Unexpected expenses can come out of nowhere. Your car’s transmission gives out; a pipe bursts in your house; or you have an emergency medical procedure. There’s no avoiding these expenses, and maybe your bank account is tapped out. What do you do?
One option is a personal loan. As with any loan, you should be careful before you take out a $3,000 loan. You may be in a tough spot, but that doesn’t mean you have to act irrationally. Take stock of your situation, and make a level-headed choice.
Consider a Credit Union
If you don’t need the cash immediately, you can save a good deal of interest by taking the $3,000 loan from your bank or credit union. According to Nerdwallet, you can cut your interest rate by about half by borrowing from a credit union rather than an online personal loan lender. The downside is that it takes a week or more to get approval and your loan money from a credit union. An online lender typically can send your money to you in one to five days.
Personal Loans Have Better Rates than Credit Cards
Personal loans have higher interest rates than mortgages or auto loans, but their interest rate are almost always better than credit card advances and payday loans. So for many people, personal loans are just the tool to get them through a tough spot.
If you choose to pursue a personal loan, many online vendors can make this happen. Each one has its own qualifications and repayment terms. Here are several online lenders and some key factors to consider when picking one.
Personal loans through Discover are best suited to individuals with good or fair credit. If you want to consolidate your debt with a personal loan, Discover can pay your creditors directly. Plus, they give you real-time access to your FICO credit score. You can watch your score improve as you make good financial decisions.
- Interest Rates:9.9% to 24.99% APR
- Loan Amount: $2,500 to $35,000
- Minimum Credit Score Required: 660
- Minimum Gross Income Required: $25,000
- Origination Fee: None
- Turnaround Time to Receive Loan Funds: 1 to 7 days
- Repayment Period: 3 to 7 years
Though it does not require quite as high of a credit score as Discover, RocketLoans only makes personal loans to individuals with fair credit or better. The biggest reason to use this company is their claim that 90 percent of borrowers receive their funds the next business day. If you need the money fast, they’ll get it to you when you need it.
- Interest Rates:9.8% to 28.99% APR
- Loan Amount: $2,000 to $35,000
- Minimum Credit Score Required: 640
- Minimum Gross Income Required: Not disclosed
- Origination Fee: 1% to 6% of the loan amount
- Turnaround Time to Receive Loan Funds: Usually 1 day
- Repayment Period: 3 to 5 years
Young people with little or no credit history can turn to Upstart for personal loans. They take into account other factors when a potential borrower does not have a credit score. They also work with several technology boot camps to offer loans to students building their high-tech skills. One major qualification for a boot camp tuition loan is you have to have a college degree, but you do not have to have a steady income. With your boot camp skills, Upstart is confident you will earn enough to pay off your personal loan.
- Interest Rates:4.8% to 29.99% APR
- Loan Amount: $1,000 to $50,000
- Minimum Credit Score Required: 620, if you have one
- Minimum Gross Income Required: $12,000
- Origination Fee: Up to 8% of the loan amount
- Turnaround Time to Receive Loan Funds: Usually 1 day; 3 days for education loans
- Repayment Period: 3 or 5 years
When you notice the minimum interest rate of 15.49 percent APR, you might gasp or make some other sudden sound. But you must realize LendingPoint specializes in helping people with not-so-great credit. They bill themselves as the lender for people with credit scores in the 600s, so the higher interest rate is expected, and they actually have better rates than many of their competitors. They hold their own with competitors because they look at more than a person’s credit score when making the loan decision. LendingPoint operates in 32 states and the District of Columbia.
- Interest Rates:4.9% to 34.99% APR
- Loan Amount: $3,500 to $25,000
- Minimum Credit Score Required: 600
- Minimum Gross Income Required: $20,000
- Origination Fee: Up to 6% of the loan amount
- Turnaround Time to Receive Loan Funds: As soon as the next day
- Repayment Period: 2 to 4 years
Avant makes loans for the little guy. They focus their business on the average American. They only require a credit score of 580, but compared to other lenders, they require a high annual income. Avant may be a good option if you don’t have very good credit and want to consolidate high-interest debt.
- Interest Rates:9.5% to 35.99% APR
- Loan Amount: $2,000 to $35,000
- Minimum Credit Score Required: 580
- Minimum Gross Income Required: No firm figure, but generally more than $40,000
- Origination Fee: 75% of the loan amount
- Turnaround Time to Receive Loan Funds: 2 days, on average
- Repayment Period: 2 to 5 years
Getting you out of a jam
A personal loan could be just the tool to get you out of your financial predicament. As with any debt, enter into a personal loan agreement with a full understanding of your commitment and the consequences of not upholding your end of the deal. Remember, just because the original source of financial strain is satisfied, your obligations are not finished. You can breathe a little easier, but maintain a diligent attitude, and get that personal loan paid off as quickly as possible.