Are you worried about the rising interest rates and are looking for low-cost options to consolidate your debt? If yes, then a personal loan might be the right solution for you. Personal loans can assist you in achieving your goals, whether you are planning to renovate your home or cover unanticipated expenses. With several lenders in the market, it can be overwhelming to pick the right one. That is where we come in.
Personal loans are available from credit unions, traditional banks, and online lending platforms. It usually ranges from about $1,000 to $50,000, with a few lenders providing loan amounts up to about $100,000. However, over 70% of Americans borrow less than $20,000. The best part is that different personal loans can be funded within a few business days. Thereby offering you quick access to the money you need.
What is A Personal Loan?
A personal loan is a sum of money that can be borrowed to meet numerous financial needs. This can include funding home renovations, consolidating debt, or financing a wedding. Personal loans are issued by credit unions, accessible by banks. Or online lenders, and must be repaid over time along with interest. In addition, some lenders may charge fees for personal loans.
How A Personal Loan Works
When you need to borrow an exact amount of money to cover several expenses, a personal loan can be a good option. This loan permits you to get a lump sum of money and pay it back in regular installments over time. You might use a personal loan to cover some things, like:
- Debt consolidation.
- Wedding expenses.
- Funeral costs.
- Unexpected expenses.
- Moving expenses.
- Medical bills.
- Home renovation.
- Vacation cost.
Unlike other types of loans, like car loans, student loans, and mortgage loans, which are intended to fund exact expenses like vehicles, education, or homes, personal loans can be used for diverse purposes.
Best Personal Loans in 2024
When it comes to personal loans, there are a lot of lenders to pick from, each providing loans that cater to different needs and financial circumstances. The lists below are some of the best personal loans in 2024, and they are as follows:
If you are not looking to consolidate debt from a Discover card, then a Discover personal loan is a great option for debt consolidation or any other type of loan. With zero origination fees and low rates, it is easy to pay it back. Plus, the fast funding time means you could get the funds in your bank account the next business day.
Note that you can only apply as a solo applicant. But you can still use your household income on your application. However, you cannot apply with a co-signer or co-borrower. Or make use of collateral for a Discover loan, so you need to qualify based on your credit merits. To avoid damaging your credit, it is essential to make on-time payments, especially since Discover charges a $39 late payment fee.
Working with a large bank like U.S. Bank gives you the added advantage of being able to walk into a branch and talk to someone about your loan. U.S. Bank is one of the largest banks in the country, with more than 2,300 branches in about half of the U.S. states. If you are already a customer of U.S. Bank, you may benefit from abridged credit requirements and higher maximum loan amounts.
However, if you were not their customer before, you would be limited to a smaller loan of about $25,000 or less. It is worth noting that U.S. Bank used to have a better standing and was ranked as the second-best option for personal loans in 2022 by J.D. Power. However, in the 2023 survey, it was relegated to below-average status.
PenFed Credit Union
Pentagon Federal Credit Union, also known as PenFed, has close to three million members, which makes it one of the largest credit unions in the country. The credit union is easy to join; you need only a $5 deposit into a savings account to get started. You can apply for a loan without joining, but if you accept a loan offer, it is a must that you become a member of the credit union to get your loan funds. To be accepted for a loan, you must have good credit.
If you do not have good credit, you may be able to apply with a co-borrower or make use of collateral to secure your loan. However, PenFed does not offer any details on how this works. In addition to providing excellent rates on a wide range of loan amounts, PenFed also has a discount program that gives savings on H&R Block tax preparation, college planning services, insurance, and more.
SoFi is the most affordable lender with a good blend of options and some nice extras. While there are lower-rate personal loans available, SoFi stands out for its complete benefits package that comes with all of its loans. This package provides free financial planning from an advisor, access to unemployment assistance in case you lose your job, and even career counseling and support.
Borrowers love this approach, which has assisted SoFi in earning the fourth-best spot in J.D. Power’s annual survey of customer satisfaction among personal loan lenders. The downside is that the minimum loan amount is about $5,000. So borrowers looking for a smaller loan may be unable to use SoFi. In addition, SoFi does not offer the option to apply with a co-signer or make use of collateral if you are unable to be approved otherwise.
First Tech Federal Credit Union
First Tech Federal Credit Union is a great alternative for a small personal loan. It gives affordable rates and does not charge origination fees, although there are no available rate discounts. First Tech also reports your payments to all three credit bureaus. This makes it an excellent choice if you are looking to build your credit.
In addition, it has options for secured loans backed with savings or stock as collateral. Qualifying for membership is easy if you work for a qualified employer like Amazon or Microsoft. However, if that is not an option, you can still join by connecting to another organization first, which charges a small membership fee.
Tips To Compare Personal Loan
When comparing personal loans, make sure you consider the tips that are listed below, which are as follows:
Consider the Purpose of Your Loan
Personal loans can be used for an extensive range of purposes, like consumer debt consolidation, weddings, home improvements, vacations, funerals, and other personal expenses.
However, lenders frequently restrict the use of personal loans for business purposes, education expenses, and illegal activities. Before picking a lender, it is important to confirm that your proposed use of the loan is allowable under its borrower agreement.
Evaluate the Lender’s Customer Support Options
Once you have found a lender that gives you suitable terms for your needs, it is important to consider their customer support. Customer support may not seem like a big deal initially.
However, it can make an important difference if you experience issues with payment or face financial difficulties throughout the repayment period. Ensure you have a good fit, review the lender’s customer service resources, and read reviews from past and present borrowers.
Where possible, Prequalify
Several personal loan providers offer the capacity for prospective borrowers to prequalify for a loan. This process permits the applicant to submit details about their financing needs and housing situation.
And other relevant information to find out what kind of loan rates, amounts, and repayment terms they are likely to qualify for. Even better, this process typically only needs a soft credit inquiry, so you can shop around without hurting your credit score.
Check Out For Additional Fees
Some lenders provide fee-free personal loans that do not require borrowers to pay origination fees. Or prepayment penalties, late payment fees, or other common loan costs. However, this is more of an exemption than a rule.
So it is important to ask about fees when shopping for the best loan terms. In addition, if a lender charges an origination fee, it is important to find out whether it is built into the APR. Or taken out of the loan amount before funding, as this may influence the loan amount you need to request.
In conclusion, navigating the vast array of personal loan options available can be overwhelming. However, with some little research, you can find the best loan for your financial needs this year. Do not forget to take your time to compare different lenders and loan products to find the best possible loan for you. This will assist in keeping your monthly payments low while reducing your risk of default.