Shopping around for a personal loan is important when you want to get the best rate possible. Luckily, applying for a loan online makes it easy to quickly compare personal loan lenders.
Backed personal loans take a new approach to lending. The lender allows you to add “Backers” to your loan so that you can potentially get a lower interest rate.
A Backer isn’t a traditional cosigner on the loan. But if a Backed loan is at risk of defaulting, the Backer is notified about its status. Afterward, there’s a 15-day grace period where a Backer can help keep the loan out of default, avoid late fees, and prevent a hit to the borrower’s credit score.
This 2018 review will walk you through Backed personal loans to help you decide if they’re the right option for you.
Backed review: Backed personal loans
Backed personal loans are targeted at young borrowers and their parents, although there are no age or education requirements. The lender appeals to parents who want to help their children develop financial independence after college.
Instead of paying living expenses, Backed suggests parents should support their child by helping them consider a Backed loan. That way, their child can develop credit while getting the money they need.
Personal loan terms
Backed provides loans between $3,000 and $25,000 to borrowers with a FICO score of 660 or higher. Borrowers with a lower credit score might still qualify for a loan if they have an eligible Backer.
Backed doesn’t provide loans in every state, but Backers can live in any state. Primary borrowers must reside in Arizona, Arkansas, Florida, New Jersey, New York, or West Virginia.
Backed offers repayment periods of one, two, and three years.
Rates and fees
This lender advertises APRs between 2.90% and 15.99%, as of May 18, 2018. Be sure to double-check the current rates on the Backed website. The rate you’re quoted is based on your credit score, information on your application, and your Backer.
Backed doesn’t assess a fee for early payment, but it does charge an origination fee. When you apply, you’re graded based on your application materials. You’ll receive a letter grade ranging from E to AAA, and your classification affects your interest and origination fees.
The highest origination fees, for E-ranked borrowers, are between 1.6% and 2% of the loan. For AAA borrowers, the origination fees are between 0.8% and 1.25%. You might be able to reduce your origination fee by providing Backed with more information and linking to your Facebook or LinkedIn.
Backed also charges other fees based on your situation. If you choose to pay by check instead of electronically, it charges a $10 processing fee per check. It also charges a $15 fee for bounced payments and a $20 late fee if you pay after your 15-day grace period.
If you’re graded at a D or an E when you apply, you’ll need a Backer to secure your loan. For borrowers with a score of D, you’ll need a Backer graded at a B or higher. For E-grade borrowers, you’ll need a backer with a grade of A or higher.
How can you use your Backed personal loan?
Backed doesn’t specify how you can use the funds from your loan. But personal loans are often used for:
- Credit card debt consolidation
Before taking on any debt, it’s wise to develop a repayment plan. Our personal loan calculator can help you plan ahead to create a realistic budget.
Financial and credit requirements
Backed loans require a FICO score of 660 or higher. If your score is below that, you could still qualify with a Backer.
When you apply, the lender will do a hard credit check. Backed also asks for copies of your last three pay stubs. If you’re self-employed, you can provide your current tax return and two bank statements.
How to apply for a Backed personal loan
You can apply for a Backed loan online. Previous applicants have been asked to provide the following:
A copy of your photo ID
Access to certain online accounts to verify the information you’ve provided
Income verification, such as pay stubs
A bill to verify your address
Bank and email address verification
This is mostly standard information. However, you might want to verify during your application process what online accounts of yours the lender will want access to, and how the information will help.
Should you apply for a Backed personal loan?
It’s important to understand the pros and cons of a Backed personal loan.
For example, using Backers could get you a lower interest rate. And the online application process for both you and your Backer makes applying straightforward.
However, watch out for the origination fee, which varies depending on the rating you’re given when you apply. There’s also no direct line to call Backed customer service if you need help during the process. To contact customer service, you need to fill out a form on the website.
Backed offers an interesting premise: personal loans with a different kind of cosigner. This could possibly help you qualify for a better rate if you have bad credit. But be sure to thoroughly research lenders before committing to a loan.
Student Loan Hero has independently collected the above information related to Backed personal loans. Backed has neither provided nor reviewed the information shared in this article.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000||Visit Upstart|
|6.26% – 14.87%1||$5,000 - $100,000||Visit SoFi|
|6.99% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|5.99% – 24.99%2||$5,000 - $35,000||Visit Payoff|
|4.99% – 29.99%3||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%4||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%5||$2,000 - $25,000||Visit LendingPoint|
|6.16% – 35.89%6||$1,000 - $40,000||Visit LendingClub|
|6.99% – 18.24%7||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%8||$2,000 - $35,000||Visit Avant|