How do we classify personal loans?


Insider experts select the best products and services to help make smart decisions with your money (Here’s how). In some cases, we receive commission from our partnersHowever, our opinions are our opinions. Terms apply to the offers listed on this page.

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

To ensure we rate all 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 take into account the pros and cons of each company and product, and compare them with others available so you can select the personal loan that matches your specific needs.

What to look for when rating 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 judged more highly than others. They are:

  • Interest rate (20% of the rating)
  • Fees (20% of rating)
  • Loan terms and amounts (15% of rating)
  • Funding Speed ​​(15% of the rating)
  • Borrower access (15% of rating)
  • Customer Support (7.5% of the rating)
  • Ethics (7.5% of the rating)

The weighting of each category depends on its importance in your borrowing experience. Rates and fees have the most direct impact on the total cost of your loan, so we weigh them even more. Customer support and ethics are still a very important part of the borrowing experience, but are not directly related to the terms of a personal loan, so they have less of an impact on the overall rating.

Interest rate (20%)

We look at the range of rates a lender offers, from the minimum annual percentage to the maximum annual percentage to determine their rating. We want to serve readers with higher credit scores (and therefore eligible for a lower rate) and lower credit scores (and therefore a higher rate).

Examples

  • Lender will get 5 of 5 If the minimum APR is one of the lowest in the market (about 5%) and the maximum APR is similarly low (about 20% or less).
  • If the lender has a higher APR but still has lower rates for borrowers with good credit (around 9%), it will earn 3 of 5.
  • Lenders with significantly higher minimum rates or those with maximum rates exceeding 36% will receive significantly 1 of 5.

Fee (20%)

Lenders may charge a variety of fees, from set-up fees to late payment penalties. We give priority to lenders who charge little or no fees.

Examples

  • If the lender does not charge any fees, it will net a 5 of 5.
  • Lenders who charge a small set-up fee and reasonable late fee will receive 2.5 out of 5.
  • Lenders will get 1 of 5 If they charge huge setup fees that take a large portion of the total loan amount and late fees that accrue if you default.

Loan terms and amounts (15% of rating)

We determine if the company has a variety of repayment lengths, and we offer options for borrowers who want to pay off their loans quickly and save interest, as well as those who want to spread their costs over more years.

We also look at the minimum and maximum company loan amount. The smaller bottom line makes the company more accessible to borrowers who just need a bit of money to work around them. The high cap enables borrowers who need to finance a more expensive project to do so.

Examples

  • The lender will earn 5 of 5 If he has a minimum loan of $1,000 and a maximum of $50,000, combined with terms ranging from one to seven years.
  • Companies with a minimum loan of $2,500 or higher or a maximum loan of $35,000 or less, or a slightly shorter term (about five years) get 3 of 5.
  • Lenders will get 1 of 5 If they have a very tight loan amount or the length of the term for you select from a limited number of options.

Financing Speed ​​(15%)

We assess how quickly a lender will get your money back after applying and being approved for a loan.

Examples

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

Borrower access (15%)

Lenders may meet borrowers’ needs only in certain states, or with certain credit scores and income levels. We look at how easy it is to access a lender for borrowers with diverse backgrounds.

Examples

  • Lenders that are available in all states and have minimal or no credit requirements will get 5 of 5.
  • A company that is available in almost every state or has more stringent eligibility requirements will receive 3 of 5.
  • Lenders will get 1 of 5 If they are not available in most states or if they have high entry barriers for most borrowers.

Customer Support (7.5% of the rating)

We review the different ways you can contact customer support. For example, we look at whether you can contact someone by phone, live chat, email, or postal mail. We also review customer service hours and give high marks to companies that provide round the clock service.

Examples

  • Lender will get 5 of 5 If it offers you several ways to contact it and it is open seven days a week for a large part of the day.
  • The lender with customer support available six days out of seven and you’ll gain many ways to contact them 3 of 5.
  • Lenders will get 1 of 5 If they have limited ways to contact them and are only available during certain hours of the traditional work week.

Ethics (7.5% of the rating)

We are looking at the company to see if there has been a scandal in the past three years. We research whether the company is known to be racist or sexist towards its customers or employees, or has predatory lending practices. We also take into account the Best Business Bureau rating of the company.

Examples

  • Lender will get 5 of 5 If it has not had scandals in the past three years and received an A+ rating from the Better Business Bureau.
  • If the company has no scandals and the BBB score is around B, you will get 3 of 5.
  • Lenders will get 1 of 5 If they have been part of a major scandal within the past three years or if they have a BBB score of D or lower.

Our ratings can help you decide which lender is best for you. Personal loan lenders with high scores in each category will be our lenders with the highest overall ratings. With that said, consider options with lower overall ratings if they are a better fit for your individual situation.


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