You’ve examined the options, weighed the pros and cons, and you’ve decided to get a personal loan.
Walking into your local bank branch is a good, conventional option, but you should also consider looking online for a lender. Not only are there a wealth of options, you can shop for personal loans online to find the best rates and terms without ever having to leave your house.
Online personal loans can vary in their rates, terms, and payment options. So knowing what qualities to look for can help ease your search immensely.
Pros and cons of finding personal loans online
There are a ton of benefits to getting an online personal loan, but it’s also not without some potential drawbacks.
Pro: Convenience. The personal loan online application and payment process is entirely web-based. There’s no need to visit a brick-and-mortar branch.
Pro: No hard credit checks. When applying for most types of loans and lines of credit, lenders will perform a “hard pull” of your credit. These hard inquiries can ding your credit score.
Online lenders, however, typically gauge your loan and interest rate eligibility though a “soft” pull, which won’t have an effect on your credit. You will, however, have a hard inquiry once you’re ready to complete a full application for online personal loans with a specific lender.
Pro: No pressure to buy other products. A bank or other lender may give you the sales pitch (or several) to open an account or buy some other product from them in addition to a personal loan. Online lending is usually reserved to just the loan itself.
Pro: Various lending avenues and perks. In addition to traditional personal loans, online loans are also available through peer-to-peer (P2P) lending. With these options, individual investors provide the funds to back personal loans online. Lenders may also offer other benefits, like more payment flexibility, if needed.
Con: Fees and limitations. Some online lenders, however, may not approve your loan if the amount requested is too small. Others charge fees and extra interest that can make your loan payments more expensive in the long run.
Choosing the right online personal loan
Like any online business, companies offering personal loans online range in credibility and affordability. When searching for online personal loans, start by checking with the Better Business Bureau or Federal Trade Commission to see if your lender in mind is legitimate; does it have any complaints or grievances against it?
Compare terms and conditions if you’ve narrowed your search down to a few lenders. Does one offer a better interest rate, but with too many penalty fees and other surcharges, versus the lender with more flexible terms but a higher APR? And while the internet is worldwide, not all online lenders loan in every state.
Also, take into account how an online personal loan will fit into your budget. Does the lender you choose offer a reasonable rate and repayment period? What’s the loan maximum you’re allowed to borrow according to your credit score? What will your monthly payments be? Ask yourself these questions as you search.
Where to find the best online personal loans
If you’re shopping for personal loans online, start with the best personal loans available today. These are reputable lenders with low interest rates, low fees, and flexible online personal loan options.
Those include SoFi personal loans, which offer a wide breadth of loan amounts, from $5,000 up to $100,000. It also offers competitive interest rates.
Keep in mind that while SoFi’s terms are generous, and fees nonexistent, the site’s approval standards are quite high. Prospective borrowers need to demonstrate a high credit score and low debt-to-income ratio.
Earnest is also a trusted source of personal loans online. Amounts cap out at about $50,000, with competitive interest rates. Earnest personal loans might be a good option for borrowers with less-than-excellent credit, since it evaluates other factors, such as your income, the amount of savings you carry, employment status, and debt repayment history.
Above all else, once you’re armed with this knowledge, don’t be afraid to use discretion in your search. Don’t confuse personal loans with payday loans and zero-credit lenders, which can leave you saddled with triple-digit interest.
With the right strategy in place, you’ll be able to obtain a low-interest personal loan online. Use it to pay down debt or affordably finance major expenses, and you’ll be on track to save money in the long run.
Interested in a personal loan?Here are the top personal loan lenders of 2017!
|Lender||Rates (APR)||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|7.39% - 29.99%||$1,000 - $50,000||Visit Upstart|
|5.19% - 14.24%1||$5,000 - $100,000||Visit SoFi|
|8.00% - 25.00%||$5,000 - $35,000||Visit Payoff|
|5.99% - 16.24%2||$5,000 - $50,000||Visit Citizens|
|5.99% - 35.89%||$5,000 - $50,000||Visit LendingClub|
|5.25% - 12.99%||$2,000 - $50,000||Visit Earnest|
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