Why High Credit Score Borrowers Take Out Larger Personal Loans

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Personal loans can undoubtedly be a great financing option for just about any consumer as they give you access to cash rather quickly, and often at a lower interest rate than your standard credit card would.

Although borrowers of all different credit score levels use personal loans, a recent LendingTree study found that those with higher credit scores are taking out personal loans that average much higher than those taken out by their lower credit score counterparts.

More specifically, the study showed personal loans for high-score borrowers (with credit scores of 720 and above) averaged $18,443, which is 122.2% higher than the $8,301 average for those with credit scores below 720. The study looked at closed personal loan data between April 2021 and March 2022.

The reason this data is so important is because it brings to our attention a clearer interpretation of how personal loans play different roles for different kinds of consumers. You may feel at first surprised that high credit score borrowers are taking on larger personal loan debts, but there are a couple of factors at play here.

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Why high credit score borrowers may take out larger personal loans

The right personal loan for you

Borrowers with strong credit scores are certainly in luck as they are more likely to receive the lowest interest rates and best terms on a personal loan. No matter your credit score, however, the good news is there are options to help just about anyone finance a large purchase.

For those with excellent credit, Select ranked LightStream as the best overall personal loan lender. LightStream offers some of the lowest interest rates available and you can take out a personal loan for nearly every purpose except for higher education and small business. Plus, you’ll generally receive your funds on the same day and there are no origination fees, administration fees or early payoff fees.

LightStream Personal Loans

  • Annual Percentage Rate (APR)

    3.49% to 19.99%* when you sign up for autopay

  • Loan purpose

    Debt consolidation, home improvement, auto financing, medical expenses, wedding and others

  • Loan amounts

  • Terms

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee

Those with fair or good credit can consider our best overall pick: Upstart. Borrowers can apply for up to $50,000 and the minimum credit score requirement is 600. Applicants with no credit history will be considered as well. There are no penalties for paying off your balance early, though Upstart does charge an origination fee (up to 8% of the amount you borrow) and late fees ($15 or 5% of the past due balance, whichever is greater).

Upstart Personal Loans

  • Annual Percentage Rate (APR)

  • Loan purpose

    Debt consolidation, credit card refinancing, wedding, moving or medical

  • Loan amounts

  • Terms

  • Credit needed

    FICO or Vantage score of 600 (but will accept applicants whose credit history is so insufficient they don’t have a credit score)

  • Origination fee

    0% to 8% of the target amount

  • Early payoff penalty

  • Late fee

    The greater of 5% of monthly past due amount or $15

Borrowers with bad credit can try LendingPoint, which may approve applicants with a minimum 580 credit score. It also offers a fast application with same-day approval and possible next-day funding (after the final documents are verified and approved). Take note that origination fees range from 0% to 6% and interest rates can be as high as 35.99% — which is typically the case with personal loans that allow low credit score applicants to apply.

LendingPoint Personal Loans

  • Annual Percentage Rate (APR)

  • Loan purpose

     Debt consolidation, wedding, car repair, home renovations and more

  • Loan amounts

  • Terms

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee

    Currently, LendingPoint does not charge any late fees but reserves the right to assess late fees of up to $30. Fees vary by state.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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