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Personal Loans

Updated: April 27th, 2012 by Timothy James -- Looking for a personal loan? We have compiled a useful guide to help you through the process and have also reviewed a number of recommended lenders and services who specialize in personal loans of up to $25,000.
 
 
   
 
This guide will give you important information you should know before applying; such as
 
An introduction to personal loans.
The different types of personal loan.
Information on P2P lending
Conclusion and reviews.
 
Personal Loans up to $25,000:
Prosper - A new and innovative lending service. We were very impressed with this one.
 
For PayDay Loans:
60-Minute Payday - Get a fast and easy pay day loan with fast approval and funding in as little as an hour.

 
Personal loan introduction

As the economy continues to improve, an increasing number of people are finding the need for small lump sums of cash to help them improve their own situation. Many are looking to consolidate more expensive credit card debt and a record number of budding entrepreneurs are looking for some start-up capital for their new business. And, after pulling up the welcome mat on borrowers as result of the financial crisis, banks and other financing companies are getting back into the personal loan business to accommodate the growing number of people looking for a quick capital infusion.

Also referred to a as a signature loan, a personal loan is an unsecured loan issued to credit worthy borrowers with nothing more than a signature. Personal loans are issued by banks, credit unions and a growing number of online finance companies for up to $25,000 with a one to five-year repayment term depending on the amount and the credit standing of the borrower. Generally, the interest rates charges on personal loans are lower than those charged on credit cards in the range of 3 percent to 16 percent with the lowest rates reserved for the most credit worthy borrowers.

Personal loans don’t always come cheap. The fees, which can include a broker’s fee, an origination fee, processing fees, and a payment security fee, can add up quickly. Some loans include a pre-payment fee. They’re not unlike mortgages or auto loans in this regard, so it is important to really study the fine print to determine your total costs for the loan.

 
Why Use a Personal Loan?

If you have very good to excellent credit, a personal loan can be a better alternative than credit cards for funding a one-time expenditure. Much depends on the terms of the loan, but, generally, they can be less expensive over a three to five year period, especially if you tend towards making minimum payments on your credit cards. With a personal loan, your monthly payments will likely be higher because you are paying a portion of principal along with the interest, and the terms are fixed.

If you use a credit card for a big purchase, you risk running up your debt-to-limit ratio which can hurt your credit score. Some people are tempted to make a big purchase through a 0% introductory period credit card offer with the intent to pay the balance in full within the six or twelve month period. Of course, the risk there is that you don’t pay off the balance and you begin to incur interest charges as high as 19.99%.

 
What is the Process for Getting a Personal Loan?

Generally, personal loans are fairly easy to obtain. The application process is straightforward and, in most cases, you will need to attach an income statement along with verification. Once known as “character loans” because they were issued, in large part, based on the character of the borrower, personal loans are no different requiring, in most cases, personal and professional references to vouch for your character.

If you work with a bank or credit union, your application can be processed that same day with money transferred to your checking account by the next day. Online finance companies might take two or three days to process your application and deposit funds.

 
What’s the Best Place to Get a Personal Loan?

The traditional sources for getting a personal loan are banks and credit unions, although they have tightened up on their qualifications for approval. You can expect most banks to restrict personal loan approvals to their very best customers. Credit Unions tend to be somewhat more liberal in their qualifications but you will still need good to excellent credit. While it is possible to get a loan with only fair credit, you can expect to be charged rates equivalent to those of high-rate credit cards.

Online financing companies have proliferated in the last several years, and while they can be a source of standard personal loans, they tend to specialize in “bad credit” signature loans, which are also unsecured, but their interest charges are significantly higher. These could be extremely costly loans for terms of a year or more. The only type of loan more costly, and one that should be avoided completely, are “payday” loans, call such because they should only be used to bridge your cash needs between paychecks. Failure to pay these loans off in their entirety can result in hundreds of dollars in fees and interest charges even over a short period of time.

 
Personal Loans from Digital Lenders

In an age of digital social networking, it shouldn’t be surprising that one of the fastest growing sources of personal lending is through peer-to-peer lending (P2P) sites on the Internet. A P2P site is a site that brings investors – regular people – together with borrowers – people who need unsecured personal loans. Investors benefit because they can invest in a diversified portfolio of loans to many different people; and borrowers benefit because they may not otherwise have access to personal loans with reasonable rates through traditional sources. Investors can generate a solid rate of return in the neighborhood of 6 to 10 percent in a low risk investment which is much better than investing in CDs that yield 1 percent. Borrowers have an avenue for loans from $1,000 to $25,000 that don’t involve greedy financial intermediaries that want to nickel and dime them to death. It’s a big win-win for both.

 
How does P2P Lending Work?

Also referred to as “social” lending, P2P lending works similarly to any social networking site, where people join a community. In this case investors mingle with borrowers to determine which ones present a good investment opportunity. Borrowers put up a profile of themselves that describes their background, interests, and their need for capital. The most common profile involves the need to consolidate debt. The next most common are for people with medical bills to pay.

Then there are the budding entrepreneurs in need of start-up capital. In all cases, they must submit to a credit check (conducted by the site authority) and be able to demonstrate their repayment capability. The site authority screens all prospective borrowers who must meet minimum guidelines in terms of credit worthiness and financial capacity. The site’s credibility is based on the lowest possible rate of default it can achieve. Only one in ten loan requests are actually accepted even among people with credit scores in the 600s and 700s. People with poor credit need not apply.

Borrowers are categorized by loan purpose and credit worthiness with a rating. People with only good credit, have a lower rating which translates into a higher interest rate. That might not be so good for the borrower, but an investor may be willing to take a bit more risk in order to receive a higher interest rate. The interest rates on loans range from as low as 6 percent to as high as 14 percent. The average loan rate is 13 percent. Investors can diversify their loan portfolio among different categories of borrowers to spread their risk, and can invest as little as $25 in any one loan.

Borrowers pay a minimal fee and there are no prepayment penalties. Best of all, the loan payments are reported to the credit bureau and can help to build your credit score.

LendingClub.com and Prosper.com are two of the more widely used P2P sites.

 
Conclusion

The good news is that more institutions are making personal loans available again. Your first consideration should be to determine whether you are better off with a 3 to 5 year fixed loan or a revolving credit line with a credit card. The size of the expenditure, its purpose, your credit score and your capacity to repay the loan are all key factors to consider. The lower your score is, the higher your cost will be. If you would rather avoid banks and online finance companies, social lending through P2P sites provides a very attractive alternative, especially if you need to borrower larger amounts. In all cases, it is vitally important to study the fine print of the loan documents before signing.

 
What are the options?

If the major lenders won't grant you a personal loan due to bad credit reasons, you will either need to improve your credit score (take a look at our tips for improving credit.), or alternatively, one of more of the following lenders may be able to help you, especially 'Prosper'.

Prosper is a peer to peer lending service with loans up to $25,000
Quicken Loans is America's biggest lender. All loans catered for.
Spring Leaf finance can do personal loans of more than $10,000.
60 Minute Payday specializes in instant loans of up to $1000.
  Read the reviews below...



 
 
 
Prosper
A new and innovative lending service. We were very impressed with this one.

Who are they?

Prosper are the market leaders in peer-to-peer lending. Launched in 2006 they have so far signed up over 1million members and have arranged for over $250million worth of personal loans to be funded. The vision of Prosper is to connect those who need money with those who have money to invest so that everyone prospers.

What do they do?

In simple terms, Prosper provides the platform for peer-to-peer lending. As a borrower you get to choose the loan amount that you require (between $2000 and $25,000) and the purpose of the loan. You then create a loan listing that explains exactly why investors should invest in your loan. After reading your loan listing investors can choose whether to lend you money, and if they do it can be anywhere between $25 and the full loan amount.

When you have enough investors to lend you the amount of money you require it is deposited directly into your bank account. The rates depend on the purpose of your loan, the rating it gets on the Prosper site and your creditworthiness. You pay monthly installments as with any personal loan but at interest rates that are generally much lower than those offered by other types of lenders. There are no hidden fees, no prepayment penalties and you don’t need collateral to secure a loan.

What services do they provide?

Prosper provides the online facilities to apply for a peer-to-peer loan in a matter of minutes. The amount of time it takes to receive the necessary number of investor-offers differs according to the amount of the loan applied for and the proposed purpose.

 
 
Recommended!    In Summary...
 
Get a peer-to-peer loan with low fixed rates in a matter of hours.
Borrow from $2000 to $25,000 over 3-5 years.
No hidden fees and no penalties for early repayment.
Connect with investors who have money to lend you right now.
 
Click here to apply today
 
 
 
 
 
 
 
Quicken Loans
Personal loans, mortgages and more from America's biggest lender.

Who are they?

According to the National Mortgage News, Quicken Loans are now the biggest online lender in the nation. They are also reputed to be the 5th largest retail home loan lender. It has only taken them since their launch in 1985 to reach this status, and as such they funded an incredible $29billion in loans in 2010 alone.

What do they do?

The main financial products provided by Quicken Loans are in the form of home financing. They offer a range of mortgage options including 15 and 30 year mortgages, VA loans (for military servicemen and veterans), the Jumbo mortgage and the FHA mortgage for first time buyers.

Quicken Loans try to help as many applicants as they possibly can, and so it’s not uncommon for those with less-than-perfect credit histories to still be approved. The online application is in many cases the only application you need to make, and depending on which loan option you choose you may be able to benefit from loan flexibility and lower equity/money down on purchases.

The Quicken Loans financing options are available for refinancing purposes and to purchase a primary or secondary property, such as a vacation home. The interest rates and other benefits are dependent on the loan package you choose but they are always competitive and often slightly lower than similar online companies offer at the same time.

What services do they provide?

In addition to the personal loan options mentioned above and the online application service, Quicken Loans also provides a number of handy calculators aimed at helping you to work out the best financial option for you. They also have a live chat function so you can get your questions answered within minutes.

 
 
Highly Recommended!    In Summary...
 
Apply online for a personal loan and get a fast decision.
Numerous loan options available to suit every need.
Less-than-perfect credit not a problem.
 
Click here to apply today
 
 
 
 
 
 
 
Springleaf Financial
Personal loans for any purpose. Simple and secure. Apply online today.

Who are they?

Springleaf Financial Services have been in business for over 90 years however they only changed their name to Springleaf Financial early in 2011. They can arrange personal loans for applicants in 40 states and have approved well over 1million individual loans so far. They also offer merchant financial solutions and corporate solutions too.

What do they do?

Springleaf Financial primarily offers personal loans to those who need them. It doesn’t matter what the loan is to be for e.g. consolidating debts, home improvements, emergency expenses etc. because they have professional loan managers available to make sure you get the best loan package for your needs. Springleaf Financial can also arrange home equity loans and mortgage refinance packages, plus retail financing for merchants and for corporate clients.

The application process for a personal loan from Springleaf Financial is a two-step process. The first step involves applying online. The details you input are then checked and you are either preapproved or you are declined. The vast majority of applicants are preapproved though.

The second step (providing you get initial approval) requires you to visit your local branch. Here you complete the application process and arrange for the funds to be deposited into your checking account.

What services do they provide?

As mentioned above, in addition to a variety of personal loan packages Springleaf Financial also offers retail finance and corporate finance solutions to help with business expenses and expansion. If approved for a personal loan you can choose to make payments via the website, and you don’t get charged a dime for repaying your loan early.

 
Recommended!    In Summary...
 
Choose from a selection of personal loans and home equity loans.
Start your application online with a simple form.
Find out if you qualify for a personal loan before visiting your local branch.
 
Click here to apply today
 
 
 
 
 
 
 
60 Minute Payday
Get a fast and easy pay day loan with fast approval and funding in as little as an hour.


Who are they?

Although they only launched a few years ago, 60 Minute Payday are one of the biggest payday loan providers in the nation. Their TV campaign has attracted millions of customers over the last two years, and over 90% say they are more than happy with the service they received.

What do they do?

60 Minute Payday market themselves as a matching service rather than a loan provider. This is because they don’t actually fund the loans they provide, they simply match applicants with lenders that can offer what the applicant needs. So, when you go to the 60 Minute Payday loan website you fill in an application form and submit it. The details are then matched with potential lenders and you are presented with a list of possible lenders.

By clicking on the lender that suits you most you are redirected to their website where the terms and conditions of the loan are set out. You can then either accept or decline the loan offer. If you accept and you are approved you can have your loan money in your bank account within 60 minutes (although it does often take 2-3 hours to register).

Repayment terms, APRs and other terms and conditions do vary from lender to lender, and so are based, to a large extent, on the information you provide in your initial application. Most lenders will agree loans of up to $1000 in the first instance.

What services do they provide?

As mentioned above, the main service provided by 60 Minute Payday is a matching service that matches borrowers with lenders. By using the online application facility you could have cash in your bank account within hours.

 
 
Highly Recommended!    In Summary...
 
Get emergency cash directly into your bank account within a matter of hours.
One simple application form matches you with numerous potential lenders.
Borrow up to $1000 in the first instance.
No credit check required and no need to fax through reams of paperwork.
 
Click here to apply today
 
 
 
 
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