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Best Personal Loans – 2020

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Which lender should you choose?

The answer to that question should be the lender with the lowest interest rate, but that’s not always the right answer. To apply and get rejected may reduce your chances for a loan in the future. So our recommendation is: Start with a low interest rate lender, if denied continue with medium and then a high interest rate lender. Interest rates and requirements for approval vary greatly between lenders.

We’ve built a completely new and unique list for you to compare lenders that increase your chances. And that’s our goal, you getting a loan approved.

1
Loan amount
Min
$100
Max
$35,000
Loan terms
Min
2 months
Max
7 years
Min credit score
550
APR
From 6.90%?
States
49
Features
  • Bad Credit allowed
  • High approval rates?
  • Deposits as fast as next business day
  • Time for decision: 1.5 min
  • Service?
2
Loan amount
Min
$100
Max
$40,000
Loan terms
Min
2 months
Max
5 years
Min credit score
580
APR
From 5.99%?
States
46
Features
  • Bad Credit allowed
  • High approval rates?
  • Deposits as fast as next business day
  • Time for decision: 1.5 min
  • Service?
3
Loan amount
Min
$500
Max
$35,000
Loan terms
Min
3 months
Max
6 years
Min credit score
580
APR
From 5.99%?
States
50
Features
  • Bad Credit allowed
  • High approval rates?
  • Deposits as fast as next business day
  • Time for decision: 1.5 min
  • Service?
4
Loan amount
Min
$1,000
Max
$5,000
Loan terms
Min
9 months
Max
3 years
APR
From 99%
States
19
Features
  • Bad Credit allowed
  • Low approval rates?
  • Deposits as fast as next business day
  • Time for decision: 1.5 min
  • Direct Lender
5
Loan amount
Min
$1,000
Max
$5,000
Loan terms
Min
14 days
Max
1 year
Min credit score
580
APR
From 7%?
States
45
Features
  • Bad Credit allowed
  • High approval rates?
  • Deposits as fast as next business day
  • Time for decision: 1.5 min
  • Service?
6
Loan amount
Min
$100
Max
$5,000
Loan terms
Min
3 months
Max
2 years
APR
Individual rates
States
37
Features
  • Bad Credit allowed
  • High approval rates?
  • Deposits as fast as next business day
  • Time for decision: 1.5 min
  • Service?
7
Loan amount
Min
$1,000
Max
$40,000
Loan terms
Min
2 months
Max
7 years
Min credit score
580
APR
From 4.84%?
States
50
Features
  • Bad Credit allowed
  • Medium approval rates?
  • Deposits as fast as next business day
  • Time for decision: 1.5 min
  • Service?

Requirements & Loan application

Requirements in general for online application

  • Social Security Number
  • Identification, like photo ID etc.
  • 18 years of age, but preferably over 20 years of age
  • Proof of income
  • Proof of employment
  • Not have active or recent bankruptcies
  • Checking account number
  • Your bank’s routing number

Loan application

Depending on the lender, you may want to only apply to one lender at a time. Most online lenders only perform soft inquiries on your credit background, so your credit score is not affected. In this scenario, it is safe to apply to multiple lenders at once. Most traditional banks, however, do a hard pull, which will impact your score each time.. Every pull results in a slight drop in your credit score and while this is usually a temporary effect, multiple applications can cause a significant decrease in your score. Before applying with either type of lender, confirm what kind of credit check they perform for preapproval.

Important to keep in mind!

  • Only apply to one lender at a time
  • Keep track of your credit score
  • Do not rush through your application
  • Make sure you have a good repayment capacity

Introduction to Personal Loans

A personal loan allows individuals to borrow funds from a financial institution rather than charging expenses to a credit card. There are two types of personal loans: secured and unsecured. Secured loans mean that there is personal property tied to the loan, which can be repossessed in case the borrower defaults on the loan. An unsecured loan, on the other hand, has no tangible property associated with it.

Advantages of an personal loan

One of the advantages of taking out a personal loan is that it typically comes with a lower interest rate than a credit card. The average interest rate for a personal loan is around 12.36% while the average interest rate for a credit card is between 27% and 29%. Another plus is that the approval process is relatively quick, sometimes as fast as 24 hours depending on the lender. There also are no restrictions on what you can use the funds for.

When taking out a traditional personal loan, it’s best to prepare your application information in advance so that you can speed up the approval process. While each lender has its own set of specific requirements, most operate using the same basic guidelines. Here are a few pieces of information and documentation you can expect when applying for a personal loan.

  • Personal information such as name, contact information and social security number
  • Income information such as salary, pay stubs, bank statements, and/or W2s
  • Collateral, if required

Importance of your credit score

Another important variable in the personal loan application process is your credit score. This number is important because it not only factors into whether your application is approved or denied, it also affects your interest rate. The higher your score, the lower your interest rate, which in turn results in lower monthly payments. Your credit score is calculated by credit bureaus who receive financial information from creditors.

The most important criteria affecting your credit score are:

  • Payment history – shows how reliable your are with your monthly payments
  • Amount of debt – demonstrates how much you owe compared to how much you earn
  • How long you’ve had credit – the longer your credit history, the better
  • New credit – lots of recent credit applications can make you look like you’re in financial distress
  • Types of credit – some types of credit appear better than others; a home mortgage, for example is viewed as a positive investment

By understanding the personal loan application process, you can better set yourself up for success. But remember, even if you are denied after submitting your first application, there are plenty of alternative options to explore to receive the financing you need.

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