OneMain Financial Review 2021: Options for Those With Imperfect Credit, but Relatively High APRs

An image to accompany a review of OneMain Financial personal loans Illustration/NextAdvisor

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OneMain Financial is a subsidiary of OneMain Holdings, a financial services holding company. Originally founded in Indiana in 1927, the company currently has 1,400 branches in 44 states and serves over 2.2 million customers. 

OneMain Financial specializes in personal loans for non-prime consumers, meaning individuals with credit scores of 659 or below. Focusing on applicants’ ability to repay, it offers loan amounts as high as $20,000 and issues both secured and unsecured loans. But because non-prime borrowers tend to be riskier loan candidates and require more intensive service levels, OneMain Financial may charge higher interest rates than some other lenders. 

OneMain Financial can be a useful solution if you don’t have great credit but need a personal loan, as the option to add a co-applicant or collateral could give you a better chance of qualifying for a loan. Its 7-day cancellation policy also provides some flexibility if you change your mind about your loan. However, borrowers with good to excellent credit may qualify for better rates and higher loan maximums with other lenders, who may not require any collateral.

What to Know Before Getting a Personal Loan

Personal loans can be appealing when you have a financial emergency, need to fund a big expense, or want to consolidate your debt. Depending on the lender, personal loans can be either secured or unsecured. Secured personal loans require you to use your property, such as a car or other vehicle, as collateral to secure the loan. Unsecured loans do not require any collateral. 

When taking out a personal loan, only apply for the minimum amount you need to cover your goal. Depending on your creditworthiness and the lender you choose, personal loans can have relatively high fees and interest rates, so you may end up paying a substantial amount of money on top of the loan principal. In the case of secured loans, you also risk losing your property if you fall behind on your payments, so it’s essential that you only borrow what you need and have a plan in place to repay the loan on time

Before submitting your loan application, it’s wise to shop around and compare quotes from different lenders to find the best personal loan rates

Alternatives to Personal Loans

Before committing to a personal loan, it’s worth looking at all the other alternatives. Other financial tools you can use include: 

  • A home equity loan, home equity line of credit (HELOC), or cash-out refinance loan: If you own a home with equity, you can borrow against that equity with a home equity loan or HELOC. Or, you can use a cash-out refinance loan to take out another mortgage for more than you owe on your current one and use the difference for your planned expenses. Just be aware that your home serves as collateral on all of these options, so you risk the bank foreclosing on your house if you miss your payments. 
  • An employer paycheck advance. Different from a paycheck advance app, you may be able to get a portion of your next paycheck early by contacting your employer’s payroll or human resources department. A pay advance can be helpful because there are no fees or interest charges, and the amount is deducted from your next paycheck. 
  • A balance transfer credit card. If you have high-interest credit card debt, you can use a balance transfer credit card to get a lower interest rate. Depending on the card, you’ll typically have between 12 and 18 months to pay off the balance with a 0% APR. But if you’re still carrying a balance at the end of the intro period, you’ll pay the normal credit card interest rate, which can be quite high. 
  • A payday alternative loan. Some credit unions offer small-dollar loans that are less expensive than costly payday loans. You can typically borrow $200 to $2,000 and have up to six months to repay the loan. Federal credit unions that offer payday alternative loans cannot charge more than 28% APR, as mandated by the National Credit Union Administration
  • Credit counseling. If you have trouble managing your money and are in debt, you can meet with a non-profit credit counseling agency to get help. A credit counselor can work with you to create a budget and debt repayment plan. To find a reputable agency, look for one that is approved by the United States Trustee program

Pros and Cons of OneMain Financial

Pros

  • Non-prime applicants accepted

  • Co-applicants accepted

  • In-person assistance available

  • No prepayment penalties

  • Same day funding available

  • Free VantageScore credit score access

  • 7-day cancellation policy

Cons

  • Relatively high origination fees

  • Loan minimums and maximums vary by state

  • Collateral may be required

  • Full coverage insurance required for collateral

  • Relatively high APRs

  • Not available in AK, AR, CT, MA, RI, or VT

OneMain Financial Compared to Other Lenders

OneMain FinancialRocketLoansAvant
Current APR18.00 to 35.99%5.97% to 29.99% (lowest rate includes autopay discount)9.95% to 35.99%
Loan Term Range24 to 60 months36 or 60 months24 to 60 months
Loan Amount$1,500 to $20,000 (varies by state)$2,000 to $45,000$2,000 to $35,000
Credit Score NeededNot specified540580
Prepayment PenaltyNoneNoneNone
Origination FeeUp to 10%Up to 6%Up to 4.75%
Unsecured or Secured DebtBothUnsecuredUnsecured

The above rates and loan information are accurate as of September 6, 2021. The NextAdvisor editorial team updates this information regularly, though it is possible APRs and other information have changed since the page was last updated. Some of the lowest advertised rates might be for secured loans, which require collateral such as your home, car, or other asset. Also, some loan offerings may be specific to where you live.

How to Qualify for a OneMain Financial Loan

To apply for a loan from OneMain Financial, you will need: 

  • A government-issued ID
  • Proof of residence, such as a driver’s license or utility bill
  • Proof of income, such as tax returns or pay stubs

In addition, OneMain Financial loans are not available in Arkansas, Alaska, Connecticut, Massachusetts, Rhode Island, or Vermont. 

OneMain Financial doesn’t have a minimum credit score requirement. When we reached out to the company for details, a company representative said that ”OneMain does not use commercially available credit scores (e.g., FICO or Vantage Score) in making lending decisions.” Instead, the company looks at “a number of different criteria including credit bureau and alternative data sources, application data, as well as any history [OneMain Financial] may have with an applicant,” according to the representative.

According to OneMain Financial’s 2020 annual report, most of its borrowers have had some financial difficulties in the past or have limited credit experience. In 2020, approximately 47% of the money OneMain Financial lent went to borrowers with credit scores of 619 or below. 

OneMain Financial doesn’t have a minimum income requirement, but a company representative said it does require “minimum monthly free cash flow levels including debt repayment for all approved loans.”

When evaluating your application, OneMain Financial will review your household budget, your capacity to repay the loan, and the value of your collateral, if applicable. If you are requesting a larger loan amount, you may need to provide collateral. OneMain Financial accepts the following as collateral: 

  • Automobiles
  • Trucks
  • Motorcycles
  • Boats
  • Campers
  • RV’s

Instead of an appraisal, OneMain Financial uses “an industry-standard valuation tool, which considers the age, mileage, and options on the collateral,” as well as images of the collateral, to determine its value, according to a company representative. To protect your collateral, OneMain Financial requires customers applying for secured loans to have full coverage insurance for the vehicle.

If you’d like to get a larger loan, OneMain Financial does allow you to add a co-applicant to your application. A co-applicant can increase your chances of qualifying for a loan and securing a better interest rate. 

Who Should Get a OneMain Financial Loan

With OneMain Financial, you can borrow up to $20,000 and you may be able to get your money as soon as the same day your application is approved. Because loans are disbursed quickly, OneMain Financial can be a good option if you’re facing an emergency expense, such as: 

  • Car repairs
  • Broken appliances
  • Medical bills
  • Unplanned emergency travel

About 25% of the company’s customers live in credit-insecure counties —  areas where residents have limited access to traditional forms of credit. With that in mind, OneMain Financial’s personal loans are best for borrowers that have less-than-perfect credit scores or that have struggled to qualify for other types of credit in the past. 

OneMain Financial is also useful if you prefer a lender that offers in-person assistance. If you need help applying for a loan, you can meet one-on-one with a OneMain Financial representative at one of the company’s local branches

How to Apply for a OneMain Financial Loan

If you decide that OneMain Financial is right for you, you can apply in person at a local branch. However, a company representative said in-person applications aren’t required, and borrowers have the option of completing some or all of the application process online or by phone.

If you’ve decided that OneMain Financial is the right lender for you, here’s how you can apply for a loan: 

  1. Find out if you’re pre-qualified. Use OneMain Financial’s pre-qualification tool to find out if you’re eligible for a loan and what terms you can receive. Using the pre-qualification tool will not affect your credit score. 
  2. Apply online or in person. You can apply in person at a local branch, or you can fill out the application online. You will be prompted to enter your name, address, contact information, employment details, and the last four digits of your Social Security number.  
  3. Talk to a loan specialist. Once your application is submitted, a loan specialist will contact you to discuss the loan’s details. They will verify your identity and income and discuss next steps if you’re providing collateral. 
  4. Sign your loan documents. Once approved, OneMain Financial will send you the loan agreement for you to review and sign. After you submit those documents, the company will disburse your loan. 

OneMain Financial FAQs

Is OneMain Financial good for personal loans?

With OneMain Financial, you can borrow up to $20,000, and, if approved, you can get access to your money quickly. However, it has costly origination fees, and the loan may have a higher APR than some other lenders offer. Get quotes from multiple lenders to see if you can get a better rate and lower fees before submitting your application with OneMain Financial.

What credit score do you need for a OneMain Financial loan?

OneMain Financial does not have a minimum credit score requirement, but it does cater to non-prime borrowers. Nearly half of the money it lent to customers went to borrowers with scores of 619 or lower.

Can I get a OneMain Financial personal loan with bad credit?

If you have poor to fair credit, you may qualify for a loan from OneMainFinancial if you have a vehicle you can use as collateral or have a co-applicant.

Does a OneMain Financial loan hurt your credit?

When you apply for a loan from OneMain Financial, the lender will perform a hard credit inquiry. Every time a credit inquiry occurs, it can affect your credit score slightly. OneMain Financial reports your payment activity to the major credit bureaus. If you fall behind on your payments, you will be reported as delinquent, which can damage your credit. 

To keep your credit report in good shape, make all of your payments on time and limit new credit inquiries.