Payday loans are notoriously predatory and come with extremely high interest rates that hit people hard when they are already struggling financially. Often when you need quick access to cash, payday loans seem like a quick fix. In reality, however, they often only compound your troubles. If you are willing to look online, you may likely find personal loans that are far better alternatives to payday loans, even if your credit isn’t perfect.
There are two key advantages to online personal loans. First, many will find the online application process much more convenient than applying in person. The entire process can be done without even leaving your bed. And often you will receive a result within a few days, if not instantly. Secondly, personal loans, and online personal loans in particular will likely carry a significantly lower APR, potentially saving you hundreds by the time the loan is paid off. Below is an overview of some of the best online personal loan lenders.
Discover Personal Loans
A number of traditional financial institutions offer personal loans with a simple online application. The benefit of these is that you dealing with well established, reputable companies. Discover is perhaps one of the most well known companies that offers personal loans completely online. Discover’s personal loans come with no fees, flexible terms and competitive APRs.
Rocket Loans
Perhaps not quite as well known as Discover, Rocket Loans is nonetheless a rising star, quickly becoming a prominent personal loan lender as well. Like Discover, Rocket Loans has always aimed to set itself apart with smooth customer service and quick turnaround on loan applications. Rocket Loans even promises same day funding on loans up to $25,000. They also strive to offer competitive interest rates and no ‘surprise’ fees. They do charge a 4% origination fee. However, this fee is only charged once and may be worth it depending on the interest rate you score.
Best Egg
Best Egg is yet another lender that strives for a quick and exceptional customer experience. Like Rocket Loans and Discover, Best Egg offers competitive interest rates, far below payday loan rates. Best Egg does charge a one time origination fee ranging from .99% to 5.99%. However, Best Egg is also up-front about this fee and again still work out to be the better deal depending on what interest rate you are offered.
Marcus
While you probably haven’t heard of ‘Marcus,’ you’ve likely heard of its backer, Goldman Sachs. Keeping up with the competition, Marcus offers loans with competitive interest rates and quick customer service. Marcus also goes above and beyond by making it clear that you’ll never pay any fees. This means no origination fee, no monthly or annual fee, no late fees, no prepayment fees, and no fees for just being you.
Lending Club
Slightly different than some of the other lenders, Lending Club is a P2P lender, meaning that individuals are able to invest and lend to other individuals. However, while technically you would be borrowing from another individual, functionally Lending Club remains similar to many of the other lenders offering personal loans. Like all the above lenders, Lending Club aims for quick response time, excellent customer service and competitive interest rates. Like some of the other lenders, Lending Club does charge an origination fee ranging from 1-6%, but skips a lot of the other fees notorious of predatory lending.
Prosper
Like Lending Club, Prosper is a P2P lender but otherwise functions like most other lenders. Also like Lending Club, Prosper does charge an origination fee. In Prosper’s case the origination fee ranges from 1-5%.
SoFi
Although SoFi has a higher minimum loan amount of $5,000 for personal loans, SoFi sets itself apart from other lenders with a variety of unique perks and features, including complimentary access to financial advisers and career experts. Like many of the other lenders, SoFi doesn’t charge origination fees or ongoing fees such as monthly or yearly fees.
Making the Pick
When times get tough and you need some extra cash, you may think that payday loans are your only option. But personal loans offer you a better repayment schedule with much better interest, even if you have some dings in your credit history.
But with so many options, how do you make a decision? If you have time, applying at several lenders may make sense. Different lenders have different formulas to determine your interest, and this way you can pick the personal loan with the lowest APR (keep in mind an APR combines all fees and interest, assuming you don’t prepay). All of the above lenders assure that an application will not affect your credit, since they use a ‘soft’ pull on your credit.
If you need the cash ASAP, however, you might only apply at a lender that promises same day or next day cash, such as Rocket Loans. However, compared to payday loans, any of these lenders are stellar choices.