American consumers spent more than $1,000 on gifts during last year’s holiday season, equivalent to about 1.2 times the median weekly salary, according to the National Retail Federation. That figure is for gifts only, and doesn’t take into consideration the cost of putting up Christmas decorations or hosting a dinner for Xmas, Hannukah, Kwanzaa or other winter festivities.
With unemployment at 3.7 percent–close to a 50-year low–and full-time median weekly earnings up 3.7% year on year in the second quarter of 2019, the average holiday spend is likely to rise again this year.
Should You Use a Personal Loan to Fund Your Holiday Shopping?
For millions of Americans, the biggest question ahead of the holiday shopping season isn’t what to buy, but how to finance it. A recent Federal Reserve survey found that almost 4 out of 10 Americans would need to borrow or sell something to pay for an unexpected expense of $400. When it comes to a large, expected expense like Christmas shopping, it would be safe to say a majority of Americans use one form of financing or another, such as a credit card or unsecured personal loan.
For those who can manage it, self-financing is the recommended option for funding those expensive holiday purchases. Dave Ramsey, a popular blogger who specializes in personal budgeting, provides some useful tips on setting up a Christmas holiday budget. With discipline and planning, most people can put themselves in a position where their entire holiday budget is self-financed.
If self-financing isn’t an option this 2019 holiday season, you may want to consider applying for financing from a personal loan provider. Even small personal loans carry interest of anywhere from 3% to 35.99%. With that said, if you take out a small loan and take care to pay it back on time over a repayment period of 1 to 2 years, the total amount of interest paid will be minimal. For example, a personal loan of $1,000 at the national average personal loan rate of 10.63% and a 2-year repayment term would require you to make $46 in monthly payments and pay total interest of $114 across the life of the loan. In addition, you would need to pay a one-off 1-5% origination fee and pay your monthly payments on time in order to avoid late penalties.
Top 5 Personal Loan Providers for the Holidays
When planning your holiday spending, we recommend thinking about self-financing before applying for a personal loan. If you do choose to apply for a personal loan, we suggest checking out these trusted lenders.
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| Max. Loan Amount | $100,000 | $20,000 | $50,000 | $40,000 | $50,000 |
| APR |
5.20% - 35.99%
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18.00% - 35.99%*
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6.99% - 35.99%
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5.99% - 35.99%
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8.49% - 35.99%
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| Loan Term | 24-84 months | 24-60 months | 3-180 months | 24-84 months | 36-60 months |
| Min. Credit Score | 680 | none | None | None | 620 |
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Get My Rate | Get My Rate | Get My Rate | Get My Rate | Get My Rate |
1. Credible
Loan amount: $1,000 - $100,000
APR: 5.20% - 35.99%
Loan terms: 24-84 months
Credit scores start from: 680
Suitable for: People with good credit scores
Credible is an online loans broker that connects borrowers with verified lenders at no cost. Credible returns up to 6 preliminary loan offers so you can easily compare your options and then contact the lender to complete the loan process. Credible caters to people with credit of 680 or better. If you have strong credit but low cash reserves, Credible can help set you up with a low-interest loan to finance all your upcoming holiday shopping.
Pros
+ Complete transparency about fees
+ Readable, side-by-side comparison guide
+ Some partners offer next-day funding
Cons
- High minimum credit score
- Doesn’t work with credit unions
2. OneMain Financial
Loan amount: $1,500 - $20,000
APR: 18.00% - 35.99%*
Loan terms: 24-60 months
Credit scores start from: none
Suitable for: Borrowing from a trusted lender
OneMain Financial is a subsidiary of OneMain Holdings, Inc., a publicly traded financial services company founded in Baltimore in 1912. It specializes in providing unsecured and secured personal loans to consumers across America. It operates online and in branches around the country. As of the end of 2019, it had more than 1,500 branches in 44 states.
Pros
+ Trusted, hundred-year old lender
+ Flexible repayment options
+ Excellent customer service reviews
Cons
- High minimum APR
- Loan must be signed in branch
3. LendingTree
Loan amount: $1,000 - $50,000
APR: 6.99% - 35.99%
Loan terms: 3-180 months
Credit scores start from: N/A
Suitable for: Comparing hundreds of loan providers
LendingTree is the oldest and largest loans marketplace on the web, having helped fund millions of borrowers since it was founded in 1996. LendingTree connects borrowers with loan options for a massive network of hundreds of lenders. It works with all types of lenders, from big to small and nationwide to local. It covers the full range of personal loan options, from low to high interest and short to super-long repayment terms. In summary, LendingTree has loans to suit all types of Xmas shopping budgets.
Pros
+ America’s largest personal loan marketplace
+ Option of very short repayment terms
+ Great for low-credit borrowers
Cons
- Partners vary in terms of reliability and loan terms
- Not all lenders offer lowest rate
4. AmOne
Loan amount: $1,000 - $40,000
APR: 5.99% - 35.99%
Loan terms: 24-84 months
Credit scores start from: N/A
Suitable for: Quickly comparing multiple loans
AmOne is another loans marketplace that works with a network of lenders to connect borrowers with loan options. Its partners range from large, nationwide lenders to small, regional lenders. Like other marketplaces, AmOne is a good place to go if you’re looking to quickly compare multiple lenders with just the one application form. This service works quickly, leaving you more time to build that holiday gift list.
Pros
+ Large partner network
+ Potentially low rates
+ Good for borrowers with poor credit
Cons
- No direct funding
- Terms and conditions vary from partner to partner
5. Upgrade
Loan amount: $1,000 - $50,000
APR: 8.49% - 35.99%
Loan terms: 36-60 months
Credit scores start from: 620
Suitable for: Free credit monitoring with your loan
Upgrade is a loans marketplace that provides added value through its free credit monitoring tools. With Upgrade, borrowers can get quick access to multiple loan options in minutes. But the best thing about this service is the tools and resources, which exist to help you boost your credit score and get yourself favorable rates and terms from lenders. Improving your credit score takes time, so this is a good option for people thinking ahead to the 2020 holidays.
Pros
+ Multiple loan options with one form
+ Quick online application
+ Free credit health tracker
Cons
- High origination fees
- Strict minimum cashflow requirement
Fund Your Expenses Wisely
If it seems like holiday shopping becomes more stressful every year, you’re not alone. Millions of Americans have trouble financing their entire holiday spend out of pocket. If self-financing isn’t an option, there are other options – including a small unsecured personal loan. Before applying for a personal loan, take care to request a loan amount you can afford to repay and always conduct a thorough comparison of top lenders.
