Earnest personal loan review: Financial habit-based interest rates

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In a Nutshell

Earnest is an online lender that offers personal loans up to $75,000 to people who have good credit and strong financial profiles. The company says it will consider more than just your credit scores to determine your interest rate, and it doesn’t charge origination or prepayment fees. But the application process can be lengthy, and its loans aren’t available in every state.
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Earnest is no longer originating new personal loans. Instead, the company has partnered with Fiona, a site that helps people compare multiple personal loan lenders with one application. Learn more in our Fiona review.

Looking for an alternative? Check out our recommendations.

ProsCons
Considers your financial habits, such as how much you have saved, to help determine your interest rateFair to good credit scores are required
Offers loans up to $75,000Not available in all states
Competitive interest ratesApplication decision can take five to 10 business days

What you need to know about an Earnest personal loan

Earnest personal loans are best for people who have fair to good credit scores, steady income, money in their savings account, low debt and a history of on-time payments. But you won’t be able to apply for an Earnest personal loan if you live outside of Washington, D.C., or the 45 states where it operates.

A personal loan through Earnest can be used for credit card consolidation, home improvements, wedding or honeymoon costs, moving or medical costs, or for a security deposit on a rented house or apartment.

In addition to personal loans, Earnest offers student loans and student loan refinancing.

Loan amounts up to $75,000

Earnest personal loans are available in amounts ranging from $5,000 to $75,000. Both its minimum and maximum loan amounts are higher than a number of other lenders.

Some lenders offer small loans in amounts as little as $1,000 or $2,000. On the flipside, some lenders cap their personal loan amounts at $50,000 or less.

Although a large loan might be ideal for home improvements, consider taking the time to create a budget and a plan for paying it back before applying for a large loan.

Financial health-based loan approval and terms

Earnest says it considers a range of factors beyond your credit scores when evaluating your eligibility for a loan. But you do need fair to good credit scores.

Here are some of the factors that Earnest considers when determining whether you qualify for a personal loan.

  • How much you have in your savings account
  • How much you spend versus how much you earn
  • Growth of bank account balances
  • Your amount of debt
  • History of on-time payments
  • How often you pay late, overdraft or insufficient-funds fees

Competitive interest rates

Starting annual percentage rates for an Earnest personal loan are competitive, and the maximum APR is lower than many other lenders. While some lenders charge a maximum APR of 36%, Earnest’s APRs are capped at below 20%.

Long application process

If you need quick funding, Earnest may not be ideal for you. A decision on your loan application can take five to 10 business days, and Earnest notes that the timeline may vary if it needs additional information from you. If you’re approved, you may receive funds within one to two business days after you sign the loan paperwork.

A closer look at an Earnest personal loan

Here are some other details to know about Earnest personal loans.

  • Steady income required: You must have proof of steady income and have had no bankruptcies within the past three years.
  • No collection accounts: To qualify, you can’t have open collection accounts.
  • Limited loan terms: Earnest only offers 36-, 48- and 60-month loan terms, though you can pay off your loan early without worrying about any prepayment penalty.
  • No co-signers: Earnest doesn’t offer the option for you to apply with a co-signer. Having a co-signer with good credit may help you qualify for a loan or help you get a lower interest rate.

Who is an Earnest personal loan good for?

An Earnest loan might be a good fit for you if you have strong credit, have good financial habits and want a large personal loan without the added cost of origination fees.

With no origination fees, an Earnest personal loan might be a less expensive way to consolidate debt, compared with a balance transfer credit card.

Just keep in mind that if you’re borrowing an amount closer to Earnest’s maximum of $75,000, a longer loan term will result in smaller monthly payments — but you’ll end up paying more interest overall on the loan.

If you need a small loan for emergency expenses, you’ll want to look somewhere else.

How to apply with Earnest

Earnest offers an online prequalification application. Within a few minutes, you can see if you might qualify for an Earnest loan and — if you do qualify — what your interest rate range might be. Just remember that these rates may change based on the information you provide in the formal application.

To see your estimated interest rate, Earnest will run a soft credit inquiry, which won’t affect your credit scores.

You must be a U.S. citizen or have a green card to qualify, be at least 18 years old and a resident of Washington, D.C., or one of the states where Earnest lends. If you live in Alabama, Delaware, Kentucky, Nevada or Rhode Island, scratch this lender from your list.

To check your potential loan rate, you’ll need to provide some personal information.

  • Full name
  • Email address
  • Home address
  • Desired loan amount
  • Annual income
  • Social Security number

If you decide to apply for Earnest, you’ll then need to submit a formal application online, which will result in a hard credit inquiry.

Since Earnest doesn’t offer new personal loans, consider these options instead.

  • Upstart: Upstart says it goes beyond your credit scores and uses artificial intelligence to see if you qualify for a personal loan.
  • LendingPoint: A LendingPoint personal loan might be a good option for someone with lower credit scores.

About the author: Marcie Geffner is an award-winning freelance reporter, editor, writer and book critic. Her work has been featured online and in print by the Chicago Sun-Times, Fox Business Network Onlin… Read more.