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Best Personal Loans of October 2020

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A personal loan can give you the extra finances you need to reach a financial goal. That goal could perhaps be the need to pay off a large amount of debt or a future expensive purchase you wouldn’t be able to afford otherwise. Before you take on any form of a loan, whether a personal loan or a mortgage, you need to look at the terms, and your focus usually gets drawn to the APR or annual percentage rate. The APR of a personal loan is generally anywhere between 6% and 30%.

Summary of Best Personal Loans of October 2020

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A personal loan can give you the extra finances you need to reach a financial goal. That goal could perhaps be the need to pay off a large amount of debt or a future expensive purchase you wouldn’t be able to afford otherwise. Before you take on any form of a loan, whether a personal loan or a mortgage, you need to look at the terms, and your focus usually gets drawn to the APR or annual percentage rate. The APR of a personal loan is generally anywhere between 6% and 36%.

Though a lower APR is better, some additional features may come with a loan that should factor into your decision. Soft credit checks, no fees, and if using the loan for debt consolidation, will the loan issuer pay directly to those that you owe money, are all factors that you need to consider before accepting a loan. Luckily for you, the below list details some of the best loans available, which will make your search for the best personal loan, that much easier.

You should note, however, that though the list below contains some of the best personal loans available, they may not all necessarily be within your reach. Loan issuers consider multiple aspects such as your credit score, your current annual income, and your debt ratio – your amount of income compared to your outstanding debts. Hopefully, there is a loan for everyone listed here, and you can have the chance to get that new car, take that vacation, or clear debts that have been looming for too long.

When Is A Good Time To Get A Personal Loan?

Committing to any form of loan is something you need to consider seriously before agreeing to any terms. You should ensure that you can handle the monthly repayments without stretching your budget. A personal loan is best for getting your debt into one easy to handle package, or for covering home renovations, both of which will improve your financial situation.

For expenses such as a vacation, a wedding, or a big unnecessary purchase, using your savings would be best, instead of paying additional fees that come with a loan for something that you can save for, with careful budget planning.

A personal loan can be used for emergency expenses, such as medical expenses, though there are better-suited alternatives, such as a dedicated payment plan for your hospital bills. If you have to choose between a payday loan and personal loan, to cover unexpected costs, a personal loan will give you better terms, though the APR can still be high for those with poor credit.

In short, a personal loan can help you get out of debt, though you should not use one if you aren’t confident in your ability to pay it back, or if the expense is not necessary.

Should I Get A Personal Loan or A Credit Card?

The choice of whether to commit to a personal loan or a credit card will depend on a consumer’s situation. However, a better credit score and history will generally secure better rates on a personal loan compared to those of a credit card. Though the rate is significant, there are other aspects to consider before making your choice.

A personal loan might be a better option if:

  • You want to consolidate your debts into one easy to manage personal loan.
  • You have a good or excellent credit score.
  • Your current budget can accommodate the monthly repayments
  • You have a single considerable expense that you need to cover.

In comparison, a credit card might be a better option if:

  • You have smaller expenses you need to cover, such as your standard daily expenses and bills.
  • You can pay off your balance each month, which will help you avoid interest charges.
  • You can qualify for special offers. Credit cards may come with 0% APR which can be a useful financial tool. Alternatively, some cards reward points for further savings in specific areas.

What You Should Know Before You Take Out A Personal Loan

Taking out a personal loan can be a great help in getting you to your financial goal, whether you need to consolidate your debt or make a large purchase. However, it is not as simple as going to a bank, asking for money, and then paying it back at your leisure. To get the best out of a personal loan, you should prepare in advance.

  • The APR of a loan is the interest you pay back on top of the borrowed amount. A strong credit score will secure you the best APR rates, meaning you will have to pay less. Do all you can to strengthen your credit score before applying for a loan.
  • As with any significant financial commitment, you should shop around for the best deals. The lists above can help you do just that. Fees, terms, and additional features all differ from lender to lender, so take your time to do your research.
  • See what you can afford to borrow. You will need to pay back your loan, and if your budget can’t deal with those repayments, you are asking for trouble. A personal loan calculator can help you put your numbers together. 

Understanding the Fees and Rates of Personal Loans

As per the above loan providers, loan interest rates and fees can vary significantly from lender to lender, with rates for personal loans coming in between 6% and 30%, with your final APR rate decided by your overall credit score, your debt-to-income ratio, and your annual income. Some loan providers offer discounts if you make use of AutoPay. For further discounts, loan providers will try and meet the quotes of their competitors, which can save you a small percentage on your APR.

The APR will also include origination fees, though not all lenders charge this fee. This fee covers the cost of processing your loan. 

A loan provider may charge other fees, which aren’t part of your APR. A late fee might apply if you are late on your monthly repayment. If the loan provider automatically takes the monthly payments, but your account does not have enough funds, then a fee for such can apply. Another cost to watch out for is the early payment fee, which can apply if you end up paying off your loan earlier than the stipulated terms.

How to Get Pre-qualified On A Personal Loan?

Most online lenders, including the majority on the lists above, perform a soft credit check to confirm your eligibility for a loan. This same process, where you pre-qualify, will provide you with an estimate of your proposed loans APR. Pre-qualifying won’t affect your credit score, so it is worth taking the extra time to pre-qualify for multiple lenders, which with give you their terms for side-by-side comparison. 

Once you have gone through those offers and picked the best once for you, you can make your official application, which is where a hard credit check gets performed. Your loan application will require various information that can include:

  • Name
  • Monthly Income
  • Current Employment Status
  • Social Security Number
  • Property Address
  • Education History
  • Loan Amount
  • Preferred Loan Repayment Terms

Once you have submitted your application, have been approved, and have received your funding, your first repayment is usually due within 30 days. Some loan issuers will let you return your loan within this period if you change your mind, though they do ask for the reason. 

Get to Know Your Loan and Lender in Depth

Before taking on your loan, though the terms of your loan are essential, you want to ensure you will have a great customer experience. Take the time to find the loan that is right for your needs.

  • A loan for your home should come from a loan provider who has earned a reputation for standing out in that field, with the best rates and additional features to make your borrowing experience stress free.
  • If borrowing money for cover to costs of education, there are specialist loan providers who are better equipped to help than those who offer general personal loans. 
  • Perhaps you have decided its time to get a new car but can’t afford it outright. Again, there are specialized loans for such a purpose.
  • Getting a business off the ground can be an expensive venture, with small business loans available to provide additional funding. 
  • A loan doesn’t have to be out of reach because of a bad credit score. There are loans created for people with bad credit. 

No matter your need, there is a loan for you. If you aren’t sure of your best option, the loan providers’ customer service team can advise.

How Was This List Compiled?

As detailed above, a personal loan is a lot more complicated than the loan amount and the APR. The loan lenders on this list stand out among their competitors because of the additional features they offer, which ultimately leads to a better experience for you, the customer. Some factors that secured lenders a place on this list include, but are not limited to:

  • Whether or not they perform a soft credit check. 
  • What fees, if any, do they charge.
  • How upfront they are with the rates and loan terms.
  • Whether or not a lender’s customer service team is easily accessible.
  • What, if any, financial tools are provided to the consumer to help them manage their repayments, and improve their overall financial situation. 

Lenders offer different services, and not all will meet your exact criteria. However, armed with the knowledge above, you know what to look for and can ultimately find the best loan provider for you.

The Best Personal Loans Of 2020 So Far, The Round-Up

The above four lenders cover nearly all possible requirements a borrower might have, though any lender on this list is an excellent option for seeking out a personal loan. Your needs and current financial standing will dictate who you ultimately decide to use.