How to compare personal loan offers: 7 crucial factors besides interest rates

Core Insights - Personal loans are versatile financial products that can be used for various purposes, but choosing the right lender involves considering multiple factors beyond just the annual percentage rate (APR) Group 1: Key Factors in Choosing Personal Loans - Loan amounts vary by lender, with most offering up to $50,000, while some, like Alliant Credit Union and SoFi, allow borrowing up to $100,000, often requiring stricter eligibility [2][3] - Repayment terms typically range from one to five years, with some lenders offering terms of seven years or more, impacting monthly payments and total interest paid [3][4] - Fees, particularly origination fees, can significantly affect the amount received; these fees can range from 0% to 10%, with higher fees often associated with lenders catering to those with poor credit [4][5] Group 2: Additional Considerations - Permitted uses of personal loans are generally flexible, but many lenders restrict funds for education or business purposes, necessitating a review of each lender's terms [6] - Funding speed varies, with some lenders disbursing funds on the same day of application, while others may take several days [8] - Eligibility requirements differ among lenders, with factors such as credit score, income, debt-to-income ratio, and the option for co-borrowers or co-signers influencing approval chances [9][13][14] Group 3: Customer Experience - Customer satisfaction is crucial; potential borrowers should check reviews and ratings from sources like TrustPilot and the Better Business Bureau to gauge lender reliability [9][10] - Comparing lenders based on the seven key factors—loan amounts, repayment terms, fees, permitted uses, funding speed, eligibility requirements, and customer satisfaction—can help in selecting the best personal loan [11] Group 4: Market Comparison - Credit unions generally offer lower rates than banks, with a reported average APR of 10.74% for three-year personal loans from credit unions compared to 12.02% from banks, indicating a potential cost advantage for borrowers [15]