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Top 14 Best Personal Loans Of 2021

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Getting a good personal loan with bad credit

If you’ve been delving into personal loans, then you have no doubt heard the term credit score non-stop.

A person’s credit score is one (but not the only) factor that lending partners use to determine whether or not the borrower is granted a loan and what terms to offer them.

Credit scores range between 300 and 850, and they systematically categorize people according to several elements including spending behavior, past and present debt, repayment history, length of credit history, what type of credit you’ve used, and new credit.

Each aspect weighs in a little differently, with payment history being the most prominent determinant.

While there are several credit score agencies, one of the most widely relied upon is FICO. 90% of top lending partners us FICO scores to help them determine credit worthiness and set loan terms. In general, scores fall into these categories:

PoorFairGoodExcellent
300 – 599600 – 699700 – 749750 – 850

If you’re not sure what your credit score is, take a quick detour and use our free Credit Estimator tool to get a rough idea.

Whether or not you will be approved for a loan based on your current credit score is dependent on the terms that the individual lending partners set out.

Obviously, the higher your credit score, the more options for lending partners and the more flexible your terms will be. Even those with low credit scores shouldn’t despair.

There are plenty of solid companies that will lend to borrowers with fair or poor scores such as Prosper, LendingClub, and GuidetoLenders.

Because repayment history and new credit acquisitions factor into your credit score, many people opt to take out a low-interest personal loan to help them build up their credit and put a positive payment history onto their record.

How much can you afford to borrow? 

Personal loan features

Personal loans come with a range of features and terms that might not be clear to the average person applying for these loans. Here is a simple guide to understanding loan jargon:

APR

Easily one of the most important factors when discussing a personal loan, the APR will determine how much money you are actually paying for your loan.

It stands for annual percentage rate and it is a tally of all interest costs and additional fees that you’ll be paying to give you a round sum of how much it will cost you to borrow money under these terms for a single year.

This is not the same thing as the interest rates. In fact, the interest rate is one of the factors that the APR aggregates to give you the total. So, a high APR tells you that you’ll be paying more for the same loan with a lower APR. Look for a lending partners that offers lower APRs.

Fees

While personal loans can be a true godsend to someone in need of the money, borrowers should be careful not to overlook the various fees and charges.

Some fees are normal and come along with any transaction of this sort.

But, there are companies that will take advantage of borrowers, tacking on exorbitant charges that cancel out any benefits that come from taking out the loan in the first place. Fees can include:

  • Origination fee
  • Late payment fee
  • Prepayment fee
  • Transaction fee

In general, look to see how much these fees come to at the end of the day to get an idea of whether or not this lending partner is dealing ethically with you. Look for lending partners with no or low fees to save yourself this expense. SoFi is a well-known lending partner that waives all fees, making your loan that much more manageable.

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