In a perfect world, we would all have enough and never have to borrow money. However, it is a fact that for many people, consumer loans and lines of credit can help finance essential purchases that we cannot afford on our own.
But with countless lenders offering different consumer loans and credit lines, it can be difficult to know which product is best for you. To help you decide, we’ll cover the differences between the two and some of the top options available.
Consumer credit is essentially any type of loan you can take out as an individual, including:
- auto loan
- student loan
- personal loan
Also known as installment loans, they come with monthly payment and repayment terms and the accounts are closed once the loan is repaid.
A line of credit, however, is a form of revolving credit, which means you can borrow money up to your credit limit, pay it back, and borrow again. A line of credit can be secured by collateral — as in the case of a home equity line of credit — or unsecured, as with a personal line of credit.
While consumer loans often give you a choice of Fixed and Variable Interest RatesLines of credit usually only charge variable rates.
To avoid making things too complicated, the consumer loans we’ll cover in our roundup below are personal loans that you can use for pretty much anything.
Also, while credit cards are a type of unsecured credit line, we won’t cover them here. Instead, we’ll focus on personal lines of credit You can get one from banks, credit unions or online lenders.
With so many options available, it can be hard to know where to start. To help you get an idea of what you can expect, we’ve put together a list of the four top consumer loans and lines of credit.
We chose these companies because they represent some of the most reputable lenders in the consumer lending and credit system. Their competitive rates, few charges and features like flexibility in repayment and overdraft protection are the reasons why they stand out.
|1. Sophie||large loans|
|2. upgrade||small loans|
|lines of credit|
|3. keybank||unsecured lines of credit|
|4. regional bank||secured lines of credit|
Top 2 Consumer Loans
As you review each of the loan options we’ve listed, pay attention to the rates and fees, repayment terms and other features each lender offers borrowers.
If you’re planning a major home improvement or other high-cost project, SoFi allows you to borrow from $5,000 to $100,000. many others personal loan companies Don’t even come close to that level. Here are some more details to know about SoFi personal loans:
- Fixed APR 7.99% to 23.43%
- Repayment terms between 24 to 84 years
- no origination fee
- Special membership benefits include interest rates on future loans, unemployment protection, career coaching even more
- no collateral required
Some of the best personal loan companies require that you borrow at least $5,000 to $10,000. But if you need nowhere near those amounts, consider an upgrade. Loans start at $1,000 and go up to $50,000. What else you need to know about the lender:
- Rates from 7.96%–35.97%
- Repayment terms from 24 to 84 years
- Fixed Interest Rates 7.96% -35.97%
- Origination fee between 1.85% – 8.99%
- Free credit monitoring through Upgrade’s Credit Health tool
- no collateral required
Top 2 Personal Lines of Credit
Depending on what you need, one of the following lines of credit may be a better fit than the others. Consider the monthly payment amount, credit limit, annual fee and availability.
Unsecured loans can be expensive, but KeyBank offers a great interest rate range on its preferred line of credit.
Your variable APR depends on your credit score and location. For example, for New York City borrowers, rates spread between 8.25% and 13.50% through December 16, 2021. This is lower than the average credit card interest rate, which stood at 14.54% in August 2021, according to the Federal Reserve. But be sure to double-check the latest rates on the KeyBank website.
Here are some other highlights to keep in mind:
- Credit limits from $2,000 to $25,000
- Receive funds online, at a branch or by writing a check
- Variable Interest Rates 7.99%–13.49%
- No Annual Fee
- Borrowers must live in one of 15 states to open a line of credit: Arkansas, Colorado, Connecticut, Idaho, Indiana, Massachusetts, Maine, Michigan, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont or Washington
- The line of credit can be used as overdraft protection for a KeyBank checking account.
- no collateral required
If you don’t qualify for an unsecured line of credit or you prefer a lower interest rate, Region Bank’s Savings Secured Line of Credit may be worth considering. Through December 16, 2021, the bank offers variable rates starting at 5.25% APR. Check the Region Bank website for the most up-to-date rates.
Other highlights include:
- Credit limits range from $250 to $100,000
- Monthly payment of 5% of your balance or $10, whichever is greater
- Receive funds online, by phone, at a branch or by writing a check
- Variable Interest Rates 4.74%-16.49%
- $50 annual fee
- Borrowers must live in one of 16 states to open a line of credit: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee or Texas
- Region Bank can use the credit line as overdraft protection for the checking account.
- Credit limit in sector savings or money market account may be up to 100% of the available balance
Consumer loans are generally better if you have a specific reason for borrowing the money and don’t need the credit on an ongoing basis. Conversely, it’s a good idea to get a line of credit if you anticipate needing to borrow on an ongoing basis. For example, small businesses often get a line of credit to help them take advantage of ongoing short-term cash needs.
Also consider a line of credit if you want a lower variable rate, but understand that it may increase in the future. Consider your needs and preferences to determine which is better.
While we have listed a few different lenders above for consumer loans and lines of credit, they are not necessarily the best for everyone. in addition to considering other Top Personal Loan CompaniesTake a look at other lenders that offer lines of credit.
Specifically, take a look at your local credit unions. Credit unions often charge lower interest rates and fees than banks because they are non-profit organizations. This means that they return profits to their members in the form of better products and services.
As you shop, compare not only interest rates but other details, such as monthly payment amounts, fees and repayment terms. Doing due diligence will put you in a better position to choose the loan or line of credit that works best for you and your situation.
Note: Student Loan Hero has independently compiled the above information related to personal credit lines. SoFi, Upgrade, KeyBank and Regions Bank have neither provided nor reviewed the information shared in this article.