Most of the time, people think of starting a business but there is no capital for it. I have seen someone think up a brilliant idea and let it die because there are no funds to make that dream come true. The presence of personal finance loans is underrated in the world today.
Loans have given many people the freedom to dream again. It ensures that that dream you have can be reached. A personal finance loan can help you start that business comfortably by giving you the lump sum and you, having to pay over a fixed period of time.
This article explains what a personal finance loan is, why you need it in 2022 and what the best finance loans of 2022 are. I hope you find this enlightening.
What is Personal Finance Loans
A personal finance loan is any loan that can be given to you by a public institution like a bank, and a private institution like the credit union, online lenders, and finance companies.
It would require that you have collateral to give in the meantime and that you would be able to pay back the money over a fixed period of time.
The majority of the time, you do not even need collateral to take a personal finance loan. These parastatals give you these loans instead, based on your creditworthiness.
You can take out a personal loan for any purpose that suits you like debt consolidation, an unexpected medical bill, a new appliance, a vacation, or even a student loan.
You and the company would reach an agreement as relates to the period of time it would take you to pay back the money given.
The money could be taken weekly from your paycheck, monthly and on some rare occasions, yearly. Interest you pay is expressed as an annual percentage rate (APR).
The average APR on a personal loan is 9.41% as of June 2019, but it can range from 6% to 36% depending on your creditworthiness, including an examination of your income, debts, and credit score.12
How do I decide how much loan to take?
Before you take a personal loan, ensure that it is what you want to do. Remember that in taking a loan, you would run into debt that you would be paying for over a period of time. Ensure that this personal loan is worth it.
Keep in mind that once you borrow money, you don’t just pay back the original loan; there is usually an interest rate you would have to pay the company alongside paying for the capital you have taken.
There’s no reason to pay interest on the money you don’t need, so ensure that you only take out a loan because it is very necessary.
However, if you decide to take a loan, ensure that you do not borrow less than you need or you may be forced to turn to more expensive loan sources at the last minute.
Where can you obtain a Personal Loan?
There are several sources where you can get personal loans from. Some of these sources include-
Banks are governed by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA).
They are the top-tier parastatals known for giving loans to people. When compared to other options, banks tend to have higher loan qualification standards.
#2 Credit Unions
In a credit union, the process is not as stringent as using banks and interest rates in credit unions are lower than at banks. One downside of taking out a loan from a credit union is that you must be a member.
If you are not a member of the credit union and you come for a loan, odds are that it would not be granted.
#3 Finance Companies
These are companies that have set themselves up for the purpose of finances. They are known to give loans at a lower rate than even banks. In a personal finance company, collateral is required for the proper execution of these loans.
You would be given a stipulated time to pay off your debts. Failure to do so would lead to confiscation of your collateral by the finance company.
#4 A peer to peer lending site
There are several peer-to-peer lending sites in existence today through which you can very easily get your personal finance loans. They are very easy to set up as it just requires you to know someone who knows someone.
#5 An online loan provider
The world is digital. A lot of apps and websites today have people who are willing to give you loans for very low-interest rates. Find them and take advantage of getting your personal finance loans.
#6 A referral from a friend or family member
You might have a rich relative or a friend or even a family member who is rich and very willing to give you a loan to finance your business or in a time of emergency. Do not overlook them when looking out for people to get your personal finance loans from.
#7 A private loan from an investor
You can attend workshops or conferences and pitch your business ideas to people. In doing this, someone may like the idea and decide to give you a personal finance loan for your business.
What do I need for Personal Finance Loans?
To see qualify for a personal loan, your lender will likely look check to see your-
- Credit score
- Payment history
- Debt-to-income ratio
Depending on where you are taking these loans from, there could be more requirements.
Why do I need a personal finance loan?
There are several reasons why you could decide to take out a personal loan. Some of them are-
- If you have emergency expenses. Instead of taking a high-interest payday loan to cover unforeseen bills, you might be able to get a personal loan fairly quickly since many lenders disburse funds as soon as 24 hours.
- You need to make a large purchase such as an appliance.
- If you need emergency cash assistance
- If you need money right away to cover bills, an emergency cost or something else that needs immediate attention, you can take out a personal loan.
- In dealing with urgent things like- Paying past-due home payments and utilities, medical bills, funeral expenses, an unexpected car repair, you may consider taking out a personal finance loan.
- A personal finance loan can be used as a form of debt consolidation, especially with credit card debt. This is because they charge lower interest rates compared to credit cards, particularly if you have good credit.
- In handling important home Improvement and repairs. If you are not willing to risk losing your home in case you fall behind on payments, you should consider taking a personal finance loan as a substitute
- Moving Costs- If you’re moving close to where you live now, you might not need to cover any major expenses. A personal finance loan can help you do this effectively.
Best Personal Finance Loans of 2022
SocialFinance,Inc. is an American online personal finance company. A mobile-first service based in SanFrancisco.
SoFi is a financial management service that provides loans, refinancing, investment services, and more to customers. It’s popular due to its lack of fees and flexible options. It’s a fully digital way to manage your money.
In using SoFi for your personal finance loans, you get access to exclusive benefits designed to help set you up for success with your money, community, and career. It has flexible loan terms and most services have no fee.
It is rated #1 in the list of best personal finance loans in 2022.
#2. PenFed Credit Union
PenFed Credit Union offers competitive rates for Mortgages, VA Loans & HELOC, in addition to loans for cars, students, and personal.
There are now more than 2 million members of PenFed Credit Union with more than $25 billion in assets. Members have access to more than 50 branches throughout the U.S. and on military bases in Guam, Japan, and Puerto Rico. PenFed Credit Union used to be limited to only the military and anyone with ties with the government.
However, it is now open to all citizens. It is ranked #2 in the list of best personal finance loans in 2022.
#3. Marcus by Goldman Sachs
Goldman Sachs, one of Wall Street’s best-known names in investment banking, in 2016 expanded its offerings into consumer banking with Marcus by Goldman Sachs.
Marcus, an online bank, offers high-yield savings accounts, high-yield certificates of deposit (CDs), and no-fee personal loans. Marcus offers unsecured personal loans for various purposes.
Whether you want to consolidate debt, pay off credit card debts at a lower interest rate, get a loan for home improvement projects or pursue other financial goals, Marcus offers no-fee personal loans in amounts from $3,500 to $40,000.
It is ranked #3 in the list of best personal finance loans in 2022.
LightStream is an American online lender that is a division of Truist Bank. It is a financial resource for people with good credit offering loans up to $100,000 for practically any purpose.
Funds are deposited directly into customer bank accounts, as soon as the day they apply, when all considerations are met. LightStream has no fees for personal loans and offers very competitive rates.
Its loans can be used for nearly anything. It is very popular and they have great customer service.
It is ranked #4 in the list of best personal finance loans in 2022.
Payoff provides fixed-rate personal loans to borrowers solely for the purpose of paying off credit card debt.
Its consolidation loans roll multiple high-interest credit card payments into one monthly payment with a lower annual percentage rate. Payoff offers no repayment or late fees.
It is one of the best ways to get a personal loan. Users who have had experience with them always have great things to say.
It is ranked #5 in the list of best personal finance loans in 2022.
Founded in April 2012 and performing wonderfully, Upstart is an AI lending platform that partners with banks and credit unions to provide consumer loans using non-traditional variables, such as education and employment, to predict creditworthiness.
Although Upstart’s personal loans don’t come with dazzling features, they’re a fast-funding option for borrowers with low credit scores and strong earning potential.
If you are looking for a fast personal loan, you should check out Upstart.
#7. Best Egg
Best Egg personal loans are available to borrowers who want to consolidate debt and secure a loan, but they lack certain features offered by other lenders.
They offer a wide range of loan amounts and ensure that their loan option is secure.
However, you can only choose from two repayment options. It is one of the best finance loans in 2022.
Earnest is a technology-enabled fintech lender headquartered in San Francisco, California that offers education financing products, including student loan refinancing and private student loans.
The company evaluates a person’s full education, employment, and financial profile, in addition to their credit score (also known as a FICO score) in order to obtain a complete financial profile of each applicant.
It is one of the best personal loans you should consider taking out, especially if you’re a student.
#9. TD Bank
TD Personal Loan is a flexible borrowing solution that you can use to borrow money for a specific goal.
You can use a loan to finance a renovation project, make a big purchase or consolidate your higher-interest debts.
Loans are available with fixed or variable interest rates and come with flexible repayment options to help you budget.
They are popular because they aim towards giving you loan payments that fit your budget.
#10. U.S. Bank
If you’re a U.S. Bank checking customer, you may borrow at least $1,000 up to $50,000. On the other hand, if you are not a bank customer, you may be able to borrow up to $25,000.
If approved, you would get to pay the same amount every month for a term of 12 to 60 months, with a fixed annual percentage rate (APR), ranging from 5.99% to 18.49% APR. When you take out a personal loan, you’ll pay no origination fees and there is no prepayment penalty.
The no hidden costs and no collateral features are what make taking a personal loan from U.S Bank one of the best.
Frequently Asked Questions on Best Personal Finance Loans Of 2022
Yes. You can. It depends on where you decide to take the loan from.
SoFi has been ranked highest amongst the best personal finance loan companies.
No. They give you the money you want when you need it.
They mostly take the money from the Federal Reserve, then give it to you at a higher rate.
It is not ideal to take a loan at all, but when you must, ensure that it is in a legit personal finance loan company.
Yes. The personal finance companies that are accredited offer good rates for your loans.
You have probably made up your mind about taking a personal loan and just looking for the best ways to do so.
Ensure that taking this loan is absolutely worth it because even though it may seem easy at first, it is not always that way. These are the best personal finance loans in 2022.