Why Personal Loans Are Attractive to People With Good Credit
JW
Last updated 03/26/2024 by
Jessica WalrackWhen thinking about personal loans, who do you imagine as the most common borrower? Someone struggling financially with a low to average income, or a college graduate with a high-paying job and great credit? The answer may surprise you.
People with good credit (scores of 700+) are now increasingly taking out personal loans to buy cars, pay for weddings, consolidate debt and more. According to a 2016 survey commissioned by Discover Personal Loans, 60% of the people who take out personal loans are in good to excellent financial shape.
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Why are personal loans so attractive to people with good credit?
Convenience
Getting a personal loan has become extremely convenient. Gone are the days when you would have to visit your local bank to apply, wait to get approved, and then wait again for the funds. Now, you can take care of the whole process online from the comfort of your home.
How can you compare personal loans?
There is a multitude of online loan providers just a few clicks away. You just find the loan with terms that you like, fill out an application online and wait for the approval. In many cases, the process can take place in under 24 hours, with the money being deposited into your bank account on the same day that you apply. Furthermore, with most of the loans being unsecured, you don’t have to hassle with any kind of collateral; good credit and high income are all you have to show.
Another convenience of securing a personal loan online is that lenders often only perform a soft credit check to determine if you are eligible. Being so, you can find out what you qualify for in terms of loan amounts and monthly payments without worrying about marks on your credit report.
Competitive interest rates
Obviously, good interest rates are a key factor when choosing a lender. Borrowers with good to excellent credit stand to get the best rates.
What kind of rates are we talking about?
Well if your credit score is in the excellent range (720-850), the average interest rate charged on a personal loan is about 10.94%. If you’re in the good range (690-719), the rate increases to about 14.56%.
But those are just the averages. By shopping around, you can find personal loans with interest rates that are as low as 2.19%. How does that compare to other types of borrowing? You may find a great introductory rate on a credit card that is beneficial for a limited time, but when you compare average rates, personal loans often can offer a better deal.
Interested in what interest rates are available on personal loans? Here are some of our top picks.
Low-interest personal loan lenders for good credit
Borrowers with good credit have plenty of options. The lenders below provide particularly good rates for borrowers with great credit.
Personal loans for borrowers with excellent credit
LightStream offers excellent low-interest personal loans to applicants who have a good credit rating and proof of sufficient income. Note that your interest rate is based on your credit as well as the loan’s intended use; for example, rates are different for home improvements versus life events. If you’d like to apply, you can do so online and will usually hear back within a few minutes.
SoFi is a marketplace lender with a range of personal loan options for people with good credit and proof of a high-income level. Loan amounts of up to $100,000 are available for those who qualify, and payment terms are offered for 36, 60 or 84 months. You need to create an account on the SoFI website to apply and then can receive loan offers from various lenders. Additionally, it provides benefits that include career assistance and business networking opportunities.
Personal loans for borrowers with good credit
JW
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.
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