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Many people turn to personal loans when they need money. They’re cheaper than credit cards, quick and easy to secure, they can be used for all sorts of purposes, and borrowers with a good credit history can score great loan rates.
You’ll find a lot of loan options from online lenders, but they’re quite different when you start exploring their terms. Some are completely fee-free; others are at least transparent about their fees upfront. And some don’t make their fees obvious until after you’ve initiated your application.
Being educated about the personal loan process and what’s available to choose from can help save you money. This guide will show you some of the best no-fee personal loans and all the charges you should avoid.
In this guide:
4 best no-fee personal loans
Which lender you should do business with depends on your credit score, because lenders focus their business on different categories of borrowers. We’ve ranked and rated the best no-fee lenders for people with good, fair, and bad credit scores to make it easier for you to find the loan that’s right for you.
Best no-fee loans for good credit
If you’re searching for personal loans with no origination fee, LightStream is a great option.
There is a lot to like about LightStream, such as its low rates and quick funding, and you have a wide variety of personal loans to choose from, such as home improvement loans or loans for debt consolidation.
Here is the key information you’ll want about LightStream’s personal loan.
- Minimum credit score: lightstream-perl-40-mincreditscore
- Loan amounts: lightstream-perl-40-amountlow – lightstream-perl-40-amounthigh
- Loan terms: lightstream-perl-40-termlengthlow_m – lightstream-perl-40-termlengthhigh_m
- APRs: lightstream-perl-40-fixlow% – lightstream-perl-40-fixhigh%
- Fees: None
- Full review: LightStream Personal Loan Review
If you have good to excellent credit, you may want to seek out one of SoFi’s no-fee loans. Founded in 2011, SoFi offers a quick online application process for a comprehensive list of loan types and great customer service.
They also provide their customers with an Unemployment Protection feature that puts monthly loan payments on hold if they lose their job and aren’t at fault for it.
Here’s what you need to know about SoFi’s information.
- Minimum credit score: sofi-perl-36-mincreditscore
- Loan amounts: sofi-perl-36-amountlow – sofi-perl-36-amounthigh
- Loan terms: sofi-perl-36-termlengthrange_y
- APRs: sofi-perl-36-alllow% – sofi-perl-36-allhigh%
- Fees: None
- Full review: SoFi Personal Loan Review
Best no-fee loans for fair credit
If you have fair credit and want personal loans without origination fees, you might want to consider Marcus by Goldman Sachs. You’ll get a no-fee loan, top-notch customer service, and easy online navigation, as well as a generous loan term.
Plus, you may feel at ease doing business with Goldman Sachs because of how established this long-standing company is.
Here is the information you’ll want to know about Marcus.
- Minimum credit score: marcus-perl-56-mincreditscore
- Loan amounts: marcus-perl-56-amountlow – marcus-perl-56-amounthigh
- Loan terms: marcus-perl-56-termlengthrange_m
- APRs: marcus-perl-56-alllow – marcus-perl-56-allhigh
- Fees: None
- Full review: Marcus Personal Loan Review
If your credit is only fair, you might be happy with DCU because you can get a small loan or a sizeable one. With a full range of banking services, DCU may also be a good choice for someone who is looking for a full-service lender so they can do all their business with one entity.
DCU is fast with their loans—you can hear whether you’ve been accepted in just one or two business days. However, it’s important to know that DCU is a credit union, so you have to become a member to do business.
Here is more information about DCU’s terms.
- Minimum credit score: N/A
- Loan amounts: dcu-perl-1068-amountlow – dcu-perl-1068-amounthigh
- Loan terms: dcu-perl-1068-termlengthrange_m
- APRs: dcu-perl-1068-alllow
- Fees: None
- Full review: DCU Personal Loan Review
Can I get a no-fee loan for bad credit?
Unfortunately, it can be difficult to get a no-fee personal loan when you have poor credit. And even if you find a bad credit lender that charges no fees, it’ll probably make up for it in sky-high APRs.
Generally, we don’t recommend lenders that charge APRs higher than 36%, as this is considered the industry maximum among reputable lenders.
Before looking for one of these lenders, try adding a cosigner with good credit to your application for one of the lenders above. Or look into other borrowing options, such as a home equity loan or HELOC.
If you’re adamant about finding a no-fee lender and you don’t have a cosigner or home equity to draw from, Rise Credit is one of your only options. However, be warned that its high APRs may make this loan more costly even than credit card debt.
Personal loan fees and charges you want to avoid
- Origination fees: This is a fee lenders can charge to cover the costs they incur from underwriting and processing the loan.
- Application fees: This fee is sometimes charged by lenders for the act of processing an application for the loan.
- Late payment fees: If you’re late paying an installment of your loan, you may be slapped with a late fee, which is imposed as a way to discourage late payments and recoup money lenders spend on collection efforts. Note: many lenders that advertise no-fee loans may still charge late fees, since it’s not an inevitable upfront cost built into the loan. You’re responsible for making timely payments.
- Prepayment fees: A prepayment penalty can be imposed for those who pay off their loans ahead of schedule. Not everyone lender charges this type of fee
- Annual fees: Although many lenders don’t charge annual fees, some do to help with their expenses of processing and collecting monthly payments.
A company may include one type of fee and not the others, or it may impose all types of fees. The best way to protect yourself from unexpected fees is to read the fine print of any offer you’re considering.
It’s better to spend a few minutes looking into the small details than realize you’ve signed a contract for a loan that will cost you far more than you initially expected.
How fees affect your loan
The two main ways that fees impact your loan are your APR and your total loan amount. But because the impact can be severe, you need to do your best to avoid them whenever possible.
If your personal loan carries a late payment fee, for instance, always make sure to pay each installment a day or two ahead of time.
If you plan to pay off a loan earlier than you have to, you should look for a loan that doesn’t carry a prepayment penalty. Otherwise, you won’t be saving much money by retiring that debt early.
How fees affect your APR
People sometimes look for the lowest rate and seem satisfied when it’s in the range they want. But they should look at the annual percentage rate (APR) instead.
While an interest rate only indicates the total amount of interest payments you’ll owe on your loan, the APR gives a comprehensive look at your total costs, showing how much you’ll pay with interest and loan fees combined. You can learn more in our guide to interest rates vs. APRs.
Some lenders advertise a lower interest rate to land customers who don’t know the difference. They’ll end up paying more than they bargained for when fees are added in.
Just because a personal loan with no origination fee has slightly higher interest rates than another lender doesn’t mean it will cost more.
How fees affect your total loan amount
Loan application and origination fees typically are taken out of your loan when it’s disbursed. While it may seem like a relief that you don’t need to pay that money on top of the loan amount, it does cut back on the total loan proceeds you receive.
For example, if you’re borrowing $5,000 and your loan comes with a 5% origination fee, you’ll only receive $4,750 from your lender, despite owing interest on the entire principal balance.
That can cause problems for those who don’t realize this money will be taken out. You can end up not having enough money or borrowing more to cover the fees, which will add more in total interest over the life of the loan.
Author: Shannon Serpette
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