5 of the Best Personal Loan Rates

Not too long ago there was one option for those needing a personal loan – the local bank. The application process was long and tedious. It was difficult and time consuming to compare rates. And fees were often extremely high.

P2P lending sites and other online financial institutions have changed the way we shop for a personal loan. These sites allow you to build a custom loan without having to go through the often grueling underwriting process for which banks have become infamous. Furthermore, the entire process is usually completed online, eliminating the need for uncomfortable face-to-face meetings with loan officers.

In this article we’ll cover five leading online unsecured loan options. For each will look at their interest rates, loan terms, fees, and credit score requirements.

Why Get a Personal Loan

The number one reason consumers get personal loans is to refinance existing debt. Lowering your interest rates is a smart way to reduce your monthly payment and shorten the time it takes to become debt free. For those looking to transfer high interest credit card debt to a 0% card, you’ll find several options here. For those looking to refinance other types of debts, the options below are your best bet.

Beyond refinancing, many seek unsecured loans to consolidate several debts into one convenient loan. This too can be a smart move, although you need to always keep the interest rates and fees in mind. You don’t want to opt for the convenience of a loan consolidation if it’s going to increase your cost of borrowing.

How to Choose the Best Option

As you read through the options below, you can use this guide on how to choose the best option for you:

Excellent Credit: For those with excellent credit and a good income, SoFi is the best choice. It offers the lowest rates, fixed and variable rate loans, no fees, and protections should you lose your job.

Good Credit: If you have good credit, Lending Club is a smart option. The minimum credit score is 660.

Average Credit: For those with average credit, both Prosper and Upstart may be a good fit.

Small Business Loans: All of the lenders on this list provide lending to individuals looking to fund a small business. Funding Circle, however, specializes in business loans.

Best Online Personal Loan Options

1. Lending Club

Lending Club is perhaps the best known of all P2P lending platforms, and generally gets the highest rating. The platform is virtually synonymous with P2P lending for a reason. The site has made loans worth $22 billion dollars since it started in 2007, with most offering rates and terms that are better than what you can get at a bank.

The entire application process takes place on the website and is completely anonymous. In fact, investors typically buy “notes”, which are small slivers of many loans, rather than funding an entire loan at once. Your loan will therefore be funded by many investors, perhaps even hundreds of them.

You can borrow as much as $40,000 at interest rates between 5.99% and 35.89% APR, with terms of between 36 and 60 months. There are no application fees or prepayment penalties, though you do have to pay an origination fee of between 1% and 6% of your loan amount. Rates are based on a credit grade that the platform assigns you based on your credit score, the loan amount and other factors.

Lending Club offers debt consolidation, personal loans, medical loans (up to $50,000), Auto Refinancing, or Business Loans. Business loans can be for up to $300,000, at rates as low as 5.90% APR to as high as 32.00% APR, and origination fees of between 1% and 6%. To qualify for a business loan, you must be in business for at least two years, have more than $75,000 in annual sales, own at least 20% of the business, have fair or better credit, and no recent bankruptcies or tax liens. No collateral is required for loans of less than $100,000, and there is no requirement for appraisals, business plans or business projections.

LendingClub Summary:

  • Interest Rates: 5.99% to 35.89% APR
  • Loan Amount: $1,000 to $40,000
  • Loan Terms: 3 or 5 years
  • Fees: 1% to 6%
  • Prepayment Penalty: No
  • Credit Needed:  Minimum Credit Score of 600
  • To Get Started: Visit Lending Club

2. Prosper

Prosper is another popular P2P lending platform, so much so that it is often mentioned in conjunction with Lending Club. Prosper launched its P2P platform in 2005, two years before Lending Club. In that time, Prosper has made over $4 billion in loans to more than a quarter million borrowers. Prosper makes loans in all states except Iowa, Maine and North Dakota.

Loan amounts range from $2,000 to $35,000, with rates between 5.99% and 36.00% APR. Origination fees are between 1% and 5% of the loan amount, and there is no prepayment penalty. Loan terms are either 36 or 60 months, fixed rate and self-amortizing. Loans are unsecured and can be used for any purpose.

You create a loan listing on the site, which is a request for a loan from investors. Much like Lending Club, Prosper assigns you a credit rating which forms the basis of the rate you are charged for your loan. The rate will be fixed once your loan is funded by investors and you pass Prosper’s verification process.

Prosper Summary:

  • Interest Rates: 5.99% to 36.00% APR
  • Loan Amount: $2,000 to $35,000
  • Loan Terms: 3 or 5 years
  • Fees: 1% to 5%
  • Prepayment Penalty: No
  • Credit Needed:  Minimum Credit Score of 640
  • To Get StartedVisit Prosper

3. SoFi

SoFi is an online lending platform that specializes in refinancing and consolidation loans. While it is best know for refinancing student loans, it also offers unsecured personal loans. Founded in 2011, SoFi has made over $4 billion in loans. The loans are funded by both institutional investors and alumni investors, and represents one of the few lending sources dedicated to providing refinancing for both federal and private student loans.

 

The minimum loan amount is $5,000, and SoFi offers loans up to $100,000. Loans can be fixed rate or variable, with terms of three, five, or seven years. Loans with fixed rates range from 3.35% to 6.74%. Loans with variable rates range from 2.795% to 6.72%. Even better, SoFi does not charge an application fee, loan origination fees or prepayment penalty fees.

The loan process takes place online, and you can scan and send any needed supporting documents through the web platform. Documents can also be sent through your smartphone.

SoFi also provides Unemployment Protection. SoFi will suspend your loan payments for up to 12 months in the event that you lose your job through no fault of your own. You must have applied for unemployment insurance, and SoFi will provide you with job placement assistance to help you find a new job.

SoFi Summary:

  • Interest Rates (Fixed): 3.35% to 6.74% APR
  • Interest Rates (Variable): 2.795% to 6.72% APR
  • Loan Amount: $5,000 to $100,000
  • Loan Terms: 3, 5 or 7 years
  • Fees: None
  • Prepayment Penalty: No
  • Credit Needed:  Excellent Credit Required
  • To Get StartedVisit SoFi

4. Funding Circle

Funding Circle is an excellent choice if you’re looking for a business loan. They offer business loans for amounts up to $500,000 (the minimum loan amount is $25,000). Funding Circle specifically serves the business loan niche since it is one that is left largely uncovered by traditional banks. The platform has provided loans totalling more than $1 billion to more than 10,000 businesses worldwide since the platform was founded in 2010.

They’re also one of the more relaxed P2P platforms in regard to credit – they’ll accept a credit score as low as 620. However, you must have a minimum of $150,000 in annual sales the previous year and be in business for at least two years. Since it is a business loan site, the application process is more involved than it is for other P2P lenders. Plus, it can take up to 14 days.

Interest rates run between 5.49% and 22.79%, which actually is pretty good as business loans go. However, the platform also charges an origination fee of between 0.99% and 4.99% of the loan amount. Loan terms are anywhere from 12 months to 60 months. All loans are secured with a lien on your business assets and a personal guaranty.

Loan proceeds can be used to expand your business, invest in new equipment, or increase staff for marketing campaigns. Since Funding Circle provides large business loans the documentation requirements are more substantial than for other P2P sites, and typically include three years of business income taxes, your most recent personal income tax return, six months business bank statements and other documents as needed.

Funding Circle Summary:

  • Interest Rates: 5.49% o 22.79% APR
  • Loan Amount: $25,000 to $500,000
  • Loan Terms: 1 to 5 years
  • Fees: 0.99% to 4.99%
  • Prepayment Penalty: No
  • Credit Needed:  Minimum Credit Score of 620

5. Upstart

Like SoFi, Upstart is a P2P site that focuses largely on refinancing for recent college graduates. For that reason, the platform emphasizes the borrower’s education as criteria for their loan. This includes consideration of your college major, academic performance, the school you attended, and your recent work history. Speaking of work history, Upstart will qualify you on a promise of employment as long as you’re scheduled to start work within six months.

But recent college grads aren’t the only borrowers who can benefit from a loan through Upstart. Since the platform requires verification of only a few months of income history (six months if you’re self-employed) it can be an excellent loan source for the self-employed, particularly those with a short business history. Best of all, you can take a loan for any purpose.

Upstart makes loans between $3,000 and $35,000 with interest rates ranging from 5.00% to 25.26% APR. All loans are offered at a fixed rate and for a term of 36 months, and there are no prepayment penalties. A minimum credit score of 640 is required (with no public records, such as bankruptcies), and an origination fee of between 1% and 6% of the loan amount will apply as well. The application process is entirely online, and your loan can be approved in just minutes with funding as soon as the next business day.

Upstart Summary:

  • Interest Rates (Fixed): 5.00% to 25.26% APR
  • Loan Amount: $3,000 to $35,000
  • Loan Terms: 3
  • Fees: 1% to 6%
  • Prepayment Penalty: No
  • Credit Needed:  Minimum Credit Score of 640
  • To Get StartedVisit Upstart

Final Thoughts

A personal loan can help refinance debt to a lower rate, consolidate existing loans, or start a business. Care must be taken not to assume more debt than you need or can handle. Further, your credit score is an important factor in the underwriting process. It will determine in large part the interest rate you can get. So if you don’t know you score you can get your official FICO score here.

Finally, keep in mind that rates and terms do change frequently. We have worked hard to verify the rates, fees, and other terms contained in this article. But please confirm all terms of any loan directly with the lender before applying for a personal loan.

Here are several options to consider when shopping for a loan:


Topics: P2P Lending

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