Taking on a debt consolidation loan from any lender entails a calculated risk. Borrowers can generally expect to make monthly payments on these loans for some amount of time between one and seven years — meaning it is not a decision to make lightly, as it has the power to affect your personal finances for years to come.
This is why it’s so important to evaluate how well you match up with a lender before even applying for a loan. Submitting loan applications will also result in one or more hard inquiries on your credit report, an action that can lower your score in the short-term. Instead of casting a wide net, it’s usually advisable to apply to only the most fitting lending company for you.
One lender you may come across while researching debt consolidation options is OneMain Financial. Here’s how to go about figuring out whether getting a loan from OneMain is a good idea or whether you should keep looking.
When Getting a OneMain Loan May Be a Good Idea
First, let’s look at some factors that may indicate you’re a possible fit for a consolidation loan from OneMain.
You have poor or average credit
Taking a look at the average interest rates on OneMain loans, you’ll notice they reside at the higher end of the spectrum as far as personal loans go. The estimated annual percentage rates (APR) for OneMain range from approximately 18 percent to just shy of 36 percent. As NerdWallet writes, this makes their APR higher than many other lenders — some of whom offer consolidation loans starting around 6 percent.
However, there is a reason for these high interest rates. Lenders willing to approve borrowers with average or bad credit will charge higher APR to counteract the heightened risk of default. This makes OneMain a viable option for borrowers who may have trouble getting approved elsewhere for low rates, but who may get approved at these higher rates.
You want a secured loan
The Bills.com OneMain Financial reviews for 2021 also point out the flexibility offered by this lender in terms of getting a secured loan, or one backed by an item put up for collateral. Putting up an asset you own, like a vehicle or boat, can help offset the risk indicated by your low credit score, ultimately helping earn you better APR. Of course, missing payments then puts that secured asset at risk of repossession.
When Getting a OneMain Loan May Not Be a Good Idea
The flip side of the coin is that getting a loan OneMain may not be a smart path forward for all borrowers. Here are some scenarios which may indicate another lender or strategy will be a better fit.
You have good or excellent credit
Borrowers with strong credit should apply for loans with low interest rates, as it’s likely they will be able to qualify for APR under 18 percent, which is where OneMain starts.
You are unable to visit a branch location in-person
The upside to OneMain is that it can facilitate quick funding once your application is approved. The downside is that you can start the application online but will need to finish it in person at a branch location. Depending on where you live and what your schedule is like, making a trip to an actual building may be quite inconvenient — or there may not be a location in your state at all.
The origination fee for your state is high
You can expect an origination fee on OneMain loans, either a fixed charge or a percentage of your loan amount. The state in which you live determines how low or high this particular fee will run.
Whether or not getting a OneMain loan is a good idea for you depends on your unique circumstances, but this breakdown can help you figure out how you stack up.