NerdWallet rating: 4.0 / 5.0
Good for: Good credit, co-signers
Backed wants to give low-interest loans to young consumers with thin credit. The online lender uses a co-signer model, allowing someone with stellar credit (typically a family member or a friend) to “back” a borrower.
You can qualify for a Backed personal loan without a backer, but you’ll need to meet minimum qualifications.
Backed could be a good fit if:
- You have a co-signer who has a credit score of 720 or higher and income of at least $50,000 per year. With a co-signer, you don’t have to meet any minimum requirements yourself.
- You are applying without a co-signer, have a credit score of 660 or higher, a minimum six months’ credit history and at least $18,000 in annual income
- You live in one of the following states: Arizona, Arkansas, Florida, New Jersey, New York and West Virginia
Backed loan rates and terms
|Loan amounts||$3,000 - $25,000|
|Typical APR||2.9% - 15.99%|
|Origination fee||0.8% - 2.0% of loan amount|
|Time to funding||2 to 4 business days|
|Repayments||1 to 3 years|
|Soft credit check?||Yes|
|How to qualify||With a co-signer
|Best for||Borrowers with good credit, or borrowers with a co-signer with good credit|
Backed personal loan review
To review Backed, NerdWallet collected more than 30 data points from the lender, interviewed company executives, completed the online loan application process with sample data, and compared the lender with other companies that seek the same customer or offer a similar personal loan product.
Backed provides loans from $3,000 to $25,000, which can be used for almost any purpose, including debt consolidation, moving or relocation expenses, weddings, or professional training.
Low rates with co-signers: Applying with a co-signer can help you get approved for a loan that you wouldn’t get on your own, and adding a backer can reduce your interest rate by as much as 41%, the company says.
For borrowers with well-qualified co-signers, Backed’s APRs start at 2.9%. Only the best applicants get that low rate; the average rate for a co-signed loan is 11.28%, according to Backed.
You can apply for a Backed loan on your own. If the rate you receive is too high, you can apply again with a co-signer to try to qualify for a lower rate.
“The whopping majority of our Backed borrowers are millennials that have reached out to us and then approached their parents for backing,” says Nufar Segal, Backed’s chief revenue officer.
Automatic payment notifications: The company automatically sends co-signers email notifications of all regular payments. If the borrower misses a payment, Backed immediately texts or calls the co-signer and offers a 15-day grace period to make the payment.
The co-signer has that time to get the borrower back on track before he or she incurs penalties or gets late payments reported to a credit bureau. If that happens, it will impact the credit histories of the borrower and co-signer.
While the notification feature allays some concerns, NerdWallet recommends that consumers avoid co-signing a loan unless they can afford to take over the payments themselves.
Loan example: A borrower with excellent credit who takes out a $10,000 loan with a repayment term of 24 months at 13.9% APR would make monthly payments of $480, according to NerdWallet’s personal loan calculator.
How Backed compares
How to apply for a Backed loan
You can start applying on Backed’s website by answering questions about why you need the loan, how much you need and for how long, as well as about your college degree or diploma. The site ranks you in comparison with other applicants (“top 30%”) as you provide further details on your job, housing situation, address and birth date.
NerdWallet recommends comparing loans to find the best rate for you. Click the button below to see estimated rates from multiple lenders on NerdWallet.
Before you take a personal loan
Updated March 23, 2018.
Personal Loans Ratings Methodology
NerdWallet’s ratings for personal loans awards points to lenders that offer consumer-friendly features, including: soft credit checks, no origination fees, payment options, short time to funding, interest rate caps of 36%, and absence of prepayment penalties. Features are considered for their positive impact on consumers’ credit history and financial health. We only review lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews. Read our editorial guidelines.
— Among the very best for consumer-friendly features
— Excellent; offers most consumer-friendly features
— Very good; offers many consumer-friendly features
— Good; may not offer something important to you
— Fair; missing important consumer-friendly features
— Poor; proceed with great caution