Marcus by Goldman Sachs Personal Loans Review

Marcus by Goldman Sachs has taken the online personal loan industry by storm. In less than two years, Marcus has already made nearly $4 billion in loans to borrowers who apply directly through its website. It’s not hard to see why Marcus is so popular, given consumer-friendly features like its promise of “No fees. Ever.” and low APRs that make it one of the least expensive personal loan options for qualifying applicants.

You’d use a mortgage to buy a home, and an auto loan to buy a vehicle. But the key advantage of a personal loan is that they can be used for just about everything. Many people use personal loans to consolidate debt, but they can also be used to pay for personal expenses like home improvements, wedding costs, or even vacations.

Personal loans work like most other loans. With Marcus, you can borrow up to $40,000 and pay it back over the course of up to six years in 72 monthly installments. Because the interest rate is fixed, the amount you pay every month is set in stone, and a part of each payment goes toward paying off your debt, so after making the last payment, your balance will be paid off in full.

Personal lenders compete on more than just payment terms and interest rates. Below, we’ll go through a few of the unique features that make Marcus stand out from the rest of the personal loan pack.

• No fees -- Marcus by Goldman Sachs operates under the motto “No fees. Ever.” Thus, it doesn’t charge an application fee, origination fee, and doesn’t even have late payment fees (though paying late could cost you more in interest and harm your credit score). Best of all, the company doesn’t charge a pre-payment fee if you choose to pay off your loan earlier than expected. We think eliminating fees makes it one of the more borrower-friendly lenders out there.
  
• Payment deferral -- After making 12 consecutive monthly payments in full and on time, Marcus allows you to defer one monthly payment. This can be advantageous for people who would prefer to skip a payment without taking a credit score hit. The ability to defer a payment could be invaluable if you encounter some unexpected expenses that temporarily affect your ability to make monthly payments.
  
• Low APRs -- Marcus has some of the lowest APRs of any online personal loan companies. The most creditworthy borrowers can qualify for an APR as low as 6.99%. Good borrowers can be rewarded with APRs lower than many other lenders offer.
  
• Large loan sizes and lengthy repayment terms -- Whereas other lenders max out at $25,000 loans and four- or five-year repayment terms, Marcus offers loans as large as $40,000 for periods as long as six years. This makes it a good choice for people who need more time to pay off a larger loan.
  
• Simple debt consolidation -- If you use Marcus to consolidate existing debt, it can automatically send the loan disbursement to your existing creditors. So, if you have three credit cards on which you have $10,000 of combined balances, you could get a $10,000 loan from Marcus and have it send a check to each of them. Not only is it convenient, this feature also makes it more likely that you pay off your debts once and for all.
  
• Flexibility -- One nice perk of Marcus is that you can customize your loan to target a certain monthly payment that you know you can afford, and a repayment date by which you’d like to have the loan paid off in full.

Get a quote without hurting your credit score -- This advantage isn’t unique to Marcus, but it’s one worth highlighting. Marcus can give you a quote for a loan by doing a “soft pull,” on your credit report, which won’t show up as a hard inquiry. Only upon accepting a loan will it do a “hard pull” to verify your information, thus enabling you to shop for a quote without affecting your credit score.

One of the best reasons to use a personal loan is to consolidate higher interest credit card debt, which can save you a fortune in interest, and help you pay off your debt faster. The table below compares how long it would take to pay off a $5,000 balance:

Data source: Author estimates and calculations.

As you can see, reducing your APR by consolidating high-interest credit card debt with a personal loan can save you hundreds of dollars over the life of the loan. In this case, you’d cut your monthly payments by roughly $22, and save about $783 in interest on a $5,000 balance.

How much you can save depends on the amount of debt you consolidate, the difference in APRs between your existing debt and the APR offered by the personal loan lender, and the term of the loan.

Not every lender is perfect for every borrower. Factors like your income, FICO® Score, and even how long you can borrow money may sway you toward one lender over another. We tend to think that a Marcus by Goldman Sachs personal loan may be a good fit for you if the following statements apply to your personal situation.

• You have a relatively high credit score. Marcus by Goldman Sachs isn’t for everyone, seeing as its borrowers typically have a FICO® Score of 660 or better, higher than many other online personal loan providers. For this reason, it’s best for people who simply found themselves with a little too much debt rather than people who have serious issues on their credit score (numerous late payments, bankruptcies, or other negative marks).
  
• You want the option to pay off debt faster. Marcus is easily a top choice for people who want the optionality to pay off a loan early because it doesn’t charge prepayment fees or origination fees. Origination fees can substantially increase the cost of a loan when they are paid off early, because the origination fee is spread over less time. For example, a loan with a 9% interest rate and no origination fees is actually less expensive than a loan with a 6.5% interest rate and 3% origination fee when paid off in 24 months.

You need more time to pay off debt. Many credit cards offer 0% intro APRs on purchases and balance transfers for 15 months, making them a good solution if you can pay off the debt within the 0% intro APR period. However, if you need more time to pay off your loan, a personal loan would be a better choice.