Avant is an online lender that offers “reasonable” (9.95% to 36% APR) rates to people with not-so-great credit.
With the 2008 financial crisis came a reduction in the average American’s credit options. Lenders shifted their focus to the sub-prime and super-prime markets. As a result, half of all Americans in the middle have few credit options. Avant’s focus is this niche they call the “underbanked middle-class”.
This target group of consumers has a typical credit score of 600 – 700 and average household income of $40,000 – $100,000.
With this model in hand, Avant has seen some impressive growth since launching in 2013. As of November 2015, it has more than 700 employees and operates in three countries. In its first three years, Avant served over 300,000 customers and funded over $1.6 billion in personal loans. Avant has an A+ rating with the BBB, and Forbes listed Avant as the sixth most promising company in the United States in January 2015.
Who Are Avant Loans Designed For?
Avant provides an affordable, fast and convenient option for people who don’t qualify for super-prime loans and credit cards, but still want access to fast cash at reasonable rates. Applicants with credit scores as low as 580 are considered.
How Do Avant Loans Work?
Avant only offers unsecured personal loans. These loans do not require any type of collateral and can be used for whatever purpose the borrower has in mind. Applying for a loan only takes a few minutes and borrowers can receive a provisional approval within 15 minutes. The pre-qualification form also allows applicants to find out what rates they will receive without the need of a hard credit inquiry.
What Are Avant’s Interest Rates and Terms?
Avant Interest Rates
Avant’s interest rates range from 9.95% to 36% APR depending on the credit history and financial situation of each borrower.
To illustrate the terms you can expect to get from Avant, the following example application was submitted with a credit score of 750 and a monthly income of $4,000. Avant responded with a loan offer of $24,700 and three rates depending on the length of the term.
36 months – 9.95% APR
48 months—11.95% APR
60 months—15.96% APR
The range of rates offered by Avant (9.95% to 36%) roughly mirrors the rates offered by credit cards. Having said that, the sample application qualified for Avant’s lowest rate, but it may not see the lowest rates offered by credit card companies.
A key benefit of Avant loans over credit cards is the fact that you don’t have to wait for a credit card to come in the mail – funds can be available as soon as the next business day. Additionally, the maximum loan amounts are larger than the credit limit of most credit cards. Another advantage comes from the fact that Avant’s product is a closed-end installment loan with equal payments. This means you’ll know what your monthly payments will be the moment you apply and your loan payments have a set end-date. This may protect borrowers from the revolving trap of never ending credit card debt.
Avant charges an origination fee that ranges from 0.95% to 3.75% the loan amount. This fee is deducted from the loan principal from the loan proceeds as an origination fee. However, borrowers still have to pay interest on the full amount. For instance, a borrower may request a $20,000 and only receive $19,600 because a 2% origination fee is deducted before the money is disbursed.
Avant Penalty Fees
Avant does not charge a prepayment penalty fee. However, it does charge a $25 late fee and a $15 fee for returned payments.
Avant Terms and Loan Amounts
Loan amounts range from $1,000 to $35,000, which is comparable to what most alternative lenders of unsecured loans offer. Loan terms with Avant range from 24 to 60 months. These flexible terms allow borrowers to choose between paying less interest with short-term loans or the more affordable monthly payments of longer terms. Remember, Avant doesn’t charge prepayment penalties, so borrowers can save money on interest payments by paying their loans early whenever they want.
The flexible terms and loan amounts are a big advantage over payday loans, which generally have maximum loan amounts of $500 or less, and short repayment periods of usually around two weeks.
To illustrate the cost of an Avant loan, let’s consider a couple of examples:
- A 30-month loan of $5,000 with a 36% APR will have monthly payments of $255.10: a total cost of $6,581.40.
- The same loan with 9.95% APR, will have monthly payments of $188.94: a total cost of $5,668.20.
What Is Avant’s Application Process Like?
Avant’s loan application process is fast and entirely online. This section will explain Avant’s eligibility criteria and the workflow required to process an application.
Avant’s Eligibility Criteria
Avant’s eligibility criteria is pretty standard. There are the usual suspects, such as a steady income, an active bank account, and no bankruptcies in the recent past. You must also live in a state where Avant operates. As of November 2015, Avant loans are not available in Iowa, Maine, North Dakota and West Virginia. Applicants must also have a credit score of at least 580. However, lower credit scores will only qualify you for the highest interest rates and most successful applicants have FICO credit scores ranging between 600 and 700.
Avant Application Process
1. Complete pre-approval form
The first step is to check what your rate will be. To do this, simply fill out their pre-approval form. You will need to provide your full name, address, email, telephone number and Social Security Number. The initial inquiry is a soft credit pull so you won’t have to worry about a hard credit inquiry on your credit report just to check your rate. Avant only performs a hard pull when you sign the full application form.
2. Choose Terms and Rates
Once you complete the form, Avant instantly provides the range of loan amounts, along with the terms and rates you qualify for. There is a sliding bar that allows you to increase or lower the loan amount. The terms and interest rates below that change instantly to reflect your personalized rate for each loan amount.
3. Review Terms and Sign Contract
Once you choose the terms you want, Avant sends you directly to a summary of the loan contract. Select the payment method, sign the contract, provide your Social Security Number one more time, and you could receive your funds within one business day.
The Benefits and Disadvantages of Avant Loans
Although Avant’s rates are certainly not the lowest around, it does provide a viable option for many borrowers. Here is what we liked about Avant loans:
- Loan amounts range from $1,000 to $35,000.
- Flexible eligibility criteria. Considers borrowers with a FICO (TransUnion) as low as 580.
- No prepayment fee.
- Fast approvals.
- Avant reports to the main credit bureaus, which could improve your credit score if you make regular and on-time payments.
- Check your rate and terms without impacting your FICO score.
- Funds deposited in your bank as soon as the next business day.
Here are some things you also may want to consider:
- There are other lenders, such as SoFi, Prosper and Lending Club that offer lower rates to prime and super-prime borrowers.
- The maximum loan amount is $35,000. Although this is a typical maximum for unsecured loans, it may not be enough for some borrowers.