goes down. Your score measures how likely you are to pay debts back. When you stop paying back a debt, your score goes down. This will make it harder to borrow more money in the future.

You'll pay penalties. Some lenders charge you money when you miss a payment. In the worse cases, this increases your debt and makes it even harder to pay back your loan.

Aggressive collection agents call. Lenders end up selling off defaulted loans to other businesses. They hire collection agencies to call and write you until you pay it back (or a portion of it).

Liens on your property. Depending on the type of loan you default on, lenders may be able to put a lien on your property and, in some locations, your income. That means the lender can make it hard for you to sell your property or access your money.

3 Tips to Help Get Approved

3 Tips to Help Get Approved

Keeping some tips in mind can improve your chances of getting approved

Here are three ways to increase your chances of being approved when you meet or deal with your lender.

First, get your credit score as high as possible. If you're young and don't have much of a credit history, don't tell the lenders that your parents won't co-sign. This might cause lenders to doubt your trustworthiness. After all, if your parents don't trust you enough to co-sign, why should the lender?

Second, don't hide your payment game-plan. f you're seeking to use a loan to make a down payment on a big-ticket item, explain how you are going to pay for the rest of the money to purchase the item. This might cause lenders to wonder how you'll ever pay them back.

Third, stay cool and confident on the phone. Financial experts recommend that you never beg for approval. This makes you look desperate and gives the impression that you may have already exhausted their other lending options.

So if you need quick cash to pay off a major expense, or if you want to reorganize your financial life to pay off your credit card debt faster, a personal loan might be a good solution to help put your finances on the right track. Make sure to do some homework, like researching lenders and different interest rates, and watch your wealth grow.

Looking for a great lender?

We hand picked the best 8 places for a great personal loan for you:

  1. Solid credit means no hidden fees and low rates with Sofi
  2. Great credit gets you in with Lending Club
  3. Use a cosigner for a Wells Fargo personal loan
  4. Excellent credit delivers lowest rates at Light Stream
  5. Borrow up to $50,000 with Earnest
  6. Avant approves without perfect credit ratings
  7. Pay off a personal loan quickly with BestEgg
  8. Upstart examines more than credit scores

Armed with the right know-how, you'll lock in the best personal loan rate, get flexible terms, and establish a good, solid rapport with your lender for future loans.

Video — Learn More

Video — Learn More

Penny was in a pinch. And after taking a closer look at her situation, she decided a personal loan was her best option. What can she expect? Will she qualify with a lender? We’ll address some of these points and show you how Penny prevailed with a personal loan!

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