Personal loans are easy to qualify for if you have stellar credit. But borrowers with “okay, but not great” credit scores have an increasing number of options, too.
Avant is one online loan servicer catering specifically to lower-credit borrowers, with fast funding for all.
What is Avant?
A private lender partnering with FDIC-insured WebBank, Avant promotes itself as an alternative to the extensive application process banks often require for borrowers.
They have a quick online application and make an effort to disburse funds as soon as possible. Clients in the middle of the credit score spectrum – those having trouble getting loans elsewhere – are their target market.
Avant offers credit cards as well as personal loans, though I’m focusing on their loan features for this review.
How does Avant work?
Like most lenders, Avant let me see my loan options before I committed. Since the application includes some sensitive info like Social Security Numbers, the page is protected with 128-bit SSL encryption to keep your data safe.
You’ll answer some basic personal questions and enter your monthly “net income” or income after taxes and deductions.
If you don’t know the exact figure without dragging out your W-2 forms from tax time, you can estimate.
Then you’ll rate your credit quality from a drop-down menu. For this question, you need some idea of your credit score range. Fortunately, it’s simple and free to get an accurate credit assessment online.
Avant also asks for the loan purpose. The menu has broad categories like “Debt Consolidation,” “Home Improvement,” “Life Event,” and even “Other,” so you don’t need to give specifics.
To assess your financial shape beyond the credit score, Avant requests a ballpark figure of your bank account balance and housing costs. At this stage, they don’t require proof (like bank statements or pay stubs).
Avant joins a number of servicers letting customers prove their financial responsibility with data outside their credit score. It’s a smart move on their part, I think, and good for customers. Credit scores can be influenced by many factors and they don’t always reflect your ability to repay a loan.
Finally, you’ll permit Avant and WebBank to do a credit check. Unless and until you accept a loan offer, the credit check will be a “soft” pull that doesn’t affect your credit score.
Then you’ll see what loan terms Avant can offer you. You’ll consent to a “hard” credit check – one affecting your score – if you accept.
Borrowers also need to upload supporting documentation (like bank statements and pay stubs) once the initial application is complete.
How much does Avant cost?
Personal loan terms
Avant lets customers borrow anywhere from $2,000 to $35,000. The Annual Percentage Rate (APR) – the yearly interest you pay, including fees – will be between 9.95% to 35.99%. Exact figures depend on your credit score and the laws in your state.
Since Avant accepts a wider range of credit scores than other lenders their APRs run a little higher. Borrowers with lower scores might end up paying more in interest than they would otherwise.
Loan terms range from 24 to 60 months, or two to five years.
Fees
Everyone pays an administrative fee up to 4.75% (included in the APR). Late payments cost an extra $25 after a 10-day grace period. Rejected payments cost $15.
But there are no prepayment penalties, so you can pay your loan off early if you have the cash.
I’d recommend staying on top of payments if you get an Avant loan, because the late and returned payment fees have the potential to add up quickly to a heck of a lot of money. The $25 late fee does get refunded after three consecutive on-time installments.
Avant features
Acceptance for low credit scores
The forgiving credit threshold is Avant loans’ standout feature. Half of Avant’s borrowers take out debt consolidation loans, and the company prides itself on catering to people in diverse financial situations.
They do require a minimum credit score of 580 and at least $20,000 in gross annual income before you borrow. Most customers have credit within the 600-700 range; a solid score with room for improvement. Timely loan payments help you build credit, which is always a bonus.
Broad criteria for borrowers
Avant looks at factors beyond your credit score, like your bank balance, and employment situation.
For home improvement loans Avant doesn’t require you to have a lot of equity in your home, while other lenders might.
Repayment terms
To simplify life, Avant only requires one monthly payment – a great perk if you’re juggling multiple loans.
They also give you some latitude when making payments. You can set up automatic withdrawals or pay via credit or debit card. Initially, your first payment is due 30 days after you receive funding, and you can see your repayment schedule online.
Fixed interest rate
Don’t worry about your interest rate rising with the market. Unlike AvantCard holders who have a variable APR, loan holders get a fixed interest rate – one remaining the same over the life of the loan.
Quick funding
Once you sign on the dotted line Avant will disburse your loan almost immediately. They aim for the next business day. This fast disbursement might be a lifesaver in an emergency situation.
Refinancing (for some loans)
Avant does offer refinancing in certain circumstances; you can get additional loan funds and possibly a lower APR. You can only refinance once.
Credit cards
The AvantCard comes with an average APR of 25.49% and credit limits between $300-$1,000. Its annual fee is $29. But many similar cards charge no annual fees. Like Avant loans, the card has a hefty late payment fee of up to $35.
The card doesn’t require a security deposit, which will save you some money initially. Unsecured cardsaren’t an ideal way to build up your credit, but when you have absolutely no other options, they’re an option out there for careful consideration given the many cons for this type of card.
If you’re building credit and in the market for a card, the AvantCard is certainly an option, but you can will most likely be able to find a better deal to consider.
SCRA program for military members
Avant offers a steep military discount through the federal Servicemembers Civil Relief Act (SCRA) program. Active duty military service members – or servicemembers on lawful leave – get a reduced 6% interest rate on Avant loans and credit cards. They’re also exempt from fees.
My experience with Avant
I’m glad there are more lenders willing to work with borrowers across the credit spectrum. The fact that not everybody in this world has great credit is the reality – and so there have to be options for those of us who still need to get that loan – for whatever reasons.
If I needed an emergency loan, I’d definitely consider Avant for the quick approval process and disbursement of funds. After testing out Avant, it’s clear that they do that well, and that’s great.
I do have to say, the 2019 FTC lawsuit gives me pause – though companies sometimes shape up under increased scrutiny.
Who is Avant best for?
Borrowers with medium credit scores
As long as your credit score is at least 580, Avant will work with you to find a manageable loan. The interest may be better than your credit card interest rate.
Debt consolidators
Consolidation loans are Avant’s specialty, and they’ll give you flexible repayment terms. Note that Avant doesn’t offer direct creditor payments for consolidation loans.
Military servicemembers
Members of the military in active duty or on leave can benefit from the substantial SCRA discount.
Who shouldn’t use Avant?
Borrowers with very good or very poor credit
If you have good credit (700+), you can find better interest rates elsewhere.
If your credit score is below 580, on the other hand, you might not qualify for an Avant loan (or if you do, you’ll be charged unusually high-interest rates). Therefore best to do a lot of research to be sure you are considering all your options in this type of instance.
Borrowers taking out business loans
Avant doesn’t offer loans for business purposes, only personal ones.
Joint borrowers or co-signers
Avant doesn’t appear to offer an option for co-borrowers or co-signers on their loans, though you can permit another person to become an “authorized user.”
Pros & cons
Pros
- Fast disbursement of funds — When time is of the essence, Avant won’t keep you waiting.
- Accessibility for a range of borrowers — Customers with fair or poor credit, or those with complex financial situations not reflected in their credit score, can find a loan that works for them.
- Credit building — Avant reports to the three major credit bureaus, so if you make timely payments, you’ll see your credit rise.
- Refunds for late payment fees — Avant forgives a $25 late fee after three consecutive on-time payments.
Cons
- High interest rates — APRs for an Avant loan are on the much higher end of the spectrum, partially to offset the wider credit range of accepted borrowers. But this is good reason to pause and consider other options.
- No co-signer option — For some borrowers a co-signer is a necessity, especially if they’re new to credit.
Federal Trade Commission complaints
Potential borrowers should know Avant settled a Federal Trade Commission (FTC) lawsuit in April 2019. The lawsuit charged Avant with taking unauthorized payments from customer accounts, requiring customers to consent to automatic withdrawals, giving inaccurate repayment quotes, and collecting money even after repayment was complete.
Avant has allegedly stopped these practices. The servicer agreed to stop taking unauthorized payments and to correctly represent repayment information. Current borrowers have a mixed bag of experiences, however, and some have filed complaints with the Better Business Bureau.
The competition
Avant may be one of the best options for bad credit personal loans on short-terms, but you may still want to do your due diligence and compare different online lenders. Money Under 30 has partnered with dozens of different online lenders to enable you to check your personal loan rates and see how much you can borrow with just a few steps. There’s no obligation, so you can circle back to Avant (or one of the other options below) if you’re not finding better results.
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- Personal information required to see rates
- High APRs for applicants with fair or low credit
| Loan servicer | APRs | Loan range | Loan terms | Minimum credit score | Fees |
|---|---|---|---|---|---|
| Avant | 9.95% to 35.99% | $2,000-$35,000 | Two to five years | 580 | 4.75% administration fee |
| Fiona | Varies by lender | $1,000-$250,000 | 6-144 months | 550 | Varied |
| Upstart | 4.60% to 35.99% | $1,000-$50,000 | Three to five years | 640 | 1%-5% origination fee |
Avant vs Fiona
Fiona isn’t a direct lender but another loan matching service. Applicants compare offers from over 17 different lenders in a “pre-qualifying” process before making a decision.
The wide ranges of Fiona’s possible APRs and loan terms, and their low credit cutoff, show how many options the site offers. Customers with credit scores in the high 500s are likely to find a loan that works for them. Though like most aggregators Fiona doesn’t guarantee a perfect match, it’s an invaluable step for personal loan research.
Avant vs Upstart
Upstart finds its niche catering to recent grads and young adults getting their feet on the ground without much of a credit history.
With Upstart, you don’t need a FICO score to apply for an Upstart loan. One of Upstart’s founders was a young grad whose thin credit file kept him from getting a decent interest rate with other lenders – and motivated him to build a new kind of business.
For borrowers who do have some credit established, Upstart’s minimum score is 640. The platform requires some form of financial stability – you need a job offer in hand – but its qualifications are still exceptionally friendly to credit newbies.
Summary
Avant loans cater to an essential niche in the personal loan market – borrowers with less-than-ideal credit scores who are on track to financial responsibility.
High-interest rates and fees make Avant best for those with lower credit scores who need funds immediately and can pay be sure to pay them back relatively quickly. Why? Again, because the higher APR adds up dangerously quickly and is, therefore, something you have to really watch. And you always want to be sure you’re making the most strategic decision with this type of loan.