Personal Loan Lender Methodology
The process, categories, and criteria used to evaluate and score lenders.
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How we evaluate lenders
To determine the best personal loans, we took a deep dive into studying two dozen lenders, looking at over 700 pieces of data. We then crunched the numbers to figure out which lenders are doing the best overall and in specific areas, like offering personal loans for different purposes, such as updating your home and paying off debt, and to different types of borrowers, like loans for bad credit or fair credit.
This methodical approach aims to guide borrowers like you toward lenders that best suit your financial situation and requirements.
- Choosing lenders: We picked lenders to look at based on their size, how often they show up in online searches, and lender type (bank, online lender, etc.).
- Setting the criteria: We considered what things are important to check in a lender — like its loan terms (interest rates, fees, repayment time, eligibility, etc.) and other loan features (like if it allows cosigners).
- Collecting and checking data: We used lender websites, spoke to lender representatives, and scoured our own internal data, making sure another party checked that each data point was accurate and current.
- Cleaning and scoring data: We cleaned up the data and gave scores to lenders based on different criteria, comparing each to its competitors.
- Weighting scores: We gave different weights to each criterion depending on how important it is for different kinds of borrowers.
- Calculating star ratings: We added up the scores for each weighted criterion to give an overall star rating out of 5 to each lender.
- Naming the best lenders: We looked at overall star ratings and scores on individual criteria to name the top lenders in different categories.
We focused on several key aspects to rate lenders, ensuring they covered what you care about as a borrower.
Rates and fees (18%)
A lower annual percentage rate (APR) means less cost to you, so we focused on the low and high ends of APRs offered by lenders. (The APR accounts for the cost of any upfront fees to borrow money, like an origination fee.) We also considered whether lenders charge other fees like late fees and insufficient funds fees.
Loan terms (18%)
How long lenders give you to pay back your loan, as well as how much they allow you to borrow, affects your monthly payment amount, total interest, and what you can use the loan for. For instance, lenders that offer long loan terms and large loan amounts may be ideal to finance extensive home renovations or a large wedding.
Customer experience (17%)
We looked at how easy it is to use the lender’s website and communicate with it, as it should be hassle-free to get information and ask questions. For instance, a lender that provides online chat plus a mobile app plus a phone number for customer service would score higher in this category than one that only provided an app.
Eligibility (14%)
Considering who can apply for a loan helps you know which loans you might be eligible for. Some factors we considered in this category include minimum credit score and income requirements, and the range of allowable loan purposes.
Customer satisfaction (10%)
We checked reviews and ratings on platforms like the Better Business Bureau and Trustpilot to get an idea of how satisfied previous customers were and whether the company was the subject of any class action lawsuits.
Efficiency (10%)
A straightforward process is crucial for borrowers. We looked at how quick and easy it is to get a loan with lenders based on whether they offer prequalification and the steps/difficulty in the prequalification and application processes, as well as funding and approval times.
Options for limited credit (9%)
Loan options such as being able to add a cosigner to your application can be vital for those with poor or no credit. We also gave lenders that offer secured personal loans a boost in this category.
Discounts (4%)
Saving money is always important, so we checked if lenders offer discounts for things like autopay and direct pay for debt consolidation.