Exploring Types of Unsecured Loans and Lenders

There are several types of unsecured loans available, each with its own set of benefits and drawbacks.

A personal loan is a type of unsecured loan that allows you to borrow a lump sum of money for personal expenses, such as debt consolidation, home improvements, or weddings.

Some lenders specialize in offering personal loans with flexible repayment terms and lower interest rates.

Credit card cash advances can also be considered a type of unsecured loan, but they often come with higher interest rates and fees.

Some lenders offer payday loans, which are short-term, high-interest loans for emergency expenses.

Unsecured loans come in various forms, each with its own characteristics. Personal loans are a type of unsecured loan that can be used for various purposes, such as weddings, travel, or medical emergencies.

There are two types of unsecured loans: revolving and term loans. Revolving loans, like credit cards, allow you to spend, repay, and spend again, whereas term loans require equal monthly payments until the loan is paid off at the end of its term.

Some common types of unsecured loans include personal loans, student loans, and credit cards.

Types of unsecured loans can be a bit confusing, but don't worry, I'm here to break it down for you. Personal loans are a type of unsecured loan that can be used for various purposes, such as paying for a wedding, travel, or medical emergencies.

A personal loan is a lump sum provided by lenders that can be used for a variety of purposes. They carry fixed rates, may come with origination fees, and are commonly repaid on a monthly basis.

There are two main types of unsecured loans: revolving loans and term loans. Revolving loans, such as credit cards, have a credit limit that can be spent, repaid, and spent again.

Revolving loans can be thought of as a never-ending cycle of spending and repayment. Credit cards, for example, allow you to spend up to a certain limit and then repay the amount you've spent, with interest, of course.

Term loans, on the other hand, are loans that you repay in equal installments until the loan is paid off at the end of its term. This type of loan is often affiliated with secured loans, but there are also unsecured term loans available.

Here's a breakdown of the different types of unsecured loans:

These types of loans can be used for a variety of purposes, such as paying for education, personal expenses, or consolidating debt.

LightStream offers some of the lowest annual percentage rates (APRs) on the market, making it a great option for borrowers with excellent credit scores.

The maximum loan amount offered by LightStream is $100,000, which is a significant advantage for those who need a large loan.

One of the standout features of LightStream is that it charges zero fees, including origination fees, prepayment fees, and late fees.

However, keep in mind that LightStream doesn't offer preapproval services, so you'll have to go through a hard credit check to see what rates and terms you may qualify for.

Private loans can be a significant source of debt, with Americans carrying $108.2 billion in private student loans in 2017.

These loans are funded by banks or other private lenders, and their terms depend on your credit history.

Private student loans often come with perks that allow students to focus on their studies, such as deferred payments until after graduation.

In fact, members of the 2016 college graduating class left campus with an average of $37,172 in academic debt from private student loans.

Private student loan payments are typically deferred until after graduation, giving students some breathing room to concentrate on their studies.

To choose a lender for an unsecured loan, you should look for competitive interest rates and flexible loan terms and amounts. We reviewed more than 30 lenders to find the best options.

Lenders that offer low credit score requirements or joint loans can make their loans available to a wider range of people. This makes them a more accessible option.

When evaluating a lender, consider their reputation, consumer reviews, and any recent sanctions from the Consumer Financial Protection Bureau. Lenders with easy-to-use mobile apps and good customer service can also make a big difference in your repayment experience.

Here are some key factors to consider when choosing a lender:

Finding the right lender can be a daunting task, but it doesn't have to be. You can save up to $3,138 by shopping around on the LendingTree marketplace.

To get started, you'll need to fill out a quick form on LendingTree, answering a few questions about yourself, your loan, and when you need the money. This won't affect your credit score.

Once you've submitted your form, you'll be able to compare your offers from up to five lenders from the nation's largest network.

The lender you choose will deposit your money into your account once your formal application is approved, and you'll get your money in no time.

We reviewed over 30 lenders to find the best unsecured loans. Our research involved rating lenders on 19 individual criteria across three categories.

We prioritized lenders that offer competitive interest rates, valuable discounts, and flexible loan terms and amounts. This means you'll get a better deal on your loan.

We favor lenders who make their loans available to a wide range of people by having low credit score requirements or offering joint loans. This makes it easier for people with less-than-perfect credit to get the loan they need.

We also look for lenders who make the application process as seamless as possible and offer easy money transfer once you're approved. This saves you time and stress.

We evaluate each lender's reputation by checking consumer reviews and looking for recent sanctions from the Consumer Financial Protection Bureau. If a lender has a bad reputation, we don't recommend them.

We give extra points to lenders with easy-to-use mobile apps and good customer service. This means you'll have a better experience with your loan.

Here are the three categories we use to evaluate lenders:

We review and fact check our picks regularly to ensure that you're getting solid financial advice.

Upstart is a great option for those with bad credit, offering fast funding and a quick online process to check if you prequalify for an unsecured personal loan. They also have transparent eligibility requirements, including a minimum credit score of 300 and a debt-to-income ratio no higher than 50%.

SoFi, on the other hand, is best suited for those with good credit, requiring a minimum credit score of 680. They also have a transparent review process, which you can read about in our personal loan review.

If you're looking for a more personal approach, you can consider peer-to-peer loans, which allow individuals to lend to one another. These loans can be found on websites like Prosper.com and Lending Club, and are often fixed-rate installment loans.

Some lenders offer online applications and instant approval, such as LightStream, which can provide funding in as little as 24 hours.

The minimum credit score required for approval varies among lenders, ranging from 600 to 720, as seen with Discover Personal Loans.

Lenders like Prosper and Lending Club offer peer-to-peer lending options, allowing individuals to lend and borrow directly from each other.

The interest rates offered by lenders can be quite high, with some rates reaching up to 36%, as seen with some personal loan options.

Lenders like SoFi and Marcus by Goldman Sachs offer competitive interest rates, often lower than those found at traditional banks.

SoFi is a great option for those with good credit. They offer personal loans with a minimum credit score of 680.

If you have a credit score of 680 or higher, you'll have access to more competitive interest rates and terms.

SoFi's interest rates range from 6.94% to 25.29% with autopay.

Upstart is a great option for those with bad credit. It's available to borrowers with bad credit and provides a quick, easy online process to check if you prequalify for an unsecured personal loan.

Upstart's funding process is fast, with borrowers receiving their funds within one business day after approval. This is a big plus, especially for those who need cash quickly.

Upstart doesn't charge prepayment fees, which is a relief for those who might need to pay off their loan early. However, borrowers may owe an origination fee (0.00% - 12.00%) that's taken out of the total loan lump sum.

To be eligible for an Upstart loan, you'll need to meet certain requirements. You must be 18 or older, have a U.S. address, personal banking account, email address, and Social Security number.

Here are some key eligibility requirements:

Upstart's eligibility requirements are transparent, making it easier to determine if you qualify for a loan.

Peer to peer lending is a great option for those who want to borrow or lend money. Peer to peer loans are loans that individuals make to one another, often with a fixed rate and installment payments.

These loans are usually made between family members or close friends, but some websites allow borrowers to post requests. For example, websites like Prosper.com and Lending Club can connect borrowers with potential lenders.

You can borrow a fixed amount of money and pay it back with interest, just like a traditional loan. The interest rate and payment terms can vary depending on the agreement between the borrower and lender.

Some people use peer to peer lending as a way to avoid high interest rates or fees associated with traditional loans. Others use it to lend money to others and earn some extra income.

Secured loans can be a good option for those who need a large sum of money, but unsecured loans offer more flexibility with loan amounts ranging from a few hundred to several thousand dollars.

Some unsecured loans have a fixed interest rate, while others have a variable rate that can change over time. This means your monthly payments may increase or decrease depending on the current interest rate.

With unsecured loans, you can choose between a short-term loan with a shorter repayment period, typically 6-18 months, or a long-term loan with a longer repayment period, often 2-5 years.

SoFi's pricing disclosure is quite straightforward. The fixed rates for SoFi personal loans range from 8.99% APR to 29.99% APR, which already includes a 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount.

These rates are subject to change without notice and are current as of February 6, 2024. The average loan amount funded in 2022 was around $30,000, but not all applicants qualify for the lowest rate. The lowest rates are reserved for the most creditworthy borrowers.

Your actual rate will depend on the term you select, your creditworthiness, income, and other factors. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive.

SoFi offers interest rate discounts for autopay and direct deposit, but you must agree to make monthly principal and interest payments by automatic deduction from a savings or checking account to receive the autopay discount. To receive the direct deposit discount, you must have an open SoFi Checking and Savings account or eligible cash management account and set up payroll direct deposits of at least $1,000/month.

Here are the key facts about SoFi's pricing disclosure:

SoFi's APRs range from 8.99% APR to 29.99% APR, reflecting a 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount.

To give you a better idea of how APRs vary by credit score, let's look at some data from LendingTree customers. Their average APRs by credit score are:

SoFi requires a minimum credit score of 680, while LendingTree's data shows a significant increase in average APRs for credit scores below 680.

You'll need to sign documents for most institutional lenders, so review the terms carefully before agreeing to sign.

Most lenders will want to know your net worth and income, and they'll also research your credit history.

If you have payment problems, loans can be denied or come with very high interest rates.

Credit card companies and financial websites make it easy to check your FICO credit-worthiness score.

A high FICO score will allow you to insist on favorable terms and a low one might require extra documentation.

Paying down debt in timely installments is almost always a step for improving your credit score.

To avoid high interest rates, pay off credit card balances in full each month if possible.

Bankruptcy can be a complex process, and understanding the difference between priority and non-priority debts is crucial.

Priority debts, such as taxes, alimony, child support, and criminal fines, get paid first in the bankruptcy process.

These debts can't be discharged through bankruptcy, which means you're still responsible for paying them after the process is complete.

Non-priority debts, including credit-card balances, personal loans, utilities, medical bills, and student loans, are paid with whatever money is left over after priority debts are taken care of.

If there's no money left, most non-priority debts are discharged and go unpaid.

Student loans are rarely discharged in bankruptcy and require a separate lawsuit to resolve.