Best Direct Lenders 2022

ElitePersonalFinance
Last Update: June 26, 2022 Loans

Direct lenders are different from loan comparison sites and peer-to-peer (P2P) lenders because they provide personal loans from their deposit bases. For example, banks borrow from their customers to lend to other customers. Likewise, credit unions use existing funds to provide loans. Similarly, online lenders partner with traditional banks to extend credit. The former handles the application, approval, and servicing process, while the latter provides the capital. Ultimately, all three can help you land an affordable personal loan.

Furthermore, our marketplace has options for borrowers of all credit scores. Whether a small or large loan, dozens of products are available. Moreover, inquiring doesn’t impact your credit score, so submitting multiple applications should help you land the lowest annual percentage rate (APR).

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The Best Direct Lenders 2022

The direct lenders on our list provide loans ranging from $1,000 to $100,000, with APRs of 2.49% to 35.99%. Moreover, most of their minimum credit score requirements are in the fair credit range, but Upgrade, Universal Credit, and Avant are prudent for borrowers with bad credit.

Lender: Loan Amount: APR: Min. Credit Score: Type: Best For:
LightStream $5,000 – $100,000 2.49% – 19.99% 660 Online Lender Strong credit profiles
Wells Fargo $3,000 – $100,000 5.74% – 19.99% 660 Bank Wells Fargo customers
SoFi $5,000 – $100,000 6.99% – 21.28% 680 Online Lender No-fee personal loans
U.S. Bank $1,000 – $50,000 5.99% – 18.49% 660 Bank U.S. Bank customers
Upgrade $1,000 – $50,000 5.94% – 35.97% 560 Online Lender High DTI ratios
BestEgg $2,000 – $50,000 5.99% – 35.99% 550 – 600 Online Lender Wide range of credit scores
TD Bank $2,000 – $50,000 6.99% – 18.99% 700 Bank Good to excellent credit scores
Pentagon Federal Credit Union $600 – $50,000 4.99% – 17.99% 650 Credit Union High DTI ratios
Alliant Credit Union $1,000 – $50,000 6.24% – 27.24% 640 Credit Union Fast funding
Navy Federal Credit Union $250 – $50,000 7.49% – 18.00% Not Listed Credit Union Service members and affiliates
FreedomPlus $7,500 – $50,000 7.99% – 29.99% 620 Online Lender Debt consolidation
Laurel Road $5,000 – $45,000 7.00% – 24.75% 660 – 700 Online Lender Debt consolidation
UniversalCredit $1,000 – $50,000 8.93% – 35.93% 560 Online Lender Low credit scores, high DTI ratios
Marcus by Goldman Sachs $3,500 – $40,000 6.99% – 19.99% 660 Online Lender No-fee personal loans
LendingPoint $2,000 – $36,500 9.99% – 35.99% 580 Online Lender $25,000 annual incomes
PNC Bank $1,000 – $35,000 5.99% – 35.99% 660 Bank Online and in-person service
Avant $2,000 – $35,000 9.95% – 35.99% 580 Online Lender $20,000 annual incomes
OneMain Financial $1,500 – $20,000 18.00% – 35.99% 0 Online Lender Low credit scores

LightStream

Loan Amount: $5,000 – $100,000
APR: 2.49% – 19.99%
Min. Credit Score: 660
Approval: 1 – 7 Days
Terms: 3 – 12 Years
Fees:
  • There are no loan origination fees
  • There are no late payment fees
  • There are no closing fees
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 660
  • The maximum DTI ratio is often 45%
  • Have recurring employment income or government benefits
  • Fill out your information through LightStream’s online portal
Average Borrower Profile:
  • Has stable income
  • Has few or no delinquencies
  • Has a long credit history across many accounts
  • Has liquid assets, savings, or retirement assets
  • Does not overuse revolving credit lines
Best For: Strong credit profiles
Check rates

LightStream is one of the best direct lenders because it has the highest loan limit among the companies in our study. You can borrow $5,000 to $100,000, with 2.49% to 19.99% APRs and three to 12-year terms. Moreover, your funds come from Truist Bank, and LightStream’s loans are excellent for debt consolidation, home renovation, and unexpected emergencies. Furthermore, it’s one of the few direct lenders that doesn’t charge origination, prepayment, application, or late payment fees.

However, LightStream doesn’t offer prequalification, so you must apply to determine your eligibility. And since the direct lender conducts a hard credit check, your credit score could suffer. Second, LightStream’s minimum credit score requirement is 660, but a reading of at least 690 is necessary to obtain the lowest APRs. But LightStream has a best rate guarantee where the direct lender reduces your APR by one-tenth if you get a cheaper rate elsewhere. The promotion applies to unsecured fixed-rate personal loans with identical amounts, terms, usages, and repayment methods. Third, LightStream mandates that qualifying applicants have a reliable history of on-time repayment across products like credit cards, mortgages, and auto loans. Moreover, a high and stable income is preferable.

Ultimately, LightStream tops our best direct lenders list. So if you need a large loan and have a high income and low DTI ratio, it’s a perfect fit.

Pros:

  • LightStream provides direct personal loans of $5,000 to $100,000.
  • Low APRs are available.
  • You can reduce your APR by 0.50% with auto-pay.
  • There are no origination, closing, prepayment, or late payment fees.
  • Unsecured, secured, and cosigner loans are available.
  • On-time repayment can increase your credit score.
  • LightStream may offer COVID-19 deferrals.

Cons:

  • LightStream usually won’t approve poor credit applicants.
  • A hard credit check can hurt your credit score, and there is no pre-qualification option.
  • You can’t amend your payment date.
  • Debt consolidation loans aren’t sent directly to creditors.

The impact of COVID-19:

While LightStream doesn’t list any specific policies or contact information to help struggling borrowers, customers should be able to inquire about their options by logging into their LightStream account.

Wells Fargo

Loan Amount: $3,000 – $100,000
APR: 5.74% – 20.99%
Min. Credit Score: 660
Approval: 1 – 7 Days
Terms: 1 – 7 Years
Fees:
  • Late payment fee of $39
  • Insufficient funds fee of $39
  • There are no loan origination fees
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 660
  • The maximum DTI ratio is often 43%
  • Have recurring employment income or government benefits
  • Apply online or at a Wells Fargo branch
Average Borrower Profile:
  • Excellent credit scores often obtain APRs of 5.74% to 8.22% on a three-year term
  • Good credit scores often obtain APRs of 9.47% to 11.96% on a three-year term
  • Fair credit scores often obtain APRs of 11.96% to 14.46% on a three-year term
Best For: Wells Fargo customers
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Wells Fargo is one of the best direct lenders among traditional banks because of its high loan limit and affordable APRs. You can borrow $3,000 to $100,000, with 5.74% to 20.99% APRs, and one to seven-year terms.

But like LightStream, there is no pre-qualification option, and applying results in a hard credit check, which may hurt your credit score. In addition, bad credit borrowers have a tough time qualifying at traditional banks. Moreover, Wells Fargo notes that only 10% of applicants receive the lowest APRs. Therefore, we don’t recommend the direct lender if you have poor credit. In contrast, Wells Fargo is a prudent option if you have fair or good credit because unsecured, secured, and cosigner loans are available. Thus, there are ways to qualify if your credit score is 660 or higher.

The downside is you must be a Wells Fargo customer to apply online. If not, you must visit one of the bank’s 7,200 in-person locations across the United States to inquire. But current customers receive 0.25% to 0.50% APR discounts depending on their checking account, and Wells Fargo doesn’t charge origination or prepayment fees. However, a $39 fee will apply for late payments and insufficient funds.

Lastly, $3,000 to $4,999 loans have one to three-year maturities, while $5,000 to $100,000 loans have one to seven-year maturities. As a result, you should consider the durations when analyzing your cash flow and finalizing your budget.

Pros:

  • Wells Fargo provides direct personal loans of $3,000 to $100,000.
  • Low APRs are available.
  • Unsecured, secured, and cosigner loans are available.
  • There are no origination or prepayment fees.
  • Some checking account holders receive APR discounts.
  • You can change your payment dates.
  • You have access to free FICO Score analysis.
  • On-time repayment can increase your credit score.
  • Wells Fargo’s mobile app is easy to use.
  • Wells Fargo may offer COVID-19 deferrals.

Cons:

  • Late payments and insufficient funds will cost you $39.
  • Wells Fargo usually won’t approve poor credit applicants.
  • Only 10% of applicants get the lowest APRs, and you need a high income and credit score to meet the requirement.
  • A hard credit check can hurt your credit score, and there is no pre-qualification option.
  • New customers have to apply in person.

The impact of COVID-19:

Wells Fargo offers hardship exemptions to personal loan borrowers affected by the pandemic. You can contact a representative via phone or manage your account online. However, the critical point is you don’t need to make payments during the deferral period. For more information, please read Wells Fargo’s COVID-19 relief FAQs.

SoFi

Loan Amount: $5,000 – $100,000
APR: 6.99% – 21.28%
Min. Credit Score: 680
Approval: 1 – 7 Days
Terms: 2 – 7 Years
Fees:
  • There are no loan origination fees
  • There are no late payment fees
  • There are no closing fees
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 680.
  • Be employed, have an employment offer that starts in 60 days, or have recurring income from other sources.
  • Fill out your information through SoFi’s online portal
Average Borrower Profile:
  • Has a FICO Score of 753
  • Has gross income of $151,144
  • Has free cash flow of $5,696 per month
  • Borrows $31,634
  • Excellent credit scores incur an APR of 6.59%
  • Good credit scores incur an APR of 15.56%
Best For: No-fee personal loans
Check rates

We rank SoFi and Marcus by Goldman Sachs as the best direct lenders for no-fee personal loans. Moreover, you save money with SoFi because there are no origination, closing, prepayment, or late payment fees. In addition, SoFi conducts a soft credit pull upon application, so inquiring won’t impact your credit score. However, a hard credit check will commence before you finalize the agreement.

You can borrow $5,000 to $100,000, with APRs of 5.74% to 20.28%, and two to seven-year terms. Moreover, the direct lender notes that excellent credit borrowers receive an average APR of 6.59%, and good credit applicants receive 15.56%. Furthermore, SoFi’s loans are unsecured, so you don’t need collateral for approval. Also, opening a SoFi money account within 60 days of your application can land you a $10 bonus.

The only downside is you must have a minimum credit score of 680 to apply, and SoFi’s average borrower has a 753 FICO Score. Therefore, we recommend SoFi and Marcus by Goldman Sachs for borrowers with solid credit profiles.

Pros:

  • SoFi provides direct personal loans of $5,000 to $100,000.
  • Low APRs are available.
  • You won’t incur closing, origination, prepayment, or late payment fees.
  • You can obtain a $10 bonus by opening a SoFi money account within 60 days of your application.
  • Applying won’t hurt your credit score.

Cons:

  • SoFi has high credit standards.
  • Bad credit borrowers won’t qualify.

The impact of COVID-19:

SoFi’s Special Handling Team offered assistance to borrowers struggling to make their loan payments during the pandemic. If you find yourself in a similar situation, contact SoFi at 1-855-456-7634 to learn more about the available options.

U.S. Bank

Loan Amount: $1,000 – $50,000
APR: 5.99% – 18.49%
Min. Credit Score: 660
Approval: 1 – 7 Days
Terms: 1 – 7 Years
Fees:
  • Late payment fee of $10
  • There are no loan origination fees
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 660
  • The maximum DTI ratio is often 60%
  • Have recurring employment income or government benefits
  • Fill out your information through U.S. Bank’s online portal
Average Borrower Profile: U.S. Bank doesn’t disclose average personal loan statistics
Best For: U.S. Bank customers
Check rates

U.S. Bank made it on our best direct lenders list because it’s a prudent option for current customers with good credit. For example, personal loans range from $1,000 to $50,000, with APRs of 5.99% to 18.49% and one to seven-year terms. Moreover, you don’t incur origination or prepayment fees, but late payment charges are $10.

U.S. bank is best for current customers because new members can only borrow a maximum of $25,000 with five-year terms. Moreover, the company’s disclosures note that clients with a credit score of at least 800 that borrow $10,000 or more over one to three years receive the lowest APRs. Furthermore, you must link a U.S. Bank external checking or savings account and enroll in auto-pay. It’s not a requirement, but it’s how you land the lowest rates.

Ultimately, U.S. Bank has physical locations in more than 40 states, so it’s a well-known bank covering most of the U.S. And the 0.50% APR discount when you enroll in auto-pay is also a plus. So if you prefer direct lenders and have good credit, U.S. Bank should meet your needs.

Pros:

  • U.S. Bank provides direct personal loans of $1,000 to $50,000.
  • Low APRs are available.
  • There are no origination or prepayment fees.
  • There are APR discounts with auto-pay.
  • Applying won’t affect your credit score.

Cons:

  • You incur late payment fees.
  • New customers can only borrow a max of $25,000.
  • You need an 800 credit score to get the lowest rates.
  • The direct lender doesn’t issue loans in all states.

The impact of COVID-19:

U.S. Bank created forbearance programs for borrowers affected by the pandemic. The policies covered multiple financial products, including large personal loans. To inquire about current policies, you can call U.S. Bank’s pandemic hotline at 1-888-287-7817. You can also obtain assistance by calling 1-800-872-2657 or emailing mobile@usbank.com.

Upgrade

Upgrade Disclaimer: *Personal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade’s lending partners.

Loan Amount: $1,000 – $50,000
APR: 5.94% – 35.97%
Min. Credit Score: 560
Approval: 1 Day
Terms: 2 – 7 Years
Fees:
  • Loan origination fee of 2.9% – 8%
  • Late payment fee of $10, after a 15-day grace period
  • Insufficient funds fee of $10
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 560
  • Have a DTI ratio that doesn’t exceed 75%
  • Have recurring employment income or government benefits
  • Fill out your information through Upgrade’s online portal
Average Borrower Profile:
  • Has a credit score of 678
  • Has an annual income of $78,000
  • Borrows $10,000
  • Finances over 40 months
Best For: High DTI ratios
Check rates

Upgrade is one of the best direct lenders for fair and bad credit. Its minimum credit score requirement is 560, plus you can qualify with a DTI ratio of 75% or less. Therefore, Upgrade offers a higher chance of approval than traditional banks and most credit unions. In addition, applicants with 700 credit scores or higher often receive the lowest APRs, so Upgrade is an excellent option for nearly all credit profiles.

Financing ranges from $1,000 to $50,000, with APRs of 5.94% to 35.97% and two to seven-year terms. Furthermore, unsecured, secured, and cosigner loans are available, so joint applicants and collateral are welcome. However, the latter is risky, and we don’t recommend it unless you’re sure you can repay the loan. But both options increase your chances of qualifying.

The only downsides are Upgrade doesn’t issue loans in Washington, D.C., Iowa, or West Virginia. Moreover, its origination fee ranges from 2.9% to 8%, while the late payment fee is $10 after a 15-day grace period. There is also a $10 insufficient funds fee, but you don’t incur prepayment charges.

Pros:

  • Upgrade provides direct personal loans of $1,000 to $50,000.
  • Low APRs are available.
  • You won’t incur upfront or prepayment fees.
  • A soft credit check during the application doesn’t hurt your credit score.
  • Debt consolidation loans have APR discounts.
  • Unsecured, secured, and cosigner loans are available.
  • You can amend your payment date.
  • The auto-pay discount is 0.50%.
  • The direct lender works with bad and fair credit borrowers.
  • You can apply if you’re unemployed.
  • On-time repayment can increase your credit score.
  • Upgrade may offer COVID-19 deferrals.

Cons:

  • The loan origination fee is 2.9% to 8%.
  • Upgrade charges late payment and insufficient funds fees.
  • The direct lender doesn’t issue loans in all states.

The impact of COVID-19:

Upgrade assists borrowers suffering due to COVID-19. You may qualify for a temporary reduction in your monthly payments or a modification extending the loan’s length. You can learn more here. Likewise, you can also call Upgrade at 1-844-319-3909 or email support@upgrade.com.

BestEgg

Loan Amount: $2,000 – $50,000
APR: 5.99% – 35.99%
Min. Credit Score: 550 – 600
Approval: 1 Day
Terms: 3 – 5 Years
Fees:
  • Loan origination fee of 0.99% – 5.99%
  • Late payment fee of $15
  • Insufficient funds fee of $15
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 550 – 600
  • Have a DTI ratio that doesn’t exceed 35% – 43%
  • Have recurring employment income or government benefits
  • Fill out your information through Best Egg’s online portal
Average Borrower Profile: BestEgg doesn’t disclose average personal loan statistics
Best For: Wide range of credit scores
Check rates

BestEgg should be on your radar if you have fair or bad credit. Its minimum credit score requirement varies, but it’s between 550 and 600. Therefore, the direct lender works with borrowers that some competitors turn away. You can apply for $2,000 to $50,000, with APRs of 5.99% to 35.99% and three to five-year terms. But BestEgg discloses that the lowest APRs go to borrowers with FICO Scores of 700+ and annual incomes of $100,000. As a result, it highlights why we spend so much time emphasizing the importance of your income and credit score.

BestEgg is not for everyone because its origination fee is at least 4.99% for loans with four-year terms or more. You also incur $15 fees for late payments and insufficient funds. Furthermore, you must borrow at least $6,500 in Massachusetts, $5,000 in New Mexico and Ohio, and $3,000 in Georgia. Therefore, loan minimums vary depending on your region.

However, financing is available in 47 states, and you can obtain several loans simultaneously, as long as the total doesn’t surpass $50,000.

Pros:

  • BestEgg provides direct personal loans of $2,000 to $50,000.
  • Low APRs are available.
  • You can obtain financing in most states.
  • The direct lender works with bad and fair credit borrowers.
  • Applying won’t impact your credit score.

Cons:

  • BestEgg charges late payment and insufficient funds fees.
  • Origination fees can be high.

The impact of COVID-19:

BestEgg doesn’t disclose any relief programs related to COVID-19. However, if you need to speak with someone about your situation, call a BestEgg personal loan agent at 1-855-282-6353 or email Loan_assistance@mybestegg.com.

TD Bank

Loan Amount: $2,000 – $50,000
APR: 6.99% – 18.99%
Min. Credit Score: 700
Approval: 1 – 7 Days
Terms: 1 – 5 Years
Fees:
  • Late payment fee of 5% of the amount due, or $10, whichever is less
  • There are no loan origination fees
  • There are no prepayment fees
  • There are no application fees
  • There are no insufficient funds fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 700
  • The maximum DTI ratio is often 43%
  • Have recurring employment income or government benefits
  • Apply online or at a TD Bank branch
Average Borrower Profile: TD Bank doesn’t disclose average personal loan statistics
Best For: Good to excellent credit scores
Check rates

TD Bank is the third traditional institution on our best direct lenders list. And like the others, TD Bank is best for high credit applicants because the minimum qualifying credit score is 700. However, you don’t have to worry about origination, prepayment, application, or insufficient funds fees, so you’re rewarded for your excellent credit history. Moreover, a 0.25% APR discount is yours when you use a TD Bank checking or savings account to enroll in auto-pay.

In contrast, you incur a late payment fee of 5% of the amount due, or $10, whichever is less. And poor credit borrowers won’t qualify. Moreover, TD Bank only issues loans in 16 states. But with 1,100 branches in these regions, you can apply in-person or online. Therefore, TD Bank may meet your requirements if you prefer speaking face-to-face with an agent.

Pros:

  • TD Bank provides direct personal loans of $2,000 to $50,000.
  • Low APRs are available.
  • You won’t incur origination, prepayment, or insufficient funds fees.
  • Applying won’t hurt your credit score.

Cons:

  • You will incur fees for late payments.
  • The direct lender only issues loans in 16 states.

The impact of COVID-19:

TD Bank provided pandemic assistance by allowing qualifying borrowers to defer their loan payments. However, the programs were specific to HELOCs and mortgages. If you want to inquire about personal loan assistance, you should contact a representative at 1-800-937-5020.

Pentagon Federal Credit Union

Loan Amount: $600 – $50,000
APR: 4.99% – 17.99%
Min. Credit Score: 650
Approval: 1 – 7 Days
Terms: 1 – 5 Years
Fees:
  • Late payment fee of $29
  • Insufficient funds fee of $30
  • There are no loan origination fees
  • There are no prepayment fees
  • There are no application fees
Qualification Criteria:
  • Be a member
  • Be at least 18 years of age
  • Have a credit score of at least 650
  • The maximum DTI ratio is often 50%
  • Have recurring employment income or government benefits
  • Fill out your information through Pentagon Federal’s online portal
Average Borrower Profile:
  • Excellent credit scores often obtain APRs of 4.99% to 5.99%
  • Good credit scores often obtain APRs of 7.99% to 9.99%
  • Fair credit scores often obtain APRs of 11.99% to 17.99%
Best For: High DTI ratios
Check rates

Credit unions are also home to the best direct lenders, so Pentagon Federal deserves some attention. The minimum credit score requirement is 650, so it’s best for borrowers with fair credit or better. Moreover, excellent credit borrowers often receive 4.99% to 5.99% APRs, while those with good credit often land 7.99% to 9.99%, and fair credit often gets 11.99% to 17.99%. Therefore, affordable options are available for most credit profiles.

You can borrow $600 to $50,000, with 4.99% to 17.99% APRs and one to five-year terms. Moreover, you don’t incur origination, application, or prepayment fees. And you can use the proceeds for home improvement projects, debt consolidation, auto, medical, and leisure expenses.

The downsides are you must be a member to apply. However, it’s as easy as opening a Pentagon Federal savings account online and depositing $5. Also, late payments cost you $29, while the insufficient funds charge is $30.

Pros:

  • Pentagon Federal provides direct personal loans of $600 to $50,000.
  • Low APRs are available.
  • You won’t incur origination or prepayment fees.
  • You can qualify in all regions.
  • Applying won’t hurt your credit score.

Cons:

  • There are insufficient funds and late payment fees.
  • You must become a member.

The impact of COVID-19:

During the pandemic, forbearance programs were available to borrowers struggling to make loan payments. If you’re still suffering from financial disruptions, you can contact Pentagon Federal’s Financial Hardship Center at 1-800-247-5626 and inquire about possible solutions.

Alliant Credit Union

Loan Amount: $1,000 – $50,000
APR: 6.24% – 27.24%
Min. Credit Score: 640
Approval: 1 – 7 Days
Terms: 1 – 5 Years
Fees:
  • There are no loan origination fees
  • There are no prepayment fees
Qualification Criteria:
  • Be a member
  • Be at least 18 years of age
  • Have a credit score of at least 640
  • Have recurring employment income or government benefits
  • Fill out your information through Alliant Credit Union’s online portal
Average Borrower Profile: Alliant Credit Union doesn’t disclose average personal loan statistics
Best For: Fast funding
Check rates

Alliant Credit Union is another excellent direct lender if you have a minimum credit score of 640. You can borrow 1,000 to $50,000, with APRs of 6.24% to 27.24% and one to five-year terms. In addition, the company doesn’t charge origination or prepayment fees, and same-day funding is available under most circumstances. Furthermore, you don’t need collateral for Alliant Credit Union’s loans, and a soft credit check means that applying won’t hurt your credit score. However, you must be a current client with an account at least 90 days old. But since Alliant Credit Union serves customers in all states, opening a checking or savings account is easy.

Also, Alliant Credit Union doesn’t list fees for insufficient funds or late payments, but they may apply. Therefore, checking with the lender before finalizing the agreement is prudent.

Overall, Alliant Credit Union is one of the best direct lenders outside traditional banks and online lenders. As a result, it should fit most borrowers’ needs, especially those who value relationships with credit unions.

Pros:

  • Alliant Credit Union provides direct personal loans of $1,000 to $50,000.
  • Low APRs are available.
  • You won’t incur origination or prepayment fees.
  • You can qualify in all regions.
  • Applying won’t hurt your credit score.

Cons:

  • You may incur insufficient funds and late payment fees.
  • You must have an account with Alliant Credit Union at least 90 days old.

The impact of COVID-19:

Alliant Credit Union doesn’t list any forbearance programs related to COVID-19. However, you can call 1-800-328-1935 to inquire about potential hardship policies.

Navy Federal Credit Union

Loan Amount: $250 – $50,000
APR: 7.49% – 18.00%
Min. Credit Score: Not Listed
Approval: 1 – 7 Days
Terms: Up to 5 Years
Fees:
  • Late payment fee of $29
  • There are no loan origination fees
  • There are no prepayment fees
Qualification Criteria:
  • Be a member
  • Be at least 18 years of age
  • Have recurring employment income or government benefits
  • Fill out your information through Navy Federal Credit Union’s online portal
Average Borrower Profile: Navy Federal Credit Union doesn’t disclose average personal loan statistics
Best For: Service members and affiliates
Check rates

Navy Federal Credit Union is an excellent direct lender for service members and their affiliates. Specifically, you must be a member or family member of the Army, Marine Corps, Navy, Air Force, Coast Guard, National Guard, or Space Forces. You can also be an affiliate or member of the Department of Defense.

Financing ranges from $250 to $50,000, with 7.49% to 18% APRs and terms max at five years. However, these rates apply to maturities up to three years, but for loan terms from 37 months to five years, you incur 14.79% to 18% APRs.

Also, you can obtain 15-year terms for home improvement loans, and Navy Federal Credit Union won’t levy origination or prepayment fees. However, late payments cost $29, and the direct lender provides financing in 34 states, so you can’t apply nationwide.

Pros:

  • Navy Federal Credit Union provides direct personal loans of $250 to $50,000.
  • Low APRs are available.
  • You won’t incur origination or prepayment fees.

Cons:

  • There are fees for late payments.
  • You must be associated with the armed forces.
  • The direct lender doesn’t issue loans in all states.

The impact of COVID-19:

Navy Federal Credit Union provided loan extensions, payment deferrals, and increased credit limits for borrowers affected by the pandemic. To learn more, you can call the company at 1-888-842-6328 or send a secure message through your online banking portal.

FreedomPlus

Loan Amount: $7,500 – $50,000
APR: 7.99% – 29.99%
Min. Credit Score: 620
Approval: 1 – 7 Days
Terms: 2 – 5 Years
Fees:
  • Loan origination fee of 1.99% – 4.99%
  • Late payment fee of 5% of the amount due, or $15, whichever is greater.
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 620
  • Have a DTI ratio that doesn’t exceed 40%
  • Have recurring employment income or government benefits
  • Fill out your information through FreedomPlus’ online portal
Average Borrower Profile:
  • Has a credit score of 700
  • Has an annual income of $120,000
  • Borrows $19,000
  • Has a DTI ratio of 23%
  • Incurs a 4.99% loan origination fee
  • Achieves a 7.99% APR with excellent credit and a loan amount of less than $12,000 on a three-year term
Best For: Debt consolidation
Check rates

FreedomPlus is one of the best direct lenders for debt consolidation. You can reduce your APR up to 4% when you wire 85% or more of the funds to a creditor. Furthermore, borrowers with significant retirement assets of $25,000 to $40,000 can land APRs that are 5% lower. And you don’t have to post the funds as collateral; they only serve as a credible cushion. As a result, FreedomPlus is excellent if you want to refinance your debts at a lower rate.

FreedomPlus’ loans range from $7,500 to $50,000, with APRs of 7.99% to 29.99% and two to five-year terms. But you need a credit score of at least 620 to qualify. Also, financing is unavailable in Colorado, Connecticut, Wisconsin, Wyoming, West Virginia, Hawaii, Kansas, New Hampshire, North Dakota, Nevada, Oregon, and Vermont. In addition, FreedomPlus charges 1.99% to 4.99% for loan origination, and late payments cost 5% of the amount due, or $15. Therefore, FreedomPlus has good and bad qualities and is best for borrowers with good credit scores.

Pros:

  • FreedomPlus provides direct personal loans of $7,500 to $50,000.
  • Low APRs are available.
  • You receive APR discounts with debt consolidation loans.
  • Retirement assets help you land APR discounts.
  • Applying won’t hurt your credit score.

Cons:

  • You incur loan origination and late payment fees.
  • The direct lender doesn’t issue loans in all states.

The impact of COVID-19:

While FreedomPlus doesn’t list any specific hardship policies, you can contact the loan company via phone at 1-800-297-5879 or email CustomerSupport@FreedomPlus.com to learn more about the options available.

Laurel Road

Loan Amount: $5,000 – $45,000
APR: 7.00% – 24.75%
Min. Credit Score: 660 – 700
Approval: 1 – 7 Days
Terms: 3 – 5 Years
Fees:
  • Late payment fee of 5% of the amount due, or $28, whichever is less.
  • There are no loan origination fees
  • There are no closing fees
  • There are no application fees
  • There are no prepayment fees
Qualification Criteria:
    • Be at least 18 years of age
    • Have a minimum credit score of 660 with a co-signer
  • With no co-signer, have a minimum credit score of 700
  • Have a DTI ratio that doesn’t exceed 43%
  • Have recurring employment income or government benefits
  • Have no bankruptcies over the last four years
  • Fill out your information through Laurel Road’s online portal
Average Borrower Profile: Laurel Road doesn’t disclose average personal loan statistics
Best For: Debt consolidation
Check rates

Laurel Road is one of the best direct lenders for medical professionals. For example, financing ranges from $5,000 to $45,000, with APRs of 7% to 24.75% and three to five-year terms. However, doctors and dentists can land up to $80,000, and you can qualify for the maximum amount if you’re an active practitioner. The same applies to doctors and dentists who complete their training within 12 months and have an employment contract. But those in training without an offer can only get $5,000 to $45,000.

Also, Laurel Road conducts a soft credit pull, and applying won’t impact your credit score. Moreover, the direct lender doesn’t charge loan origination fees, and borrowers in all states should be able to inquire.

The downsides are you need a minimum credit score of 660 with a cosigner and 700 as a sole applicant. As a result, we recommend Laurel Road for borrowers with good to excellent credit. Likewise, personal loans for auto, business, green, moving, and other standard expenses max at $35,000, and the late payment fee is 5% of the amount due, or $28, whichever is less.

Overall, Laurel Road is an excellent option for medical and dental students or those in the workforce. In addition, Laurel Road also offers affordable student loan refinancing.

Pros:

  • Laurel Road provides direct personal loans of $5,000 to $45,000.
  • Low APRs are available.
  • Doctors and dentists can get up to $80,000.
  • You won’t incur loan origination fees.
  • Applying won’t hurt your credit score.

Cons:

  • You need a 700 credit score without a cosigner.
  • There are fees for late payments.

The impact of COVID-19:

Laurel Road’s forbearance programs helped customers pause their loan payments for up to three months. However, if you’re still experiencing financial difficulties, Laurel Road encourages borrowers to contact its servicing partner Mohela at 1-877-292-6845.

UniversalCredit

Loan Amount: $1,000 – $50,000
APR: 8.93% – 35.93%
Min. Credit Score: 560
Approval: 1 – 7 Days
Terms: 3 – 5 Years
Fees:
  • Loan origination fee of 4.25% – 8%
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 560
  • Have a DTI ratio that doesn’t exceed 75%
  • Have recurring employment income or government benefits
  • Have a valid email address and bank account
  • Fill out your information through UniversalCredit’s online portal
Average Borrower Profile:
  • Has a credit score of 638
  • Has an annual income of $60,000
Best For: Low credit scores, high DTI ratios
Check rates

Like Upgrade, UniversalCredit is one of the best direct lenders for bad credit because its minimum credit score requirement is 560. Moreover, while UniversalCredit is a partner company of Upgrade, it approves borrowers with lower average credit scores and incomes. For example, the average UniversalCredit borrower has a 638 credit score and makes $60,000 per year, while the average Upgrade borrower has metrics of 678 and $78,000, respectively. As a result, the direct lender should be on your radar if you have a weak credit profile.

You can borrow $1,000 to $50,000, with APRs of 8.93% to 35.93% and three to five-year terms. In addition, there are no prepayment penalties, and you can qualify with a DTI ratio as high as 75%. In contrast, origination fees are expensive at 4.25% to 8%, and while UninversalCredit doesn’t list any regional restrictions, Upgrade doesn’t issue loans in Washington, D.C., Iowa, or West Virginia. Therefore, UninversalCredit should have similar policies.

Pros:

  • UniversalCredit provides direct personal loans of $1,000 to $50,000.
  • Low APRs are available.
  • Borrowers with lower average incomes and credit scores have a higher chance of approval versus Upgrade.
  • There are no prepayment fees.
  • Applying won’t hurt your credit score.

Cons:

  • A loan origination fee of 4.25% to 8% is higher than Upgrade.
  • You may incur late payment and insufficient funds fees.
  • The direct lender may not issue loans in all states.

The impact of COVID-19:

UniversalCredit doesn’t list any pandemic-related programs. However, since Upgrade provided loan assistance during the outbreak, UniversalCredit should have similar policies. To learn more, you can call UniversalCredit at 1-877-418-9765 or email support@universal-credit.com.

Marcus by Goldman Sachs

Loan Amount: $3,500 – $40,000
APR: 6.99% – 19.99%
Min. Credit Score: 660
Approval: 1 – 7 Days
Terms: 3 – 6 Years
Fees:
  • There are no loan origination fees
  • There are no late payment fees
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 660
  • The maximum DTI ratio is often 43%
  • Have recurring employment income or government benefits
  • Fill out your information through Marcus by Goldman Sachs’ online portal
Average Borrower Profile: Marcus by Goldman Sachs doesn’t disclose average personal loan statistics
Best For: No-fee personal loans
Check rates

Marcus by Goldman Sachs is among the best direct lenders for no-fee personal loans. Like SoFi, you won’t incur origination, prepayment, or late payment charges. Moreover, Marcus by Goldman Sachs has a high-end APR of 19.99%, which is cheaper than many competitors. Therefore, borrowers with credit scores of at least 660 can save money by applying.

You can borrow $3,500 to $40,000, with APRs of 6.99% to 19.99% and three to six-year terms. In addition, enrolling in auto-pay and linking your checking account can reduce your rate by 0.25%. Furthermore, making 12 consecutive monthly payments qualifies you for a one-month payment holiday with zero interest. As a result, Marcus by Goldman Sachs offers some perks that other direct lenders don’t.

In contrast, personal loans with six-year terms have higher APRs than those with three-year terms. So extending your time horizon makes the product less affordable. However, if you want to refinance debt at a lower rate with no fees, Marcus by Goldman Sachs should fit your needs.

Pros:

  • Marcus by Goldman Sachs provides direct personal loans of $3,500 to $40,000.
  • Low APRs are available.
  • You won’t incur origination, prepayment, or late payment fees.
  • You can reduce your APR by 0.25% with auto-pay.
  • You get a payment holiday with 12 straight months of on-time repayment.
  • Applying won’t hurt your credit score.

Cons:

  • Longer loan terms have higher APRs.
  • Bad credit borrowers won’t qualify.

The impact of COVID-19:

While Marcus by Goldman Sachs’ policies remained consistent throughout the pandemic, help was available to borrowers in need. If you confront similar issues today, you can discuss the problem with Marcus by Goldman Sachs by calling 1-844-627-2872 and speaking with a representative.

LendingPoint

Loan Amount: $2,000 – $36,500
APR: 9.99% – 35.99%
Min. Credit Score: 580
Approval: 1 – 7 Days
Terms: 2 – 5 Years
Fees:
  • Loan origination fee of 0% to 6%
  • Late payment fee of up to $30
  • Insufficient funds fee of $20
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 580
  • Have a DTI ratio that doesn’t exceed 50%
  • Have an annual income of at least $25,000
  • Fill out your information through LendingPoint’s online portal
Average Borrower Profile:
  • Has a credit score of 673
  • Has an annual income of $80,000
Best For: $25,000 annual incomes
Check rates

Like Upgrade and UniversalCredit, LendingPoint has one of the lowest credit score requirements among the direct lenders on our list. You can qualify with a score as low as 580, and the minimum annual income requirement is only $25,000. Moreover, this includes employment, self-employment, and government benefits. Therefore, while bad credit borrowers should expect an APR near the high-end of LendingPoint’s range, the direct lender makes it easier for applicants with weak credit scores to obtain financing.

You can borrow $2,000 to $36,500, with APRs of 9.99% to 35.99%, and two to five-year terms. However, LendingPoint’s loan origination fee is 0% to 6%, and service is unavailable in Nevada and West Virginia. In addition, you incur up to $30 for late payments and $20 for insufficient funds. Also, applicants in Georgia must borrow at least $3,500, which is higher than the national minimum.

Overall, LendingPoint is one of the best direct lenders for bad credit, and obtaining a personal loan with a 15% to 35.99% APR is cheaper than alternative products.

Pros:

  • LendingPoint provides direct personal loans of $2,000 to $36,500.
  • Low APRs are available.
  • It’s easier for bad credit borrowers to qualify.
  • You only need a minimum annual income of $25,000.
  • Applying won’t hurt your credit score.

Cons:

  • You incur origination, insufficient funds, and late payment fees.
  • The direct lender doesn’t issue loans in all states.

The impact of COVID-19:

LendingPoint doesn’t reference any specific hardship policies. However, you can call the lender at 1-888-969-0959 or email customerservice@lendingpoint.com to learn more about your options.

PNC Bank

Loan Amount: $1,000 – $35,000
APR: 5.99% – 35.99%
Min. Credit Score: 660
Approval: 1 – 7 Days
Terms: 6 Months – 5 Years
Fees:
  • Late payment fee of 10% of the amount due, or $40, whichever is greater, after a 15-day grace period
  • Insufficient funds fee of $36
  • There are no loan origination fees
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 660
  • The maximum DTI ratio is often 45%
  • Have recurring employment income or government benefits
  • Apply online or at a PNC Bank branch
Average Borrower Profile: PNC Bank doesn’t disclose average personal loan statistics
Best For: Online and in-person service
Check rates

PNC Bank is the last traditional institution on our best direct lenders list. And like Wells Fargo, U.S. Bank, and TD Bank, PNC Bank provides online and in-person service, so it’s suitable for those who value face-to-face interaction. Moreover, borrowers in all regions should be able to apply, and PNC Bank has over 2,600 branches in 29 states.

You can borrow 1,000 to $35,000, with APRs of 5.99% to 35.99% and six-month to five-year terms. However, PNC Bank’s disclosures show 5.99% to 28.74% APRs for three-year personal loans of $15,000 to $36,000. Therefore, loan metrics vary depending on the amount, and the direct lender notes that “well-qualified” applicants receive the lowest rates. But there is a 0.25% APR discount if you open a PNC Bank checking account and enroll in auto-pay.

Also, you won’t incur origination or prepayment fees. However, insufficient funds cost $36, and late payment charges are 10% of the amount due or $40.

Pros:

  • PNC Bank provides direct personal loans of $1,000 to $35,000.
  • Low APRs are available.
  • There are no origination or prepayment fees.
  • You can reduce your APR by 0.25% with auto-pay.
  • Applying won’t hurt your credit score.

Cons:

  • You will incur fees for late payments and insufficient funds.
  • Bad credit borrowers won’t qualify.

The impact of COVID-19:

PNC Bank supported its customers during the pandemic by offering assistance to those suffering from financial hardship. You can submit your application through PNC Bank’s online portal.

Avant

Loan Amount: $2,000 – $35,000
APR: 9.95% – 35.99%
Min. Credit Score: 580
Approval: 1 – 7 Days
Terms: 2 – 5 Years
Fees:
  • Loan origination fee of up to 4.75%
  • Late payment fee of up to $25, after a 10-day grace period
  • Insufficient funds fee of $15
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 580
  • Have a DTI ratio that doesn’t exceed 70%
  • Have an annual income of $20,000
  • Have monthly after-tax income of at least $1,200
  • Have a monthly cash surplus of $500
  • Fill out your information through Avant’s online portal
Average Borrower Profile:
  • Has a credit score of 644
  • Has a DTI ratio of 30%
  • Has monthly after-tax income of $4,000
  • Has a monthly cash surplus of $2,800
Best For: $20,000 annual incomes
Check rates

Avant has a minimum credit score requirement of 580 and an annual income floor of $20,000. Therefore, it’s an excellent choice for bad credit applicants. For example, the average Avant borrower has a 644 credit score and a 30% DTI ratio. However, the credit score average is lower than Upgrade (678) and LendingPoint (673) and closer to UniversalCredit’s metric (638). As a result, while they’re all among the best direct lenders for bad credit, Avant and UniversalCredit may offer higher chances of approval.

Financing ranges from $2,000 to $35,000, with 9.95% to 35.99% APRs and two to five-year terms. However, the downsides are loans are unavailable in Colorado, New York, Iowa, Hawaii, Vermont, West Virginia, and Nevada. In addition, Avant’s loan origination fee can reach 4.75%, and a $15 charge applies for insufficient funds. Furthermore, you may incur $25 for late payments after a 10-day grace period.

Ultimately, Avant’s loans are relatively more expensive than the other direct lenders on our list. However, the low credit score and income requirements make the product more easily accessible.

Pros:

  • Avant’s provides direct personal loans of $2,000 to $35,000.
  • Low APRs are available.
  • It’s easier for bad credit borrowers to qualify.
  • You only need a minimum annual income of $20,000.
  • Applying won’t hurt your credit score.

Cons:

  • You incur origination, insufficient funds, and late payment fees.
  • The direct lender doesn’t issue loans in all states.

The impact of COVID-19:

Avant offered relief programs to help support struggling borrowers throughout the pandemic. Moreover, if you cannot make your scheduled loan payments, you can call the lender at 1-800-712-5407. In addition, you can also email support@avant.com.

OneMain Financial

Loan Amount: $1,500 – $20,000
APR: 18.00% – 35.99%
Min. Credit Score: 0
Approval: 1 – 7 Days
Terms: 2 – 5 Years
Fees:
  • Loan origination fee of 1% to 10%, or $25 to $500
  • Late payment fee of 1.5% to 15%, or $5 to $30
  • Insufficient funds fee of $10 to $50
Qualification Criteria:
  • Be at least 18 years of age
  • Have recurring employment income or government benefits
  • Fill out your information through OneMain Financial’s online portal
Average Borrower Profile:
  • Has an annual after-tax income of $45,000
  • Borrows $10,000
  • Finances over a five-year term
  • Incurs an APR of 25%
Best For: Low credit scores
Check rates

OneMain Financial is the perfect solution if you have bad or no credit. The direct lender’s APRs max at 35.99% and the minimum credit score requirement is 0. Moreover, OneMain Financial is more willing to work with borrowers with weaker credit profiles and may consider alternative metrics to determine whether to approve a loan. As a result, the company is one of the best direct lenders for rebuilding your credit.

You can borrow $1,500 to $20,000, with APRs of 18% to 35.99% and two to five-year terms. Moreover, OneMain Financial extends financing in 44 states. However, applicants in Alabama ($2,100), California ($3,000), Georgia ($3,100 unless you’re a current customer), North Dakota ($2,000), Ohio ($2,000), and Virginia ($2,600), must borrow more than the $1,500 minimum. Furthermore, loans in North Carolina max at $7.500.

Also, OneMain Financial’s origination fee ranges from 1% to 10%, or $25 to $500. Likewise, late payments cost 1.5% to 15%, or $5 to $30, and insufficient funds cost $10 to $50. In addition, the direct lender notes the average borrower incurs a 25% APR.

Overall, OneMain Financial has good and bad qualities. But given its looser underwriting standards and max APR of 35.99%, its products are better than alternative and payday loans.

Pros:

  • OneMain Financial provides direct personal loans of $1,500 to $20,000.
  • Low APRs are available.
  • The minimum credit score requirement is 0.
  • It’s easier for bad credit borrowers to qualify.
  • Applying won’t hurt your credit score.

Cons:

  • You incur origination, insufficient funds, and late payment fees.
  • The direct lender doesn’t issue loans in all states.

The impact of COVID-19:

To help its customers stay afloat during the pandemic, OneMain Financial offered payment deferrals and waived late fees. In addition, the loan company also donated funds to the Centers for Disease Control and Prevention (CDC). And if you find yourself requiring further assistance, OneMain Financial recommends that you call the loan company at 1-800-961-5577.

What Is a Direct Lender?

A direct lender uses in-house funds to provide financing. For example, banks, credit unions, and online lenders borrow from depositors, use their capital, or obtain your loan proceeds through a partner institution. As a result, most direct lenders bear the credit risk.

Moreover, there is no intermediary between you and the lender. Occasionally, companies may outsource their underwriting, collection, or customer service to third parties. However, direct lenders usually handle all facets of the loan process, from reviewing your application to processing your repayments.

In addition, direct lenders often have a large and diverse employee base, allowing them to build relationships and scale effectively. But traditional and online direct lenders differ because the former has physical locations, while the latter usually does not. However, the criteria are the same: the best direct lenders provide loans with affordable APRs and flexible terms.

Where Do I Find the Best Direct Lenders?

As mentioned, banks, credit unions, and online companies are where you find the best direct lenders. All three provide affordable financing, but their underwriting standards and perks vary.

Banks:

Most banks don’t issue personal loans. However, direct lenders like Wells Fargo, U.S. Bank, TD Bank, and PNC Bank stand out from the crowd. The main issue is they often have stringent underwriting standards, so it’s challenging to qualify. For example, the four have minimium credit score requirements of 660, 660, 700, and 660, respectively. Therefore, bad credit borrowers won’t qualify. However, banks are among the best if you have good or excellent credit and value in-person service.

Credit unions:

Credit unions are similar to banks because they have physical branches and provide face-to-face service. However, while they often approve more bad credit borrowers, the credit unions on our list have minimum credit score requirements similar to banks, so there is no guarantee. But our experience shows credit unions take a more holistic approach by considering your employment and banking history. As a result, it’s prudent to apply and gauge direct lenders’ interest.

Online lenders:

Online lenders dominate our list and have the most expansive credit standards. So no matter your credit score, affordable options are available. The downside is online lenders don’t have physical locations, so the entire process occurs online. Moreover, you won’t obtain in-person help.

In addition, most online lenders’ partner banks provide financing, while banks and credit unions use in-house funding. Ultimately, your proceeds are identical, so it doesn’t change the disbursement process. However, understanding the difference may be helpful.

Do Direct Lenders Have Minimum Credit Score Requirements?

The best thing about direct lenders is their minimum credit score requirements vary. Therefore, you can qualify with excellent, good, fair, or bad credit.

Upgrade is one of the best direct lenders for poor credit because it has a minimum credit score requirement of 560. Likewise, TransformCredit is an affiliate of Upgrade. And while it has an identical minimum standard, it often approves more applicants at the low-end of the credit spectrum. Furthermore, OneMainFinancial doesn’t have a minimum credit score requirement, so it’s perfect if you’re rebuilding your credit.

The critical consideration is bad credit borrowers often receive higher APRs and incur more fees. And this occurs because low credit score applicants have a higher risk of default and direct lenders view them as risky. As a result, your APR often ranges from 15% to 35.99%. In addition, the best direct lenders typically enforce financing limits. So while some companies on our list offer $100,000, loan amounts positively correlate with your credit score. Thus, it helps to have reasonable expectations about bad credit funding.

Overall, direct lenders approve borrowers with all credit scores. However, amounts, APRs, and fees differ, and applicants with the highest incomes and credit scores often obtain the best terms.

Can I Get a Direct Personal Loan If I Have Bad Credit?

Many bad credit direct lenders are dishonest, and we found several disguised as payday lenders, trying to mislead people by manipulating their terminology. Payday lenders attract borrowers by camouflaging as direct lenders and peddling costly loans. Moreover, we strongly recommend avoiding these products due to their average APR of 400%.

The best options for people with bad credit are:

  • Loan comparison sites, P2P lenders, and alternative lenders supporting poor credit borrowers.
  • Direct lenders like Upgrade and Universal Credit.
  • Credit unions with reasonable underwriting standards.
  • Other products like loan apps, Buy Now, Pay Later (BNPL) financing, and cheap cash advances.

How to Land the Best Direct Personal Loan

Determining the differences between mediocre companies and the best direct lenders takes time, effort, and research. However, we did the work, so you don’t have to. Here is a careful process:

Shop around:

The best strategy is to submit multiple applications to several direct lenders. Because inquiring doesn’t impact your credit score, nearly all companies on our list will review your application without penalty. Therefore, checking your rate lets lenders compete for your business and helps you obtain the lowest APR.

Loan comparison sites are prudent pathways to finding the best direct lenders. Since you can submit several inquiries in one place, you don’t need to visit multiple websites. As a result, you save time and money when using connection services. We will explain more about loan comparison sites later.

Weigh the pros and cons:

After compiling potential offers, narrow your list by lenders offering the lowest APRs and the most flexible terms. We recommend choosing the lender with the lowest rate because a penny saved is a penny earned. However, the repayment term is critical. For example, one lender may offer a lower APR, but the short repayment duration could result in your monthly payments exceeding your budget. Conversely, a loan with a more extended repayment period and a slightly higher APR may fit your cash flow requirements. So determining the best direct lender depends on your specific needs.

Finalize the agreement:

After finding a product that works for you, complete the paperwork to obtain the funds. However, a hard inquiry should follow, which may impact your credit score. In addition, carefully read the documents and ask questions before signing. You can also consult a lawyer for additional assistance.

Do Banks, Credit Unions, Or Online Lenders Provide Cheaper Loans?

There is no one-size-fits-all. You may obtain a cheaper loan at a bank, credit union, or online direct lender. However, it depends less on the company and more on your income, credit score, and DTI ratio.

Income:

The best direct lenders pay close attention to your income, so the more you earn, the better your chances of obtaining desired terms. Thus, if you make $5,000 per month and have a free cash flow of $2,000, you can easily afford a monthly payment of $1,500. In contrast, the amount is risky if your free cash flow is $1,500 because an emergency could result in a cash shortfall. As a result, the cheapest rates go to borrowers with the lowest perceived credit risk.

Credit score:

The easiest metric to understand is your credit score. And a borrower with a 700 score looks more creditworthy than one with 550. Therefore, whether it’s a bank, credit union, or online lender, the former has a higher probability of landing a cheaper loan.

DTI ratio:

Your DTI ratio tallies your monthly debt payments and divides the sum by your monthly income. Some direct lenders include different expenditures, so it’s best to ask about the calculation specifics. However, we recommend a DTI ratio of no more than 40% because it’s often a direct lenders’ minimum threshold.

The bottom line:

Your credit metrics are more important than where you apply. However, the wildcard is that online lenders win new clients by offering cheaper products or better services than their traditional counterparts. Therefore, an online direct lender may offer a more affordable rate to win your business. However, the potential generosity won’t override a low income or a weak credit score and DTI ratio.

What Types of Lenders Provide Personal Loans?

Understanding the nuances may be challenging when so many financial products are available. However, personal lenders fall into three categories:

Direct lenders:

As mentioned, direct lenders provide financing with internal capital. Moreover, multiple departments handle the loan process from start to finish. However, borrowers often assume that direct lenders have the cheapest rates and lowest fees, but it’s not always the case. Thus, shopping around and submitting several inquiries is how you land the best deal, and we recommend considering all potential suitors.

Peer-to-peer (P2P) lenders:

Unlike direct lenders, P2P lenders connect you with third-party investors, and platform members determine your loan amount, APR, and terms. Moreover, your proceeds can be funded by a single investor or split among several investors. In addition, some assume they’ll incur additional fees. However, most sites don’t charge platform fees.

Furthermore, since P2P sites help match borrowers’ credit scores with investors’ risk tolerances, bad credit applicants often obtain more affordable rates. In contrast, direct lenders are subject to regulations and conduct firm-wide risk assessments to determine their potential losses under adverse scenarios. Thus, they may seek to limit their exposure to bad credit borrowers if their Value at Risk (VaR) increases. However, P2P sites don’t have this problem. And since ten investors can provide a $10,000 loan with $1,000 each, it limits their credit risk in ways direct lenders can’t. As a result, it’s prudent to explore P2P lenders’ potential offers.

Loan comparison sites:

Loan comparison sites connect you with direct lenders, P2P lenders, alternative lenders, and more. Therefore, they don’t issue loans directly. However, they’re beneficial because they list several options in one place, and you can apply with a few clicks. Moreover, most loan comparison sites provide side-by-side breakdowns of lenders’ terms. Also, you can filter your search results by credit score, income, cosigner ability, military status, and more. As a result, we highly recommend loan connecting sites.

Lenders to avoid:

Be careful with bad credit scams. We found that many companies are payday lenders in disguise with an average APR of 400%. We don’t and never will recommend payday loans, and our guides on alternative loans and cash advances provide you with much cheaper options. Furthermore, our guide on the best direct lenders for bad credit includes extensive reviews of more attractive products.

Which Has the Highest Approval Rate?

While it depends heavily on your credit metrics, online direct lenders are more lenient than banks and credit unions. And this is because they want to expand their market share and win new clients. Thus, they must loosen their qualifications to differentiate from their traditional counterparts.

Moreover, many online lenders use alternative metrics like your spending habits, income, savings, education, and rent history to guide them. In addition, online lenders employ algorithms that analyze hoards of data and conduct better risk assessments. Therefore, while a bank could deny your application due to standardized red flags, online lenders may uncover optimistic trends that increase your chances of acceptance. As a result, bad credit applicants should stick to online companies.

Also, online direct lenders, loan comparison sites, and P2P lenders are prudent for poor credit borrowers. Because loan comparison sites partner with hundreds of lenders, personalized offers are easily attainable. Likewise, since P2P lenders can share the credit risk by slicing the loan into smaller pieces, they are also perfect for borrowers with less-than-stellar credit.

Ultimately, no lenders guarantee approval, so your credit profile and alternative metrics are critical. Therefore, we recommend sticking to online lenders if you have poor credit and rebuilding your score before inquiring at banks.

Are Direct Personal Loans Cheaper Than Non-Direct Loans?

Most borrowers assume direct lenders offer cheaper financing than comparison sites and P2P lenders. However, it’s not always true.

Loan comparison sites let you analyze multiple loans from non-direct lenders, banks, and credit unions in one place. Therefore, you can compare several products with minimal effort. The best part about marketplaces is that lenders compete for your business, leading to higher amounts, lower APRs, and better terms. Furthermore, there are no fees, so you don’t incur expenses on your end.

But which product is better?

They’re essentially identical. Whether your proceeds come from one lender, a group of investors, or a third party from a comparison site, the critical aspects are obtaining low APRs and flexible terms. So shop around, and conduct a comprehensive search to get the cheapest rate.

What About Direct Mortgage, Auto, Student, and Business Loans?

Some of the best direct lenders provide mortgage, auto, student, and business loans. In addition, they may offer lines of credit, cosigner loans, credit cards, secured loans, and many other products.

Direct mortgage loans:

Mortgage loans let you finance home purchases with a typical loan-to-value (LTV) ratio of 80%. So most home buyers will make a 20% down payment and obtain the rest from a direct lender. Remember, you must purchase mortgage insurance if you borrow more than 80%. And this increases the loan balance and your total interest paid, so we don’t recommend this route.

Furthermore, mortgage loans differ from personal loans because they’re secured. And this means if you default, the direct lender can seize your home and sell it to recoup the funds. In addition, most borrowers opt for fixed-rate mortgages due to the certainty of their monthly payments. However, variable rates are available, and they fluctuate with changes in the U.S. Federal Reserve’s overnight lending rate.

Ultimately, we recommend sticking with fixed rates to avoid monetary policy uncertainty. Also, our marketplace lists plenty of affordable fixed-rate products.

Direct auto loans:

Direct lenders issue auto loans to borrowers looking to purchase a vehicle. And like mortgage loans, you can sometimes choose a fixed or variable rate, but the former is most common. In addition, direct lenders secure the loan against the value of your car. Therefore, defaulting will also result in repossession.

Experian’s State of the Automotive Finance Market found that new car finance APRs averaged 4.07% in Q1 2022, a decline from 4.15% during the same period last year. Furthermore, Experian also revealed realized APRs for new car purchases by credit score:

  • 300 to 500 credit scores incurred 14.76%.
  • 501 to 600 credit scores incurred 10.87%.
  • 601 to 660 credit scores incurred 6.70%.
  • 661 to 780 credit scores incurred 3.56%.
  • 781 to 850 credit scores incurred 2.40%.

As you can see, a good credit score is critical to obtaining the lowest APRs. As a result, we recommend small borrowing limits if you have bad credit. This way, you can keep your interest charges subdued and rebuild your score through on-time payments. Then, applying for higher amounts later will result in less interest and lower monthly payments. To see a list of affordable auto loans, please consult our marketplace.

Direct student loans:

Direct student loans differ from mortgages and auto loans because they’re unsecured and don’t require collateral. However, failure to repay will impair your credit profile, so there are plenty of risks.

The Biden Administration announced recently that 560,000 former Corinthian Colleges students would receive $5.8 billion in student loan cancellations. Moreover, the Student Borrower Protection Center’s latest poll shows that 60% of respondents support canceling student debt. However, the issue is contentious, and it’s unclear whether a formal agreement will materialize. As a result, please consult our marketplace for affordable education loans.

Direct business loans:

Business loans are hybrid products because they can be secured or unsecured, with variable or fixed APRs. And like individuals, businesses also have credit scores.

However, the best direct lenders emphasize your business’s economic prospects rather than past achievements. So while your excellent credit metrics may stand out, a weakening economy may result in less demand for your company’s products and services. Therefore, your sales could suffer and impair your business’s ability to repay the debt.

As a result, lenders often lower your loan amount or increase your APR depending on the macroeconomic outlook. Furthermore, small businesses are more exposed to economic stress than larger businesses, so lenders will place higher risk ratings on companies that lack size. Thus, issues beyond your control can heavily influence your cost of debt. For additional assistance, please see our marketplace.

Are Direct Lenders’ Personal Loans Secured or Unsecured?

Direct lenders offer both secured and unsecured loans. The latter doesn’t require collateral, so you won’t lose anything financially if you default. However, doing so severely damages your credit profile and will impair your ability to obtain future loans at reasonable APRs. Moreover, wrecking your credit profile may make the dream of owning a home unattainable.

Similarly, secured loans wager both your reputation and collateral. For example, direct lenders may require your home equity, retirement account, automobile, art collection, jewelry, or other valuable assets to act as surety.

However, the downside is the loan is often much lower than the value of the collateral. Therefore, if your $15,000 possessions guarantee a $10,000 loan, defaulting could result in a $5,000 net loss. As a result, securing a loan is a decision you shouldn’t take lightly, and only consider it if you know you can repay the loan.

How to Avoid Loan Scams

Borrowers who need personal loans are often suffering from a financial shortfall. Therefore, falling victim to a loan scam only makes matters worse.

State laws:

State laws mandate lenders to register with regulators in the region. Moreover, the information is a public record, and you can view the document through your state’s attorney general’s office or by inquiring through your state’s financial or banking regulator. So if a prospective lender’s actions raise suspicions, do your homework and find out for sure.

Lender copycats:

Some scammers disguise themselves as legitimate companies, using a reputable lender’s logos and advertisements to lure unsuspecting targets. Moreover, they may recreate a company’s website using similar text and images and do the same with phishing emails.

The best practice is to focus on the URL. While scammers’ correspondence may look legit, their website and email address won’t match the actual lender. Therefore, look for strange symbols or frequent misspellings to spot the bad actors.

Upfront payments:

If a prospective direct lender asks for an upfront fee, it should ring alarm bells. No legitimate lender requires upfront payments to approve or process a loan. Thus, if a scammer asks for brokerage, application, or research fees, don’t cooperate. Also, many scammers ask for payment in cryptocurrencies or gift cards. Or they may ask you to move money to another account for safekeeping until the loan arrives. If so, resist these inquiries.

Phone loans:

Phone offers are illegal in the United States, and lenders must craft the document in writing. Moreover, it must outline all fees and include details about the repayment process. Therefore, if a prospective lender offers approval over the phone, it’s not following U.S. regulations. As a result, end the conversation and look elsewhere for financing.

Guaranteed approval:

No lenders guarantee approval. Moreover, many direct lenders have strict underwriting policies due to their firm-wide risk requirements. Thus, they won’t issue financing without conducting a credit assessment. Similarly, P2P investors won’t provide funds without doing their homework, and loan comparison sites need the green light from one of them before sending a congratulations letter.

As a result, if a prospective lender guarantees approval with no credit check, it’s a scam. Remember, some legitimate alternative lenders and loan apps offer no credit check. But it only relates to your credit score. They still conduct cash flow analysis by analyzing your checking account and require direct deposit information. In addition, some deduct the repayments automatically from your next paycheck. Thus, there is a material difference between no credit check and guaranteed approval.

Why Did We Select These Lenders?

We analyzed over 100 companies and narrowed our list to the best direct lenders. The mix includes some of the largest and most respected banks, credit unions, and online lenders. Moreover, the wide range of loan amounts and minimum credit score requirements should meet the needs of most borrowers. Therefore, we believe our reviews include a comprehensive assortment of the best direct products available.

Conclusion

The best direct lenders offer prudent pathways to affordable personal loans, and you can qualify with excellent, good, fair, or bad credit. Moreover, APRs max at 35.99%, and some companies don’t charge origination, prepayment, or late payment fees.

In addition, borrowers with materially weak credit scores can use collateral or a cosigner to increase their chances of approval. Ultimately, the best approach is to shop around and submit multiple inquiries. Today’s lending market is highly competitive, so you win when you let lenders compete for your business.

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