I have spent the majority of the last 35 years telling consumers to shop for loans in my role as a loan originator and personal finance writer. Given how common advice is among other Fin-Fluencers, I thought there was a lot of data to show how valuable a personal loan purchase is.
I was wrong. Considering that personal loan rates range from under 7% to an eye-catching 36%, how is this possible? To get to the bottom of whether personal loan purchases are worth it, I placed myself in the shoes of the average borrower and compared the loan options with a variety of lenders. I still believe I have time to shop for my loan, but I discovered some surprises along the way.
Mission: Find the best debt integration loan
Many news reports that Americans are struggling Credit card debtI decided to go shopping Debt settlement loan It’s worth $20,000. Remembering that many consumer budgets are being squeezed by inflation, I chose a seven-year (84 months) period to keep my payments as low as possible. I also wanted to avoid charges so that all the funds I borrowed could be used to repay the debt balance.
Most financial websites recommend shopping with a variety of sources of personal loans, including institutional banks, credit unions, and online lenders. I thought I’d put it too Bankrate’s Personal Loan Market Please test it as well and report my findings.
Personal loans from the bank
Best: Borrowers with excellent credit
I started a search where most consumers start theirs – I Googled “Best Debt Integrated Loans” and visited the banks that appeared in the search results. I also considered a bank that I would use for my financial needs here at Nashville: US Bank. My credit score is around 700, so I kept that in mind when considering bank loan requirements.
What I liked
The starting rates offered by the banks quickly caught my attention. They were much lower than the average rates I saw online – in some cases, even lower than the current mortgage rate. Most of the banks I considered did not charge the original fee. This means that the full loan amount can be spent on repayment of your debt.
The banks I reviewed are more likely to disclose what they need to qualify for the best rate. Some banks have listed the percentage of applicants who have recently caught their heading rate.
Overall, I found it easy to find the information I needed from the institutional bank. As a result, I only spent an average of 10 minutes on each lender’s site.
What paused me
I have discovered that banks usually do not offer repayment terms for more than five years unless they plan to use the funds for home improvements. Additionally, to qualify for the lowest rate, you will need a credit score well above the 700 threshold and you will need to choose a repayment period of 3 years or less.
Banks by numbers
Both US Bank and Discovery were good options, but unless I’m not a client of a US bank, I’m not eligible for a seven-year term. (Non-customers can only access the loan on terms of up to five years.) Wells Fargo provided a loan that met my needs, but it only serves the borrower who lends the bank for at least one year.
| The bank I shopped | At least April | Repayment terms | Did you meet my needs? | Why or why? |
|---|---|---|---|---|
| Wells Fargo | 6.99% | 1-7 years | no | Not a Wells Fargo customer |
| Discover | 7.99% | 3-7 years | yes | Desired amounts and terms provided Credit score within the minimum threshold |
| US Bank | 7.99% | 1-7 years | yes | Desired amounts and terms provided Credit score within minimum threshold |
Personal loans from credit unions
Best: Lower prices in shorter terms
Credit unions are often advertised as the most affordable way to get a personal loan due to the 18% fee cap required by federal credit unions. Some lenders charge a claim rate as high as 36%, double the interest costs of credit unions. In this category, I shopped with two largest credit unions in the country and community institutions.
What I liked
As expected, I found the lowest rate in the credit union. Not only was the maximum rate lower than other lenders, but the starting rate was also competitive. The credit union was also transparent about how the choice of repayment period would affect the rate you are unlikely to receive. Like banks, origination fees were rare in credit unions.
If you need a very small personal loan, a credit union can be a good option. They offer a small loan of $250. I wasn’t interested in a safe loan for the purposes of this experiment, but I found creative options, such as a 2.10% fee and a corridor loan with a repayment period of up to 12 years. Members with a high savings account or CD balance can borrow against their savings and pay off their higher debts.
The transparency provided by credit unions made it easy to find the information you needed. However, I spent more on each credit union website than I did at the bank because I had to check membership requirements. It averages 15 minutes.
What paused me
Only one of the credit unions I considered provided a period for over 60 months. Additionally, the starting rate was reasonable, but the available rates were a few percentage points higher under longer conditions. A higher rate negates many of the debt settlement profits. (To be fair, most lenders charge higher fees on longer terms. Credit unions are more transparent about their rate structure.)
However, to get a personal loan you have to become a member of a credit union that involves jumping over several hoops. I am lacking in military service records to qualify for membership with the Navy Federal Credit Union, and the other two agencies require the proponent to participate in a small charity. We also realized that some credit unions require a certain number of days of membership before they are eligible to apply for a loan. Remember if you need a loan immediately.
Credit Union by Numbers
Credit unions offer a wider range of terms than banks, without limiting their objectives. However, you will need an additional hoop to apply for membership before you can receive the loan. (Most credit unions allow non-members to apply for non-members, but you must complete the membership process before you can receive the loan funds.)
| Credit Union I bought | At least April | Repayment terms | Did you meet my needs? | Why or why? |
|---|---|---|---|---|
| Navy Federal Credit Union | 8.99% | 1-5 years | no | The desired term is not provided Not eligible for membership |
| Alliant Credit Union | 8.99% | 1-5 years | no | The desired term is not provided |
| Leader Credit Union | 9.24% | 1-7 years | yes | Desired amounts and terms provided Membership eligible |
Personal loans from online lenders
Best: borrowers with low credit scores or those who need quick financing
What I liked
The smallest APR for online lenders was competing with banks and credit unions I have considered. Additionally, some online lenders have offered fee discounts for direct creditor repayments. Your lender will use your loan funds to repay it on behalf of your creditors and streamline the debt settlement process. No perks were found in either the credit union or the bank.
These lenders also cited very fast loan approvals and financing times. Some people claim to pay the funds on the day you apply and are approved. My goal was to get the lowest rate for a 7-year term, so that wasn’t that important to me, but it’s worth remembering for borrowers seeking emergency loans.
What paused me
Two of the three online lenders I shopped for had shortcomings that were not found in credit unions or banks. These advance costs amount to as much as 12% of the loan amount, allowing you to get a significant bite from the funds you receive. If you choose a lender to charge origin fees, you may have to borrow more money than is planned to cover the fees.
The initiation rate was in line with banks and credit unions, but online lenders charged top-end fees as high as 35.99%. This gave the impression that these products were targeted by fair and bad credit borrowers, while banks and credit unions were targeted at customers with a stronger credit profile.
Online lenders by numbers
It took a little time to organize the fine prints and figure out the fees and eligibility requirements, which resulted in an average of 20 minutes for each online lender.
| Online lender I shopped | At least April | Repayment terms | Did you meet my needs? | Why or why? |
|---|---|---|---|---|
| New | 6.70% | 3 or 5 years | no | Up to 12% origination fee The desired term is not provided |
| Sophie | 8.99% | 2-7 years | yes | Desired amounts and terms provided Offer discounts on debt consolidation fees with direct creditor repayments Origination fees are optional |
| prosperity | 8.99% | 2-5 years | no | Origination fee up to 9.99% The desired term is not provided |
Personal loans from the lending market
Best: Borrowers who don’t know where to start and want to compare multiple lenders at once
I didn’t know much about marketplace lending until I started writing about it. Key Benefits of Finding Using the Market Debt settlement loan It is a feature that allows you to quickly check the basic details of multiple lenders at once. I checked the Bankrate page to see if the process was easier than doing legwork on my own with individual banks, credit unions and online lenders.
What I liked
Immediately we found out that the APR range, loan term, loan amount, and minimum credit score for each lender were listed in the rate table. When I wanted to dig deeper into a particular lender, I was able to see whether it charged fees, notable pros, cons, or special features. This was a great change by scrutinizing a small print section of each lender’s website for basic information I need.
I found two lenders, but the table was easy to see that it provided the repayment period I was looking for.
What paused me
When clicking to “see offers,” the small print revealed that several lenders can qualify in advance. I wanted to apply directly to two prominent lenders, but I liked the convenience of receiving offers that I could accept or reject.
Number lending market
I honestly loved the marketplace shopping experience. Information was easy to review without searching for small, fine prints with eye on it. While many major banks and credit unions are not listed on the market site, the featured lenders offered competitive terms and unpaid flexibility. After reading the lender’s reviews and submitting a prequalified offer form, I spent a total of 20 minutes on the page and received two reasonable offers.
| Marketplace lender match | At least April | Repayment terms | Meet my needs | Why or why? |
|---|---|---|---|---|
| Lightstream | 6.99% | 2-7 years | yes | Desired amounts and terms provided Credit score within minimum threshold There are no fees |
| Discover | 7.99% | 3-7 years | yes | Desired amounts and terms provided Credit score within the minimum threshold There are no fees |
result
I spent just under three hours on a loan shopping, but in the end, the lender that best suited my needs came from the market website. Some important things I learned from my experience:
- Borrowers with excellent credits can find competitive debt consolidation loans from a variety of lenders, but only through shopping can they find lenders who provide the best rates for their specific needs.
- If you have a specific lender in mind, applying through that lender’s website is the most reliable way to understand your eligibility for that company.
- If you’re not used to popular lenders or are unsure where you want to borrow, visiting lending markets like Bankrates can help you narrow down your field.
- Remember that if you want a lender’s minimum rate, you may need to opt for a short repayment period. Usually, rates are higher under longer conditions.
So is buying a personal loan worth it?
For personal loans, loan shopping is definitely worth it. I have ruled out lenders who didn’t meet my needs, even if I was attracted to a low start rate. We also found that some of the lowest-price online loans come with a fee that increases the total cost of borrowing.
Of the lenders that offered the fee-term combination I was looking for, shopping has now zeroed out to the most affordable loans with the best features. It took a long time to explore individual banks, credit unions and online lenders. So putting all that information on my fingertips on the market site was a real time savings.
