The Balance’s Guide to Personal Loans
Frequently Asked Questions
What is the best place to get a personal loan?
It depends on what you’re looking for. Online lenders tend to offer quick access, even with same-day funding in some cases. Credit unions may offer better rates and be easier to work with if you have bad credit, while traditional banks tend to favor borrowers with strong credit profiles. Another option is peer-to-peer lending platforms, which rely on less conventional means to approve loans.
Can you get a personal loan with a credit score of 550?
Maybe, but probably not. The lowest recommended scores in our database are 580 (the bottom of the “fair” range), but some lenders may offer loans if your credit is worse. Seeking a secured loan or applying with a co-signer could improve your chances and reduce your rate. But the best option might be to work on improving your credit score before seeking a personal loan.
What is the minimum credit score for a personal loan?
There is no one minimum credit score to get a personal loan. Some lenders have a cutoff of 680, while others offer unsecured loans to borrowers with scores as low as 580. Secured loans (those backed by collateral) have more liberal score requirements. Some lenders even look beyond your credit score, such as a credit union that offers Payday Alternative Loans (PALs) or a paycheck app like Earnin.
Which bank has the easiest personal loan approval?
LendingClub, OneMain Financial, LendingPoint, and First Tech Federal Credit Union are more likely to offer personal loans for bad credit, as long as borrowers meet other requirements. If you’re looking for the easiest application process, consider Rocket Loans or LightStream, both of which offer fast funding.
What credit score do I need for a $50,000 loan?
Each lender sets its own requirements for what credit score you need to get approved for an installment loan. There are no hard-and-fast rules, but in addition to credit score, your income, existing debt, and the loan’s purpose may all contribute to the amount you get approved for. Securing the loan with collateral may also increase your borrowing limit.
What is the easiest loan to get approved for?
Smaller personal loans and secured loans present less risk for the lender and so can be easier to be approved for. But remember, if you secure a personal loan with your property, such as a car or bank account, and you default on loan payments, the lender can take that property away from you.
Will checking my rate affect my credit score?
It can, depending on what type of credit check the lender does. Some lenders offer loan prequalification based on a “soft credit pull,” which doesn’t affect your score. But others do a “hard credit pull,” which will impact your score. Know how the lender will pull your credit before checking what rates and terms you qualify for.
Annual Percentage Rate (APR)
An annual percentage rate (APR) is the interest rate you pay each year on a loan, credit card, or other line of credit. It’s represented as a percentage of the total balance you have to pay.
An origination fee is charged by a lender to cover the costs of processing a loan. It may be used to pay for preparing documents, processing your application, or underwriting your loan.
A credit score is a number that evaluates and rates your creditworthiness based on your credit history. Lenders use credit scores to decide whether to approve someone for a loan or credit card and to determine what interest rate to charge.
The loan principal is the amount of money you borrowed from a lender. The loan principal can be found in a mortgage, car loan, student loan, credit card balance, and many other loans.
Debt consolidation is using one loan or credit card to pay off multiple loans or credit cards so you can simplify your debt repayment. With one balance instead of many, it should be easier to pay off your debt and, in some cases, secure a lower interest rate from the lender.
Unsecured loans are loans that are approved without the need for collateral. If a borrower defaults on the loan, the lender is left with few options to get paid outside of filing a lawsuit.
Collateral represents some type of property that you own that you offer as security in order to obtain a loan. The item you offer should have value, and it is something the lender can repossess if you don’t make payments.
Maximum Loan Amount
A maximum loan amount is the total amount of money a lender will approve for a borrower. Maximum loan limits can apply to mortgages, personal loans, lines of credit, and credit cards.
Line of Credit
A credit line, also known as a line of credit (LOC), is a type of standing loan that allows individuals, businesses, or other organizations to borrow cash when they need it, repay what they have borrowed, and continue borrowing without applying for a new loan.
A co-signer is someone who applies for a loan with another individual and who contractually agrees to pay off the debt if the other borrower doesn't make payments. The co-signer signs the loan application with the borrower and effectively guarantees the loan.