May 30th, 2013

AvantCredit Review: A Better Alternative to Payday Loans?

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AvantCredit Review: A Better Alternative to Payday Loans? | Credit Karma Blog

Welcome a new member to the online-only personal loan space! Chicago-based AvantCredit aims its unsecured loans at consumers with credit scores between 620 and 720—a nearly-prime community rarely served by other lenders. Like NetCredit, AvantCredit hopes to bridge the gap between payday loans and traditional personal loans.

Its loans range from $1,000 and $10,000 and are payable over one to three years, depending on the terms you receive.

How it works

AvantCredit services its loans with a completely online process. You fill out an online application, and can receive a “provisional approval” instantly. This means you’re probably approved for the loan, but AvantCredit may require you to fax in additional information, like proof of income.

Once you receive final approval, your loan amount will be deposited into your checking account the next business day. You can make repayments on your AvantCredit loan by setting up automatic Electronic Fund Transfers from your bank account so you don’t have to worry about due dates. And the only fee you’ll pay is the daily simple interest accrued on the remaining unpaid principal of your loan.

It’s important to note that AvantCredit’s loans are only available to residents in a short list of states right now: South Dakota, South Carolina, California, Alabama, Utah, New Mexico, Georgia, Missouri, Wisconsin, Illinois and Virginia. You can see the rates and terms for each state on Avant’s site.

How it could change the industry

AvantCredit loans could be a better alternative to payday loans for consumers who can’t qualify for traditional personal loans. Known for their cyclical and predatory nature, payday loans can have interest rates in the triple digits, since they’re calculated over a year’s time. An AvantCredit loan interest rate varies from 35 percent to 95 percent a year, depending on a borrower’s credit score.

But even so, you can reduce the amount of interest you’ll pay by doubling up your monthly payments and paying off your loan sooner. AvantCredit doesn’t penalize you for paying off your loan early.

What borrowers should look out for

If you’re considering applying for a personal loan with AvantCredit or any other lender, here are a few things to consider:

  • The potential interest cost: Do the math, or have Credit Karma do it for you using our personal loan search. For some personal loan offers, you can find out if you’re pre-approved before you apply and initiate a hard inquiry on your credit.
  • The project you want to fund: Getting approved for a personal loan means quick access to a chunk of cash. While you might want to fund that home improvement project now, in some cases it might be best to wait until you have the cash. On the other hand, if you’re fixing up your home to put it on the market to sell, a loan with a relatively low interest rate can be a good option.
  • The credit impact: A new loan adds new debt to your credit report. If you plan on applying for other types of credit in the near future and can hold off on the personal loan until you do so, that might be the way to go. Use Credit Karma’s Credit Score Simulator to see how a new personal loan could affect your credit.

Bottom Line: AvantCredit is not the first online lender working to serve consumers between payday loans and traditional loans. And it’s easy to see that there will be more hoping to fill the opportunity this space affords.

For more information on AvantCredit and how their loans work, check out their FAQ’s and their Who We Are page.

Bethy

is the Communications Manager at Credit Karma, where she’s been since February 2011. When she’s not writing about credit and finance all over the web, you can find her playing her guitar, catching the latest movie, training for her next race or just exploring the city of San Francisco. Say “Hi” on Twitter: @bhardeman.

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5 Comments

  1. In which continent do you live? Those interest rates are extreme compared to ours.

    SA Personal Loans at 1:29 am on June 7, 2013
  2. Yes I agree with you but payday loan is more convenient to pay loan without any burden.

    themoneycentre at 10:32 am on June 12, 2013
  3. I just try avantcredit . I have never had a company to make me fill
    So bad as these people did. I am really think when it comes to peole
    of color are we being rejected, how can you prove it, at first rhey are
    so nice to you, then it change. They had me to sign the contract
    send in proof of income, send bank stateman,call my company
    Which I have been there 19 years, I know my credit score, they
    went I believe out they way to keep from me a loan.They show
    they really donot care, about helping people. I hope they be stop
    for the way they are processing their loans it is wrong, May the Lord God help rhem to get right
    ,InJesus name.Change is here!

    Frances Handrick at 9:11 pm on August 26, 2013
  4. Another alternate option to payday loans are car title loans. This works for those who do not have credit and are in need of immediate cash. 123TitleLoan.com in particular, are a direct lending company, they act as a bank, but without the red tape. Worth checking them out: http://www.123titleloan.com/about.html.

    Mary SmithAndie at 5:45 pm on October 17, 2013
  5. I used Avant. It was easy and fast. The rates were pretty good too. I would use them again.

    Annmarie Kostyk at 4:02 pm on December 30, 2013

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