Are you looking for a personal loan but you do not know which bank is best for personal loan? Do not worry, in this post, Info Credit Free will introduce to you some banks which were considered the best banks for a personal loan in 2018.
In the previous post, we introduce people to personal loans for debt consolidation, to get information about it, you can read Five steps to get personal loans for debt consolidation. Now, let find knowledge about which bank is best for a personal loan.
WHICH BANK IS BEST FOR PERSONAL LOAN
Just like a lot of article posts such as credit bureau contact information, credit reporting services, credit rating companies…, this post about best bank for a personal loan includes some main parts.
1. How to choose a lender which bank is best for personal loan
1.1. Minimum credit score
Most lenders require you to have at least fair or good credit when signing up for a personal loan. Each lender sets a separate cut for what they perceive as excellent, good credit, fair or bad. In general, fair credit is the FICO score in the range of 580 to 669 and good credit is between 670 and 739. Most companies require a minimum score of 600, but some require a larger payout.
The higher your score, the better your chances of getting approved and the higher your score will be, the interest you will be eligible to receive.
1.2. Clean credit history
Lenders do not want to see the default, collection or bankruptcy. If you have one or more of these in your credit report, you may not be approved for personal loans. If you are approved, you may have to pay exorbitant interest.
1.3. Stable employment
The lender should know that if it lends you money, you will have the means to pay off your debt over time. Without a steady job, you may miss out on payments or defaults for the loan. Proof of employment confirming your loan application.
1.4. Proof of identification
Lenders often need proof of identities, such as a copy of your driver’s license or passport, before approving your loan. Identity theft is common and they want to prevent thieves from borrowing money under someone else’s credit.
2. How to choosing lender which bank is best for personal loan
2.1. Type of Lending Company
There are two types of lenders you can choose: banks and peer-to-peer lenders. Banks provide personal loans including Earnest and LightStream and peer-to-peer lenders including Upstart, LendingClub, Prosper, and Perform.
Peer loans, or P2P, are provided by people who decide to invest in other individuals by lending them money. Marketplace-based lenders typically require less stringent credit scores than their bank-based counterparts. For example, LendingClub and Perform only require a FICO score of 600 while bank-based companies like EarnestPayoff have a minimum FICO score of 660.
2.2. Interest Rates
Each individual loan comes with a fixed or variable interest rate. A variable rate of change in the loan lifecycle, depending on market movements. A fixed rate will remain the same throughout the loan period. The variable interest rate is usually lower than the fixed rate but comes with the warning that you can eventually pay a higher interest rate if interest rates change while you repay the loan.
Some borrowers prefer not to have the uncertainty of a variable rate loan and prefer to attach it to a fixed-rate loan.
2.3. Loan Terms
Every lender has their own specific terms about the amount of money they will lend, the length of time the borrower has to pay the money and the restrictions on what they can use the money for.
Each lender has a minimum and maximum loan amount. For example, SoFi will lend up to $ 100,000 while Payoff lends up to $ 35,000. If you need a $ 45,000 loan, just look at the lenders that provide that amount.
The lender also has a minimum and maximum loan period, which is how long your repayment period is. Lenders usually have a loan period of at least two years and a maximum of seven years. The longer your loan is, the lower your payment will be, but you will pay more interest. If you can afford higher monthly payments, go with shorter loan periods to save some money.
Some lenders have restrictions on what your loan can be used for. Payoff only allows you to apply your personal loans to your credit card debt, while LightStream does not allow borrowers to pay college tuition on a personal loan. Don lies about what you would use the money to do. Lying on your loan application can be considered as fraudulent lending and may result in additional charges and fees.
Lenders also have their own time frame on how fast you will receive money from a personal loan. Usually, the money is distributed within no more than five business days. Sometimes, you can get it on the same day. Most lenders will disburse money through a transfer.
Some discount lenders if you set up automatic payments online. For example SoFi offers a 0.25 percent interest discount if you set up a paid auto and LightStream offers a 0.5% discount. This can help you avoid miss a payment and save a bit of interest at the same time.
2.4. Fees and Penalties
The important aspect to compare before choosing an individual loan is the fee that the lender charges. Fees can increase the cost of a personal loan. For example, a starting fee of 3 percent on a $ 25,000 loan is $ 750.
An initial charge is a fee that the lender charges for managing the loan. Only a few lenders, including Lightstream, SoFi, and Earnest, do not charge origination. Most lenders have an initial fee of 1 to 6%. The amount you pay for your origin fees may depend on your credit score, so the higher your score, the lower the cost of origin.
2.5. Repayment Options
Most lenders offer a few different repayment options including automatic pay, check by mail or online. These changes are based on the lender, so if you find a lender you like, make sure that it offers the repayment option that works best for you. Some lenders, including LendingPoint, Best Egg and Upstart, allow you to change your payment due date.
2.6. Additional Features
Some lenders have additional features that make them more affordable to some borrowers. Discover allows you to pay back your personal loan within 30 days without paying interest or other fees if you change your mind after the loan has been approved and completed. SoFi has an employee assistance program that allows you to temporarily stop paying and get personal help to find a new job if you lose your job without your fault.
Indeed, you need to have a good credit score if you want to get a loan with the best interest rate. In order to know your credit history is good or not, you should check credit frequently from the credit check agencies.
Info Credit Free introduce to people not only about loans, credit card but also about the insurance in the US, Australia. If you are interested in the insurance, you can read our articles such as car loans, health loans, home loans, or travel insurance.
Hillary (Team Content) – Info Credit Free