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We've researched interest rates, loan limits, fees and requirements from various lenders so that you can quickly compare options and find the one that’s best for you. We’ve also included helpful tips throughout this article on how to improve your credit score while you’re paying off your loan. Let’s dive in!
What Is Fair Credit and How Do Types of Credit Affect My Loan Options?
To get the best personal loan for your financial needs, it’s important to understand your credit score. Fair credit is usually defined by FICO as a credit score between 580 and 669. Generally, these scores aren’t high enough for the best loan rates, highest loan amounts and lowest fees.
The types of credit accounts you have also play a role in determining whether you qualify for a loan and what your interest rate will be. Having a diverse portfolio of credit card accounts, installment loans, mortgage loans and other types of revolving debt can all factor into your overall score—with the goal of demonstrating to lenders that you can manage various complex financial products responsibly.
By managing your fair credit scores responsibly, you can pave the way to better loan terms—and potentially even rebuild your credit if you’ve been struggling with late payments or other issues that have hurt your rating in the past.
How Do I Get the Best Personal Loan Terms With Fair Credit?
If you have fair credit, congratulations! You’re well on your way to a better score. Depending on your current financial situation, however, you may need to find a loan that is within this credit range. It’s important to make sure you understand the terms of any loan or line of credit you take out. Here are some topics to review closely when comparing personal loans for fair credit:
Annual percentage rate (APR):
The lender’s APR will determine how much the loan will cost in interest over the life of the loan. Remember, the higher the APR, the more expensive your loan will be overall.
Loan terms:
The length of your loan affects how much interest will be charged and how much growth potential you have with that money. Generally speaking, shorter payment periods lead to lower total costs in the long run.
Loan limits:
Depending on your needs and credit history, lenders may issue loans up to certain limits. Make sure to review these limits carefully and ensure they meet both your short-term and long-term needs.
Flexible repayment options:
If a lump sum isn’t an option for you at this time, look for lenders who offer more flexible repayment plans such as partial payments or installment plans over time.
By taking all of these factors into consideration, you can ensure that you’re getting the best possible personal loan terms with fair credit and help get yourself financially fit in 2023
What Are Some of the Best Personal Loans for Fair Credit in 2023?
Do you have fair credit and are looking for a personal loan? It can be tough to find lenders that offer competitive rates and terms given your score, but luckily, there are various options out there for you.
Here are some of the best personal loans for fair credit that you should consider in 2023:
Light Stream:
Light Stream is offered by SunTrust Bank and its APR range can reach as low as 4.99%.You will need a minimum credit score of 660 to qualify for their loan products, so this may be a great option if your score is on the higher end of fair credit. They also offer great loan terms with repayment periods up to 144 months[1].
Avant:
Avant focuses on providing personal loans to those with less-than-perfect credit scores, which makes it an ideal option if your FICO score is lower than 660. In fact, they accept scores as low as 600 and offer quick decisions[2]. Interest rates range from 9.95% to 35.99%, depending upon your creditworthiness[3].
Upgrade:
Upgrade provides personal loans with terms up to 60 months and interest rates ranging from 6.99% to 35.89%, depending on the strength of your application[4]. To qualify for one of their products, you must have income that exceeds $50K annually[5] and have at least three lines of open revolving credit (such as a credit card).
When considering one of these lenders, make sure it’s the right choice for you by comparing features like fees, interest rates and repayment terms before proceeding.[1] https://www.lightstream.com/personal
What Things Should I Avoid When Searching for a Personal Loan With Fair Credit?
When it comes to getting a personal loan with fair credit, there are some things you should look out for. Here are some tips to ensure you’re getting the best deal:
No balloon payments
Avoid loans that include balloon payments, which require one lump sum at the end of your loan term. This could be a difficult blow to your budget if you’re not prepared for it.
Don't borrow more than you need
Even if the lender offers high loan amounts with an attractive interest rate, try not to borrow more than you need. Taking out too much money can lead to more debt in the future and can even damage your credit score further if you’re not able to pay the loan back on time.
Don't settle for a high-interest rate
Don’t just take whatever rate is offered to you because of your lower credit score and settle for it. Compare other offers and shop around until you find one that suits your needs and goals.
By taking these steps, and a few others such as reading the terms and conditions of the loan carefully and looking out for hidden fees, you'll be able to find a suitable personal loan with fair credit that fits with your budget.
Are There Prepayment Penalties or Other Fees on Personal Loans for Fair Credit?
When you’re taking out a personal loan with fair credit, there are a few fees and other details that you should keep in mind. The best rule of thumb is to always read the fine print before signing up for a loan.
Prepayment Penalties
One thing to double check for is the presence of prepayment penalties. It’s never wise to sign on to a loan that penalizes you if you pay it off early. The last thing you want is to be stuck paying more on a loan than necessary. Make sure your lender allows you the option to pay off your debt early without penalty—ideally without any additional fees.
Other Fees
In addition to prepayment penalties, look out for other fees and charges associated with the loan. Origination fee: This is usually charged as a percentage of your total loan amount and will be subtracted from your initial disbursement.
Late fees:
Some lenders allow late payments but may charge an additional fee or raise your interest rate if you make one.
Annual fee:
Unless waived, some lenders also charge an annual fee for having an open account.
Good faith deposits:
Some lenders also require good faith deposits in order for them to process your application or extend credit up front before you receive the funds from the loan.
Dishonored check/insufficient funds fee:
If any of your payments don’t go through due to insufficient funds, some lenders may charge an additional fee as well as apply late fees to your account balance.
It's important to consider all these details when applying for a personal
Conclusion
Securing a personal loan with fair credit isn’t impossible, but you should be prepared to work hard and do your research. It isn’t easy finding the best loans for fair credit, but by following the tips above and researching loan options from the lenders in this list, Don’t forget to put in the hard work to repair your credit and keep it up over the long term. Poor credit is not a death sentence, but it can impede your journey to financial freedom and make it harder to take advantage of low interest rates. Doing the work to improve your credit now can save you thousands in the future.
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