Unique Ways to Borrow or Consolidate Debt with Personal Loans

Handing Over Money
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Credit reports and scores play an exorbitant factor in whether or not traditional lenders are willing to offer someone a loan. A weak credit score or derogatory mark on a credit report could result in rejection, and understandably so. Banks are under rather intense scrutiny and regulatory red tape. An institution only wants to lend to the best-of-the-best, but where does that leave people without 700-plus credit scores, minimal credit history or a derogatory mark?

With personal loans.

The lending industry has experienced a recent rush of new entrants into the personal loan business. These, primarily startup, organizations are looking to service an overlooked or marginalized group of loan seekers. These lenders created a new approach to underwriting and unique safeguards in order to offer personal loans to young professionals with minimal credit history as well as experienced workers with damaged credit. These options can help reduce the need for predatory payday and title loans – just check to see if the personal loan is available in your state.

There are a wide variety of personal loan providers, some of which are even peer-to-peer lenders, meaning your fellow common man could be backing your loan. Here’s a look at some of the personal loan providers for young professionals, millennials looking to refinance student loans, people suffering with credit card debt and those with less than stellar credit scores.

Most of these options even offer you the opportunity to see potential rates without harming your credit score.

SoFi

Social Finance, more commonly known as SoFi, is a peer-to-peer lending business focused on helping young professionals with minimal credit history (but proof of being responsible in other ways).

SoFi evaluates a person’s employment history, current job, degree and college as well as more traditional factors like credit score. SoFi does focus on the top-tier candidates and may not approve someone with a credit score under 700.

Borrowers can turn to SoFi for:

  • Personal loans
  • Student loan refinancing
  • Mortgages
  • Mortgage refinancing
  • Parent loans
  • Parent PLUS refinancing
  • MBA loans

APR ranges depend on product, but personal loans start with a fixed rate of 5.50 percent on amounts of $5,000 to $100,000.

Personal loans are fee-free with no origination fees or prepayment penalties (obviously there are fees if you fail to keep up with payments).

Anyone can see if SoFi is a good fit without harming his or her credit score: SoFi does a “soft pull” in order to determine rates to perspective customers. There is no harm in seeing if SoFi loans are a good fit and no obligation to take a loan.

Payoff

Payoff seeks to help with one problem: credit card debt. While SoFi provides a suite of loan options, Payoff exclusively works with people trying to pay off credit cards.

People struggling with credit card debt can apply for a loan with Payoff, use the money to pay off the credit card balances and then start making one payment to Payoff – hopefully with reduced interest rates as well.

Similar to SoFi, anyone can see a rate without harming a credit score because Payoff also uses a soft pull.

Rates range from 7.96 percent (10 percent APR) to 19.54 percent (22 percent APR) for up to 60 months.

Payoff requires a credit score of 660 or higher, a debt-to-income ratio of 40 percent or less, at least three years of credit history, no unpaid tax liens, no current delinquencies and less than four inquires on your credit report in the last six months.

Vouch

Vouch offers one of the unique forms of personal loans on the market. As the name implies, borrowers get people to vouch for them, which in turns drives down the APR on a loan.

A borrower must get two vouches and meet Vouch’s credit criteria order to be eligible for a loan. There is a 600 FICO score minimum and the vouches must mean people will pay an amount of money if you default on the loan, similar to a co-signer.

The more people vouching, the higher the loan amount and lower the APR a person can receive. Vouch has a relatively low maximum cap with $7,500 being the most someone can borrow.

There is an origination fee of one to five percent and no hard inquiry to apply and see rates. But borrowers need a strong network in order to maximize the Vouch approach.

Lending Club

Similar to other peer-to-peer lending options, Lending Club offers the opportunity to see a rate without harming a credit score. Its personal loans are eligible for people with credit scores as low as 620 with an APR range of 6.48 percent to 29.99 percent depending on creditworthiness and length of the loan. Just keep in mind, the lower a credit score, the stricter the underwriting.

Lending Club offers loans in 24, 36 and 60-month terms for as little as $1,000 or as much as $35,000. There will be an origination fee of one to five percent and no prepayment penalty.

Avant

Avant (formerly AvantCredit) offers personal loans in the form of installment loans for those with the inability to qualify for a personal loan with a traditional lender or personal loan provider with stricter underwriting. Avant will approve credit scores as low as 550, but the common range is 600 to 750.

This provides options to credit seekers with weak or damaged credit who are looking to avoid a payday lender. Checking an Avant loan rate won’t hurt a credit score.

Avant loans range from 12 to 60-month terms on $1,000 to $35,000 with APRs of 9.95 to 36.00 percent depending on the state.

It doesn’t Hurt to Shop Around

The number one principle when looking for a personal loan should be to shop around. Unlike applying for other forms of credit, many personal loan providers offer the opportunity to look at rates without harming a credit score. So take the time to look around and accept the best offer for which you qualify.