Anyone who has started a business, wanted to start a business, or had a sizable chunk of debt they wanted to pay off knows the difficulty of getting a loan from a traditional bank. There are credit checks, forms to fill out, and meetings to attend that make you feel you are having a financial colonoscopy performed on you. Many people would say that is not far from the truth.
Now there is a website you can go to that will let you see your best options for a personal loan, including the interest rate and the monthly payment in a simple grid format. That website, Fiona, is set up to search through the top online lenders and match up your needs with available offers. Once you have decided on a bank you will meet a personalized loan officer who will go over the terms and conditions of the loan. Best of all, the initial search takes less than 60 seconds.
One of the biggest problems of getting a personal loan is collateral. Without it, your chances of getting one are dramatically reduced. With Fiona, no collateral is required. The amount of the loan you can get will depend on several factors, but you may be able to borrow as much as $100,000 and get a fixed rate of just under 5%. The available term of the loan will also vary, but the general range is between 24 and 84 months.
Before I wrote this article I went to the website to find out if all this was too good to be true because … well, the rule of thumb is if it sounds too good to be true it usually is. The initial search is exactly what is advertised. My search came for a $5,000 personal up almost instantly, offering me three choices with the lowest rate at 11.9% and the highest at 22.9%. It is a bit confusing as to why a bank that is offering an interest rate twice that of the lowest offer would appear on the grid, but at least you have a choice.
Then it was time to some sample searches based on different criteria. On the left side of the page there are four categories of credit scores. After running a few tests I found that any credit score below 660 will yield zero results, no matter how low the amount of the loan. A FICO score of 660 is in the solid “Good” category, so you have a good idea of what results to expect from Fiona.
One of the best features of the grid is if you are accepted for the personal loan you are able to see what your monthly payment will be to the penny. If you are getting a loan to start a small business you can know exactly how much you need to make to cover your basic starting expenses. You can choose from several categories of reasons why you want the loan – student, vacation, special occasion, etc. Selecting different categories didn’t seem to matter much during my test runs but you may have a different experience.
An important point to make here is that these online banks are not offering business loans, even if the money will be used to start your business. The personal loan officer will review all the particulars of repayment with you, so be sure to pay attention to the details. Because it is not a business loan it is likely the bank will begin seizing all of your personal assets in the event of a default. No collateral is required because your FICO score is presumed to be enough evidence you will pay back the loan.
So what is the best way to use Fiona? First, if you have high interest credit cards that you want to pay off, simply compare the selection Fiona offers and find an interest rate that is significantly lower than your current credit card’s APR. Once the loan is in hand, cut up the card and contact the company to close the account. (Be sure to check with a financial advisor on the impact closing the account may have on your credit score. It may do more harm than good.)
Another strategy is to not borrow the maximum available. You can go ultra conservative and only borrow exactly what you need, but having a little play money has not yet made the list of financially irresponsible acts. Besides, you can also stash the money away in an emergency fund so you don’t have to go back to Fiona too soon.
Fiona may indeed be the game changer many people are saying it is. Online banking is simpler and easier – even banks know this. Getting personal loans online is the next logical step. Bypassing the forms and formalities of the traditional bank seem more than a reasonable approach, and the most critical piece of your financial life seems to be your FICO score when dealing with Fiona. It seems like a win-win for people whose financial situation is in good shape.