Loqbox vs Self

Two Credit Builders with Different Advantages

Between Self and Loqbox, Self is the more established credit builder loan in the market and they appear frequently on TV ads. Self has a credit builder loan but also a secured credit card you can get after you have saved up a certain amount in your account. You are permitted to use your savings for their secured card security deposit.

Loqbox is a traditional credit builder that does not charge any interest (yes APR is 0%). However, they do charge a fee when you withdraw your cash to your bank account unless you open an online banking account with one of their partners.

In this comparison, we will examine in closer detail both Self and Loqbox and see which is the better credit builder loan.

The Basics

Loqbox Basics

Loqbox is a credit builder loan that does not charge any interest. All of their credit builder loans have a 12 month term maturity and you simply have to choose an amount that you want to save. Technically, Loqbox calls the credit builder loan a cash-redemable digital voucher. Every month, Loqbox Finance will fund the digital voucher (which is your savings account) and you will pay back Loqbox Finance. These payments will be reported to the major credit bureaus.

When the 12 months are up, you can "unlock" your account and transfer your cash to a bank account. This is where things get interesting. As Loqbox does not charge any interest, it does not make money on the credit builder loan itself. Instead it does so the following way. If you open an online bank account with one of Loqbox partners, you can transfer your cash to these accounts for free (and Loqbox bank partners will pay it a referral fee). If you insist on transferring the cash to your own bank account that is not a Loqbox partner, then you have to pay $40 fee. Loqbox bank partners include Stash, AXOS, Nationwide and CIT.

Self Basics

The Self Credit Builder has 4 payment plans with maturities of either 12 or 24 months. In addition to the credit builder loan, Self also has a secured credit card. You get get the secured credit card once you have saved up at least $100 and have made a minimum of three $25 monthly payments. Like the Self credit builder, there are no credit checks when you get the secured credit card. The $100 that you have saved up can be used for the security deposit of the Self secured credit card. If you want to have a larger security deposit, then you just simply have to wait until you saved that amount. Below is a table highlighting their four payment plans.

Program	Installment Amount	Maturity	Payment Amount
Self	$520	24 Months	$25/month
Self	$724	24 Months	$35/month
Self	$539	12 Months	$48/month
Self	$1,663	12 Months	$150/month

Similarities

• No Credit Checks - Like most credit builder loans, both Self and Loqbox do not check your credit report or perform any hard inquiry when you apply.

Differences

• Self has secured credit card - In addition to the credit builder loan, Self also has a secured credit card. Self does not allow you to get their secured card until you have saved up at least $100 in your credit builder account. You can then get the secured card (there are no credit checks as well) and use the amount you have saved as your security deposit.


• Loqbox does not charge any interest - Logbox does not charge any interest on their credit builder loan. In contrast, the APR on Self's program is around 15.91%.

Which is better?

From a cost perspective, Loqbox is better than Self because you do not pay any interest cost. In contrast, Self is just like a regular credit builder loan that charges an interest rate. However, Loqbox requires you to open a banking account with one of their banking partners when you decide to move your cash out of Loqbox. If you transfer your cash to your own bank account that is not a partner, then Loqbox will charge you a $40 fee. Despite this, $40 will most of the time be less than the interest cost on a Self credit builder loan.

However, Self has a secured credit card as well as a credit builder loan and is especially suitable for those who want to use a credit builder loan to save specifically for a secured credit card. If that describes you, then Self offers a seamless process to save in a credit builder loan and then use the savings for the security deposit in a secured credit card.

To sum up, if you are just looking at a standalone credit builder loan to diversify your credit mix, then Loqbox would be the logical choice because they do not charge any interest rate on their loan. But if you are looking at a credit builder loan to save for a secured credit card, then Self is the logical choice.