Millions of Americans use personal loans to consolidate debt or to get fast funds for large or unexpected purchases.
If you’re thinking of taking out a personal loan, there are some important things you should know:
Loan marketplaces make comparing rates and loan terms quick and painless
Loan marketplaces, driven by superior technology and a more customer-centric business model than traditional banks, have eaten up a huge share of the lending industry (accounting for around 36% of the total number of personal loans in 2017, compared to less than 1% in 2010, according to TransUnion).
There are a few big lending marketplaces in the industry but the loan application process is basically the same across the board. Borrowers can submit one loan application and receive multiple offers - allowing anyone to easily shop around and negotiate multiple loan offers without having to wade through dozens of applications. The business model is based on loan providers competing for your business, which in most cases means you will get more favorable loan terms and amounts.
The biggest name in the industry is LendingTree, which works with a network of over 1,500 lenders. That variety means that LendingTree can match borrower with a lender who will work with any credit score and any loan terms.
Amone is another reputable marketplace (though not as vast as LendingTree’s). Their form is quick and easy to fill out, and you’ll be comparing loan rates in no time.
You only have to input what type of loan you want, the amount, your zip code, and a bit of other basic information, and then they provide multiple loan options for you.
It bears repeating - it pays to compare.
Shopping around for personal loans can save consumers 35% on their interest, according to LendingTree. APRs for personal loans typically range from less than 5% to as high as 35.99%, representing substantial differences in interest payments over the course of a loan.
LendingTree found that borrowers can save an average of $1,700 ($47 per month) over the duration of a 3-year personal loan for $10,328 (the average amount sought by users of its platform). Consumers with credit scores of 640 to 679 can save an average of $1,726 over the course of a 3-year personal loan, the most of any group in the study.