Rocket Loans vs. LightStream: Which Personal Loan Is Right for You?
Updated: December 6, 2023
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Rocket Loans and LightStream are great options if you need money fast. LightStream personal loans are ideal for borrowers seeking larger loans of up to $100,000, while Rocket Loans are best for borrowers needing smaller loans under $5,000. LightStream may also be beneficial for those seeking more flexible repayment terms. However, the best personal loan lender will depend on your circumstances.
MoneyGeek compares Rocket Loans and LightStream and provides comprehensive, up-to-date information so you can choose the best personal loan option.
Rocket Loans or LightStream: Overview
LightStream offers a more extended payment range than Rocket Loans, but Rocket Loans has lower credit score requirements. The personal loan lender that's right for you will depend on your needs and circumstances. Rocket Loans and LightStream have different APRs, credit scoring requirements, loan amounts and repayment terms, so it is important to compare them carefully before choosing a lender.
Rocket Loans
LightStream
APR Range
APR stands for annual percentage rate, which is the yearly interest rate you pay on your loans. You should factor in the APR when evaluating potential loan costs. Generally, lenders offer borrowers with good credit scores lower APRs. The type of loan you take out, the amount and the payment terms will also affect your APR.
Although getting a low APR is important, it’s one factor among many to consider when choosing a personal loan lender.
When it comes to APRs, LightStream beats Rocket Loans with a lower minimum and maximum. The lower the APR, the lower the overall cost of your loan.
Nevertheless, you should look for more than just a low APR when selecting a lender. A lender's repayment terms, loan amounts and credit requirements are also important factors to consider. By comparing quotes from different lenders, you can find the best lender for you.
Minimum Credit Score
Rocket Loans and LightStream require good credit scores, making them unsuitable lenders for people with bad credit. An individual's credit score is a measure of their ability to pay back debts on time. A higher credit score can lead to better loan terms, like a lower interest rate.
Many factors can affect your credit score, including your payment history, credit history length and debt-to-income ratio. To build your credit, pay your bills on time and avoid closing old accounts, which will shorten your credit history.
Rocket Loans and LightStream have similar credit score requirements and are not suited to borrowers with bad credit. The higher your credit score, the better your loan terms.
Before choosing a lender, shop around and compare the terms different companies offer.
Loan Amount Range
The maximum loan amount refers to the highest amount a lender will allow applicants to borrow, while a minimum loan amount pertains to the lowest amount available.
LightStream offers loans up to $100,000, significantly higher than Rocket Loans’ maximum of $45,000. However, applicants can borrow as little as $2,000 with Rocket Loans. Rocket Loans is best for loans under $5,000, but LightStream is better for major expenses like debt consolidation or home renovation.
Regardless of the lender's maximum, the amount of your loan will depend on several factors, including your creditworthiness, the loan's repayment period, its purpose and other lender-specific criteria. Lenders with broader loan amount ranges offer more borrowing flexibility.
Rocket Loans and LightStream offer vastly different loan amount ranges. With a maximum loan amount of $100,000, LightStream has an obvious advantage. However, those who need loans of less than $5,000 may prefer Rocket Loans.
The best lender for you will depend on your needs. Remember that loans cost money, so never borrow more than necessary.
Repayment Terms
The repayment term is the amount of time the bank gives you to repay your loan. The shorter the term, the lower your interest rate, but the higher the monthly payments. However, shorter repayment terms are preferable if you can swing the higher monthly payments.
LightStream offers terms ranging from two to seven years, while Rocket Loans provides two options: three or five years. While LightStream offers greater flexibility, longer repayment terms cost more. Be mindful of this when evaluating lenders.
Due to its repayment period of 24 to 84 months, LightStream offers borrowers a broader range of options to repay their loans. However, the longer the repayment term, the more interest you'll have to pay. So, if you can afford higher monthly payments, you're better off choosing a shorter repayment period.
Time to Receive Funds
LightStream disburses funds on the same day it approves your application, making the lender a great option for people facing financial emergencies.
Applying online is the quickest way to get a personal loan. Many lenders allow customers to prequalify without affecting their credit scores. LightStream, however, performs a hard inquiry, while Rocket Loans performs a soft inquiry that won’t affect your credit score.
LightStream wins in this category. When lenders release funds more quickly, borrowers can spend their money sooner. Disbursement speed is crucial if you need the money for an emergency. While quickly receiving money is a great advantage, also look at other factors like the interest rate before making a decision.
Final Thoughts
Rocket Loans and LightStream are credible lenders offering personal loans across the U.S.
LightStream features a broader range of loan amounts from $5,000 to $100,000, making it suitable for people who need a midrange or large loan. Borrowers can also choose repayment terms between two and seven years. Additionally, the lender disburses funds quickly, usually on the same day.
On the other hand, Rocket Loans allows borrowers to borrow amounts as low as $2,000. Additionally, unlike LightStream, Rocket Loans conducts a soft credit check that doesn't affect your credit score. And although both lenders have high credit score requirements, Rocket Loans has a lower minimum limit.
Ultimately, your individual needs will dictate which company is right for you. If you want the best deal, always compare multiple lenders before deciding.
Frequently Asked Questions About Personal Loan Lenders
We answered a few commonly asked questions about personal loans so you can choose the best lender for your needs.
Approval for a personal loan normally requires proof of your identity, address, income, employment and credit history.
You can request a free copy of your credit report, including your credit score, on the Annual Credit Report website. You can also make the request by phone or in person.
As part of the prequalification process, most lenders, including Rocket Loans, conduct soft credit inquiries, followed by hard credit inquiries during the application. However, LightStream performs a hard inquiry that can affect your credit score.
Not at all. Lenders offer different interest rates on personal loans.
In some cases, yes. The main costs associated with personal loans are application, late and origination fees and prepayment penalties.
Applying for a personal loan online is the best option if you have all the necessary documents on hand. Your application will be approved and funded more quickly this way, saving you both time and money.
You can prepay your loans, though some lenders impose penalties for doing so.
sources
- LightStream. "Frequently Asked Questions." Accessed September 21, 2022.
- Rocket Loans. "Rocket Loans Personal Loan." Accessed September 21, 2022.
The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.
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