10 Best Home Equity Line of Credit Alternatives

During the height of the housing bubble, home equity line of credit (HELOC) financing and home equity loans represented two of the most popular forms of credit. Homeowners, some of whom had paid very little toward their mortgages, nonetheless were able to borrow against the equity created by the inflated value of their homes. But as the housing market crashed, home equity loans and HELOCs diminished in popularity, although never disappearing completely.

Nonetheless, alternatives to HELOCs and home equity loans exist for borrowers with fair to excellent credit. The lenders below, listed by credit situation, represent ten of the best options.  Depending on your specific needs, one or more of these lenders may provide just the financing you need.

10 Best Home Equity Line of Credit Alternatives

If you have EXCELLENT credit:

SoFisofi

Ideal For: College graduates
Loan Amounts: $5k-$100k
Highlights: Rates as low as 5.5%

SoFi originally offered loan only to students and graduates who wanted to consolidate their debt, but has since expanded its operations to provide loans to all borrowers, or at least those borrowers with excellent credit and high incomes. SoFi offers loans with repayment periods of 3 to 7 years, ranging from 5,000 dollars to 100,000 dollars. Interest rates range from 5.50 to 9.24 percent, depending on borrowers’ credit profiles. Borrowers submit profiles and receive loan offers prospective lenders, and then negotiate the final terms for the offers they’ve chosen. Applications are generally processed and loans distributed within a few days. However, would-be borrowers in Idaho, Louisiana, Mississippi, Nevada and Tennessee are out of luck.

Lightstreamlightstream

Ideal For: People needing funds fast
Loan Amounts: $5k-$100k
Highlights: Rates as low as 1.99%, same day funding

Also, read >  Where Does Your Spending Stack Up to the Average American Woman?

Lightstream offers 24-month loans with interest rates as low as 1.99 percent. Interest rates vary according to borrowers’ credit profiles and the purpose for the loan. The application process is conducted online and over the phone.  Prospective borrowers receive a response within minutes of submitting their applications. Borrowers who complete the application process by 2:30 p.m. Eastern time on weekdays can receive their funds the very same day.

 

If you have GOOD – EXCELLENT credit:

Upstart Loansupstart

Ideal For: College graduates
Loan Amounts: $3k-$25k
Highlights: Rates as low as 5.7%

Many recent grads struggle with debt – not just student loans, but with credit card debt or with day-to-day bills. Upstart Loans is a peer-to-peer lender that offers loans from 3,000 dollars to 25,000 dollars with interest rates as low as 5.7 percent.  Upstart investigates applicants’ academic records and work records along with typical financial information in making lending decisions. Loan applications must be fully funded by donors before borrowers receive their money, a process that could require several days.

Karrotkarrot

Ideal For: People needing funds fast
Loan Amounts: $5k-$35k
Highlights: Rates as low as 6.44%, 24 hour processing

Karrot is the consumer loan division of Kabbage, an online lender geared toward entrepreneurs and small business owners. Karrot provides 36-month personal loans with interest rates as low as 6.44 percent, with origination fees as low as 1.05 percent. One big advantage with Karrot is that loan processing occurs immediately. If you’re approved, you could receive your cash within 24 hours.

 

If you have GOOD credit:

Earnest earnest

Ideal For: College educated
Loan Amounts: $5k-$35k
Highlights: Rates as low as 4.25%

If your credit is decent but not excellent, ordinarily you would not qualify for the best interest rates for loans. But with Earnest, if  you have a good education, high earning potential and have demonstrated responsible spending patterns and credit handling behavior, you could qualify for a 12-month loan with interest as low as 4.25 percent. Earnest requires prospective borrowers to submit far more information than conventional loan applications, including access to LinkedIn profiles.  Loan processing can also be slow, so Earnest isn’t the best choice to deal with financial emergencies.

Also, read >  10 Ways To Budget Like A Pro

Payoffpayoff-logo-4x3-49421a9fba81f4be1eadf305243deabf

Ideal For: People looking to consolidate other debt
Loan Amounts: $5k-$25k
Highlights: Rates as low as 8%

Payoff is designed to allow people with at least 5,000 dollars in credit card debt to take loans to pay off their balances.  Payoff offers loans of varying lengths with interest rates as low as 8 percent.  Prospective borrowers must have credit scores in the mid-600 range, along with disposable income of at least 1,000 per month, a debt-to-income ratio of no more than 50 percent and no payments more than 90 days late during the previous 12 months.  Payoff only operates in Alaska, Arkansas, California, Florida, Georgia, Hawaii, Idaho, Kentucky, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, and West Virginia.

 

If you have FAIR – GOOD credit:

ProsperProsperLogo

Ideal For: Someone interested in P2P, credit score above 640
Loan Amounts: $2k-$35k
Highlights: Rates as low as 5.99%

Prosper has adopted the crowd funding model to a peer-to-peer lending platform, offering loans from 2,000 dollars to 35,000 dollars at interest rates as low as 5.99 percent. Borrowers first pass a preliminary credit screening before being allowed to submit a full application. After the pre-screening process, prospective borrowers prepare detailed profiles that are posted on the Prosper website, where borrowers can choose to fund part, all or none of each particular request. Borrowers only receive their funds when they have collected enough donations to fully fund their requested loan amount – which can be a very lengthy process. 

Lending Clublending club

Ideal For: Someone interested in P2P
Loan Amounts: $5k-$35k
Highlights: Rates as low as 5.99%

Lending Club takes a different approach to peer-to-peer lending. Instead of posting profiles online, prospective borrowers submit preliminary applications to generate a soft credit pull and produce one or more loan offers. Interest rates for 36-month loans are as low as 5.99 percent. After choosing an offer, borrowers submit more detailed applications.  The online application process produces a response within minutes. Approved borrowers receive their funds within days. 

Also, read >  Ideas for Valentine’s Day Gifts Under $30

 

If you have FAIR credit:

USAAusaa

Ideal For: Members of US Military and their families
Loan Amounts: $2.5k-$25k
Highlights: Rates as low as 8.9%

For active military personnel and veterans, along with eligible family members, USAA represents one of the best available lending options.  USAA offers loan from 2,500 dollars to 25,000 dollars with a maximum lending period of 60 months. Interest rates for USAA loans range from 8.99 to 10.99 percent. Borrowers must have good or excellent credit to qualify for USAA loans.

Pentagon Federal Credit UnionPENFED Logo

Ideal For: PenFed Members
Loan Amounts: $500-$25k
Highlights: Rates as low as 9.99%

Pentagon Federal Credit Union, commonly known as Pen Fed, is located in Alexandria, Virginia and is the third largest credit union in the United States, with more than 1.4 million members. Pen Fed offers loans from 500 dollars to 25,000 dollars with interest rates ranging up to 9.99 percent. The maximum repayment period for Pen Fed loans is 60 months. Borrowers must be members of the credit union to be eligible for loans.