Everything You Need To Know About Getting A Personal Loan Online

The Credit Review
July 18, 2019
Everything You Need To Know About Getting A Personal Loan Online

A personal loan is a tool that can be used for a variety of reasons, such as getting rid of your debt or funding an important venture.

Either way, you want to find the best loan for your situation. Taking out a loan has come a long way since the days of going to a financial institution and asking for one directly. These days, the process is made much easier by simply filling out an application online.

The Benefits Of Online Loans

Online loans have been growing in popularity recently due to the ease of the application process and the ability to compare offers from multiple lenders in just a matter of minutes. Rather than going to a bank, you can simply apply in the comfort of your home by filling out a form online and your contact with your lender is limited to the agreements you make online.

In addition to the convenience of an online application, there are many other benefits of shopping for loans online:

  • Compare loan offers quickly: One of the biggest advantages of applying for a loan online is all the possibilities. By filling out an application with some basic personal information, you can receive multiple loan offers and pre-approvals in minutes.
  • Choose from a variety of loans: There are many different types of loans. Peer-to-peer (P2P) loans allow consumers to invest their money in another person by funding part or all of a posted loan and then collect any accrued interest, which means that your loan could be funded by multiple individuals.
  • Pick between a short-term or long-term loan: Short-term loans generally don't have extra fees like prepayment or application fees, flexible payment schedules, and a shorter repayment period. Long-term loans tend to have lower fees and interest rates.
  • Receive lower interest rates: Online lending allows you to have lower interest rates than traditional banks and credit unions since they don't have to factor in the expense of a physical location.
  • Decide between fixed or variable rates: You can choose loans with fixed or variable interest rates, although fixed rates are more common. Having a fixed rate ensures that your interest rate won't fluctuate during the repayment period while variable rates are great for those with short-term loans.
  • Loans for all credit types: Online lenders accept a much larger range of credit scores than traditional banks, which gives you options whether you have excellent credit or less-than-stellar credit.
  • You can take out partially funded loans: Banks require you to be approved for a full loan but online P2P lenders may allow you to take a loan that is only 60% to 70% funded by investors.
  • Receive your funds quickly: You can receive loan funding through direct deposit in as little as one business day.

How To Shop For Loans Online

The first step to applying online is to do your research to find the best online lender out of the hundreds that exist. Looking at reviews and company accreditation through sites like the BBB, which lists customer feedback, can help you narrow down your search. The US Consumer Financial Protection Bureau lists consumer complaints and any lender responses that have posted within 15 days.

You can also check to see if a lender is licensed in your state. If you end up having issues with an unlicensed lender, getting your money back may be difficult.

If you have any friends and family who have taken out online loans, talk to them about their firsthand experiences and recommendations.

Once you have found an online lender, simply fill out an application and wait for offers. This can take as little as a few minutes and you are under no obligation to follow through with these offers.

Remember to borrow only as much as you can repay. You don't need to borrow the maximum amount you qualify for or accept a larger amount than what you asked for.

What To Watch Out For

Although there are many reputable online lenders, there are also many scam artists. When you provide personal details online like your Social Security number, date of birth, and address, it's important to make sure that sensitive information stays secure. You could end up having your identity stolen if that website is not secure.

Here are some other red flags to look out for when working with online lenders:

  • If you come across a lender that you haven't heard of before, be wary of your dealings with them.
  • Any sites that list "Guaranteed loans no matter what your credit" can be dangerous for borrowers. Lending to a consumer with no credit or bad credit is extremely risky and most lenders have no reason to believe that they will get the loan repaid in full if you have bad credit history. Loans like these usually come with extra fees and high interest rates.
  • You should be the one seeking out lenders, not the other way around. Stay away from lenders who send unsolicited emails, snail mail, calls, or inquiries.
  • Most reputable lenders do not demand any extra fees unless they are large loans like home loans that require a credit check. Personal loans and auto loans should not require any upfront fees.
  • Lenders should not ask you to wire any payments. After all, you don't know who is receiving these funds. Any fees can be paid by check or credit card.
  • Avoid lenders who have names that sound similar to well-known ones but make a few small changes in spelling or add an extra word.
  • Websites should look professional and be free of spelling errors and pop-up windows with security errors.
  • When you speak directly to the sales staff, take note of how they speak to you. Avoid any company that pressures you into taking out a loan.
  • You should stay away from loans with high interest rates -- especially payday loans. Payday and auto title loans are predatory and charge you extremely high interest rates and fees which can exponentially increase your existing debt.
  • Look out for lenders that renew or rollover high-fee loans.
  • Avoid lenders who try to add extra services like insurance without asking you first.
  • Be wary of lenders who break debt collection laws that limit the practices they can use to collect on defaulted loans.

Top Loan Companies For Borrowers With Good Credit

When you have good or excellent credit, your options for taking out a loan are nearly endless.

Here are some of our top recommendations for reputable personal loan services:

EVEN Financial

even-financial-logo

  • Minimum Credit Score: 600+
  • APR: 4.99% to 35.99%
  • Loan Range: $1,000 to $100,000
  • Term Length: 24 to 84 months

EVEN Financial allows potential borrowers to compare offers from top online lenders like Prosper, LendingClub, and SoFi in just a matter of minutes. Applicants simply have to be at least 18 years of age and a US citizen or permanent resident.

Checking loan offers through EVEN Financial is completely free and does not affect your credit score. If you choose to follow through with a loan offer, funds are provided through direct deposit.

Credible

credible-logo

  • Minimum Credit Score: 600
  • APR: 5.99% to 35.99%
  • Loan Range: $1,000 to $100,000
  • Term Length: 2 to 7 years

Credible's 100% free and no obligation loan matching service can connect borrowers to multiple loan offers.

Consumers receive personalized offers from up to 11 lenders by filling out one simple application.

If you have fair to excellent credit, Credible's marketplace is a great option.

Monevo

monevo-logo

  • Minimum Credit Score: 580
  • APR: 3.99% to 35.99%
  • Loan Range: $1,000 to $100,000
  • Term Length: 3 to 96 months

Monevo is a 100% free and no obligation loan matching service that connects borrowers to top industry lenders through their online network.

Monevo is best for consumers with fair to excellent credit who are looking for unsecured loans with amounts up to $100,000. Their easy application process is simple and allows borrowers to receive their funds quickly through direct deposit.

LightStream

  • Minimum Credit Score: 680
  • APR: 3.09% to 14.24% for non-home and auto-related loans
  • Loan Range: $5,000 to $100,000
  • Term Length: 2 to 7 years
  • Origination Fee: None

LightStream's interest rates are catered to the purpose of your loan so you must use your personal loan in the way you informed LightStream. For example, taking out a secured loan means you will receive lower interest rates.

Applicants must have at least five years of good credit history and different types of credit. LightStream also looks at your income, savings, and retirement account. Customers receive their funds through a direct deposit on the same business day (either wire transfer or ACH).

There are no origination fees, prepayment fees, or late fees. LightStream deducts 0.50% from your monthly payments if you use autopay.

If you are not satisfied with your LightStream experience, you can fill out a questionnaire and receive a $100 guarantee.

Top Loan Companies For Borrowers With Poor Or Bad Credit

When you have bad or poor credit, it is much harder to find a lender that will offer you loans with reasonable terms. Here are some of our top picks for reputable lenders who offer services to borrowers with bad credit:

5KFunds

5kfunds-logo

  • Minimum Credit Score: No minimum credit score
  • APR: 5.99% to 35.99%
  • Loan Range: Up to $35,000
  • Term Length: 2 to 72 months

5KFunds is a free and quick online comparison service that allows you to find the best personal loans and reasonable interest rates regardless of your credit.

5KFunds has an extensive partner network of over 100 lenders for you to choose from. Once you've picked your loan, the funds are directly deposited into your bank account.

EVEN Financial

even-financial-logo

  • Minimum Credit Score: No minimum credit score
  • APR: 4.83% to 35.99%
  • Loan Range: $1,000 to $100,000
  • Term Length: 24 to 84 months

EVEN Financial provides personal loans for all types of credit, including bad credit. Their website offers you a fast and free application that connects you with reputable lenders.

Read more about how EVEN Financial's free marketplace can help you rapidly compare loan offers without affecting your credit.

BadCreditLoans.com

  • Minimum Credit Score: No minimum credit score
  • APR: Depends on the lender
  • Loan Range: $500 to $5,000
  • Term Length: 3 months to 5 years

BadCreditLoans.com connects you to a network of lenders who then contact you with loan offers. To apply at BadCreditLoans.com, you must meet the following requirements:

  • Be at least 18 years old
  • Have a valid phone number and email address
  • Have a checking account
  • Receive income through a steady job for a minimum of 90 days or be on Social Security
  • Have a monthly income of $1,000 after taxes
  • Provide proof of citizenship or residency

Because BadCreditLoans.com only offers services to those with very low credit scores, the loan amount is usually less than $5,000. Repayment terms are also much shorter and have much higher interest rates. If you receive loan offers, be sure to review the loan terms before deciding whether or not to follow through with one.