You may have seen OneMain Financial in your neighborhood. The lender offers personal loans at more than 1,000 physical branches, as well as online.
OneMain and its parent company, Springleaf Financial Services, are both known for lending to those with poor credit. The lender has a low minimum credit score, 520, and a minimum annual income requirement of $20,400.
The average OneMain customer had an annual household income of $46,000 and a credit score of 600 to 650 as of January 2016, according to the company.
OneMain’s starting annual percentage rate of 17.99% is steep compared to other online lenders that also cater to those with poor credit. Rates top out at 35.99%. For borrowers who can’t find a loan anywhere else, that is still a better option than taking a payday loan or a no-credit-check installment loan; interest rates on those types of loans can top 300% and trap people in a cycle of debt.
OneMain considers traditional factors such as credit history and debt-to-income ratio when evaluating borrowers. Borrowers receive a hard credit check when they apply, which can affect their credit score.
That will change soon, says Dave Hogan, executive vice president of OneMain’s Decision Analytics & Marketing division. Applicants will be given an option to see if they prequalify for a loan, which means they may receive only a soft credit check, he says.
There are three ways to apply for personal loans at OneMain:
- You can fill out an application on OneMain’s website, but every loan request goes to a local branch for approval. You may get a phone call to verify your identity and application information before the loan is approved. It takes up to three days to receive funds.
- You can apply in person at a branch. The loan limit is $15,000, vs. $10,000 on OneMain’s website. Loans are typically funded the same day, according to the company.
- OneMain and Springleaf have an online-only lending site called iLoan. The loan limits are different from OneMain, starting from $2,550 and going up to $25,000. The minimum APR for those who are well-qualified is also lower, at 11.24%.
» COMPARE: Personal loans for good, fair and bad credit
What makes OneMain Financial different
Borrowers receive their credit score, a feature not offered by many online lenders.
OneMain reports payments to all three major credit bureaus, which means you can improve your credit score by making timely payments.
In addition, borrowers can enroll in the company’s rewards program, which awards points for good behavior such as paying on time, signing up for automatic payments and paperless statements, or regularly checking their credit score, Hogan says. The points can be redeemed for gift cards or movie tickets.
If borrowers have trouble making payments, they can call the local branch and make adjustments to their payment plan. (OneMain’s late fee, as well as its origination fee, varies by state.)
Facts to consider before taking a OneMain personal loan
The top reason people borrow money from OneMain is to consolidate debt. If you are borrowing to tackle debt, remember that taking a loan helps only if you get a lower interest rate on your debt or if it helps you pay off the debt more quickly. You should also have a plan to get out of debt once and for all. Otherwise, taking a personal loan just delays the inevitable.
Some lenders, including OneMain, offer optional credit insurance products that cover your loan payments in case of death, disability or unemployment. Before you choose this option, consider how much it will cost you and whether you really need it, and read the fine print on the insurance terms. Often, credit insurance products drive up the cost of a loan and are more expensive than traditional life insurance, according to the Federal Trade Commission.
Here’s what else you need to know before applying for a personal loan from OneMain:
OneMain Financial’s credit standards
- Minimum credit score required: 520
- Minimum gross income required: $20,400
- Minimum credit history: Not provided
- Maximum debt-to-income ratio: Not provided
OneMain Financial’s lending terms
- APR range: 17.99% to 35.99% at OneMain, 11.24% to 35.99% at iLoan
- Minimum loan amount: $1,500 at OneMain, $2,550 at iLoan
- Maximum loan amount: $10,000 online, $15,000 at a branch, or $25,000 at iLoan
- Loan duration: 3 years to 5 years
- Time to receive funds: Up to three days
OneMain Financial’s fees and penalties
- Origination fee: Varies by state
- Prepayment fee: None
- Late fees: Varies by state
- Unsuccessful payment fee: Varies by state
OneMain Financial review: the bottom line
The new OneMain is similar to a bank for poor credit; the fact that it has so many branches around the country makes it a convenient option if you’re looking for a personal loan in your neighborhood. But other online lenders that accept bad credit scores have lower APR ranges. They usually allow borrowers to check their rates without affecting credit, so shop around before you settle on a lender.
If you’re borrowing to consolidate debt, as many existing OneMain consumers do, make a plan to get out of debt before you get a loan. If the loan isn’t an immediate need, you can also work on improving your credit score by making timely payments on your existing debt. That will give you more financial options and lower interest rates when you want to borrow money.
More from NerdWallet:
The Best Personal Loans for Bad Credit
Personal Loans for Debt Consolidation
Personal Loans: Compare Best Rates & Lenders
Amrita Jayakumar is a staff writer at NerdWallet, a personal finance website. Email: ajayakumar@nerdwallet.com. Twitter: @ajbombay.
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