If your wheels are turning and your mind is heading toward the realm of personal loans, then you are on the right track. Welcome to club borrow. More people are taking personal loans than ever before. In fact, CNBC reported a 30 percent increase of applicants from 2013 to 2016. Such people take personal loans to conduct a wide variety of tasks. One of the most common tasks for which consumers borrow personal loans is debt consolidation. Therefore, you have many sisters and brethren in the same financial boat that you are in. However, you have to develop a plan to make the personal loan work for you. You will have to take such a loan from a top provider. You should never just settle for any half-concocted loan product. Way too many respectable lenders are in the world for that. The best loans will have characteristics such as:
- Low APRs
- Fixed interest rate
- FDIC insurance
- No hidden fees
The Simple Dollar recently conducted research on 40 of the top companies. Some of them had some amazing features. Others did not come close to being the best. Discover is the number one company on the list because it meets the necessary criteria and adds more.
The Best Personal Loans According to Research Findings
Out of the 40 companies, only a few fit all four of the previously stated requirements. Those four financial institutions were Discover, Citizen’s Bank, LightStream and Avant. Those four companies had the best personal loans, hands down. Discover provided the most enjoyable overall experience. Three companies that did not make it but deserved honorable mention were Wells Fargo, Earnest and SoFi.
Personal Loans for Credit Card Debt: Uber-Smart Move
Taking an unsecured personal loan to handle credit card debt is a smart move. Why? Well because the interest rate on personal loans are usually lower than those of credit cards. Even the loans that have high interest rates are sometimes still lower than that of credit cards. You can perform a debt consolidation of sorts by paying off the credit card debts with the personal loan. The consolidation can make your financial profile neater, as well.
Five Qualities of the Best Personal Loans
The best personal loans didn’t get voted in by chance. They all had five things in common. One thing was that they offered almost nationwide cash advances. The providers that made it to the top of the list offered their products in at least 35 of the 50 states. Another quality that they all shared is that they allowed their best customers to obtain APRs that were below 10 percent. The “best customers” are the ones who have such an impeccable credit score that they almost automatically qualify for the lowest APR possible.
Fixed interest rates were another quality that all of the winning lenders possessed. They offered their customers stable figures instead of “variable” figures that change all the time. Consumers like to know what to expect so they do not get caught off guard.
No borrowing fees
The quality that sealed the deal the most for the finalists was the willingness to forgo the additional fees. Lenders makes oodles of money off the interest alone, but sometimes that is not enough. Such people must have more even when they have it all. The four companies on the list saw things a different way. They believed in giving a consumer a reasonable deal without a bunch of additives.
Finally, that Precious FDIC backing is another element that all the companies had in common. That is a feature that no person should ignore. No person should compromise when it comes to that, especially when big-number profits are involved. Discover, LightStream, Avant and Citizen’s Bank won because they shared the most positive attributes.
Requirements for Personal Lending Companies
Testing started on the websites of the four companies. The categories that the tests covered were categories such as ease of navigation, procedural clarity, resources and special features. The research included completing a full application and receiving an answer from all the lenders. The examination was thorough, and it left no issue unresolved. The companies that won were true winners in their own rights. Only one company denied the loan product.
A quick turnaround is something that no lender should compromise. Consumers need to know where they stand as quickly as possible. No one ever wants to wait two to three weeks to hear an answer. Therefore, the companies that provided the fastest turnaround received the highest ratings. A quick turnaround loan application is one that gets approved and processed in one day. Avant and Citizens Bank were the two lenders who provided immediate feedback on the application.
Impeccable Customer Service
Customer service was a huge determining factor of the top providers, as well. Impeccable customer service is always consistent from the beginning of the transaction to the end. Such customer service provides a friendly greeting, prompt answers to questions, calming qualities and willingness to thoroughly explain products and services. Impeccable customer service includes availability. A company should always be reachable either by telephone, email, contact form or online chat. Furthermore, the representatives who are in charge of correspondence should make sure that they do return all calls from prospective customers.
All four of the top lenders had amazing customer service. They also had fantastic loan products and processes. Out of all the lenders, Discover was the one that seemed the most concerned about whether or not the loan product was the correct product. They took a counseling approach to offering the loan and reviewing alternative options first. Avant replied by email and telephone contact almost immediately. Citizen’s Bank returned contact by email within 24 hours, but not so quickly on the phone. Discover answered their telephones within three minutes of time. LightStream replied by email within 24 hours.
Information You Should Know Before You Apply for a Personal Loan
The first thing you should know before you apply for a personal loan is the amount of debt you have and your credit score. Your credit score will affect your APR greatly. Take a quick assessment and add up all your debt so you know the amount that you need to borrow for your personal loan. You also want to know your current interest rates. Taking a personal loan to pay off your debt is not a good solution if the interest rate on the personal loan is higher than what you are already paying.
You will need to know the difference between hurtful credit inquiries and non-hurtful credit inquires. Some applications can decrease your credit score by one point. They are known as hard pulls. Other apps do not affect your credit score. They are soft pulls. Avant was the only soft-bull establishment. Everyone else was a very hard pull on the credit score.
Beware of Dangerous Loans
Payday loans are an example of a dangerous type of loan that can get you into a heap of trouble. A payday not only has a high interest rate, but also it has a 14-day repayment span. You do into want to take a payday loan if you are trying to resolve debt issues.
Try Loan Matching
Loan matching services can help you find lenders and investors if you do not want to use this list, and you do not know where to go for an advance. Lending Tree is an example of a lender that may be able to help you.
Try a Credit Union
Credit unions offer some wonderful interest rates if you can get in good with such an organization. Apply for membership at your local credit union and inquire about its loan products.
Does a Personal Loan Fit You?
If you are using the personal loan to pay off debt, then you have to do it in a smart way. You have to ensure that the interest rate is low enough and the payment period is sooner than your current debt repayment situation. Furthermore, you may not want to take a personal loan for a purchase. It may make more sense to save money and buy what you need outright.
Do You Stand a Chance at Approval?
If you have bad credit, you will have some challenges, but you may be able to get an approval. You may have a difficult time obtaining an approval if you have too much unpaid debt, as well. Your best bet is to clear some of the debt out of the way before you apply for an advance if you can help it.
The conclusion is that you should only choose a product that fits the four key criteria if you are going to apply for a personal loan. That is a low APR, no fees, fixed interest and a strong reputation.