Today, many financial tasks can be handled on an app, including shopping for and managing your car insurance coverage.

If you’re in the market for a new auto insurance policy, we reviewed top car insurance providers to rank their service and app features. Here are some of the best auto insurance apps that offer rate-shopping tools, digital services, safe-driving perks and discounts.

• Best overall: State Farm
• Best for safe-driving perks: Root
• Best for discounts: Allstate
• Best for policy and vehicle management: Geico
• Best for car insurance rate shopping: Jerry

Best overall: State Farm

Why State Farm stands out above the rest — State Farm is the largest writer of car insurance in the country and has more than 19,000 agents. The company ranks highly for customer satisfaction and offers three car insurance apps — one to manage your policy and two other optional apps that monitor driving habits and reward customers for safe driving behavior.

• In-app claims processing — You can start claims, track claims, upload photos of car damage and speak to an agent in the app. If you need roadside assistance after an accident, the app can also help you contact a tow company and provide other roadside support.
• Safe driver savings — State Farm’s Drive Safe & Save and Steer Clear programs are two optional drive-tracking apps you can download and enroll in for insurance discounts. State Farm’s Drive Safe & Save uses Bluetooth to gather information about your driving habits. If you use this program, driving safely could reduce your insurance rates. For drivers under 25 years old, the Steer Clear app tracks driving history, provides driving training and offers discounts if young drivers meet program requirements.
• Customer satisfaction — Customers rank State Farm highly for its policy-purchasing and claim-processing experiences. It’s also the highest-ranking car insurance provider for customer satisfaction in the Southwest, according to J.D. Power’s 2023 U.S. Auto Insurance Study℠.

Read reviews of State Farm car insurance to learn more.

Best for safe-driving perks: Root

Why Root could be a good choice for safe-driving perks — Several insurance companies offer optional drive-tracking programs you can enroll in to land safe driver discounts. But telematics (car tracking) is at the core of Root’s product. Root tests the driving behavior of each prospective customer and sets insurance rates based on certain factors that it uses to determine safe driving. If you drive safely according to Root, this feature could help you secure low premiums right from the start of your policy.

• Test drive for rates — Root provides you with a rate quote after monitoring your driving behavior for a few weeks during a test drive. To set your rate, the driving test looks at factors like how you brake and turn, what time of day you drive and whether you use your phone while driving.
• Claim filing and account management — Customers can review coverages, change drivers and handle other policy tasks using the app. You can also file claims by answering questions and taking pictures. Each policy comes with roadside assistance.
• Limited availability — Root has limited availability, so check to see if it offers coverage in your state before committing to this insurer.

Read reviews of Root car insurance.

Best for discounts: Allstate

Why Allstate could be a good choice for discounts — Allstate’s app provides tools to view your policy, pay a bill, file a claim, contact roadside assistance and view your insurance card digitally. Allstate also offers plenty of ways to get discounts on your car insurance.

• Discount opportunities — Allstate offers several discount opportunities, including new-car discounts, multi-policy discounts, paperless billing discounts, pay-in-full discounts, student discounts and more.
• Customer satisfaction — Allstate is ranked above industry average in two U.S. regions, according to J.D. Power’s 2024 U.S. Auto Claims Satisfaction Study.

Read reviews of Allstate auto insurance.

Best for policy and vehicle management: Geico

Why Geico could be a good choice for policy and vehicle management — Geico Mobile’s Vehicle Care tool can help you keep up with your car’s maintenance and service history. Customers can also handle account basics with the Geico app, like viewing insurance cards digitally, printing ID cards and setting up online billing.

• Claim filing and roadside assistance — Customers can use the app to submit photos of car damage, file claims and get estimates for damage. You can also use the app to get towing and emergency assistance anytime.
• Vehicle records — Geico and Carfax partner to provide information in the app about your car’s service history, manufacturer recalls and more to keep you aware of maintenance dates and potential car safety hazards.
• Price and customer satisfaction — According to J.D. Power, Geico ranked above the industry average for claims satisfaction in multiple regions in the U.S. for 2024.

Read reviews of Geico auto insurance.

Best for car insurance rate shopping: Jerry

Why Jerry could be a good choice for rate shopping — Jerry is an insurance broker that compares rates from a database of more than 50 carriers to help customers find affordable car insurance. If you find coverage using Jerry, the company handles canceling your old insurance and writes you a new policy.

• Quick application — Jerry asks you to answer a questionnaire about your current policy and insurance history, reviews your current insurance coverage and then presents you with quotes from different companies.
• Contract management — If you decide to move insurance companies, Jerry will handle the paperwork of switching insurance, and you’ll get a new digital insurance card.
• Automatic rate shopping — Jerry can also compare rates before your insurance renewal to help you continually shop around for coverage savings.
• Newly established company — Jerry was founded in 2017, so it’s a relatively new company. So if you want to buy a policy from a veteran insurance company, Jerry might not be a top choice.

Read our full review of Jerry.

FAQs about car insurance apps

How we picked these insurers

We looked at 11 major car insurance providers with apps to rank them by customer satisfaction, complaints, features, discount opportunities and digital tools. To research each company, we looked at app store ratings, insurance availability, J.D. Power survey results, NAIC complaint index data, policy tools, app features and discount options.

Rideshare companies, like Uber and Lyft, provide driver insurance that offers the most coverage when you’re on the way to pick up a customer and when they’re in your car. While waiting to accept a ride, you may have liability-only coverage that provides no protection for your vehicle.

To fill in coverage gaps, rideshare insurance is a type of coverage that may be added to your personal auto policy as an endorsement (also known as a “rider”). Although it may not be required, the extra coverage can give you peace of mind and lower your out-of-pocket costs if you get into an accident.

• Best overall: Progressive
• Best for customer satisfaction: State Farm
• Best for driver discounts: Farmers
• Best for service members and veterans: USAA
• Best for claims processing: Allstate

Best overall: Progressive

Why Progressive stands out above the rest: Progressive offers numerous protection options to cover periods when you’re waiting for a trip, including comprehensive coverage, collision coverage and personal injury protection for you and your car. Progressive’s rideshare endorsement may also cover you when making deliveries for services like DoorDash and Instacart.

• Roadside assistance and rental car reimbursement: If your personal car insurance policy has roadside assistance and reimbursements for rentals when your car is in the shop, that coverage will extend to protect you while ridesharing.
• Deductible reimbursement: Deductibles are often high for rideshare company coverage when it’s in effect. Progressive’s deductible reimbursement feature pays you the difference between your rideshare company’s deductible and your personal deductible. Say your rideshare company insurance has a deductible of $1,000 after you get into an accident, but your personal policy has a deductible of $500. Progressive would pay you $500.
• Wide availability: Progressive rideshare car insurance is an option in most states, but it’s not currently available in Alaska, California, Connecticut, Delaware, Hawaii, Kansas, Nevada, New Jersey, New York, Oregon or Vermont.

Read our full review of Progressive car insurance.

Best for customer satisfaction: State Farm

Why State Farm could be a good choice for customer satisfaction: State Farm ranks among the top five insurance companies for customer satisfaction in multiple U.S. regions, according to J.D. Power’s 2024 U.S. Auto Insurance Study. Ranking highly in this study means a good number of customers have given the company high marks on the billing process, claims, policy offerings, price and interaction.

• Coverage for your car and injuries: State Farm can fill in insurance gaps by providing comprehensive, collision and medical coverage (if you’ve selected these coverages on your personal auto policy) to protect you and your vehicle if you get into an accident before you accept a ride while your app is on.
• Transparent pricing: State Farm states that adding rideshare car insurance to a personal policy may increase your policy premiums by about 15% to 20%.
• Safe driving discounts: When you download State Farm’s Drive Safe & Save app to monitor your driving, you may qualify for discounts if you practice safe driving habits.

Read our full review of State Farm car insurnace.

Best for discounts: Farmers

Why Farmers could be a good choice for discounts: Rideshare car insurance at Farmers is an add-on to a personal insurance policy, and personal policies come with a wide range of discount options. Farmers’ website lists its many discount opportunities, including discounts for automatic insurance payments, paying in full and having anti-theft alarms.

• Lower than average claims satisfaction: Farmers ranks below the industry average for claims satisfaction in most regions in the United States, according to J.D. Power’s 2024 claims satisfaction survey.
• Safe driving rewards: You can download and turn on the Signal by Farmers app to track how you’re driving — and if you drive safely, you could get entered into drawings to win rewards worth up to $100. You may also get a discount when you sign up or renew.
• Wide availability: Farmers insurance is available in all 50 states and Washington, D.C. However, rideshare car insurance may not be available everywhere.

Read our full review of Farmers car insurance.

Best for service members and veterans: USAA

Why USAA could be a good choice for service members and veterans: USAA is a bank that caters to military members and their families, and it consistently ranks highly for customer satisfaction among all major insurance providers.

• Car repair warranties: If you get into an accident and choose to make car repairs at one of USAA’s preferred centers, the repairs come with a limited lifetime warranty.
• Wide availability: Rideshare coverage is available in most states except Hawaii, North Carolina, Michigan, Montana, New Mexico, New York, South Carolina and Virginia.
• Membership limitations: To be eligible for USAA products, you must be active military, retired, honorably discharged or be a family member of a military service member.

Read our full review of USAA car insurance.

Best for claims processing: Allstate

Why Allstate could be a good choice for claims processing: If you get into an accident, you can quickly take pictures of damage, file claims and track claims processing using Allstate’s app. According to J.D. Power’s 2024 claims satisfaction survey, Allstate ranks higher than the industry average in multiple regions in the U.S.

• Deductible gap coverage: Allstate provides deductible gap coverage of up to $2,500 that reimburses you for the difference between your rideshare company’s insurance deductible and your personal insurance deductible.
• Limited coverage information: Aside from gap coverage, Allstate shares limited details on its website about the specific protection available for rideshare coverage, so you’ll have to call an agent to explore your options.
• Safe-driving discount: If you sign up for Allstate’s Drivewise program, you can earn discounts for safe driving. 

Read our full review of Allstate car insurance.

FAQs about rideshare insurance

How we picked these insurers

We looked at insurance companies that provide rideshare protection and ranked them by coverage options, discount opportunities, availability and customer satisfaction scores.

Traditionally, financial experts recommend putting 20% toward a conventional loan down payment — but in some cases you may be approved with a significantly smaller percentage.

A conventional loan is a mortgage that’s not backed by a particular government program. Requirements for conventional loans vary by program and lender. While putting 20% down is often suggested, some conventional loans require as little as 3% down.

The trade-off is that putting down a smaller sum can drive up your monthly costs because of private mortgage insurance, or PMI.

We’ll review common down payment requirements for conventional loans, the role PMI plays in the cost and down payment assistance options in case you need them.

• What is the down payment on a conventional loan?
• What is the minimum down payment for a conventional loan?
• Do you have to put 20% down for a conventional loan?
• Down payment assistance options

What is the down payment on a conventional loan?

The down payment for a conventional loan usually ranges between 3% and 20%. While 20% is considered the recommended amount to put down on a house, many people don’t pay that much upfront.

First-time homebuyers typically put down 6%, and repeat buyers put down 17%, according to a 2022 report from the National Association of REALTORS®.

The benefit of putting down less money is that you may be able to buy a home sooner — but that convenience comes at a cost. The less you put down, the higher your monthly loan payment will be.

In addition to PMI costs, you’ll likely pay more interest over time because you’re borrowing more.

What is the minimum down payment for a conventional loan?

First-time homebuyers may qualify for a conventional mortgage with a down payment as low as 3%. Just be aware that when you put down less than 20%, you’re often required to purchase PMI.

The minimum down payment for a conventional loan is 3% with the following Fannie Mae and Freddie Mac mortgage types:

• Standard 97% Loan-to-Value Mortgage — Standard 97% LTV loans are a Conventional 97 loan that allow you buy a home with a loan-to-value of 97%, which means 97% of the home purchase would be covered by a mortgage while the remaining 3% would be paid by your down payment. There are no income limits for Standard 97% LTV mortgages, but at least one borrower has to be a first-time homebuyer. Homebuyers must have credit scores of at least 620 for a Conventional 97 loan.
• Fannie Mae HomeReady® Mortgage — Fannie Mae’s HomeReady program is open to all borrowers who meet income and credit requirements — not just first-time homebuyers — and the minimum down payment is 3%. You may qualify with credit scores as low as 620.
• Freddie Mac HomePossible® — Freddie Mac’s HomePossible program accepts down payments of as low as 3% for low- to moderate-income homebuyers. For a home purchase, you can qualify with credit scores as low as 660.
• Freddie Mac HomeOne® — Freddie Mac’s HomeOne program lets first-time homebuyers put down a minimum of 3%, and there’s no income limit. You may qualify with minimum credit scores of 620.

Do you have to put 20% down for a conventional loan?

You don’t have to save up a full 20% to get a conventional loan since some lenders will accept a lower down payment. But if you can put down 20% upfront, you can lower your monthly payment and avoid paying private mortgage insurance.

PMI is designed to protect the lender in case you stop making payments on your loan. The cost of PMI varies, but you can expect to pay about $30 to $70 per month for each $100,000 you borrow, according to Freddie Mac.

That means if you borrow $300,000 for a home with less than 20% down, you’re looking at $90 to $210 per month in PMI. The good news is that PMI can be removed once you build 20% home equity.

Below is an illustration of how payments and total interest paid over 30 years can differ based on the amount of the down payment.

We used the Credit Karma Mortgage Calculator to show the differences.

Ultimately, how much you should put down depends on the cash you have available and your financial goals. If you have the means to put more money down to buy your next home, the long-term savings can be substantial.

Down payment assistance options

If your personal savings fall short of the 20% you’d like for a down payment, there are ways to help bridge the gap. Here are several options to consider.

Look into down payment assistance options

State and local governments may have down payment assistance programs that provide money or loans to cover part of the down payment. For example, Maryland has the Maryland Mortgage Program Flex plan, which can offer a zero-interest loan for a down payment. The loan is due when you pay off the mortgage, sell the home or refinance.

Alaska’s Affordable Housing Enhanced Loan program is another initiative that offers down payment assistance through grants and forgivable loans.

Consider checking with your state and local housing authority to see what assistance might be available.

Check if your lender offers assistance

Some banks offer their own down payment programs to qualified homebuyers.

U.S. Bank has the American Dream loan that may provide homebuyers up to $5,500 or 3% of the purchase price (limited to $10,000), whichever is greater. This money can be used for a down payment, closing costs or home repairs.

Bank of America’s Down Payment Grant program may offer grants that equal up to 3% of the purchase price (limited to $10,000) to help you cover upfront costs. But the down payment program is limited to certain locations.

Use gift funds

Lenders may accept funds given to you as a gift from someone you know. If you receive gift funds from a family member or friend, the lender will likely ask for a gift letter from the person giving you the money that says how much they’re giving you and confirming that the money doesn’t have to be repaid.

Next steps

The lack of a large down payment doesn’t have to keep you from becoming a homeowner. Besides government-backed loans, such as FHA loans or VA loans, you may be able to qualify for a conventional loan with as little as 3% down.

The first step of homebuying is figuring out how much personal savings you have for a down payment.

With that number in mind, you can get an idea of how much home you can afford using Credit Karma’s Home Affordability Calculator.

When you’re ready to start looking for home financing, it’ll pay to shop around so you can choose the best mortgage lender for your situation.

Selling a home you love isn’t the only way to draw cash from equity.

When you need cash, home equity lines of credit or HELOCs, are a flexible credit product that let you tap into home equity you’ve built up without refinancing or putting your home on the market. 

We’ll dig into HELOC requirements and what you need to know before borrowing.

• What is a HELOC?
• What are the requirements for a HELOC?
• How much can you borrow with a HELOC?
• What can you use a HELOC for?
• Advantages and disadvantages of a HELOC

What is a HELOC?

A home equity line of credit is a credit line that’s secured by your home. Unlike home equity loans that provide cash in a lump sum, HELOCs offer a credit limit you can borrow against, and you’re only charged interest for the amount of the credit line you use.

HELOCs make sense if you have open-ended expenses or need to borrow money on an ongoing basis. That’s because they allow you to borrow only what you need.

For example, if you’re working on a home improvement project you could draw money from a HELOC to pay for materials instead of taking out a large loan and budgeting out the cash.

What are the requirements for a HELOC?

Requirements for HELOCs can vary by lender, but here are some general requirements to consider.

Home equity

Home equity represents your ownership stake in a home and is an important factor in HELOC approval because your home equity is what you’re borrowing from. Typically, lenders require at least 15% to 20% equity in your home to take out a HELOC.

DTI ratio

Your debt-to-income (DTI) ratio shows lenders if you can afford to take on new debt based on your current debt load. You can calculate your DTI ratio by adding your total minimum monthly debt payments, dividing that sum by your monthly income and multiplying by 100.

Lenders typically look for borrowers with a DTI below 50% to qualify for a HELOC, but a lower DTI could increase your chances of approval.

Credit scores

Credit scores measure the strength of your credit profile and the likelihood that you’ll keep up with credit line payments. You may need a credit score of 680 or above to qualify for a HELOC though having stronger credit could help you qualify with a better interest rate.

Income

Your income is used to calculate your DTI and as an indicator of your general capacity to pay back the credit line. Lenders may ask for pay stubs, bank statements or other tax documents to show proof of income.

How much can you borrow with a HELOC?

The credit limit of your HELOC depends on your credit, the value of your home and how much equity you have. In general, credit limits range from 80% to 90% of your home equity, so having a large amount of equity can increase the credit line you get approved for.

What can you use a HELOC for?

There aren’t restrictions on what you can use HELOCs for but they can be most beneficial for home projects because of the tax perks. If you use funds from a HELOC to make upgrades that increase the value of your home, the interest on your HELOC may be tax deductible.

Aside from home-related projects you can use HELOCs for education costs, travel, medical bills and other major expenses.

Despite their flexibility HELOCs can be risky. If you use a HELOC for a car, the car could depreciate faster than you’re able to pay off the debt. And if you’re unable to make payments on a HELOC it could put your house at risk of foreclosure.

Advantages and disadvantages of a HELOC

Like most financial products, there are pros and cons to taking out a HELOC. Here’s what you need to know.

Advantages of a HELOC

• Flexible withdrawals and repayments. Lenders may offer a draw period — when you can draw money from the credit line using checks or a credit card — followed by a repayment period. During repayment you may be able to spread payments over several years or you may have to pay the whole balance at once.
• Potential for a lower annual percentage rate than a credit card. Since HELOCs are credit lines backed by your home, they may come with lower interest rates than unsecured credit cards. HELOCs may also provide a low-interest introductory period, which can offer interest savings compared to personal loans.
• It could help your credit scores. If your HELOC and payments are reported to the credit bureaus, on-time payments could help you build credit.
• Interest may be tax deductible. If you use the money for home improvement, you may qualify to write off interest paid on the HELOC.

Disadvantages of a HELOC

• Your house is collateral. Your home backs the loan, which means you could lose your home if you’re unable to pay off the balance on your HELOC.
• Interest rates could increase. Interest rates on HELOCs are usually variable and can increase. 
• You could face a balloon payment. If the full amount charged to the credit line becomes due when the draw period ends, you could be required to make one large payment.
• Equity stake is reduced. When you borrow from equity, the equity or ownership you have in the home is lowered. If you sell your home, you’ll pocket less profit because your HELOC will need to be paid off.

What’s next?

If you’re interested in a HELOC, the next step is reviewing requirements with individual lenders and shopping around to see what terms are available. HELOCs may come with appraisal fees and other closing costs to consider when determining the total cost of borrowing.

Taking out a home equity loan and doing a cash-out refinance are other ways to borrow from home equity. Exploring these options and comparing them to HELOCs can help you find the most affordable way to borrow.

Home equity loan requirements can vary — but having strong credit and a low debt-to-income ratio can increase your likelihood of approval.

Like other types of loans, lenders measure your credit, income and current debt load to determine if you qualify for a home equity loan. But since your house secures this type of loan, how much equity you have also plays a role in your approval. We’ll cover home equity loan requirements to help you decide if it’s the right loan for you.

• What is a home equity loan?
• How much can you borrow with a home equity loan?
• What are the requirements for a home equity loan?
• What can you use a home equity loan for?
• FAQs about home equity loan requirements

What is a home equity loan?

A home equity loan, or a second mortgage, is an installment loan that lets you draw from home equity. Interest rates are typically fixed, with terms of up to 30 years.

Since home equity loans let you borrow money in a lump sum, they can be a good way to pay for expenses where you need a specific amount, like consolidating credit card debt or paying a contractor for a home project.

Home equity loans and home equity lines of credit differ in a couple of ways: HELOCs offer a credit line with a limit you can draw from on an ongoing basis, and interest is only charged on the amount you borrow. HELOCs can be a good alternative when you need money continuously, like if you’re making ongoing repairs to a home.

How does a home equity loan work?

Home equity loans allow you to access money, dispensed as a lump sum, from the equity you’ve built in your home. This money doesn’t even have to go toward home-related expenses either. When you get a home equity loan, your lender will go over repayment terms, interest rates and closing costs for your loan during the approval process.

How much can you borrow with a home equity loan?

With home equity loans, the rule of thumb is that you can borrow up to 80% of the equity in your home. In some cases, you may be able to borrow up to 100% of your equity. Borrowing a higher amount can be risky, though, because a decrease in the value of your home could result in you going underwater, meaning you owe more on the home than it’s worth.

What are the requirements for a home equity loan?

When reviewing your application for a home equity loan, lenders will measure your home’s value, your credit, and your ability to keep up with payments. While requirements can vary, here are the general guidelines for a home equity loan.

Credit scores of 620 or higher

You generally need credit scores of 620 or above to get a home equity loan. But getting approved with higher credit scores can be easier than with lower scores, and having good credit could also lower your interest rate.

In some cases, lenders may offer home equity loans to borrowers with credit scores of 619 or below, but these loans can cost more over the life of the loan. And being unable to keep up with high home equity loan payments could put you at risk of losing your home, so it’s important that payments are affordable.

At least 20% equity in your home

You generally need a combined loan-to-value, or CLTV, of at least 80% to qualify for a home equity loan. This means a maximum of 80% of your home is financed, and you have at least 20% equity in the home to borrow from. That said, requirements vary widely by lender. If you don’t have 20% equity built up, waiting until you’ve paid down your mortgage further could help you qualify for a home equity loan down the road.

DTI ratio under 43%

Your debt-to-income ratio shows how much of your monthly income goes to debt payments. A high DTI can signal to lenders that you have many debt obligations and could have trouble paying for a new loan.

For home equity loans, the DTI requirement is typically 43%, but can be higher. You can calculate your DTI by totaling your monthly debt payments and dividing that sum by your monthly income. Then multiply that by 100 to get a percentage. If your DTI is above 43%, paying down debt to eliminate debt payments or increasing your monthly income could lower your DTI.

What can you use a home equity loan for?

You can use home equity loans for things like debt consolidation, emergency bills, major purchases, medical treatments or home renovation. If you use a home equity loan to pay for renovations or upgrades on the home securing the loan, interest may qualify for the mortgage interest tax deduction.

In comparison, personal loans may have some limitations. For example, you may be unable to use a personal loan for college tuition costs, while home equity loans don’t have the same restrictions.

Advantages and disadvantages of a home equity loan

If you’re considering applying for a home equity loan, here are the pros and cons to consider.

Advantages of a home equity loan

• Low interest — Since your home secures a home equity loan, it’s a lower-risk loan to fund than unsecured loans that don’t require collateral. For this reason, home equity loans can have lower interest rates than other personal loans and credit cards.
• Long loan terms — Loan terms may be as long as 30 years, allowing you to spread out your payments.
• Flexibility — You can use the amount you borrow for many different types of expenses.

Disadvantages of a home equity loan

• Lowers equity — Borrowing from home equity lowers your ownership stake in the home. And if you sell, the loan will have to be repaid, which can lower the amount you get from the sale.
• Foreclosure risk — Taking out a second mortgage against your home adds another debt payment to your budget, and if you can’t pay it, your lender could foreclose on your home.
• Fees — While some lenders may not charge fees to process your loan, others may have closing costs ranging from 2% to 6%.
• Long application process — Getting a home equity loan may require an appraisal to determine how much your home is worth. Compared to an unsecured loan that could be funded within a few days, a home equity loan’s application and closing process can take a month or more. For example, Discover home equity loans can take 55 days to process from application to close.

Which one is better: A home equity loan, HELOC or cash-out refinance?

HELOCs are lines of credit borrowed against the equity you have in your house. You can borrow up to a certain limit for a fixed time before having to pay it back. It functions similarly to a credit card, but often you won’t have to start repaying it right away — even for years, depending on the terms of your HELOC. Home equity loans are similar to HELOCs, but you receive your money in a lump sum and will need to start making payments immediately. 

A cash-out refinance allows you to take out a new mortgage, for more than you owe on your current one, in order to keep the difference in cash. But since you’re refinancing your mortgage, your interest rates may change and you’ll have to pay closing costs. 

Whether a home equity loan, HELOC or cash-out refinance is best for you depends on your individual situation. Each product has different terms and uses so be sure to evaluate what may fit best with your needs. 

FAQs about home equity loan requirements

Next steps

If you’re considering taking out a home equity loan, the first step is calculating your equity and checking your credit score to see where you stand. From there, shop around with different lenders to check rates, fees and funding timelines. If you need faster cash than a home equity loan can offer (or you don’t have equity to borrow from), unsecured personal loans could be another way to borrow money for personal expenses.

Wondering how to get a mortgage?

Applying for a home loan can be time-consuming and intimidating, but getting funds to buy your dream home can make it all worthwhile.

During the mortgage process, lenders carefully review your finances to determine the likelihood that you’ll repay a home loan. You’ll undergo a credit check to get approved, and lenders review documents like your pay stubs and bank statements. We’ll cover the details of getting a mortgage, so you know what to expect.

• What mortgage lenders look for during application
• Documentation you’ll need for mortgage approval
• Steps for getting a mortgage

What mortgage lenders look for during an application

Here are the factors that affect your mortgage application.

• Income — Your income is how much you earn from work, self-employment, alimony, child support and more. Lenders review your income to ensure you have enough cash flow to keep up with mortgage payments and home upkeep.
• Debt-to-income ratio — Your debt-to-income ratio measures how much gross income you earn each month compared to your monthly debt payments. Having a high DTI or a high percentage of your income going to debt each month can signal to lenders that you might have trouble keeping up with home loan payments.
• Assets — Lenders look at assets like the liquid cash you have in savings and the money you have in investments to see if you have money to draw from to pay the mortgage if you experience a financial emergency.
• Property type — Whether you’re buying a single-family home, second home, condo or investment property can affect the loan cost and down payment. Interest rates for condos tend to be higher, and second homes or investment properties may require more money down than mortgages for primary residences.
• Credit — Your credit scores measure your credit risk, or how likely lenders think you are to repay your loan. The credit score required to get a mortgage depends. In the case of FHA loans, you could have credit scores as low as 580 and still qualify to put just 3.5% down. But conventional loans typically require scores in the 600s or higher.
• Payment history — Payment history is one of the most critical factors that affects your credit scores. Having a record of on-time payments on any on student loans, installment loans and credit cards can help you get approved for a mortgage.
• Down payment — Your down payment is how much you pay upfront for a mortgage — and having a large down payment could lower your interest rate. The size of down payment you make on a house can depend on the type of mortgage you’re applying for. Generally, loans require 3% to 20% down. But VA loans and USDA loans may require no money down.

Documentation you’ll need for mortgage approval

Here are some examples of financial documents you may need to provide to get home loan approval.

1. Pay stubs, W-2s or other proof of income — Lenders may check pay stubs, W-2s and child support or alimony documents to verify income sources. You can get pay stubs and W-2s directly from your employer, while several months of bank deposits could show proof of regular child support or alimony payments.
2. Tax returns — You may need to provide several years of tax returns to show your income, particularly if you’re self-employed and don’t have pay stubs or W-2s. You can get copies of tax returns from your accountant or the tax software you use to file returns.
3. Bank statements and other assets — Mortgage lenders may request bank and investment statements to show you have enough money in your accounts to make several months of mortgage payments. Lenders may have online application platforms that can connect to your financial accounts, so you don’t have to print out individual statements.
4. Credit history — As part of the loan application, lenders will check your credit, which usually involves a hard credit inquiry. It’s always a good idea to check your credit before borrowing to see if there are any steps you could take to raise your credit scores. This can lower your interest rate and improve your approval odds.
5. Gift letters — If a friend or relative is gifting you down payment funds, lenders will likely ask for a gift letter that states the sum given doesn’t have to be paid back. You can ask the lender what the letter should say, but generally, the gift giver should explain that the funds are a gift and where the money is coming from.
6. Photo ID — Lenders use your government identification to verify your identity. You could provide a driver’s license, passport or state-issued ID.
7. Renting history — Lenders may want to contact past landlords to get information about your past rental payment history. You can provide rental history by giving lenders phone numbers and names of your past landlords so they can call and do a verification.

Steps for getting a mortgage

Now that we’ve covered what factors affect your mortgage and the documents you’ll need to apply for a home loan, let’s cover the steps for getting a loan from start to finish.

Step 1: Calculate your buying power

A general rule of thumb is to spend no more than 28% of your monthly salary on housing payments. So you can calculate 28% of your household’s income and look for homes at a price point that would keep mortgage payments under that amount. Using a home affordability calculator, you can also calculate your buying power.

Step 2: Get a mortgage preapproval

The actual mortgage process starts with rate shopping and getting loan preapprovals. A preapproval is a conditional offer that estimates how much a lender may be willing to let you borrow. Here are the types of mortgage loans to consider when looking for loans to apply for.

• Conventional mortgages — A conventional loan is a non-government-backed loan that’s geared toward borrowers with minimum credit scores of 620. With higher credit scores, you’re more likely to qualify for better interest rates. Lenders may accept as little as 3% down on a conventional loan as long as you have private mortgage insurance.
• Government-backed mortgages — There are a variety of government-backed mortgages, including VA loans (available to veterans, active-duty service members and eligible spouses), USDA loans (for people who live in rural areas), and FHA loans, which offer flexible credit requirements and low down payments.
• Jumbo mortgages — Jumbo loans are large mortgages for homes that exceed loan limits set by Fannie Mae and Freddie Mac. If you live in a high-cost-of-living area or want a larger house, jumbo loans could get you the financing you need.

Step 3: Use your preapproval letter to make offers

Once you have an estimate of the loans you qualify for, you can create a list of houses in your budget, tour them and put in offers with the help of a real estate agent. Putting in multiple offers for different homes could increase your odds of attracting a seller’s attention.

Step 4: Go through loan underwriting

After you get a home offer accepted, you’ll choose a loan offer (if you were preapproved with multiple options), and then the loan goes to underwriting. During underwriting, lenders look closely at your financial documents to verify income, assets and credit. The home will undergo a home inspection, as well as an appraisal during loan processing to determine its market value. Additionally, performing a title search will ensure that the seller has the right to sell the home and that there aren’t liens or other problems with the title.

Step 5: Close on your mortgage and get your keys

If all goes well with the home inspection and appraisal, closing is the last step of the mortgage process. You should get a Closing Disclosure at least three days before your closing appointment that outlines loan terms and closing costs such as appraisal fees, title insurance and prepaid interest purchased to lower your interest rate.

Closing costs generally work out to 2% to 5% of your loan amount and are essential to budget for. In some cases, you can add closing costs to your loan and pay them off over time, or the seller could offer to assist you with closing costs. During closing, you’ll also pay down payment funds, and you should get the house keys.

What’s next?

If you’re interested in buying a house, do a financial checkup to review your credit and the money you have for a down payment. From there, you can look at loan requirements and get the documents you might need for the application process before reaching out to lenders to start checking rates and weighing options.

Interest paid on a HELOC may be tax deductible, an advantage that doesn’t apply to personal loans or credit cards.

Interest rates on HELOCs might be lower than other forms of credit because your house secures the debt. We’ll cover what the HELOC interest tax deduction is and who qualifies for it.

• Is HELOC interest tax deductible in 2023?
• HELOC interest deduction limitations
• When is interest on a HELOC tax deductible?
• How the mortgage interest tax deductible process works
• How to claim a HELOC interest deduction on taxes
• The difference between a HELOC and a home equity loan

Is HELOC interest tax deductible in 2023?

A home equity line of credit or HELOC is a credit line secured by your house that you can apply for and draw money from on an ongoing basis. Currently, taxpayers are allowed to deduct interest paid on a HELOC if the following conditions are met:

1. The HELOC is secured by a “qualified home” that you own. A qualified home is a primary residence or second home, like a vacation home. But if you rent out the second home, you must live in it for at least 14 days or 10% of the days it’s available for rent (whichever is longer) for it to be considered a qualified home.
2. You use HELOC funds to improve the home. Home improvements could include projects like renovating your kitchen or adding another room to the house.
3. You itemize deductions. Instead of taking the standard deduction, you must itemize deductions to qualify for the mortgage interest tax break.
4. You meet loan limits. The interest you can deduct depends on your mortgage balances, the date you took out loans and your filing status.

HELOC interest deduction limitations

The interest you can deduct for loans secured by your home is based on whether you borrowed before or after Dec. 16, 2017. Here’s what you need to know.

• Mortgages taken out before Dec. 16, 2017 — Interest is fully deductible on mortgage debt (including HELOCs) that total $1 million or less ($500,000 if married filing separately).
• Mortgages taken out after Dec. 16, 2017 — Interest is fully deductible on mortgage debt totaling $750,000 or less ($375,000 if married filing separately).

Note this limit is a combined amount for mortgage indebtedness. So if you’re single and took out a $350,000 mortgage to buy a home in 2020 and then a $10,000 HELOC in 2022 to refinish the floors, your mortgage debt in total would be $360,000. This is below the full deduction threshold, which means all interest paid may be deductible.

When is interest on a HELOC tax deductible?

The rules are strict here: Interest paid on a mortgage is only tax deductible if the money is used to “buy, build or substantially improve the taxpayer’s home that secures the loan,” according to the IRS. Here are a couple of scenarios that do and don’t qualify.

Example of when you can deduct HELOC interest

Say your home has two bathrooms, and you want to build a third bathroom in your main bedroom for more privacy when guests visit. You decide to take out a HELOC to cover the cost of building walls and installing a shower, plumbing and toilet.

Since this upgrade improves your home, the interest you pay on the HELOC may qualify for a tax deduction, as long as this is a first or second home and you itemize deductions.

Example of when you can’t deduct HELOC interest

Using a HELOC for any personal expense unrelated to improving your first or second home wouldn’t qualify for a tax deduction. For example, if you buy a car, interest paid on a HELOC to cover the cost wouldn’t qualify for the tax deduction. Suppose you take out a HELOC to cover other expenses, like adoption or education costs. That interest wouldn’t be deductible, either.

How the mortgage interest tax deductible process works

During tax season, you’ll file Form 1040 or 1040-SR and use Schedule A to itemize deductions. Mortgage companies should send you Form 1098, Mortgage Interest Statement, at the end of the year, which can help you fill out the form.

Whether it makes sense to itemize mortgage interest depends on how many other deductions you have. For 2022, the standard deduction is $12,950 for single filers, $25,900 for joint filers and $19,400 for heads of household. If mortgage interest and other itemized deductions don’t surpass this amount, taking the standard deduction may be the way to go.

How to claim a HELOC interest deduction on taxes

If you have a HELOC and want to deduct interest, here are the steps to take next.

• Determine whether your credit line qualifies. A HELOC needs to be secured by your primary residence or second home. To get the full deduction, your total mortgage debt must be below $750,000 (or $1 million if you borrowed before 2018).
• Confirm how you used HELOC funds. Your HELOC must be used on qualifying expenses — like a home upgrade, renovation or remodel — to be eligible for the interest tax deduction.
• Pull the receipts. Keep receipts of purchases you made for your home renovation project as a backup to prove you used HELOC funds for home upgrades.
• Gather financial documents. Your mortgage lender should send you Form 1098 to report interest paid on tax documents. You can also assemble your own mortgage statements to confirm what’s on the mortgage lender’s final statement for the year.
• Complete Schedule A. With the help of a tax preparer, tax software or by hand, complete Schedule A to itemize your deductions and attach it to Form 1040 for your tax filing.

The difference between a HELOC and a home equity loan

Interest paid on both HELOCs and home equity loans may be tax deductible, but these debt vehicles work differently from one another. Both HELOCs and home equity loans let you borrow money from home equity, but one is a form of revolving credit while the other is an installment loan.

With a HELOC, you draw the money you need from the credit line like a credit card, and you’re only charged interest on the balance. A home equity loan, sometimes called a second mortgage, is an installment loan that provides you with a lump sum, and the balance is repaid in equal payments. Interest applies to that lump sum you’ve borrowed until it’s entirely paid off.

What’s next?

Tax software could help you determine if you qualify for the mortgage interest tax deduction by asking questions about what you borrowed and how you used the money.

But whenever you’re in doubt about your tax filing, consider calling in a professional. They can run through your financial situation and tax scenario to determine if you can deduct interest, and knowing a tax code expert looked at your filing could give you peace of mind.

Cash-out refinances and home equity loans are two ways to tap into home equity — but is one better than the other?

If you need cash to make a large purchase, pay for home repairs or consolidate debt, a home equity loan or cash-out refinance could help you borrow money. Plus, using home equity to pay for home improvements may come with tax advantages.

We’ll explore how cash-out refinancing and home equity loans work to help you decide which may be best for you.

• What is the difference between a home equity loan and a cash-out refinance?
• When to use a cash-out refinance
• When to use a home equity loan
• Things to consider when comparing a cash-out refinance vs. a home equity loan

What is the difference between a home equity loan and a cash-out refinance?

A home equity loan, sometimes called a second mortgage, is an installment loan that’s secured by your home. The loan is separate from your first mortgage, and monthly payments are usually fixed. The amount you can borrow is typically capped at 80% to 85% of the equity you have built up.

A cash-out refinance lets you take out a new mortgage for a higher amount than what you owe. The new mortgage pays off your current mortgage, and you pocket the difference (minus any fees).

How much can you access with cash-out refinancing? It depends on factors such as your home’s value and how much equity you have. For conventional loans, you’re typically able to draw up to 80% of the value of your home. But if you have a VA loan, you may be able to draw up to 100% of your home’s value.

Here are some more differences between home equity loans and cash-out refinances.

Loan terms

When you borrow cash using a cash-out refinance, the repayment period is a new mortgage term, typically 15 to 30 years. Loan terms for a home equity loan can be as little as five years.

Interest rates

While interest rates vary depending on your credit, cash-out refinances may have lower interest rates than home equity loans. You should compare rates to see what makes the most sense for your finances.

Availability of funds

It could take several weeks to apply for and get funds from a home equity loan. Cash-out refinances can also take a month or more to process since you have to go through the steps of refinancing and closing before you get a lump sum in cash.

When to use a cash-out refinance

Refinancing to take out cash makes the most sense if you have a game plan for the money and you’re able to secure better mortgage terms than what you currently have.

Ideally, cash-out refinancing should lower your interest rate so you can access interest savings while borrowing. This way, the money you save offsets the closing costs. On the other hand, if a cash-out refinance increases your rate and monthly payments to an unmanageable level, it could put your home in jeopardy.

If convenience is high on your priority list, cash-out refinances can also be a good choice because the money you borrow is rolled into your monthly mortgage payment and you still only have to keep up with one bill.

When to use a home equity loan

If you already have a good interest rate on your mortgage, taking out a home equity loan instead of opting for a cash-out refinance could be the better move.

Home equity loan closing costs may be lower, and you could customize your home equity loan terms separately without changing your mortgage.

Things to consider when comparing a cash out-refinance vs. a home equity loan

Before tapping into your home’s equity with a home equity loan or cash-out refinance, these are important variables to consider.

1. What are the eligibility requirements? Homeowners may need at least fair credit to qualify for a cash-out refinance or home equity loan. But having a higher credit score could land you a better rate.
2. What loan term do you need? Both home equity loans and cash-out refinancing may offer terms of up to 30 years. But if you’re looking for a shorter loan term, a home equity loan may provide more-flexible repayment options.
3. How much do you need to borrow? If you only need a few thousand dollars to, say, pay for a medical bill, special event or new furniture, the closing costs of the cash-out refinance could end up being higher than the amount you actually need to borrow. In this case, a home equity loan or unsecured personal loan could be more affordable ways to get cash.
4. How long do you plan on staying in the home? The longer you live in a home, the more time you’ll have to recoup the refinancing costs with interest saved. If you have plans to move and buy a new house, a home equity loan could be a better option since the upfront costs are lower, and the loan could be paid off using cash from the deal when you find a buyer.
5. How fast do you need cash? Cash-out refinances and home equity loans don’t offer quick money — it could take several weeks or longer to close on either type of loan. If you need fast money in your bank account for an emergency, consider the alternative of a personal loan. Some personal loan lenders may offer funding within a business day of approval, though exact timing will depend on your bank.

Next steps

If you’re considering a home equity loan or cash-out refinance, the first thing to do is calculate your home equity to see how much you may be able to borrow.

Then start shopping around with lenders to see what rates and fees they offer. In some cases, lenders offer no-closing-cost loans — but this doesn’t mean you won’t pay those costs in other ways. You might, for example, pay a higher interest rate to compensate for the lower upfront cost, so be sure to review the total cost of the mortgage when shopping around for a home loan.

Pros

• No annual fee
• Ability to pay rent with no transaction fees
• Solid rewards program

Cons

• No cash redemption options
• Need to make five transactions a month to earn points

Key features of the Bilt World Elite Mastercard®

The Bilt World Elite Mastercard® is a unique credit card from Wells Fargo that lets cardholders pay their rent without a transaction fee and earn rewards on rent payments, dining out, travel and everyday purchases.

The card has no annual fee and includes some other useful perks that people who like to eat out and travel might enjoy.

If you’re a renter and are considering this card, here are a few more things to know about the Bilt World Elite Mastercard®.

You can use the card to pay your rent

Many landlords don’t accept card payments for rent. And if they do it’s likely they’ll add a transaction fee. If you’re renting for months — or even years — these charges can really add up. With the Bilt World Elite Mastercard®, these credit card transaction fees are waived.

What’s more, even if your landlord doesn’t accept credit card payments, you can still schedule your monthly rent payments within the Bilt rewards app and Bilt will send your landlord a check. Just note that you can only use the card to pay one property a month.

Another cool perk about paying your rent with this card is that it doesn’t even have to affect your credit card balance. Instead, you can connect a bank account to your Bilt account and simply transfer funds, which can help you avoid racking up interest charges.

And if you happen to be renting an apartment from a Bilt Alliance property, you can have rent payments reported to all three major credit bureaus, which can help you build credit.

Get rewarded for paying your rent

If you’re a renter, there’s a good chance that rent is your biggest monthly expense — so why not get rewarded for making payments?

The Bilt World Elite Mastercard® offers one point per $1 spent on rent payments, as long as you make at least five card transactions on the card that month.

This can be a convenient way to earn rewards — but keep in mind that points are capped at 100,000 each year.

You’ll also earn points on travel, dining and everyday purchases

In addition to rent rewards, cardholders can earn two points per $1 spent on travel booked directly with airlines, hotels, cruise lines and car rental agencies.

For foodies and takeout lovers, the Bilt World Elite Mastercard® offers three points per $1 spent on dining at restaurants, bakeries or fast-food restaurants.

And you’ll get one point per $1 spent on all other purchases.

Like the rent rewards category, you’ll need to have at least five monthly transactions to earn points in the other rewards categories.

Cardholders get trip cancelation protection and other travel and everyday perks

Trips booked using your Bilt World Elite Mastercard® are covered by special travel benefits, like cancelation protection and trip delay reimbursement. There are also no foreign transaction fees as long as transactions abroad are converted to U.S. dollars.

Exclusive deals on curated clothing and art and decor collections may also be available to cardholders through The Bilt Collection.

Understanding your points and redemption

You can put your points toward rent payments or savings for a down payment on a house, which might be handy if buying a house is one of your long-term goals.

You can also redeem points with Bilt’s travel and fitness partners. Or cash them in to purchase artwork, decor or clothes from the Bilt Collection.

But if you want the flexibility to trade points for cash, statement credit, gift cards or other merchandise, you won’t be able to do that with this card.

What else you need to know about the Bilt World Elite Mastercard®

If you’re thinking about getting the Bilt World Elite Mastercard®, here are other things to consider.

• Cellphone protection — If you pay your cellphone bill with the Bilt World Elite Mastercard®, your phone is covered up to $800 for damage and theft (with a $25 deductible).
• Purchase protection — Purchases of up to $10,000 that you make with your Bilt World Elite Mastercard® may be covered for the first 90 days from damage or theft.
• Auto collision damage waiver — Car rentals paid for with your Bilt World Elite Mastercard® could already be covered, so you may be able to decline the in-store insurance.
• Lyft credits — Take three Lyft rides a month with your card and you’ll get a $5 Lyft credit.
• Interest could be high — Rates go well into double digits — and landing a rate on the higher end could be expensive, so check and consider your terms carefully.

Who this card is good for

The Bilt World Elite Mastercard® is best for renters who enjoy traveling and eating out often because they’ll be most likely to maximize the card’s perks and rewards. Plus, earning points on all other purchases can make this a card with solid long-term value.

But if you’re not a renter or prefer to dine at home and don’t like to travel much, you may want to consider another rewards card.

Not sure this is the card for you? Consider these alternatives.

• Capital One Savor Cash Rewards Credit Card: This card may be a good fit for both restaurant lovers and at-home chefs.
• Citi Double Cash® Card: This card offers straightforward, unlimited cash back.
• Blue Cash Preferred® Card from American Express: If you’re looking to rack up points on groceries, this card offers excellent cash back.

Pros

• Borrowers may skip up to two payments per year (for a fee)nNo payments for the first 45 days

Cons

• Must qualify for membershipnOnly available in certain Texas counties

What you need to know about a Firstmark personal loan

Firstmark Credit Union is a not-for-profit cooperative started in 1932 by teachers. Firstmark personal loans are unsecured loans that can be used to pay for a range of expenses, including vacations, car repairs, debt consolidation, home improvement projects and more.

Flexible loan amounts

Firstmark offers personal loans from $500 to $50,000, with repayment terms that range from 12 to 60 months.

That’s helpful if you need a small loan or have a major purchase to make.

Typical interest rates

Personal loan rates at Firstmark Credit Union aren’t the highest around, but they aren’t the lowest either. If you have strong credit, you may be able to qualify for a lower interest rate elsewhere.

Borrower benefits and membership eligibility

Firstmark Credit Union offers several perks for borrowers. If approved for a loan, you don’t have to start making payments for 45 days.

Firstmark also gives you the option to skip a loan payment every six months as long as you’re not delinquent on your loan. But it does charge a $25 fee for the service, and interest will continue to accrue on your loan during the break, which could extend your loan term.

To qualify for membership, you must live, work, go to school, teach or worship in certain counties in Texas.

Who is a Firstmark loan good for?

If you qualify for Firstmark Credit Union membership, taking out a Firstmark loan may be a good way to cover a small or large expense.

A Firstmark personal loan could also be good for consolidating credit card debt as long as you can secure a lower rate on the loan than what you’re currently paying on your credit cards.  

One caveat, though: If you have strong credit, you should shop around elsewhere before going with a Firstmark Credit Union personal loan. That’s because the lowest interest rates available at Firstmark Credit Union are higher than some rates you may be able to qualify for with other lenders.

How to apply for a Firstmark Credit Union personal loan

Firstmark Credit Union has an online application. Firstmark recommends having this information available before you apply.

• Social Security number
• Valid ID
• Requested loan amount
• Basic info such as birth date and email address

You’ll also have the opportunity to join the credit union if you aren’t already a member.

Even if you’re an existing member of Firstmark Credit Union and considering a loan, it’s always a good idea to shop around with a few other lenders before borrowing. Comparing rates, fees, terms and total costs across several loans can help you choose a personal loan that works for you.

Not sure if Firstmark is right for you? Consider these alternatives.

• LightStream: This lender is a good option for a competitive rate.
• Upgrade: Upgrade lets you check potential offers without a hard inquiry.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

Pros

• Personal loan amounts up to $5,000nGood credit may not be necessary to qualify for certain loansnPotential to get funds quickly

Cons

• Rates and terms, which vary by lender, aren’t listed on the sitenSome loans may come from tribal lenders than might not be subject to state-imposed interest rate capsnLoans not available in all states

GotLoans.com is an online loan marketplace that hosts a network of lenders. The site markets itself as way to find quick funds for emergencies, for “all credit types.”

Lenders within the GotLoans.com network may offer fast funding to borrowers with bad credit, but the website provides no information on how much these loans actually cost. Since you won’t know the loan terms until after approval, it’ll be important to review the loan agreement and compare it to other options before borrowing from a lender through GotLoans.com.

What you need to know about a GotLoans.com personal loan

GotLoans.com is a loan marketplace, not a direct lender

GotLoans.com doesn’t issue or service loans. To connect with a lender through this online personal loan marketplace, you’ll complete an online form. Submitting the form at GotLoans.com authorizes the company and loan issuers to perform a credit check for you.

GotLoans.com doesn’t specifically disclose whether this credit check is a hard or soft credit inquiry – though it’s likely a hard credit inquiry, which causes a temporary negative impact on your credit. After reviewing your information, lenders in the network may decide to make you an offer.

Eligibility requirements may be flexible

Lenders in the GotLoans.com network may approve you for a loan even with bad credit, but you may need to meet additional eligibility requirements including the following:

• Be employed for at least 90 days
• Earn at least $1,000 a month (after taxes)
• Be a U.S. citizen or permanent resident

If you don’t have a job, another source of income such as Social Security may count.

Interest rates and loan terms on GotLoans.com are unclear

Lenders that partner with GotLoans.com may offer loans ranging from $100 to $5,000, but amounts can vary based on where you live.

GotLoans.com doesn’t share information on the APRs, origination fees or repayment terms offered by lenders on the site, making it hard to shop for loans without first submitting your information and authorizing what’s likely a hard credit check.

Applicants may be referred to tribal lenders

Another thing to know about the GotLoans.com marketplace is that you may be referred to tribal lenders. Tribal lenders aren’t necessarily required to follow the same rules as state-licensed lenders, such as adhering to state interest rate caps.

Before signing an agreement with a lender through the site, it’s important to pay close attention to the fine print and make sure you understand all the loan terms and conditions.

A closer look at GotLoans.com personal loans

Comparing rate ranges and payment options across several lender marketplaces can help you find a loan that best fits your needs. But window shopping is harder with GotLoans.com, since you can’t gauge the rates or repayment terms offered without authorizing a credit check.

Here are some other pros and cons of GotLoans.com to consider.

• Quick funding timeline — You could get approved and receive loan funds on or near same-day (within 24 to 48 hours).
• No fee charged by GotLoans.com — You won’t be charged a fee to use the marketplace, but individual loan pricing and fees will vary depending on the lender.
• Loan extensions (rollover loans) may be possible — Depending on the laws of the state you’re in, it may be possible to get an extension or rollover of the original loan if you struggle to repay it. Rollovers can cost much more than you anticipate and not all states allow the practice.
• Not available in all states — GotLoans.com mentions that loans aren’t available in all states but doesn’t list the states where you can borrow.
• Repayment terms vary — Since this is a loan marketplace, the loan terms available may be different from one lender to the next.
• Limited contact options — GotLoans.com provides very little contact information on its website. There’s an email address provided to unsubscribe from marketing messages and a general building address located in the West Indies, but there’s no contact phone number for live support, which may be a red flag for some.

Who a GotLoans.com loan is good for

GotLoans.com could be good for borrowers who earn at least $1,000 per month and can’t qualify for other personal loans in an emergency. But it’s crucial to review the rates and terms that you’ll get in the loan agreement before you commit — high monthly payments on a loan could put you in a worse financial situation.

If you’re in a financial bind, you may also want to consider potentially less expensive options, like borrowing from a family member or friend or applying for a payday alternative loan. PALs are small loans offered by credit unions that could come with lower interest rates than you’d see with a payday loan.

How to apply with GotLoans.com

To qualify for a loan through GotLoans.com, you need to have a valid email address and bank account. You must also be 18 years or older and a U.S. citizen or permanent resident.

The process of applying for a loan starts with filling out and submitting a form on the GotLoans.com website. The form asks for your personal information (your name, phone number and where you live) and how much you want to borrow.

GotLoans.com will then comb its network for lenders that might be willing to work with you. If approved by a lender, you can review terms, rates and fees directly on the lender’s website before you decide whether to accept the offer. Lenders may also ask you to provide additional information, like paystubs or employment verification.

After receiving an offer, it’s a good idea to shop around and compare loan rates before signing. You’ll want to make sure you’re accepting the best possible offer available to you.

If a GotLoans.com personal loan isn’t right for you, consider these alternatives.

• Personify: If you’re looking for a small installment loan, Personify offers loans of $500 or more, depending on the state you live in, is more upfront about rates and costs.
• Affirm: Affirm may be a good option for financing large purchases, like appliances or furniture. Loan terms typically range from one to 12 months, but you may be able to borrow for as much as 48 months.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

If you need to buy some electronics but don’t want to pay for your purchase all at once, a buy-now, pay-later (or BNPL) app could help you break up the cost into payments.

Typically, buy-now, pay-later plans let you pay in installments, and you may find no-interest and no-credit-check options.

Here’s our take on the best buy-now, pay-later options for electronics.

• Best for wide acceptance and ease of use: Pay in 4 (PayPal)
• Best for Amazon shoppers: Klarna
• Best for larger purchases: Affirm
• Best for no fees: Zebit
• Best for online and in-store payments: Afterpay

Best for wide acceptance and ease of use: PayPal Pay in 4

Why Pay in 4 stands out: In 2020, PayPal announced the launch of Pay in 4 — a buy-now, pay-later option that lets you pay for online purchases in four installments at participating stores including Best Buy, Bose and more.

• Payments are interest-free — PayPal charges no interest for Pay in 4 plans, and there are also no late fees.
• Easy sign-up process — After selecting PayPal as your payment method, the option to Pay in 4 may be available depending on the purchase. If approved for a plan, the first payment is due at the time of purchase and the three remaining payments are due every two weeks after that.
• Soft credit check — If there is a credit check, it will be a soft credit inquiry that doesn’t affect your scores, and shoppers may get instant approvals.
• Limited purchasing amounts and availability — Only purchases between $30 to $1,500 are currently eligible, and there are location limitations. At the moment, Pay in 4 isn’t available in all states.

Best for Amazon shoppers: Klarna

Why Klarna stands out: Klarna is a buy-now, pay-later app you can use to pay in installments when shopping at major electronics retailers, including Amazon, Bose and Harmon/Kardon. Klarna offers several different payment plans, but the type of plans offered for each purchase may vary.

• Multiple ways to pay — You may be able to pay in four biweekly installments, pay in full within 30 days or pay over six to 36 months.
• Interest-free and financing options — There’s no interest if you pay within 30 days or over four biweekly installments. However, interest does apply if you choose a payment plan that’s six weeks or longer (up to 36 months), and the rate is well into double digits.
• Soft credit check — Klarna may check your credit if you request a payment plan, but for its Pay in 4, 30-day and monthly plans, Klarna will run a soft credit inquiry, which shouldn’t affect your scores.
• Shop anywhere online — You can use Klarna payment plans when shopping in the app or anywhere Klarna is accepted. If a store isn’t in the Klarna app, you can download the Klarna Google Chrome Extension and use it to shop on a laptop. Another option: Tell Klarna how much you want to spend at a U.S.-based online store in the app, and if the purchase is approved, you’ll get a single-use card that you can use at checkout.

Read our full review of Klarna to learn more.

Best for large purchases: Affirm

Why Affirm stands out: Affirm could be an option to consider if you need to borrow a larger sum for an electronics purchase. Affirm loans go up to $17,500, with loan terms for small loans ranging from 1 to 3 months, and terms for large loans extending up to 48 months.

• No credit impact — Affirm says applying shouldn’t affect your scores.
• Interest may be charged — Longer-term plans can go up to 30% APR. But if you choose to pay in four installments, there’s no interest.
• Loan terms vary — Affirm negotiates different loan terms and rates with individual stores, so terms offered by Affirm at checkout may differ from one store to the next.
• Shop anywhere online — Certain stores like Walmart offer Affirm as a payment option at checkout, but you can use Affirm elsewhere online too. If Affirm isn’t a checkout option, you can first sign up for the Affirm app. If approved for credit, you’ll get a one-time virtual card to use to make the purchase.

Read our full review of Affirm to learn more.

Best for no fees: Zebit

Why Zebit stands out: Zebit is an e-commerce brand that offers credit to customers buying merchandise in its marketplace. Zebit charges no interest, late fees, application fees or membership fees.

The Zebit marketplace has major brands and products such as Apple Watches, AirPods, Xbox systems, Samsung smartphones and more. If you visit the site, you’ll see a “preview” of Zebit marketplace merchandise, but to make a purchase you must create an account and log in.

• Credit lines up to $2,500 — The credit you may get approved for can vary and you can pay back purchases over six months.
• Limited credit may be accepted — Being new to credit or not having a FICO score isn’t an automatic dealbreaker. Zebit may look at other credit-reporting data and information to determine if you’re eligible.
• Large selection of products for sale — You can find a range of electronics for sale on the Zebit site, including TVs, phones, headphones, video game consoles and smartwatches, for example.

Best for online and in-store shopping: Afterpay

Why Afterpay stands out: Afterpay offers shopping flexibility, with both online and in-person options. You may be offered Afterpay as a payment option when checking out at participating online stores, but you can also use it at physical stores by signing up for an account, and then adding the Afterpay Card to your digital wallet. You can then use the app in-store to pay via Apple Pay or Google Pay with a contactless payment at checkout time.

• No interest — Afterpay charges no upfront fees or interest. However, you may be charged late fees if you don’t pay on time or if your payment is returned.
• No credit check — There’s no hard credit check when you apply.
• Payments spread over six weeks — Your first payment is due right away, and the next three payments are due within six weeks.
• View and manage your spending limit — Afterpay shows you an estimate of the credit limit you can use, and the limit can grow as you make on-time payments.

Read our full review of Afterpay to learn more.

What you should know before using buy-now, pay-later apps for electronics

If you want to buy a new laptop, camera, video gaming system or gaming accessories, buy-now, pay-later apps may help you avoid paying for the entire purchase at once.

But buy-now, pay-later apps do have some drawbacks. Applying is so easy that you might be tempted to sign up for multiple buy-now, pay later plans — leaving you juggling multiple buy-now, pay-later payments. This could become difficult to manage.

If you can’t make your payments on these plans, you may be charged late fees. And if the company reports late payments to the credit bureaus, they can show up on your credit reports and potentially hurt your credit.

To make the most of buy-now, pay-later apps, make sure you can manage the payments.

How we picked these apps

We looked at 10 popular buy-now, pay-later options and considered their features, costs and ease of use. Then we categorized the top ones by what they’re best for.