“Sometimes an unexpected event can throw your life and your finances off balance.” This is the opening sentence you’ll see if you visit Balance Credit “about us” page on their official website. This Ohio company gained lots of popularity by offering personal loans to people who need it, by skipping the regular eligibility aspects required to obtain a personal loan – such as a good credit score – and offering personal loans to everyone in need.
Balance Credit show themselves to the world as the company that’s there to help when you are in financial trouble, your credit score is not good enough to go to your bank, or when you have an emergency and need the money approved as soon as possible.
This sounds awesome, doesn’t it? However, Balance Credit does not have quite an outstanding reputation among its customers. What is more, it mostly has bad reviews and an average of two stars on popular review sites.
With that, are Balance Credit personal loans worth it? Or is there any catch? I’ll speak facts on this post so you can make your own judgment on this company.
But, first things first. You need to understand what a personal loan is and see the whole picture when it comes to Balance Credit compared to well-known lenders.
What Is a Personal Loan?
A personal loan is the amount of money you borrow from a lender with the purpose of covering personal needs. Unlike mortgages, which are loans you use to purchase a house, or student loans to pay for college, personal loans don’t have a specific purpose.
When you take out a personal loan with a bank or a lender, you can use the money to pay for education, home repairs, medical bills, or to get yourself out of a financial emergency.
How Do Traditional Personal Loans Work?
There are two types of personal loans. The first type is secured personal loans, which you have to put up collateral for, such as a vehicle or home, to guarantee the lender that you will pay back the loan.
The second type is unsecured loans. When you apply for an unsecured personal loan, the lender will take a look at your credit score to determine if you are a trustworthy borrower. Qualifying for an unsecured personal loan is often more difficult since it puts lenders in a risky position.
In addition to this, a personal loan can come with either a fixed or a variable interest rate. When you get a fixed rate, this means the interest percentage will never change and the monthly payments will be the same until you pay back the full amount.
On the other hand, variable rates mean that the interest percentage can fluctuate and will often increase as the life of the loan progresses. You will often start at a low rate but most times you will end up paying higher rates later.
Balance Credit Breaks Traditional Loans Schemes
As you can see, personal loans are tightened to your credit score or a valuable asset that you can put up as collateral in case you can’t pay the loan back.
Here is where Balance Credit works its “magic”: unlike the majority of banks and lenders out there, Balance Credit decided to bet on the elimination of painful credit scores evaluations, or even worse, the risk of losing a valuable asset like your vehicle or house.
It was almost predictable that a company that offers such benefits will soon become popular. The million-dollar question is, what’s the real cost of taking out a personal loan with Credit Balance?
Let’s dive into it.
Are Balance Credit Personal Loans Worth It?
Before considering taking out a personal loan with Balance Credit, you have to think through interest rates. A traditional personal loan will often have an interest rate in the range of 5% to 40%. In addition, traditional lenders will also charge origination fees between 0% and 8%.
With this in mind, we can take a look at Balance Credit.
Balance Credit Interest Rates [APR]
Here is where things get complicated. Balance Credit does not disclose any information on their official site regarding the annual percentage rate, which means you can only know the interest rate you will end up paying once you apply.
Nevertheless, I did some research and discovered first-hand testimonies of people who did take out personal loans with Credit Balance. This is how it went:
1. Balance Credit Interest Rates Are, at a Minimum, 200%
That’s right! 200% on interest rate and this isn’t even the worst part. Many users have reported getting a 300% interest rate, and I could even find a case where a borrower had to pay a staggering 600%.
Is this even possible? Well, Balance Credit does not disclose any information to the public in general. However, there are hundreds of complaints of angry customers who warn you to stay away from the company.
The truth is that you have to apply to get a personal loan if you want to see the APR yourself.
2. The Loan Repayment Terms are Unclear
A repeated observation at least a dozen users have made on CreditKarma is that repayment terms are unclear. One particular user assured that you can’t access the documentation to read the terms carefully until you accept the loan and the money is already in your bank account.
3. There Is No Negotiation to Pay off the Loan Early
Another popular complaint was that the company did not negotiate if you want to pay off the debt completely in a shorter amount of time.
Even though the paperwork says that you can pay off the debt early, a borrower claimed that he wanted to pay back the loan just eight days after having borrowed it, but the company told him he had to pay the full year of interest.
4. Customer Service Leaves Much to Be Desired
According to some users, the company’s customer service is not good at all. They do not offer any real help and they are not supportive in any way.
After seeing hundreds of complaints and one or two positive comments about Balance Credit, it becomes difficult to even consider the company to take out a personal loan.
But, is everything about Balance Credit so bad?
Let’s compare it to traditional personal loan lenders to see if it has any benefits at all.
Balance Credit Personal Loans vs. Traditional Personal Loans
Yet it is true that Balance Credit reviews are mostly negative, we have to dig even deeper and see the whole picture before deciding whether you should take out a personal loan with the company.
For this purpose, I’ll be comparing Balance Credit with SoFi, which is a traditional and competitive lender in the world of personal loans.
|APR||5.99% to 17.67%||200% to 600%|
|Rating||5 out of 5||2 out of 5|
As you can see, SoFi offers way better interest rates. If you keep comparing, you will find that other lenders are far better than Balance Credit.
If you are interested in getting a personal loan, just take a look at possible options:
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That said, there are some details that are worth mentioning and that could be the reason that Balance Credit is still operating and funding personal loans in the U.S.
Advantages and Disadvantages of Balance Credit
First of all, the minimum amount you can borrow from SoFi and other traditional lenders out there is $5,000. On the other hand, that’s the top amount you can get with Credit Balance.
What does this mean? Well, you can’t possibly get a quick loan to fix your car for the amount of $3,500, to say something, from traditional lenders like SoFi.
Another advantage is that practically anyone with a bank account can get a loan. This is not the case with traditional lenders, as you will need to meet eligibility requirements.
The conclusion is, yes, it is quite expensive to get a personal loan with Credit Balance. I recommend staying away from the company if you don’t have an emergency or if you are not prepared to pay off high-interest rates over the life of the loan.
However, if you find yourself in an emergency and need up to $5,000 quickly, you can consider going with Credit Balance. Of course, knowing that high-interest rates will come with it.
Good Luck getting your loan!
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