Personal Loan: The Ultimate Guide

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What is a Personal Loan?

A personal or consumer loan is a sum that an individual borrows for personal needs or company investments. These loans are pretty popular globally and are an excellent way to manage one’s finances with little or no trouble.

There’s a wide range of personal loans you can choose from, but it’s important to know what makes a good personal loan.

Characteristics of a Good Personal Loan

Following are the top characteristics of an excellent personal loan

• No Fees

A good personal loan should have no fee or collateral for the process. Most reputable loan companies provide the sum for the loan taker’s creditworthiness. The worthier you are, the better you will perform.

• Rate Discounts

Like other loans, personal loans also have interest rates, which can cost a significant amount. A good personal loan should have lower rate discounts to help the loan takers for their investments or similar ventures.

• Payment Flexibility

Having multiple payment options and methods to ease the personal loan is a big convenience. Borrowers prefer personal loans with payment flexibility. For instance, a creditor may allow installments for the personal loan on a monthly, bi-monthly, or bi-annual basis, depending on the terms of the agreement.

• Customer Experience

A good personal loan should still make the borrower feel valued because the customers will pay the amount back and return the amount at a substantial interest rate. A company that doesn’t ensure a good customer experience can never run a successful personal loan service.

• Personal Loan Application: How It Works?

Getting a personal loan is a quick way to get extra funds on your hands. However, there’s a vast chance that your loan application might get rejected.

Learn about the personal loan application process to avoid missing out on your loan payments.

1. Prequalification

Prequalification is a simple method to test your financial creditworthiness. Borrowers can assess their finances before applying for a loan and qualify for the sum. Prequalification helps reduce personal loan hassle by allowing quick fund access to the borrowers.

2. Loan Application

Personal loan borrowers need to start with their loan application once they know they can qualify for the amount. The loan application generally includes the borrower’s personal information, financial history, credit score record, legal records, and other significant information.

It’s essential to meet all the loan application requirements, or it will get rejected right away, and you will have to go through the application process again.

3. Application Processing

The borrowers must wait for the bank to process their application once submitted. Depending on the loan amount and the creditor’s policy, it can be somewhere between a few days to a few months. The creditors perform detailed checks on the borrowers before allowing them a personal loan on interest.

4. Underwriting Process

Underwriting is when the lenders verify the borrower’s income, financial history, and other details to check their credibility for the personal loan.

5. Credit Decision

Once all the assessments are complete, the creditors decide to check if the borrower deserves the loan. The personal loan can still get rejected at this stage because the final decision is the creditors. You can apply for the loan again, but consistent loan rejections will reflect on your credit reports in the long run.

6. Loan Funding

The personal loan finally gets funded, and the lenders will lend you the personal loan. The loan funding usually takes up to 7 days to reach the borrower. However, you may receive it quicker under exceptional circumstances or by explaining your situation to the creditor.

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Five Personal Loan Providers

1. SoFi

SoFi is an online personal loan lending platform in all states (except Mississippi) and started in 2011. The platform is a leading service for personal loans because of its services.

The organization offers many benefits, including pre-account checks and prequalification for high loan amounts for long tenures. However, it does not pay third-party creditors for debt consolidation.

2. LightStream

LightStream is a platform formed by the merger of SunTrust Bank and BB&T, which are reputable lending options in the U.S. The service offers personal loans ranging from $5000 up to $100,000, depending on the borrower’s creditworthiness.

There’s no prepayment or late fee on the platform. Borrowers get quick funding and fast approval for low and competitive rates.

3. Marcus

Marcus is a subsidiary of Goldman Sachs, which is an investment bank. The company offers personal loans ranging from $3,000 up to $40,000. The organization may not be best for large amounts but still offers plentiful benefits for its users. For instance, it provides direct consolidation to third-party creditors and allows borrowers to change their payment dates up to three times. There’s no origination or late fee payment on the platform.

4. LendingPoint

LendingPoint is another top pick on our list as it offers personal loans in over 48 states in the U.S., apart from Nevada and West Virginia. The organization offers loans ranging from $2,000 to $36,500 for 24 and 60 months of repayment tenure, as per the agreement.

Customers in Georgia can opt for a minimum loan of $3,500. Customers can get quick funding, save payment penalties, and sign up with low credit scores for the loan.

5. Figure

The figure is another online service that uses blockchain technology in its operations. The company uses equity management, banking and payments options, and much more for the customers. Their loans range between $5,000 and $50,000, depending on the client’s requirements, and are ideal for almost every borrower. There’s also a referral program that allows each referrer and the referred person to get a $150 bonus. There’s next-day funding available on the platform, with no payment penalty, making it suitable.

Summing it Up

A personal loan is a quick way to get extra funding on your hands. However, choosing the right lender is essential because of the interest rates and customer experience. Fortunately, firms like SoFi, LightStream, Figure, LendingPoint, and Marcus are great options for subsequent funding.