What are the best personal loans for fair credit?
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There is no perfect fair credit loan for every borrower, but instead the perfect loan for your specific needs. These needs can range from fast funding, a long repayment period or a low monthly payment. Taking into account these needs is especially important as a fair credit borrower, as your rates may not be as competitive as the ones afforded to those with higher credit scores.
According to FICO, a fair credit score falls between 580 and 669.
7 key components of the best fair credit personal loans
To find the best fair credit personal loan for you and your needs, consider where your priorities lie and which of the components outlined hold more weight for you.
1. Requirements for approval
Every lender carries its own specifications for approval. Some lenders only work with borrowers with a certain score, income or debt-to-income ratio. While others factor in one’s education history or encourage the use of co-signers.
As a fair credit borrower, look for lenders that allow for a co-signer or have nontraditional approval criteria. You’ll likely walk away with a more competitive loan than you might with a traditional bank.
If approval requirements are top-of-mind, explore personal loans offered by Upstart. The company considers education and employment along with your credit history.
2. Funding timeline
Depending on the use of your personal loan, the speed that funds become available is important to consider. If you are in a financial pinch that requires money as soon as possible, it is important to take stock of how quickly your personal loan will become available. Funding timeline can range greatly by lender so use this to measure if the loan is right for your needs.
Some lenders in the Upgrade network state to have funding available as soon as the day you apply, which is great for those in need of money quickly.
3. Interest rates
Due to a fair credit standing, the minimum APR that lenders offer will likely not apply. When looking at potential interest rates side by side be sure to consider the whole of the picture. This means adding in any fees charged by the lender for early loan payments or the application.
The Chicago-based lender Avant is excellent for the rate-conscious borrower. Avant caters specifically to those with low credit so the rates displayed will be the ones you likely get.
4. Loan amounts and use
It is wise to consider the use of your personal loan and the amount that you need. Many lenders offer specific loans based on use. That may be financing something small like a vehicle repair or large like a wedding. Depending on the amount necessary, some lenders may be better than others.
Borrowers looking to borrow large amounts should consider Best Egg. The lender offers amounts up to $50,000, making it perfect for more expensive projects and purchases.
5. Repayment terms
The amount of time that you choose to pay off your loan is an important consideration when picking the best loan for your needs. A longer repayment period will mean a less expensive monthly cost but more interest incurred over time. On the other hand, a shorter repayment term will increase your monthly payment but decrease the overall cost of the loan.
Discover allows for a repayment period longer than most, up to seven years, best for those who need to stretch out their loan payments.
6. Unique features
Many lenders, especially in the fair credit space, have restrictions on what your loan can be used for. But outside of these restrictions, some lenders offer special perks to borrowers that can sweeten the deal and mean more competitive rates.
Adding a co-signer can greatly improve your rates. Prosper is one lender that encourages joint applications, great for those needing an extra credit boost.
7. Customer support
Not only is customer service important following loan approval, but it can prove to be essential for those that need an extra hand during the application process. When shopping around pay close attention to support available, online or in-person, and how that approach fits your needs.
Achieve doesn’t just have competitive interest rates — it also offers support seven days a week for its applicants and borrowers.
How to secure the best personal loan for fair credit
To sign off on the best personal loan as a fair credit borrower you must approach the process just as a borrower with a perfect 850 would — but with some additional care. Consider the following tips when shopping for a fair credit personal loan.
- Apply for loan prequalification. While not all lenders offer this perk, prequalifying for your personal loan can help you to get a firm grasp on your monthly payment and the likelihood of approval.
- Use a co-signer. Adding a co-signer, especially one with strong credit, will make you a more appealing borrower as it will create an added layer of reliability for the lender.
- Use a local bank or credit union. Those with a previous relationship with a local institution can benefit from more competitive rates as a longstanding history of payments aids in approval.
- Pay down debt. Your debt-to-income ratio serves as another measure of reliability when it comes to qualification. Work to pay down remaining debt ahead of loan exploration to ensure better rates.
The bottom line
Signing off on the best personal loan for fair credit requires a bit of reflection on what you need from your loan. This way you will walk away satisfied with a competitive loan for your specific wants. And as always, be sure to shop around and compare offers before finalizing.