Unlike credit cards, which can charge exorbitant interest rates that change with market conditions, personal loans come with fixed interest rates, fixed repayment periods, and fixed monthly payments that will never change.
Also, since your monthly personal loan payment will never change either, these loans are easier to plan than credit cards, which can further increase your payment if you run into debt.
This combination of factors makes personal loans a good option when you want to borrow and repay a certain amount of money for a period of time without wondering how much interest you will end up paying.
Because the best personal loans can offer fixed rates as low as 3.99% annual interest, they are suitable for a variety of purposes, from home remodeling projects to debt consolidation. However, it is important to ensure that you are getting the right personal loan for your needs – with the lowest long-term cost.
Fortunately, it is easier than ever to compare personal loans online and apply for them in just a few clicks.
8 Best Lenders And Personal Loan Interest Rates For 2020
However, before signing up for a personal loan, it is helpful to know which reputable lenders offer the lowest interest rates and fees. We compared some of the best personal loans available today to create this list of the best personal loans for 2020:
- Marcus from Goldman Sachs
- Best egg
- Pay off
1. Marcus from Goldman Sachs
Goldman Sachs’ Marcus offers some of the best personal loans available today as their loans do not come with an application fee or an origination fee. You could get as little as 6.99% APR with excellent credit and no penalties if you choose to repay your loan early.
This online lender simplifies the online loan application process and lets you borrow up to $ 40,000 with no collateral. Loan terms range from 36 to 72 months, so you can customize your loan payment and desired repayment schedule to suit your needs as well. Better still, Marcus at Goldman Sachs allows you to fill in some basic information and view your credit options without putting a tough query on your credit report.
SoFi is very popular for its student loan and student loan refinancing products, but it also offers high quality personal loans. Because they are geared towards consumers with good or excellent credit, SoFi personal loans with Autopay are offered with fixed rates from 5.99% to 17.67%.
If you are looking for a loan with minimal fees, SoFi loans are definitely worth considering. Your personal loans will accrue with no late fees, no origination fees, and no prepayment fees if you choose to repay your loan early. You can borrow up to $ 100,000 if you qualify, and you can even request that your payments be temporarily suspended if you lose your job.
LightStream is also very popular for its versatile personal loans because of its low interest rates and high loan amounts. This online lender offers interest rates from 3.99% to 16.79% and loan amounts from $ 5,000 to $ 100,000. You can even repay your loan over a period of 24 to 144 months. This is one of the most extensive options among any other personal lender.
The best thing about LightStream is that you can complete the entire loan process online. You can even get your loan money straight away via direct deposit the same business day, depending on when you apply.
4. Best egg
Another personal lender that gets good reviews from customers is Best Egg. This lender offers loans with interest rates as low as 5.99% for consumers with great credit, and you can even get pre-approved for a loan online without a tough query on your credit report.
Depending on your income and other factors, you can borrow anywhere from $ 2,000 to $ 35,000 with Best Egg. However, be aware that the best egg personal loans come with an origination fee, which can be as high as 5.99% of your loan amount.
5. Lending Club
While online banks are popular in the personal lending space, don’t forget the LendingClub – a peer-to-peer lender that allows individual investors to lend instead of banks. On the borrowing side, LendingClub allows consumers of all credit ratings to apply for personal loans up to $ 40,000.
Interest rates range from 6.95% to 35.89%, with the lowest rates going to consumers with great or excellent credit. There are no prepayment penalties required if you want to repay your loan early even though you will pay an origination fee between 1% and 6% of your loan amount.
To qualify for any of their loans, according to LendingClub, you must be at least 18 years old, have a verifiable bank account, make enough money to repay your loan, and have a good credit score.
Payoff is a personal lender that offers credit specifically for consumers who need to pay off high-interest credit card debt. Withdrawal personal loans are available in amounts between $ 5,000 and $ 35,000. You can get pre-approved and see your interest rate online without asking a hard query on your credit report. However, to qualify for a loan, you usually need a FICO score of 640 or higher, a debt to income ratio of 50% or less, a credit history of at least three years, and no arrears on your credit report.
Interest rates on personal payout loans can be as high as 5.65% of the annual interest rate, which is well below the average rates charged by credit cards. Because of this, according to Payoff, their customers usually pay off their debts faster and save a lot of interest. Because they report all of your credit movements to the three credit bureaus – Experian, Equifax, and TransUnion – you can also use this loan to improve your credit score.
Upstart is another online lender that makes it easy to get pre-approved and see what interest rate you qualify for without putting a hard query on your credit report. This company is also a credit aggregator, meaning it does not offer the loans itself. Instead, you can fill out a loan application form and view quotes from multiple competitive lenders in one place.
Make sure to apply for a personal loan with Upstart to see how much you can save by consolidating debt or borrowing at a low interest rate.
8. Lending Tree
Finally, no matter what, you may want to check out the loan options on LendingTree. LendingTree is a credit aggregator that allows you to apply for a personal loan once and receive multiple competing quotes on the same day. This way you can compare all loan terms, monthly payments and fees before making a decision.
There’s a reason this company uses the slogan “When Banks Compete, They Win”. With LendingTree, banks can easily compete for your business with minimal effort. LendingTree also has useful tools like payment and debt settlement calculators that can help you create a plan that will allow you to use your personal loan to improve your life and finances over time.
How to Qualify for the Best Personal Loan Interest Rates
As you continue to search for the right personal loan for your needs, it is important to find ways to become the ideal loan candidate. In the meantime, you need to know what to look for in credit and how to set up to find the best loan rates.
The tips below can help you find the best personal loan for a debt consolidation, home repairs, large remodeling project, or other financial goal.
Improve Your Credit Score
Most personal loan companies place great importance on your creditworthiness – the three-digit number that represents your creditworthiness. While very good credit is usually considered a FICO score of 740 or higher, you can qualify for a personal loan with a FICO score at a lower interest rate. Remember that the best interest rates and loan terms always apply to those who have excellent credit scores and a long credit history.
Since your payment history is the most important factor in your FICO score, the biggest step you can take to keep your balance in good shape is to pay all of your bills early or on time. If you’re late paying bills, you’re sending a signal to lenders that you’re struggling to keep up with monthly payments – a red flag that will make you pay a higher interest rate on your personal loan.
Pay off part of your debt
Also, think about the second most important factor in your FICO score – how much debt you owe in relation to your credit limits. High debt on your credit limits tells banks and lenders that you are desperate for credit, while a lot of open credit tells lenders that you are doing well with your cash flow.
When you have lines of credit that have already been used, paying off debt in a hurry can make a big difference in your credit score. Most experts recommend keeping credit utilization below 30% for the best results for your creditworthiness. So this is a good area to aim for.
Fix any errors in your credit report
If you haven’t checked your credit report in a while, now is the time to do so. Incorrect reporting can affect your creditworthiness – especially if the incorrect information is negative. However, it is likely that you will never find out that your credit report contains bad information unless you take the time to review it.
Fortunately, once a year you can get a free copy of your credit report from all three credit reporting agencies on AnnualCreditReport.com. If you find inaccurate information that needs fixing, this guide can help you correct Federal Trade Commission (FTC) credit reporting errors.
Build stable sources of income
Once you start looking for personal loans and comparing the eligibility requirements, you will find that most want a stable source of income. This means you may have trouble qualifying if you’ve only been in your job for a few weeks or months. However, if you keep a steady job for several years, you are in a better position for approval.
If your employment history makes it difficult to qualify for a personal loan, it may be worth waiting to apply until you have at least 12 months of steady work experience. This shows lenders that you will have no problem paying back your loan, which hopefully means you can get a lower interest rate.
Find a co-signer
Also, keep in mind that some banks and lenders allow consumers to apply for a personal loan from a co-signer. However, not all lenders offer this option. So compare several options and see who will allow co-signers before applying.
When you have someone with excellent credit ready to sign your loan, you may be able to rely on their solid credit rating to get approval and get a much lower interest rate. Remember, however, that your co-signer is jointly responsible for repaying the loan, just as you are.
Sign up for a bank account
Most banks also require you to have a verifiable bank account in order to apply for a personal loan. This is especially true for online lenders who will process your application and deposit your loan funds electronically.
If you don’t have a traditional bank account, you should open one before applying for a personal loan. Be sure to compare checking account offers and remember that some offer bank bonuses that reward you for signing up and meeting the initial deposit requirements.
Browse and compare lenders
Don’t forget that the best way to save money on a personal loan is to compare lenders and quotes. If you keep looking for the right loan, you will find that lenders have different lending criteria and requirements which can result in a lower interest rate depending on who you are applying to.
We always recommend comparing prices and fees from at least 3-4 lenders before applying. That way, you will know how much your loan will cost, based on how much you borrow, how long your loan will be repaid, and other factors.
Take the time to do an apple to apple comparison and you are sure to find the best personal loan at a price you can afford. How are you going to use your loan funds? That’s up to you.