Quicken Loans has expanded into the business of personal loans with its first lending product that is not a home mortgage.
Detroit-based Quicken last week launched RocketLoans, an online service offering cash loans of $2,000 to $35,000 to prospective borrowers with good credit scores and financial histories. The loans have fixed terms of three to five years and carry interest rates ranging from just over 5 percent to the low or mid-teens, depending on a borrower’s financial history. There also is a loan origination fee.
RocketLoans are generally aimed at consumers who wish to consolidate high-interest credit card debt, do home improvements, pay medical expenses, finance weddings or help with a small business. The product gives Quicken Loans an entry into the hot market for personal loans that are being offered via the Internet by a growing number of nontraditional banks and lenders. RocketLoans is a new and distinct company from Quicken, under the same parent company Rock Holdings.
“This will be the first financial service that is not a mortgage product that we have offered in 30 years of existence,” Todd Lunsford, CEO of RocketLoans, said in an interview. “Many folks that are looking to do a mortgage are looking to take cash out and pay for other debt. And in today’s mortgage market that can sometimes be difficult, depending on where they are.”
Quicken is tapping into the growing market as interest rates rise and as some predict the traditional mortgage business, including refinancing home mortgages, could be slowing down.
Personal loans are considered an unsecured loan because, unlike a mortgage or auto loan, they aren’t tied to a physical asset that can be foreclosed on or repossessed. And like credit card debt, they can be discharged in a bankruptcy. This added risk is why personal loans carry higher interest rates than secured loans.