Finding the best fair credit loans: 7 factors to consider

Muhammad Ahmad

7 considerations to consider while looking for the perfect fair credit loans

If your FICO score is between 580 and 669, you have fair credit. Although there is no perfect fair credit loan for every borrower, it is still possible to find one that suits your goal and desired financial situation.

Finding a lender that can meet your needs, while still offering you the most competitive rate, is especially important as a fair borrower. This is because the lowest rates are usually for borrowers with excellent credit, so you will need to do some research to find the cheapest loan you can get.

The main points

A Fair Credit Personal Loan is one that targets borrowers with a credit score between 580 and 669.

Although you can get fair credit loans from banks and credit unions, online lenders are usually the better option because of their flexible criteria.

To find the best credit loan, you'll need to consider eligibility requirements, loan amounts, interest rates, fees, and additional incentives, such as rate discounts and co-orders.

7 Main Components of the Best Fair Credit Personal Loans

To find the best personal loan for you and your needs as a credit fair borrower, think about where your priorities lie and what will benefit you most in the future.

1. Approval requirements

Every lender has its own set of approval criteria. Some lenders only work with borrowers of a certain degree, income, or debt-to-income ratio. While others—usually those that cater to borrowers with minimal credit—take into account an individual's educational history or require borrowers to meet these criteria in conjunction with a co-signer.

As a fair credit borrower, look for lenders that allow co-signing or have non-traditional approval criteria. You will likely end up getting a loan whose terms and interest rates are offered by lenders who use the traditional approval model or who only allow individual applications.

Listick tip

If approval requirements are your top priority, look into Upstart Personal Loans. The company takes into account education and employment along with your credit history.

2. The funding schedule

Depending on your personal loan usage, the disbursement schedule can be a make or break factor when comparing lenders. If you are facing financial problem and need money as soon as possible, it is important to know how quickly you can get your personal loan. Financing schedules will vary from lender to lender, so use this to gauge whether a loan is suitable for your needs.

Listick tip

Some of the upgrade network lenders have financing available as soon as the day after approval, which is great for those who need money right away.

3. The interest rate

Lenders usually reserve the best rates for people with excellent to excellent credit (or a FICO score of 740 and above), so as a borrower with fair credit, you'll get more. The price must be estimated. According to Listick, the average interest rate on personal loans is currently 11.29 percent. However, those with fair credit earn an average interest rate of between 17.80 and 32 percent.

Many personal loan lenders offer pre-qualification as part of their approval process. Pre-qualifying for a loan allows you to know what you'll qualify for with a particular lender - including rates and terms - without affecting your credit.

Before applying for a loan, pre-qualify with at least three lenders to compare your expected rates side by side. It is also important to calculate any fees the lender charges to get a fuller view of how much you will actually pay each month.

Listick tip

Chicago-based Avant Bank is ideal for rate-conscious borrowers. Avant caters specifically to people with poor credit, so you'll likely get a lower rate.

4. Loan amount and use

Consider your personal loan usage and the exact amount you need to borrow. Many lenders offer specific loans based on usage, so it may be best to choose a lender that meets these requirements.

For example, some lenders provide loans specifically for home renovations or wedding expenditures. Similarly, some lenders offer lower rates for personal loans meant to pay for certain purposes, such as medical expenses or debt consolidation. Dealing with a particular lender can increase your chances of getting approved or, in some cases, increase your loan limit or lower your interest rate.

Listick tip

Lenders who are willing to borrow large amounts should consider Best Egg. The lender offers up to $50,000 USD, making it an ideal financing option for larger projects or purchases.

5. Payment terms

The loan repayment period is the number of months - or years - that it will take to pay off your entire balance. The length of time you choose to repay your loan is an important consideration when choosing the best loan for your needs, as it will determine your monthly payment as well as the interest rate you will pay.

For example, a longer payment term automatically translates into a lower monthly payment, but it also means you'll pay more interest in the long run. On the other hand, a shorter repayment period will result in a higher monthly payment, but lower interest over the life of the loan.

Listick tip

Discover allows a maximum repayment period of up to seven years, ideal for those who need to extend their loan payments.

6. Unique features

Many lenders, especially in the area of fair credit, have limits on what your loan can be used for. But outside of these restrictions, some lenders offer special incentives to borrowers that can sweeten the deal and mean more competitive rates. This includes interest rate discounts for things like signing up for automatic payments or maintaining an account with the company, and the ability to add a participating location for a better rate.

When looking for lenders, be sure to keep them in mind, as you may be able to get a loan at reasonable rates, even if your credit is not in good shape.

Listick tip

Adding a co-signer can greatly improve your rates. Prosper is a lender that encourages joint applications and is great for those who need an extra credit extension.

7. Customer support

Not only is customer service important after a loan is approved, but it may also be necessary for those who need additional assistance during the application process. When shopping, pay close attention to what's available, online or in person, and how that method meets your needs.

Listick tip

Not only do they get competitive interest rates, but they also provide 24/7 support to applicants and borrowers.

How to get the very best fair credit loans

As a fair credit borrower, you should treat the process of getting the best personal loan just as you would a borrower with a perfect score - but with a little extra care. Keep the following tips in mind when shopping for a fair credit personal loan.

Apply for loan pre-qualification. Although not all lenders offer this feature, pre-qualifying for your personal loan can help you have more control over your monthly payment and chances of approval.

Use one of the two sites. Adding a co-signer, especially one with strong credit, will make you a more attractive borrower because it will create an extra layer of credibility for the lender.

Use a local bank or credit union. Those with a previous relationship with a local establishment can benefit from more competitive rates as the long history of payments helps in getting approved.

Debt repayment. The debt-to-income ratio is another measure of creditworthiness when it comes to creditworthiness. Work on paying off remaining debts before looking for a loan to ensure better rates.

Bottom Line

Signing up for the best fair credit personal loan requires a little attention to what you need from your lender. This way, you will come away satisfied with a competitive loan that meets your specific needs. And as always, be sure to shop around and compare offers before you finalize.

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