Welcome back to The Yukon Project, where we provide insider insights on lenders and financial products to help you make informed decisions. Today, we’re reviewing unsecured personal loans from Axos Bank. Axos is a digital bank, meaning they operate primarily online without physical branches. They offer a range of financial services, including personal loans. Let’s get into the specifics.
Is Axos Bank legit?
Axos Bank is a digital bank founded in 2000, headquartered in San Diego, California. They offer a full suite of banking products, including checking and savings accounts, CDs, and personal loans, all accessible online. As a digital bank, they don’t have physical branches, which allows them to offer competitive rates and low fees.
Axos Bank Personal Loan Details
Loan Amounts
Axos Bank offers unsecured personal loans ranging from $7,000 to $50,000. This range is suitable for a variety of needs, whether you’re consolidating debt, making home improvements, or covering a major expense. The amount you can qualify for will depend on factors like your credit score, income, and debt-to-income ratio.
Interest Rates
The lowest APR (Annual Percentage Rate) Axos advertises is 11.79%, with the highest being 20.84%. Remember, APR includes both the interest rate and fees, representing the total annual cost of borrowing.
Behavioral finance tip: People tend to underestimate the impact of compound interest. Even a seemingly small difference in APR can add up to significant savings (or costs) over the life of a loan. Always calculate the total cost of borrowing, not just the monthly payment.
Loan Terms
Axos offers loan terms from 3 to 6 years. Longer terms mean lower monthly payments but more total interest paid. Shorter terms mean higher monthly payments but less total interest. Choose the shortest term that fits comfortably in your budget.
Origination Fee
Axos charges an origination fee of 1-2% of the loan amount. This fee is deducted from your loan proceeds before you receive them. For example, if you borrow $10,000 with a 2% origination fee, you’ll receive $9,800. Keep this in mind when deciding how much to borrow.
Credit Score Requirements
Axos states that the minimum credit score required for approval is 730. In the FICO score model, a score of 730 falls into the “excellent” range. This suggests that Axos is targeting borrowers with strong credit profiles.
However, credit score isn’t the only factor. Your income, existing debts, and other elements also play a role. But if your score is below 730, you may face a tough time qualifying with Axos.
Other Fees
In addition to the origination fee, be aware of other potential fees:
- Late payment fee: $15
- Payment return fee (e.g., for insufficient funds): $25
You can avoid these fees by always paying on time and ensuring you have enough in your account to cover your payment.
Fast Funding
If your loan is approved, Axos says you are likely to receive your funds within two days of submitting the final loan agreement. This quick turnaround can be beneficial if you’re facing an urgent expense.
How to Apply for an Axos Personal Loan
As a digital bank, Axos allows you to apply for a personal loan entirely online. You’ll need to provide personal information, income verification, and authorize a credit check.
Axos will likely do a soft pull on your credit first, which doesn’t impact your credit score, to prequalify you. If you decide to proceed with the offer, they’ll do a hard pull, which can temporarily lower your score by a few points. This is standard among lenders.
Is an Axos Personal Loan Right for You?
If you have excellent credit and are comfortable with a digital banking experience, an Axos personal loan could be a good fit. Their quick funding time is also a plus.
However, their credit score requirement of 730 is higher than many lenders, so this may not be the best option if your credit is less than excellent. Also, remember to factor in the origination fee when considering the total cost of the loan.
As always, we recommend shopping around and comparing offers from multiple lenders. Interest rates, fees, and terms can vary significantly, even for borrowers with excellent credit.
Our marketplace at The Yukon Project makes this easy. With a single application, you can receive prequalified offers from up to 40 lenders without impacting your credit score. It’s a smart way to ensure you’re getting the best deal available.
Tips for Managing a Personal Loan
Once you’ve secured a personal loan, here are some tips for managing it effectively:
- 1. Automate your payments. Set up automatic payments from your checking account to ensure you never miss a due date. Just make sure you always have enough in your account to cover the payment.
- Pay more than the minimum. Whenever possible, pay more than the required monthly minimum. Even small additional payments can help you get out of debt faster and save on interest.
- Avoid taking on new debt. A personal loan can help you consolidate existing debt or cover a necessary expense, but avoid using it as an opportunity to take on new debt. Focus on paying down what you owe.
- Check your statements. Even with automatic payments, it’s a good idea to check your loan statements regularly. This can help you catch any errors or changes in your loan terms.
- Communicate with your lender. If you face a financial setback and can’t make a payment, contact your lender immediately. Many have hardship programs, but you have to ask for help.
Final Thoughts
Axos Bank offers personal loans with competitive rates for borrowers with excellent credit. Their high credit score requirement and origination fee are potential drawbacks, but their quick funding could be a benefit for some borrowers.
As with any financial product, it’s essential to read the fine print, understand the total cost of borrowing, and choose the loan that best fits your needs and budget. And remember, The Yukon Project team is here to help guide you on your financial journey.
