Detailed comparison on which Personal Loan from NetCredit or OneMain Financial is the right for you. $1,000 to $20,000 Personal Loan.
We’re going to compare personal loans from NetCredit and OneMain Financial. These two lenders cater to people who can’t get a loan from a traditional bank or credit union. But the question is whether they would be a good option for you. We’ve spent years working in the lending industry and we track dozens of lenders. We’ll break down the details of these two lenders so you can see which one might be better for your situation.
Both of these lenders have terms that are dependent on the state in which you live. It will affect the loan amounts they offer, the fees they charge, and the APRs on the loans. So, there will be a bit of complexity that you might not see with more traditional lenders.
The first thing we are going to look at is the loan amounts that they offer.
NetCredit lends as little as $500 in a handful of states, most of their states offer a minimum of $1,000. From there, they have a smattering all the way up to $5,500. OneMain will lend as little as $1,500. So, if you are looking for just a little bit of money to cover a monthly shortfall, either of these lenders offer pretty good flexibility on the low side. If you are looking for a more substantial amount of money, NetCredit lends up to $10,000 and OneMain’s top amount is $20,000. I will highlight OneMain.
NetCredit offers terms between 6 and 60 months.
Sixty months seems like an awfully long time to be in debt, even for a $10,000 loan, especially given the cost of their loans. OneMain has terms than run from 2 to 5 years. These are pretty standard terms for a personal loan. However, if you are borrowing a couple of thousand dollars, you don’t want to take two years to pay it back. That means paying interest longer than you should for a loan of that size.
Now let’s look at the cost of the two loans.
These loans should only be for short-term borrowing and only for emergencies…because they aren’t cheap. NetCredit’s minimum APR is 34%. OneMain’s minimum is 18%. So, I will highlight OneMain for having the lower minimum APR. NetCredit’s top APR will depend on the state in which you live. You can see that their most common maximum APR is 100%. They have a handful of states that are below 60% and a chunk that is 155%. OneMain caps their top APR at 35.99%. So, again, I will highlight them.
NetCredit will charge an origination fee between 1 and 5% of the borrowed amount. OneMain’s origination fee structure is significantly more complicated. Their fees range from 1% to 10%. But in some cases it would be a flat rate of $25 to $500. It all depends on state law. I am going to highlight NetCredit because their origination fees are generally lower.
The origination fee does not increase the cost of the loan because the origination fee is accounted for in the APR. The APR includes the origination fee and the interest rate. You want a lower origination fee if you plan on paying off your loan early. Paying off early will save you on the interest you would have paid, but you don’t get a reimbursement of the origination fee.
Now let’s look at who these companies will approve.
Both of these companies target customers who have Poor-to-Fair credit scores. For NetCredit, I suspect that most of their borrowers have credit scores between 550 and 650. We actually have a little more data on OneMain. Just over half of their borrowers have credit scores below 620. I believe that OneMain will lend down into the mid-500s. Of course, the lower you go down in their ranges, the less likely you are to be approved. And the more likely they will encourage you to secure your loan to be approved. We’ll talk more about that later.
OneMain will allow you to include a cosigner on your application.
NetCredit does not. A cosigner is someone who agrees to pay off your loan if you fail to repay it. If you have a spouse or loved one that has a stronger credit profile than you do, adding them as a cosigner can help you get approved. I will highlight OneMain for accepting cosigners.
NetCredit only offers unsecured loans.
For personal loans, I like it when they are unsecured. That means that if you have trouble repaying the loan, they can’t come seize any of your assets as repayment. OneMain offers unsecured loans, but they also offer secured loans. This would be where you put up the title to your motor vehicle as collateral on the loan. If you fail to repay, they can repossess your car. Securing the loan adds to the risk. But it can also make it easier to be approved. I will highlight OneMain for offering this option, but you should be cautious about using secured credit.
If you’re late on a payment, NetCredit will charge you between $10 and $25. Again, it will depend on the state in which you live. But two-thirds of NetCredit’s states have the $25 late fee. That is a pretty high late fee for personal loans. There are a bunch of companies that don’t charge late fees at all. OneMain’s late fees are even more confusing. They will charge between $5 and $30 or 1.5% to 15% of the late amount. 15% of the late amount is an eye-popping number. I am not going to give this category to either lender.
OneMain will also charge an NSF fee, or a non-sufficient fund fee. If your check bounces or an ACH draw fails, they will charge you between $10 and $50. Fifty dollars seems so outrageously high that I have to double-check it every time I see it. NetCredit does not charge any additional fees. So, I give this category to them.
Because these lenders are dependant on state laws, they are not available in all states. OneMain does lend in most states. These are the states that they do NOT lend in. NetCredit has pretty good coverage as well, but not quite as broad. You can see that they generally don’t offer loans in the Atlantic northeast. If you are interested in their line of credit product (which we aren’t talking about today), they are available in these states. We’ll do a review of their line of credit product in a future video. But, if you are interested, leave a comment below and we could move it up in the schedule.
You conduct the entire application process for a NetCredit loan online. You can apply for a OneMain loan online as well or you can go into one of their 1300 storefront locations. Both of these lenders will make a decision on whether to lend you money very quickly, within minutes of submitting your application. NetCredit will deposit the funds in your bank account on the next business day. OneMain can do that as well, but if you want the money on the same day, you can go into one of their stores to pick up the money.
There are a few issues that I need to bring up when it comes to OneMain Financial.
OneMain has several different kinds of insurance that they will try and get you to buy. The cost of the insurance will not be accounted for in the APR, so paying for the insurance could make borrowing from OneMain Financial more expensive than it looks. They like to insure any collateral you put up, so they might actually encourage you to put up the title to your motor vehicle so they have another way to make money on the loan. You do need to know that they cannot require you to buy the insurance, otherwise it would have to be accounted for in the loan’s APR.
That kind of leads to the second issue: sales pressure. If you go into the store to complete the process, you might be subjected to some sales pressure. They may pressure you to buy the insurance. Or, they may not want you to take the loan agreement so you can compare it to other offers. Don’t let sales pressure keep you from shopping around.
The last issue we need to talk about is that they don’t make it easy to pay off the loan early. I am most concerned about this one because you should go into any personal loan with a plan to pay it off early. When you make extra payments to OneMain, you are just prepaying future payments rather than paying down the principal. That just means that you are paying for the interest before it has even been accrued. You don’t actually save money on interest by making extra payments. To apply extra payments to principal, you need to call and work directly with their customer service team. We have heard a few customers report that it is a very difficult process. One customer flat out said that they were never able to do it.
Let’s summarize what we’ve learned about personal loans offered by NetCredit and OneMain Financial.
OneMain appears to have more green cells in the categories that are most important: loan amount and APR. NetCredit is not a bad lender, but because of their higher APRs, you should only use them for short-term lending. If you can help it, never take the whole term to pay off the loan. Make extra payments early in your loan to save a lot of money on interest. Finally, I can’t overstate my concerns over OneMain’s insurance and prepayment complications. No loan should ever have roadblocks to making extra principal payments. That can negate a better interest rate.
Of course, these aren’t the only lenders you could consider. The best way to make sure you’re getting the best deal that you can qualify for is to shop around. Apply to at least 3-4 lenders before you make a decision on who to go with.
One of the most efficient ways of shopping around is to visit our marketplace page at The Yukon Project. We’ve tried to make shopping around easy. If you visit our marketplace page, you can apply to any one of our other featured lenders. Behind the scenes, we will check your rate with up to 40 other lenders. Our partners use a soft credit check, so applying won’t hurt your credit score. We will show you all of the approved offers so you can pick the loan that’s best for you.
If you have any questions about either of these lenders that we didn’t cover, leave a comment below. If you found this video useful, please like it and subscribe to our channel. Thanks for watching.
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