Personal Loans are considered ‘Safe’ if they are unsecured and don’t expose your property to risks, should you miss or default on the loan repayment. To cushion the lender from the threat of bad and nonperforming loans, especially in the absence of collateral, safe personal loan providers turn to insurance. In the table below, we have provided you with a list of the best safe personal loan providers, their rates, and amounts advanced.
Safe personal loans refer to unsecured forms of credit advanced to individuals by either online lending companies or traditional banks. They are insured loan products advanced to individuals at highly competitive interest rates. And they differ from such other credit products as car loans, mortgage, or home improvement loans due to the simple fact that they are unsecured.
Instead of using your car or home as collateral, the lender will only deduct or have you deduct a portion of the loan to cater for the loan insurance. Nevertheless, these personal loans are hugely popular and are currently offered by both traditional high street banks and digital lenders online.
Credit score: Unless you are applying for a payday loan, most lenders will almost always pull your credit report. It helps them assess your creditworthiness by looking at, among other things, your borrowing history and credit score. It pays to have a high credit score and a good borrowing history when applying for safe personal loans, as it translates to a lower loan APR.
Stable income source: In addition to a good borrowing history, your lender must be convinced that they aren’t taking a gamble with their funds. They will need to verify your liquidity by looking at your cash inflows and outflows. If they don’t have access to your bank records, like in the case of online lenders, they will usually ask that you furnish them with your bank statements.
Low debt to income ratio: The debt-to-income ratio is an indicator of your total debts in relation to your total incomes. A low debt-to-income ratio tells the lender that you have minimal loan obligations, and that you will be comfortable paying the monthly installments needed to clear the loan.
Insurance: Safe personal loans are insured. And by doing so, you eliminate the need to attach personal property as collateral. The insurance company will take over the loan repayments should you lose your income source or in the case of any other circumstance that makes it impossible for you to honor the loan obligations. The lender may recommend an insurance company, but you are also free to source for less expensive and equally effective alternatives.
Interest rate: The interest rate charged on safe personal loans will, in most cases, be determined by such factors as your credit score and the stability of your income source. A perfect score and a stable income provide a low-interest rate guarantee. But you also have to consider such other factors as the insurance charges, loan processing, and origination fees when vetting different safe personal loan providers as they tend to push up the loan APR.
Loan repayments: Safe personal loans have extended loan repayment periods. The totals due are then broken down into small manageable monthly installments. In most cases, the repayment period will depend on your preferred lender, while monthly installments are largely dependent on the amounts borrowed and loan APR.
Approval time: While it may take one safe personal loan lender a few hours to process and approve the loan, others take as much as ten days. For instance, LightStream claims that they will process the loan and deposit your funds within the day if approved before 2.30 pm, while it takes American Express Bank between 5 and 10 days to approve and disburse the loan. Consider turning to the online digital lending platforms if you are looking for a fast turnaround in loan processing.
Today, the industry minimum and maximum borrowing limits for safe personal loans range from $1,000 to $100,000. However, note that these limits aren’t cast in stone, and most lenders will be willing to customize a loan offer for you, possibly extending this limit, if you meet their loan qualification requirements. You can, therefore, borrow as much as your income can allow you to repay.
How much is approved for disbursement by the safe personal loan providers will be dependent on your creditworthiness. And in assessing this creditworthiness, the lender looks at such factors as your credit score, your borrowing history, your credit utilization levels, and your ability to repay the amount offered. Different lenders will impose varied maximum limits. We advise that you request multiple lenders’ loan offers and compare the maximum amounts each is willing to give you.
Online lending platforms – both online banks and peer-to-peer lending platforms – have consistently posted lower APRs for safe personal loans compared to traditional banks. For instance, while SoFi online bank maintains a minimum APR of 5.99% for borrowers with 680 credit score points, TD Bank – one of the largest legacy banks in the US – maintains a minimum APR of 6.99% for borrowers with 700 credit score points.
And we attribute this low APR to SoFi’s low overhead costs. Therefore, we recommend that you try out online lenders if you are looking for relatively low loan APRs, flexible qualification requirements, and fast loan application processing and approval.
But what are the pros and cons of less costly safe personal loans?
One of the many factors endearing trusted personal loans to most borrowers is their accessibility. Today, the number of traditional and digital lenders offering safe personal loans has grown exponentially, and they all have very friendly qualification requirements.
For instance, while a high credit score may earn you a lower APR, having a perfect score is not mandatory for safe personal loan applicants. Numerous lenders are willing to process your loan application, approve, and disburse funds to you within a day or two, even when you have a bad credit score.
Yes. Most lenders will take issue with a high debt to income ratio by either adjusting the maximum loan limit they can offer downwards, increasing the loan APR, or both.
Anyone. Typically, anyone above the age of majority who meets the lender’s basic qualification requirements like having a source of income can apply for a safe personal loan.
Well, it takes between a few hours to 10 days to get your loan approved and the funds disbursed, depending on the lending company. Digital lenders are faster in approving and disbursing loans compared to traditional banks.
It sometimes is because it frees you of any debt, which saves you money in the long run, and it might even improve your credit score. However, the disadvantage is that you might pay an early settlement fee or a prepayment penalty fee.
Start by improving your credit score, lowering your debt-to-income ratio, and proving your income source’s stability to the lender.