The best personal loans for 2024 are those that offer the lowest interest rates for your particular situation, and are also recession-proof. One of the key factors in finding the best personal loan is outlining the reason for the loan in the first place. Are you paying off debt and lowering the overall interest rates and charges? Or maybe you are updating your home to be more energy efficient.
You do not need perfect credit to get personal loans, but your credit does affect your annual percentage rate, as well as the interest rate charged on any unpaid balance. It is also important to note that personal loans are by nature “unsecured.” This means no collateral is necessary to qualify for them, and the better ones come with fixed rates and payment amounts. This makes it easier to budget for your bills each month. You can use the following criteria to find the best personal loans available for you in 2024.
Online Banks vs. Traditional Lenders
The personal loan business has recently expanded into the cyber world, often challenging well established credit card companies and banks. Their more efficient and streamlined application processes make them attractive, especially to those with good credit.
Another factor that often makes online lenders the better choice is the level of transparency compared to traditional banks. Transparency regarding interest rates and lending requirements, as well as repayment terms, are usually explained in fuller detail with personal loans.
Credit Card or Personal Loan?
One important factor to consider is that personal loans are known as installment loans, meaning you have a fixed amount you pay each month. Alternately, credit cards are considered revolving debt and have variable payments each month. The main difference, and where it impacts you the most, is that personal loans do not impact your credit score the same way a credit card at its limit does. Credit cards count against your utilization ratio given by credit reporting bureaus when determining your credit score.
Characteristics of Good Personal Loans for 2024
The personal loan you select should have an outstanding customer service reputation, and reviews that back up its claims. Iit is important to take the time to read the reviews from several reputable sites. Overall, the best personal loans offer most of the following perks:
- No or Low Fees
- Low APR
- Flexible Terms
- User-friendly website
- Multiple branches located near you
- Higher loan limits
- Good reviews and reputation
Comparing Personal Loans
No two lenders offer loans the same way, and for exactly the same terms. This is because lenders use a proprietary “formula” when considering submitted applications. For example, a credit union uses a different set of evaluative criteria than an online bank. This difference can impact the amount of monthly fees you pay, interest rates charged and penalties enacted if your payment is late (even once).
If you have great credit history and a credit score rating that is between good and excellent, then look for credit cards with a 0 percent introductory APR. Effectively you use this as a type of personal loan, but the credit limit must be high enough to meet your needs. You also need to have the discipline to pay the credit card off before the introductory rate expires.
Another way to compare loans is to see what the associated fees are. For example, how much is the lender charging for the “origination fee”? This can vary widely, from one percent to six percent. Make sure you are aware of the fees for late payments and any prepayment penalties.
You also need to weigh the terms each loan offers you. Some, especially online lenders, only allow three to four year loan terms. The longer a term is, the lower your monthly payments are, but the more money you pay over the entire length of the loan. Shorter terms mean higher monthly out-of-pocket payments, but the overall amount of interest you pay is less.
Personal Loans With Great Reputations
The following loans offer most of the must-have criteria outlined above. They are listed in order from personal loans for those with excellent credit, to loans for average credit, and even a few for those whose credit is not quite stellar.
Lightstream
Lightstream offers loan terms from 24 to 144 months depending on the loan’s purpose, and the APR is between three and 25 percent. They loan up to $100,000 to highly qualified borrowers. They also provide flexible terms, no prepayment penalties and they do not charge any origination fees. However, you must meet a series of highly strict criteria to be approved for this loan.
Peerform
This option is good for applicants with average credit. The APR ranges from five percent to 29 percent, with terms between 36 and 60 months. However, they only loan up to $25,000, and there is a five percent origination fee.
One Main
One Main has branches nationwide, with both an online and traditional office setting. The maximum loan offered is $20,000, and the longest you can get the loan for is 60 months. Keep in mind that the APR is higher than the other personal loan lenders, as the risk is greater when an applicant’s credit is lower. As such, the APR is between 18 percent and 35.99 percent.
One Main has a very good rating with the Better Business Bureau, and offers clients several value added benefits through their website. Incentives for making payments on time, or signing up for automatic payments can help reduce interest rates, or compound to offer discounts on various services.
Personal Loan Scams
Make sure to be on the lookout for more loan scams this year. This is especially true if you apply for a loan online. Your inbox is likely to receive numerous offers, some legitimate and others complete scams. You can tell the difference because the scams offer to create the loan without first checking your credit. Other typical scams include demanding up front fees to submit your application, guarantees of loans, and no listing or website for their company.