The best kind of loan for personal use is a personal loan, which can be used for just about anything, from debt consolidation to financing a wedding. The best personal loans have competitive rates and high loan amounts, which are determined by factors such as your credit score, income and existing debts.
Personal loans typically fall into two categories: secured and unsecured. Secured personal loans require you to put something up as collateral, such as a car, your home or money in a savings account. Most personal loans are unsecured, though, meaning they don’t require any collateral. Below is a table listing some of the best unsecured personal loan options available.
The easiest banks to get a personal loan from are USAA and Wells Fargo. USAA does not disclose a minimum credit score requirement, but their website indicates that they consider people with scores below the fair credit range (below 640). So even people with bad credit may be able to qualify.… read full answer
Wells Fargo normally requires a credit score of 660 for their unsecured personal loans. However, they also offer secured personal loans that are available even with lower scores. Wells Fargo’s secured loans require collateral in the form of money in a Wells Fargo savings account or CD.
Most banks that offer personal loans require a credit score of at least 660. Some require even higher scores, like Citizens Bank (680) and Barclays (700).
Easiest Banks to Get a Personal Loan From:
USAA: Will lend to people with less than fair credit (scores below 640)
Wells Fargo: 660 minimum credit score for unsecured; no minimum for secured
American Express: 660 minimum credit score
Discover: 660 minimum credit score
TD Bank: 660 minimum credit score for existing customers (750 for non-TD customers)
These credit score requirements are either official info from the lender or the consensus of third-party sources.
The average person’s credit score is over 660, which puts them in a decent position to qualify for a personal loan from most banks. But if your score is lower, you can apply with USAA or get a secured loan from Wells Fargo.
You might also want to look outside of banks. Some credit unions and online lenders offer better chances of being approved with bad credit. For example, Avant’s minimum score requirement is reportedly 600 and LendingPoint’s is 585.
A personal loan is good to take out when your expense is necessary, the terms are better than other borrowing methods, and you know you can pay it off on time. Personal loans are particularly good to take out if you have a solid credit score and a steady income because this could help you get a low APR.… read full answer
Personal loans help you improve your credit over time, too. They will slightly hurt your credit score in the short term, though.
When It Is Good to Take Out a Personal Loan
When your expense is necessary
Personal loans can be used for virtually anything. Some wise uses of a personal loan include consolidating debt or funding a home improvement project. Funding a vacation or a wedding are other examples of ways to use a loan, but it's better to use the money you've already saved for those activities.
When credit cards aren't a better option
People with good or excellent credit may find better long-term interest rates on personal loans rather than credit cards. However, there are plenty of credit cards with introductory 0% APRs for 12-18 months. Credit cards may be better for smaller purchases in this case.
When home equity loans and home equity lines of credit aren't a better option
Home equity loans and home equity lines of credit may have lower interest rates than personal loans and can allow you to borrow more. They use your house as collateral, though, and most personal loans do not require collateral.
When you're confident you can pay it off
Most personal loans require full repayment in 12 to 84 months. You have to make sure that you can afford the monthly installments, along with any other monthly expenses you have. You can use WalletHub's personal loan calculator to help you calculate your monthly and overall loan payments.
In the end, whether or not it's good to take out a personal loan depends on your financial situation. If you're ready to compare options, WalletHub's personal loan comparison tool can help you find a loan that meets your needs.
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