What is an excellent credit loan?
Personal loans are unsecured loans which means that you don’t have to provide collateral such as your car or house to get the loan. Instead, lenders assess your repayment capacity taking into account factors such as credit rating, debt, and income.
Having excellent credit can give you access to the lowest annual percentage rates and the most advantageous conditions offered to borrowers. Personal loans are offered to borrowers with excellent credit through banks, online lenders, and credit unions. Compare the offers of several lenders to get the loan that’s right for you.
What Are the Rates for Great Credit Personal Loans?
As with most credit products, the rate you receive on a personal loan depends a lot on your credit score. Borrowers with excellent credit will pay less interest over the life of the loan than borrowers with lower credit scores. The interest rate also affects your total monthly payment, as does the length of the term; a longer term means lower monthly payments, but more interest.
Here’s what the average personal loan interest rates look like:
28.7% (lower scores are unlikely to qualify).
Source: Average rates are based on aggregated and anonymized supply data from users who prequalified in the NerdWallet lender market between January 1, 2020 and December 31, 2020. The rates are only estimates and are not specific to any lender.
Best Great Credit Personal Loans From Banks
Banks that offer personal loans tend to cater for borrowers with excellent credit, and most offer low interest rates compared to other lenders. If you already have an account with the bank, you might also benefit from a simpler application process and reduced rates. The downside is that some banks require you to visit a branch to complete the loan application process.
HSBC offers larger loan amounts to some existing customers, and your first payment is due in 50 days, instead of the usual 30 days.
TD Bank provides fast personal loan financing primarily to East Coast clients. New customers must have excellent credit to qualify.
Wells fargo allows existing customers to apply for personal loans online and offers relatively large loan amounts that make it an option for financing home renovations.
Will a personal loan hurt my excellent credit score?
Most online lenders do a gentle inquiry on your credit when you pre-qualify, followed by a rigorous check during the approval process that can drop your credit score a few points. The drop in your score should be temporary, and making payments on time helps build credit if the lender reports your borrowing activity to one or more credit bureaus: Equifax, Experian, and TransUnion.
A personal loan also allows you to diversify your debt. According to FICO, the credit mix contributes 10% to the calculation of your total credit score. (However, you shouldn’t get a personal loan just to improve your credit.)
How to choose the best personal loan for great credit
Having excellent credit is an advantage, but it can make it harder to choose from several loan offers. Consider the overall cost of the loan and monthly payments versus your budget, and carefully weigh the different features that each lender offers.
Here are three considerations to keep in mind:
Compare the loans. Shop multiple lenders to compare rates and terms. The loan with the lowest APR is the cheapest and usually the best choice. Use this comparison tool to check rates with multiple lenders online without affecting your credit score.
Loan features. Some lenders will send the loan proceeds directly to your creditors if you are debt consolidation, allow flexible payment schedules, or offer price discounts if you accept automatic payments.
Advantages. Take advantage of the resources offered by lenders such as free credit score plans for supervision, financial education or assistance in the event of difficulties.