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Unsecured Personal Loans

Unsecured personal loans hinge exclusively on the borrower’s creditworthiness and dedication to repayment, typically spanning from $1,000 to $50,000. Read on to know more.
unsecured personal loans
Unsecured Personal Loans
Unsecured personal loans offer financial flexibility without the need for collateral. Let’s look at what goes into availing an unsecured personal loan.
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In financial options, unsecured personal loans shine without collateral. They provide a lump sum for diverse needs, though higher interest rates warrant thorough comparison. Discover how these loans offer flexibility and accessible support in a dynamic financial landscape.

This blog will explore the nuances of unsecured personal loans, shedding light on the best options available and providing essential insights for potential borrowers.

Best Unsecured Personal Loans

Unlocking financial freedom begins with choosing the right unsecured personal loan. Let us explore the top contenders in the market, each offering unique benefits and features.

Beem

Beem provides loans with personalized rates ranging from $500 to $100,000. The application process won’t impact your credit score. To apply, provide accurate personal, financial, and credit information and necessary documentation. Beem’s step-by-step guide ensures a smooth process, empowering borrowers to secure funds responsibly and build a positive credit history.

Everdraft Instant Financial Assistance

Everdraft provides instant Beem cash for emergencies, offering a quick and convenient solution for urgent financial needs.

Flexible Money Management

Users can easily add money to their Everdraft wallet for free using various methods like debit cards, credit cards, prepaid cards, and popular digital payment platforms. Withdrawal options include gift cards, prepaid cards, and bank transfers.

Comprehensive Financial Services

Beyond emergency cash, Everdraft offers a suite of financial services such as BFF (Better Financial Feed) for personalized budgeting, tax filing, gift card purchases, cashback on select expenditures, credit score monitoring, and identity theft protection, providing a holistic financial management solution.

Also Read: How Many Personal Loans Can You Have at Once?

Lightstream

LightStream stands out with its same-day loan proceeds, low rates, and fee transparency. Offering loans up to $100,000 with flexible terms (24 to 144 months), it’s an attractive option for those with solid credit profiles. No origination or prepayment fees make it a borrower-friendly choice.

Best Egg

Best Egg excels in providing unsecured personal loans tailored for debt consolidation. With APRs ranging from 8.99% to 35.99%, loan amounts between $2,000 and $50,000, and a minimum credit score requirement of 600, it’s a solid choice for those seeking financial consolidation solutions.

Upgrade

Upgrade offers personal loans up to $50,000 with an estimated APR between 8.49% and 35.99%. With a minimum credit score of 560, it provides quick offer views, low fixed rates, affordable monthly payments, and no prepayment fees, making it an attractive option for diverse financial needs.

Upstart

Upgrade offers a versatile lending platform with multiple rate discounts, secured and joint loans, and a user-friendly mobile app for payment management. However, borrowers should note origination fees (1.85% to 9.99%), limited initial payment date flexibility, and potential late/failed payment fees. With a fast approval-to-funding process (1 day), Upgrade caters to diverse financial needs.

OneMain financial

OneMain Financial stands out for catering to those with bad credit, offering financial education classes for credit improvement. Despite higher interest rates and various fees, including origination and late fees, it allows pre-qualification without affecting credit scores. It offers same-day funding for approved applications by noon.

LendingClub

LendingClub provides personal loans with an estimated APR between 9.57% and 35.99%, accommodating loan amounts from $1,000 to $40,000. With a minimum credit score of 600, it provides a joint loan option, debt consolidation with direct payments to creditors, pre-qualification, and the flexibility to change payment dates. However, there’s an origination fee (3% to 8%) and no dedicated mobile app for loan management. Funding typically takes two business days, and the service is available nationwide.

SoFi

SoFi offers more than just loans, providing perks like financial planning services, referral rewards, rate discounts, and personalized career advice. With competitive rates, a pre-qualification option, co-applicant acceptance, and a fee-friendly approach (no late fees or prepayment penalties), SoFi prioritizes borrowers’ overall financial well-being.

PenFed 

PenFed Credit Union offers unsecured personal loans with an APR range of 8.49% to 17.99%, accommodating loan amounts from $600 to $50,000, and flexible terms of 12 to 60 months. While it avoids prepayment, application, and origination fees, a $29 late payment fee applies. Borrowers typically receive funds within one to two business days via direct deposit. Although membership isn’t required for application, acceptance of a loan necessitates joining PenFed.

Avant

In partnership with WebBank, Avant offers credit products, including the Avant Credit Card with a $39 annual membership fee, minimum credit limit of $300, and variable APR (31.24%). Avant’s loans range from $2,000 to $35,000, with APRs between 9.95% and 35.99%, catering to diverse credit profiles. Loan terms vary based on credit, state laws, and other factors, with ACH deposit for approved personal loans typically within the next business day. The Avant Credit Card offers rewards, including Extra Points. At the same time, loan details, rates, and terms may vary based on individual qualifications.

Understanding Unsecured Personal Loans

Unsecured loans, exemplified by personal loans, deviate from secured loans by dispensing with the need for collateral such as a home or vehicle. These loans hinge exclusively on the borrower’s creditworthiness and dedication to repayment, typically spanning from $1,000 to $50,000. Accessible through credit unions, banks, and online lenders, unsecured personal loans commonly entail steady monthly payments spread across two to five years.

These versatile loans find applications in various aspects of life, from debt consolidation and credit card refinancing to funding business expenses, home improvements, vehicle purchases, and even moving, vacation, medical, and wedding expenses. The absence of collateral provides flexibility, making unsecured personal loans an accessible financial tool for many needs.

Here’s a look at average personal loan interest rates based on your credit bracket.

Borrower credit ratingScore rangeEstimated APR
Excellent720-850.14.38%.
Good690-719.16.92%.
Fair630-689.19.99%.
Bad300-629.22.04%.

Unsecured personal loan interest rates, expressed as an annual percentage rate (APR), vary from 6% to 36%, encompassing interest and associated fees.

What are the Things to Know Before Applying for an Unsecured Personal Loan?

Explore various financial institutions like banks, credit unions, and online and peer-to-peer lenders for unsecured personal loans, which is crucial in finding the most suitable option.

  • No Collateral Requirement: Since unsecured personal loans do not need collateral from the borrower, they are more accessible than secured loans.
  • Credit Impact: Credit scores are crucial in loan approval and interest rates. Higher credit scores typically result in lower interest rates, influencing the borrowing terms.
  • Fixed Interest Rate and Term: Many unsecured personal loans come with a fixed interest rate and term. This structure allows borrowers to make consistent monthly payments over a specified period, simplifying budgeting.
  • Loan Amounts and Repayment Terms: Borrowers are free to choose from a range of loan amounts and repayment terms with unsecured personal loans. However, knowing the potential origination fees some lenders charge is essential, impacting the total loan proceeds.

Application Process for Unsecured Personal Loan?

Navigating the application process for an unsecured personal loan involves strategic steps. From pre-qualifying with multiple lenders to budget adjustments post-approval, understanding the journey is critical.

  • Pre-qualification: Shop by pre-qualifying with multiple lenders to assess potential loan amounts and rates without impacting your credit score. While not universally offered, many online lenders provide this option.
  • Application: Select a lender and begin the application online, providing personal details like name, address, contact information, and Social Security number. Typically, documentation such as proof of identity and income is necessary.
  • Funding Process: Once approved, the time for loan funding varies by lender. Some lenders can disburse funds on the same or the next business day after approval, offering a quick turnaround.
  • Monthly Payment Planning: After approval, plan for monthly payments, typically due 30 days after closing the loan. Adjust your budget to ensure timely payments, preventing late fees and preserving your credit score.

Advantages of Getting an Unsecured Personal Loan

Unsecured personal loans offer financial flexibility without requiring collateral. Explore their advantages for accessible funding and diverse financial needs.

  1. Creditworthy Borrowers: Ideal for individuals with good credit, as a solid credit history increases approval chances and qualifies for lower Annual Percentage Rates (APR).
  2. Steady Income: Suitable for borrowers with a consistent income to ensure timely repayments. Lenders assess income and expenses, and defaulting can lead to legal action and credit score reduction.
  3. Large Purchases: Beneficial for those planning substantial expenses like medical bills or home improvements. Unsecured loans break down costs into manageable monthly payments.
  4. Debt Consolidation: This is particularly useful for consolidating debts, offering a chance to regain control by combining multiple debts into a single loan. Debt consolidation loans may secure a lower APR compared to existing debts.
  5. No Collateral Requirement: This doesn’t require appraisal or collateral, making it accessible without risking assets like a home or car.
  6. Quick Approval and Funding: Applications may be approved within minutes, with funds deposited as swiftly as the same or the following business day.
  7. No Repossession Risk: Unlike secured loans, unsecured personal loans don’t risk property repossession if repayment is incomplete.
  8. Fixed Interest Rates: With set interest rates, you can expect a consistent and stable monthly payment experience throughout the loan.

Disadvantages of Getting an Unsecured Personal Loan

Unsecured personal loans pose drawbacks, including higher credit score requirements, potentially elevated interest rates, and a significant impact on credit scores if defaulted.

  1. Stringent Credit Requirements: Higher credit scores are typically necessary for approval, given the absence of collateral to mitigate risk for lenders. This can limit accessibility for individuals with lower credit scores.
  2. Higher Interest Rates: Unsecured loans often carry higher interest rates than secured ones, as lenders compensate for the increased risk of lending without collateral.
  3. Credit-Dependent Approval: The approval process heavily relies on borrowers’ credit profiles, including credit scores and history. A less favorable credit profile may result in higher interest rates or even denial.
  4. Severe Impact on Credit Score: Defaulting an unsecured personal loan can severely damage your credit score. Non-repayment may lead to the lender involving a debt collection agency, exacerbating the negative impact on your creditworthiness.

Conclusion

In the ever-evolving landscape of personal finance, unsecured personal loans are a valuable choice for those pursuing financial adaptability. It’s imperative to grasp the intricacies, weigh the advantages and disadvantages, and select a trustworthy lender to navigate the borrowing journey wisely. With the proper knowledge, an unsecured personal loan becomes a potent instrument for realizing your financial aspirations.

Try the Beem app to get personalized loan options to stay on top of your financial game.

FAQs

How hard is it to get an unsecured personal loan?

Obtaining an unsecured personal loan requires a good credit score and a strong credit history, which makes it challenging.

Does an unsecured loan hurt your credit?

While initially, it may have a minor impact due to a hard inquiry, timely repayments can positively contribute to your credit history.

Do I need good credit for an unsecured loan?

A good credit score is generally required for unsecured loans, as lenders assess creditworthiness to mitigate risk.

Can you get denied for an unsecured loan?

Yes, you can be rejected for an unsecured loan, especially if your credit profile doesn’t meet the lender’s criteria or you have a history of late payments or defaults.

Do banks prefer unsecured loans?

Banks may select secured loans as they come with collateral, reducing risk; however, unsecured loans are still offered based on creditworthiness and financial stability.

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Team Beem

Team Beem

Team Beem brings you the latest in the world of personal finance to you. From tips and tricks on how to manage money to how to get cash for emergencies, Beem is your destination for all the information you need to be smart about your money.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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