How We Rate Personal Loans

Insider experts choose the best products and services to help you make informed decisions with your money (here’s how). In some cases, we receive a commission from our partners, however, our opinions are our own. Terms apply to offers listed on this page.

If you’re looking to borrow money to pay for an expense, whether it’s a home improvement project or a medical bill, a personal loan could be a great option for you. There are many lenders out there, and we provide reviews and guides on them and their loan offers to help you make the best borrowing decision possible.

To ensure that we rate each of them equally, we use a rating system that takes into account a range of factors from interest rates and fees to customer support and ethics. We look at the pros and cons of each company and product, comparing them with others available so you can decide which personal loan is right for your particular needs.

What we look for when scoring personal loans

We rate all personal loan products in our reviews and guides on a scale of 1 to 5. The overall rating is a weighted average that takes into account seven different categories, some of which are rated more heavily than others. They are:

  • Interest rate (20% of note)
  • Fees (20% of the bill)
  • Duration and loan amounts (15% of the rating)
  • Funding speed (15% of grade)
  • Borrower accessibility (15% of score)
  • Customer support (7.5% of score)
  • Ethics (7.5% of grade)

The weighting of each category is based on its importance to your borrowing experience. Rates and fees have the most direct impact on the overall cost of your loan, which is why we weigh them the most. Customer support and ethics are still very important parts of the borrowing experience, but are not directly tied to the terms of a personal loan, so they have less impact on the overall rating.

Interest rate (20%)

We look at the range of rates offered by a lender, from minimum APR to maximum APR, to determine their rating. We want to serve readers who have both higher credit scores (and therefore qualifying for a lower rate) and lower credit scores (thus obtaining a higher rate).

Examples

  • A lender will receive 5 out of 5 if its minimum APR is one of the lowest in the market (around 5%) and its maximum APR is also low (around 20% or less).
  • If a lender has a higher APR range but still has low rates for borrowers with good credit (around 9%), they will win 3 out of 5.
  • Lenders with very high minimum rates or maximum rates well over 36% will get 1 out of 5.

Fees (20%)

Lenders can charge a variety of fees, from origination fees to late payment penalties. We prioritize lenders that charge little or no fees.

Examples

  • If a lender does not charge any fees, they will collect a 5 out of 5.
  • Lenders with minimal origination fees and reasonable late fees will receive 2.5 out of 5.
  • Lenders will receive a 1 out of 5 if they charge high origination fees that take a significant chunk of your total loan amount and late fees that accrue if you are late on payments.

Duration and loan amounts (15% of the rating)

We determine whether the company has a variety of repayment terms, providing options for borrowers who want to repay their loans quickly and save on interest, as well as those who want to spread their costs over several years.

We also look at the minimum and maximum loan amount for a business. A smaller minimum makes a business more accessible to borrowers who only need a little cash to tide them over. A high maximum allows borrowers who need to finance a more expensive project to do so.

Examples

  • A lender will earn a 5 out of 5 if it has a minimum loan of at least $1,000 and a maximum of at least $50,000, combined with terms between one and seven years.
  • Businesses with a minimum loan of $2,500 or more or a maximum loan of $35,000 or less, or a slightly shorter maximum term (about five years) get a 3 out of 5.
  • Lenders will receive a 1 out of 5 whether they have extremely tight loan amount ranges or select your term length for you from a limited number of options.

Funding Speed ​​(15%)

We assess how quickly a lender will get your money to you after you apply and get loan approval.

Examples

  • Lenders who get your money to you on the same business day will get 5 out of 5.
  • If you receive your money within three days, the company will earn 3 out of 5.
  • Lenders will receive a 1 out of 5 if it takes them seven business days or more to get your money.

Borrower accessibility (15%)

Lenders can only meet the needs of borrowers in certain states, or with certain credit scores and income levels. We look at how accessible the lender is to borrowers from diverse backgrounds.

Examples

  • Lenders who are available in all states and have minimal or no credit requirements will get 5 out of 5.
  • A business that is available in nearly every state or has slightly stricter eligibility criteria will receive a 3 out of 5.
  • Lenders will receive a 1 out of 5 if they are not available in most states or if they have high barriers to entry for most borrowers.

Customer support (7.5% of score)

We go over the different ways you can contact customer support. For example, we look at whether you can contact someone by phone, live chat, email, or regular mail. We also look at customer service hours and give high marks to companies that offer 24-hour service.

Examples

  • A lender will receive 5 out of 5 if it offers you several ways to contact it and if it is open seven days a week for a good part of the day.
  • A lender with customer support available six days a week and many ways to contact them will win 3 out of 5.
  • Lenders will receive a 1 out of 5 if they have limited ways for you to contact them and are only available during certain hours of the traditional work week.

Ethics (7.5% of grade)

We review the company to see if there has been a scandal in the past three years. We investigate whether the business is known to be racist or sexist towards its customers or staff or has predatory lending practices. We also consider the company’s Better Business Bureau rating.

Examples

  • A lender will receive 5 out of 5 whether it has been scandal-free in the past three years and whether it has an A+ rating from the Better Business Bureau.
  • If a company has no scandals and a BBB rating of around B, it will get a 3 out of 5.
  • Lenders will receive a 1 out of 5 whether they have been part of a major scandal in the past three years or have a BBB rating of D or lower.

Our ratings can help you determine which lender is best for you. Personal lenders who score high in each category will be our lenders with the highest overall ratings. Nevertheless, consider options with lower overall ratings if they are more suitable for your individual situation.

About Judith J. George

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