What is an Unsecured Personal Loan
Unsecured personal loans do not require a lien against your property or assets. The loan amount and interest rate you receive will depend on your credit score, annual income, and debt ratios. The loan repayment is based on equal monthly payments over a set period of time at an agreed-upon monthly interest rate. Interest rates range from 5.94% to 36%, so best to shop around and compare online lenders, banks, and credit unions.
Compare Unsecured Personal Loan Providers
Our credit score determines how much money we can borrow, the length of the loan (term), and the interest rate we will be charged. A credit score of 725 and above offer the best interest rates and term. Under 620 is considered fair to poor credit, and you are limited as to lenders, rates, and terms.
Will A Loan Application Affect My Credit Score?
Most providers start with a soft credit pull, and this will not affect your credit score. Lenders will advise you if they require a hard pull before they finalize the loan.
The Personal Loan Process
This is a quick overview of the personal loan process. In the application, you will provide information about how much you earn, social Security number, and other personal information. The lenders will evaluate your application, review your credit score, how much income you earn relative to your debt, and other factors involving credit and possibly work history. When the lenders are ready to fund, most lenders transfer money directly to your bank account. If there are charges like origination fees, the payment is withdrawn from the loan before the funds are deposited. Once you've started repayment, lenders will automatically withdraw payments from your bank account. If you have a fixed-rate loan, that monthly payment does not change over time, and a variable-rate loan payment can change if interest rates move over the term of the loan.
What Can We purchase with an Unsecured Personal Loan
You can use an unsecured personal loan to finance various expenses, including debt consolidation, auto purchase, home repairs, medical expenses, weddings, and vacations. If you're planning a major home renovation, you may want to consider a secured loan.
Unsecured Personal Loan for Debt Consolidation
A personal loan is a good option for a debt consolidation loan. If you have credit cards that you cannot pay off every month, and the interest is above 20%, it is wise to consolidate this debt into a personal loan. If you are only making the minimum payment now on your credit card, a debt consolidation loan will start the process of reducing the debt every month.
Secured or Unsecured Personal Loan
Unsecured personal loans can be more difficult to acquire than a secured loan. A good credit score is required when the loan is not secured by assets or collateral. You may pay higher interest rates with an unsecured personal loan in comparison to a secured loan. We have added options below on secured and unsecured loans.
Loan Interest Rates
Interest rates for unsecured personal loans start near 5% with a credit score above 720. Interest rates can go as high as 35.99%. Some lenders charge origination fees, closing costs, and this percentage increases with credit scores.
Estimated Interest Rate and Fees (APR) Cost by Credit Score
Credit scores range from 300 to 850, and the interest cost increases with a lower credit score. With a great credit score, you will be offered rates from 6% to 12 %, and a poor credit score will be offered rates above 25%. Shop around and find the best rate for you.