How To Get A Personal Loan (Online)
To get a personal loan, you start by checking your credit score and taking your options into account. Then, choose the type of loan you prefer – secured or unsecured as well as the amount – and choose a provider. It pays off to shop around for the best rates.
There are different kinds of lenders: banks, online loan brokers, credit unions, and fintech companies. We’ll discuss the leading ones and their terms. To pick the right lender for your needs, you must be as informed as possible. This article will help you to find out whether it will be possible for you to get a personal loan and with which company.
What is a Benefit of obtaining a personal Loan?
A personal loan is usually taken out when an extraordinary private payment is due, for which the current account balance isn’t sufficient, but you still absolutely want or need to do the thing. It is up to you to decide how urgent the matter is and whether it is worth taking out a loan for it.
There are many use cases for which you can need a personal loan. The most common cases are paying off credit card debt, a medical procedure, a special vacation, car repair or home improvement.
Uses of a Personal Loan
Many borrowers face difficulties and wonder if they can get a personal loan to make a down payment on another loan. Generally, a mortgage lender won’t allow this. In the event that they agree and you don’t have any other options, it is a possibility.
Paying off Credit Card Debt
You might benefit from a personal loan with a lower rate to cover your credit card balance if you’re struggling with payments. If you are able to obtain a good debt consolidation loan, it might translate to less debt per month as well as more timely loan payments.
Personal Loan for Home Renovation
Your home improvement project might become more affordable with a personal loan that’s customized to assist you in covering renovation costs. Depending on your needs and the rate you get, a personal loan for home renovation could be a good option. This loan type is unsecured and can range from $1,000 to $100,000. Generally, the monthly payments and the interest rate are fixed.
Personal Loan for a Vehicle
You can get a personal loan to buy a car, but a car loan is preferable in most situations. For one, it’s easier to qualify for. You are not as likely to have to pay additional loan costs. You will probably get a better interest rate.
Personal Loan for Self-employed
Personal loans are available to self-employed individuals. However, the income verification process can be a bit prolonged. Most loan providers will ask for proof of a source of income to make sure you can pay the loan off.
How hard is it to get a personal Loan?
It depends on several factors. In general, it is not particularly difficult to obtain a personal loan – as you will see, there are different providers for personal loans on the market and their requirements and terms are quite different. It depends on how much you need, what your credit score is and whether you can provide collateral or not.
You can get a loan even with a relatively bad credit score, but the interest rates are much higher than for people with higher credit scores. In the area of personal loans, unsecured loans are common, but the interest rates are higher than for secured loans.
Personal Loans: Secured vs. Unsecured
Secured loans require the borrower to offer an asset as collateral. If they can’t make payments, the lender takes this asset. Generally, your home or car is the collateral in the case of a mortgage or car loan. Secured personal loans typically come with a certificate of deposit or cash in a savings account as collateral.
If you opt for an unsecured personal loan, the lender can’t ask for collateral as compensation if you default. The consequence of default will be a lower credit rating and loss of all payments made until the point of default.
In general, unsecured personal loans come with higher interest rates, which only makes sense. Most personal loans are unsecured.
According to data of the Federal Reserve in 2020, the average APR (annual percentage rate) for a 2-year personal loan was 9.34%.
Some banks offer secured personal loans. Depending on your credit history, the amount borrowed, and the loan repayment term, you can get a secured loan with APR of under 6%. You need to offer an asset as collateral.
Generally, secured loans don’t require a down payment. Unsecured ones might. It depends on the specific terms of the lender.
Best Personal Loan Brokers in the US
Our list of the best personal loan brokers in the US starts with Lending Club, who have unsecured loans from $1,000 to $40,000. Your credit score must be at least 600. The APR ranges from 10.68% to 35.89%. Funds can be available in as little as four days. The only fee on Lending Club’s loans is an origination fee of 1% – 6%.
600 is not a particularly high credit score, which means that almost anyone can apply for a personal loan from Lending Club. However, the higher your score and your income, the better terms you’ll get.
The broker also accepts joint applications, where two people can apply for a loan together. This is convenient in case you don’t qualify for one individually. The loan repayment term is either 36 or 60 months.
Prosper offers only unsecured loans just like Lending Club. The minimum credit score required is 640 and the APR is from 7.95 to 35.99%.
You can get from $2,000 to $40,000. As for loan duration, you can choose between a three- and five-year repayment term. This is close to average for online lenders. Unfortunately, you can’t choose a longer term to reduce payment amounts per month or a shorter one to reduce interest.
Prosper’s personal loans allow borrowers to cover home improvement projects, debt consolidation, and other expenses. The lender’s origination fee ranges from 2.41% to 5.99%. If you default on your loan by more than 15 days, the lender charges a late fee of $15 or 5% of the monthly instalment, whichever is higher.
Many online lenders offer a further discount to set autopay up, ranging from 0.25% to 0.5%. Prosper, however, does not.
To be eligible for an unsecured personal loan from Peerform, you need a minimum credit score of 600. The APR is 5.99 – 29.99%. You can get from $4,000 to $25,000. There is just one repayment term: three years.
Peerform runs a soft credit check if you’re pre-qualified for the loan and offers comparably competitive rates. On the downside, they report payments to just one of the three national credit agencies. The idea is that this agency will report to the other two.
Like most online lenders, Peerform charges origination fees and late fees. You aren’t allowed to change your payment date though.
Funding Circle has a low credit score requirement: the minimum is just 580. They offer both secured and unsecured personal loans.
Interestingly, the loan type does not affect the interest rate owed. They do require personal guarantees for unsecured loans.
The APR is 12.18% – 36.00%. Loan duration is three to five years. Funding Circle has competitive rates on loans of up to $500,000.
Upstart offers unsecured personal loans ranging from $1,000 to $50,000 with APR of 6.16% – 35.99% and loan terms of three to five years. Information about origination or late fees is available upon request.
Best Personal Loan Brokers in Europe
The credit score system is not used in Europe. Instead, lenders review the borrower’s current salary and debt, residence status, family situation, and other factors to make a loan decision.
If you default or fail to make timely payments, the lender will enter your data in a special file that lenders across the continent share. Once that happens, getting a loan becomes very hard. This section is dedicated to the best online lenders in the Old World.
Bondster offer secured as well as unsecured loans. Some of the latter come with a buyback guarantee. On average, the interest rate on EUR loans is 13,26%. Loans in CZK (the Czech koruna) come with 7.79% interest.
The loans available from this provider tend to be smaller. The average repayment term is five months with an average loan amount of just EUR 250.
Twino evaluates individual borrowers from all over Europe. The lender has provided more than a billion in unsecured personal loans since their founding in 2009.
They offer secured or unsecured loans with a buyback or a payment guarantee. This makes protecting one’s investment as a lender easier. Amounts from EUR 1,000 to EUR 100,000 are available at an average interest rate of 12.8%. The loan duration is from 30 days to 24 months.
The majority of loans are up to EUR 500 with repayment terms of up to 60 days. The interest rate is from 9.5% to 13%.
PeerBerry allows its users to invest in loans exclusively from unconventional loan originators (not banks). Most originators require a buyback guarantee.
Mintos offer unsecured personal loans of EUR 5,000 to EUR 50,000 with a term of three to five years. The average APR on their loans is 12.83%.
Flender does not use third parties to provide or list loans and collect debt. Their personal loans are from EUR 10,000 to 100,000 with up to 16% interest.
Crowdester’s loans are from EUR 10,000 to 500,000. Rates start at 15% p.a. The terms for repayment range from 3 to 18 months. All loans are unsecured.
On average, the interest on Swaper’s personal loans is 14% p.a. You can get up to EUR 10,000. The loans come with a buyback guarantee, meaning that the lender can repurchase the loan if the borrower is late for more than a month.
FinTechs for Cryptocurrency-backed Personal Loans
The companies offering crypto-backed loans do not conduct credit checks. All of their loans are secured through cryptos as an asset.
On Blockfi, borrowers put up collateral in Bitcoin or Ether. To apply for a loan, you enter either the cash amount you want to get or the collateral amount you want to deposit.
The lender’s interest rates start at 8%. Borrowers pay the principal off at the end of the loan term, which is up to one year.
You can refinance your loan at the end or pay it off early without a fee. Payment in USD is accepted as well.
Kraken uses a decentralized lending system that makes it possible to borrow, lend, and earn interest on cryptocurrencies without third parties.
One of the assets they deploy is Aave, which runs on the Ethereum blockchain.
This smart contract system allows management by a distributed computer network. Aave software helps create lending pools, which allow users to borrow or lend ETH, BAT, MANA, and 14 other cryptocurrencies.
Aave borrowers have to provide collateral in cryptocurrency as with all other lending systems running on Ethereum. The maximum amount they can borrow is equivalent to the value of their collateral.
Borrowers obtain funding in the form of aToken, a special token pegged to another asset’s value. Lenders get interest on deposits as this token is subsequently encoded.
You can borrow money in BUSD or USDT from this platform by posting collateral in crypto (XRP, ETH, BTC, BCH, EOS, or LTC) in your account. You can choose from four repayment terms: one week, two weeks, a month, and three months.
Binance breaks down interest calculation and calculates the collateral you need to post and the total repayment amount. Their personal loans serve a wide variety of purposes. Interest rates on loans in BUSD are more affordable.
YouHodler offers 8-12% APR plus compounding interest and repayment terms ranging from one to six months. This lender offers loans in Bitcoin backed by altcoins. While only cryptocurrencies are accepted as collateral, you can also get a loan in EUR or USD.
You get your collateral back when you pay off the loan. You will get exactly as much as you deposited, regardless of whether prices have changed.
To qualify for a loan from this Swiss company, you only need a verified account and sufficient collateral. Loan repayment terms are 30, 60, or 180 days.
The lender does not calculate interest based on your collateral. The rate is determined by the type of loan.
Salt Lending offers loans starting from $5,000. Repayment terms are from 3 months to a year. The lowest possible interest rate is just under 6%. There are no origination or early repayment fees.
It is very fast and easy to secure a loan on Crypto.com. You start by depositing collateral in BTC, CRO, XRP, ETH, LTC, EOS, or XLM.
Interest rates range from 8% to 12% and the maximum loan repayment term is one year. The lender does not charge late fees. Neither do they establish fixed repayment schedules.
The amounts of personal loans from CoinLoan reach EUR 100,000. Borrowers put up collateral in Bitcoin. The amount of Bitcoin needed depends on the amount you want to borrow.
The maximum repayment term is three years, but you can pay your loan off at any time before that without incurring a penalty.
Personal Loans from Banks
Banks offer secured and unsecured personal loans for a variety of purposes. Typical requirements to receive a loan include:
- Be an existing customer of the bank
- Meet minimum income requirements
- Meet minimum credit requirements
A personal loan from a bank will require a good to excellent credit score. APRs range from 5% to 25%. Loans from $1,000 to $100,000 are typically available. At the time of writing, Capital One and Bank of America do not offer personal loans. However, other banks do. Read on to find out more about their terms.
Wells Fargo Personal Loan
Wells Fargo offer unsecured as well as secured personal loans. Both have pluses and minuses. With a secured loan, you might qualify for a bigger amount at a lower rate. Because they don’t require collateral, unsecured loans can be more convenient.
The bank offers secured personal loans from $3,000 to $250,000 and unsecured personal loans in amounts ranging from $3,000 to $100,000. Interest rates vary, but they are generally similar to what a number of other major banks charge. Customers who use a qualifying checking account to sign up for autopay are eligible for rate discounts.
Repayment terms are up to 120 months for secured personal loans and from one year to 84 months for unsecured ones. The exact term depends on the loan amount. The bank does not levy origination fees on unsecured personal loans. No annual or prepayment fees are charged on either secured or unsecured loans. There is an origination fee of $75 on secured loans.
DCU Personal Loan
The Digital Federal Credit Union has a lot of products to choose from, including certificate secured loans, secured savings loans, and unsecured personal loans. They also have products to build credit and consolidate debt.
Unsecured personal loans from as little as $300 to $25,000 are available. There are neither origination fees nor prepayment penalties. Interest rates range from 8% and 18%. They are near the lower limit if you sign up for relationship benefits or electronic payments. Additional discounts may be offered. Here is some more data:
- No NSF/returned payment fee
- Late payment fee: 4% per month for every month that’s overdue
- No check processing fee
- Loan terms: 1 to 5 years
- No prepayment penalty
- Direct payment to creditors
- Monthly repayment
Secured Savings Loans
To be eligible for a secured loan, you must have a savings account with the DCU with a minimum balance. You borrow against your account’s value. There is a minimum of $200. The APR is just 3.5%. The rest of the terms are the same as those for unsecured loans with one important exception: you can get a loan of up to 10 years. You will also undergo a hard credit check if you apply for a secured loan.
Citibank Personal Loan
Citibank does not have a minimum credit score requirement. You can borrow from $2,000 to $50,000 with an APR of 7.99% to 23.99%. Both secured and unsecured loans are available. The bank doesn’t charge prepayment or origination fees. There is a rate discount if you sign up for autopay and a mobile app to help borrowers manage their loans.
As a downside, there is no pre-qualifying option. You can’t change or even choose your payment date. There are no joint or co-signed loan options. You have to be an existing customer of Citibank to be eligible for any loan, no matter what kind.
We hope you found our article about personal loans helpful. It pays off to be informed when choosing a loan type or provider. An uninformed decision may prove disastrous.