The Best Unsecured Loans
It used to be that the best unsecured personal loans were available solely through brick and mortar banks. Everything banking related was handled through physical locations, even if they didn’t provide good options. The Internet has changed that.
By giving birth to a wide variety of different financial institutions, the Internet has leveled the playing field for consumers to find what works best in our given situations. This is not to say that in every instance an online institution is always going to be the top option available, as there are a lot of crappy options to wade through to find something decent. That fact must be kept in mind when looking for personal loans.
With that in mind, there are several options to consider if you’re looking to consolidate debt and get an unsecured loan. Some of those options are:
- Best unsecured loans – Prosper
- Best unsecured loans for excellent credit – LightStream
- Best unsecured loans for good credit – Payoff
- Best unsecured loans for average credit – Avant
- Best unsecured loans for student loan debt – Achieve Lending
Each of these companies will be covered in detail later in the post. If you have bad credit, understand that it is going to be more difficult to get a loan, though not necessarily impossible. As with anything financial in nature, make sure to do your homework and find a firm that meets your needs.
Best Unsecured Loan Option Available: Prosper
The best unsecured loan provider, overall, is Prosper – one of the two large peer-to-peer lenders. Generally speaking, Prosper is a little more liberal in their extension of loans and requires a credit score of at least 640. As they do what’s called a soft pull of your credit you won’t see any negative impact on your credit score. Prosper does look at many different factors, so your rate isn’t based entirely off your score and thus still offers the potential to get a good overall rate.
Prosper offers a wide range of unsecured loan options – anywhere from $2,000 on up to $35,000. Prosper offers loans in 47 states (sorry Maine, North Dakota and Iowa) and offers competitive rates as low as 5.99 percent up to 36 percent. However, as with other peer-to-peer lenders you could be waiting up to a week or two to receive your funds.
- Extremely competitive rates
- Available in 47 states
- Those with average credit can still get a loan
- No hidden fees
- Relatively easy to apply
Drawbacks to Prosper:
- Have to wait to get funds
- Can only get three or five-year loans
- Origination fee of up to five percent
Top Runner-Up: Lending Club
Following Prosper, Lending Club is the next best provider for unsecured personal loans. Lending Club is the other major player in the peer-to-peer lending space. This brings about some similarities; though they’re different enough to warrant taking a serious look.
Lending Club is available in 45 states (sorry Idaho, Iowa, Maine, Nebraska and North Dakota) and offers rates from 5.99 – 32.99%. Lending Club does look a little more seriously at DTI . so it could make them a little more difficult to get a loan from. The Lending Club website has a cleaner and easier feel to it than does Prosper if that is important to you.
Lending Club Pros:
- Lowest rates available
- Easy to use website
- No prepayment penalty
- Quick application process
Drawbacks to Lending Club:
- Origination fee of up to five percent as well as a potential check-processing fee
- Have to wait to get funds, just as with Prosper
Best Unsecured Loan for Excellent Credit: LightStream
If you have excellent credit and are looking for an unsecured loan, LightStream is a good option to consider. LightStream, which is a division of SunTrust Bank, offers loans as low as 1.99 percent though it’s somewhat difficult to secure such a rate. In most cases, you’ll be able to get an unsecured loan between 5.99 and 9.99 percent.
LightStream does not look for a specific credit score but is largely looking for those with good to excellent credit. What LightStream is looking for specifically is someone who has set a pattern of financial health – having no delinquencies, an established credit history of at least five years, stable employment and investments. The best part of LightStream is they do not charge any origination fees.
- Very competitive interest rates
- No fees
- Higher loan amounts – up to $100,000
- Same day fund availability
- Flexible repayment schedules between 2-8 years
Drawbacks to LightStream:
- Minimum available loan is $5,000
- May not be able to qualify
- Funds have to be used for the specific loan purpose
Next Best Option for Excellent Credit: Earnest
A solid backup for an unsecured loan with excellent credit is Earnest . Earnest is a newer company and is only available in 23 states, though it is growing. Earnest is different in two main ways. First, they work to match the amount you can pay back each month without tying you to a generic repayment schedule.
Secondly, Earnest makes a merit-based loan decision, meaning they look at things like employment and overall financial healthiness. Earnest is honestly geared more towards younger borrowers looking to consolidate debt and offers loans up to 30 years with a competitive rate of 4.25-9.25%
- Ability to set your own payment
- Very competitive rates
- Funds available within two days
- Merit-based decision model
Drawbacks to Earnest:
- Only available in 23 States and Washington D.C.
- Hard inquiry on credit report
- More stringent application process
Best Unsecured Loan for Good Credit: Payoff
The best unsecured loan for good credit is a newer player in the space – Payoff . While Payoff has been around since 2009, it went through a rebrand in 2014 and now offers loans in 30 States. The main goal at Payoff is to help people refinance their credit cards in order to achieve debt freedom.
Although Payoff is not a true P2P lender like Prosper or Lending Club, they have private funding to meet your loan needs of anywhere between $5,000 and $25,000. In most cases with Payoff, you’ll be able to get a rate between 6% (8% APR) 19.65% (22% APR). Payoff requires a FICO score of at least 660, a DTI of less than 50 percent and at least three years of credit history.
Payoff is different in two main ways. First, there are no prepayment fees, no loan origination fees, etc. though there is a Payoff Platform fee that ranges from 2-5% based on the length of the loan. Payoff offers installment loans that range anywhere from 2-5 years. The second difference is that after your loan is approved, Payoff assigns a member advocate to you. This advocate is your personal resource whenever you have needs, questions, or concerns. With Payoff, your member advocate helps you achieve success.
- Only does a soft pull on credit report
- Relatively low rates
- Can get loan with a FICO score as
low as 660
- Installment loan availability to better fit your needs
- Personal member advocate assigned after loan approval
Drawbacks to Payoff:
- Takes 5-7 business days to receive funds in bank account
- Only allowed up to $25,000 loan
- Only available in 30 States
Best Unsecured Loan for Average Credit scores: Avant
The award for the best unsecured loan for average credit goes to Avant . Like Earnest, Avant is a newer player in the unsecured loan space though they stand above the rest. Avant is a bit more forgiving on the credit score requirement, extending loans to those having scores as low as 600.
Though they’re younger, Avant is available in 46 states (sorry Iowa, Maine, North Dakota and West Virginia). Where Avant really sets themselves apart is by giving funds as quick as the same day and offering loans for as short as one year up to five. The rates are a little on the higher end, starting at 9.95 percent on up to 36 percent, though with lower credit scores you’re much more likely to see that.
- No loan origination fees
- Flexible repayment schedule
- Same day fund availability
- Wide availability
- Soft pull on credit
- No prepayment penalties
Drawbacks to Avant:
- Newer lender
- Potentially higher rates with lower credit score
Next Best Option for Average Credit Scores: Peerform
The runner-up for the best unsecured loan with average credit is Peerform . Peerform, like Avant Credit, allows you to get an unsecured personal loan with a credit score as low as 600 for up to $25,000.
The rate at Peerform is somewhat better than that found at Avant with rates starting as low as 7.12 percent on up to 28.09 percent. However, where Peerform falls short is with fees – charging both a loan origination fee as well as a collection fee.
- Lower rates than Avant
- Can get a loan with a 600 credit score
- Can borrow up to $25,000
Drawbacks to Peerform:
- Only available in 23 States
- Can take up to two weeks at times to receive money
- Charge too many fees
Student Loan Option: Achieve Lending
The final unsecured loan provider to look at is Achieve Lending . Achieve Lending is not the actual lender. You do not go to them to get funding or take out a loan. Rather, they make shopping for a student loan . or consolidating student loans easier. Think of Achieve Lending as the grocery store to student loans.
When you go to the Achieve Lending site, you fill out a quick application, and they bring back the best options available in terms of rates, length of the loan, etc. There are no fees with Achieve as they act as the middleman connecting you with the loan service provider. If you’re not a traditional college student, you can still use Achieve Lending as they offer loan services for non-traditional students and those going for technical training as well.
Who Needs to Use an Unsecured personal Loan?
As was touched on earlier, there should be one purpose behind getting an unsecured personal loan – achieving financial freedom. It can be very easy to justify taking out a loan because the funds are available and using them on something frivolous that will only incur debt. If that’s the case for you, look the other way and save for said expense.
However, unsecured loans can be good to consider in some instances – such as:
- People wanting lower interest rates
- Those wanting to consolidate debt into one simple payment
- People not having luck with brick and mortar bank locations
A common question is whether or not you need good credit to get the best unsecured loans. While a higher credit score will generally get you a better rate there are options to consider for those needing a personal loan with bad credit – you just need to shop around to find those options. As one who dealt with paying off debt personally and spent some time looking at unsecured loans as an option, doing your due diligence is vital.
How to Find the Best Unsecured Loans
Unfortunately, there are a lot of scams out there in the unsecured loan space. Please don’t fall for them. This is not something you want to make a rash decision about, as there are many things to consider when taking out a personal loan.
The only real way to find the best unsecured loans is to shop around. Take your time looking at various lenders, at both online (peer-to-peer) and brick and mortar financial institutions. You may find that the best loan rates are available through the former option, but it still pays to do your homework. There are tools available, like PersonalLoans.com . which matches you with the best personal loan provider available or you can go to some of the companies listed here.
What to Watch Out for With Unsecured Loans
As mentioned above there are a lot of things to consider when taking out an unsecured loan. This is largely due to the scammy nature in the industry, not to mention taking on a loan. If you’re considering taking out a personal loan, following are some of the things to be on the look out for:
- Low rates – the last thing you want is to pay an exorbitant rate. That’ll only extend the life of your loan.
- Little to no fees – origination fees can be hard to avoid, but it is possible. There are other fees to keep in mind, be aware of them as the only bring added cost.
- Transparency – the site should be very clear about what the loan process is like. Their rates should be clear and communicate the process simply. This should also be the case when you call their customer service area as well as in mailings.
- Flexibility – not everyone has the same need. You want to pick a loan provider that’s going to provide flexibility. If they don’t offer it, look elsewhere.
- Loan limits – this really only applies if you need to consolidate a sizable amount of debt. You want to be able to stay with one lender for sake of ease.
- Watch out for scams – never agree to pay anything upfront or fall for some sort of guarantee. Verify all the information they provide and run the other way if they aren’t willing to explain everything clearly.
When researching for the best unsecured loans, the top ones were Achieve Lending, Avant, LightStream and Prosper. By no means are they the only ones you should look at – in fact you should look at all the options available to you, even physical financial institutions.
If you’re dealing with debt I understand the desire to knock down your rate and get started paying it down as soon as possible. That makes complete sense. Just make sure not to allow your desire to backfire thanks to not doing your due diligence to find the best loan provider possible.