How hard is it to get approved for a personal loan?
You are almost certain to be approved by at least some lenders for a personal loan if you have good credit, make enough money to easily repay your loan, have been at your job for a while, and your debt-to-income ratio is below 35% -- even when factoring in the payment on the loan you're applying for.
You are almost certain to be approved by at least some lenders for a personal loan if you have good credit, make enough money to easily repay your loan, have been at your job for a while, and your debt-to-income ratio is below 35% -- even when factoring in the payment on the loan you're applying for.
Personal loans generally aren't hard to get and are available from credit unions, banks, and online lenders. There are various types of personal loans to consider, depending on how much money you need to borrow.
In short, yes. While most reasons won't stop you from obtaining a personal loan, you'll need to explain why you need the money you're borrowing. You can generally use the loan proceeds however you see fit, but some lenders have restrictions. Plus, the loan purpose could impact the loan terms you receive.
The most common reasons for rejection include a low credit score or bad credit history, a high debt-to-income ratio, unstable employment history, too low of income for the desired loan amount, or missing important information or paperwork within your application.
Requirements for a $20,000 Personal Loan
Requirements vary by lender, but most lenders require borrowers to have a credit score in the good to excellent range — meaning a score of at least 670. Some lenders state they require stable, consistent income, while others list a minimum income requirement.
This depends on your financial situation. For those with a good credit score — around 670 and up — a $30,000 personal loan may be pretty easy to get.
Some of the easiest loans to get approved for if you have bad credit include payday loans, no-credit-check loans, and pawnshop loans. Personal loans with essentially no approval requirements typically charge the highest interest rates and loan fees.
You will almost certainly have no problems qualifying for a $5,000 personal loan if you have a strong income and good credit. However, you may struggle to get approved if your income is inconsistent, you have a low credit score, or you have a considerable amount of debt already.
While a $2,000 personal loan is relatively easy to get, interest rates and fees vary widely depending on your credit history and personal finances.
What reason is most likely to get approved for a personal loan?
The most common reasons to get a personal loan include emergency expenses, major purchases, home repairs, or milestones.
The most common reason to take out a personal loan is to consolidate debt. Fast funding turn times make personal loans a good choice for emergency expenses. Gives you a predictable monthly payment to finance home improvements, wedding expenses or other large purchases.
There are many reasons to consider a personal loan, but you should only borrow money when you have a plan to pay it back. Additionally, make sure you have a purpose for the loan, whether you need funds for debt consolidation, home improvements, or another goal.
- Build your credit score first. ...
- Improve your DTI ahead of time. ...
- Choose a realistic loan amount. ...
- Find a cosigner. ...
- Secure your loan with collateral. ...
- Prequalify before applying.
Credit score, income and debt-to-income ratio are the main factors lenders consider when reviewing applications. Paying down debts, increasing your income, applying with a co-signer or co-borrower and looking for lenders that specialize in loans within your credit band could increase your approval odds.
- Check the accuracy of your credit report. ...
- Improve your credit score. ...
- Prequalify before formally applying. ...
- Work on reducing your debt. ...
- Find ways to increase your income. ...
- Don't apply for too much money. ...
- Adding a cosigner or a co-borrower.
Loan Amount | Loan Term (Years) | Estimated Fixed Monthly Payment* |
---|---|---|
$20,000 | 5 | $415.07 |
$25,000 | 3 | $771.81 |
$25,000 | 5 | $518.84 |
$30,000 | 3 | $926.18 |
The monthly payment on a $20,000 loan ranges from $273 to $2,009, depending on the APR and how long the loan lasts. For example, if you take out a $20,000 loan for one year with an APR of 36%, your monthly payment will be $2,009.
Many give preference to borrowers with good or excellent credit scores (690 and above), but some lenders accept borrowers with bad credit (a score below 630). The typical minimum credit score to qualify for a personal loan is 560 to 660, according to lenders surveyed by NerdWallet.
The monthly payment on a $30,000 loan ranges from $410 to $3,014, depending on the APR and how long the loan lasts. For example, if you take out a $30,000 loan for one year with an APR of 36%, your monthly payment will be $3,014.
How much can I borrow with a 580 credit score?
Credit score range | Average APR | Average loan amount |
---|---|---|
640-659 | 44.50% | $10,010.65 |
620-639 | 62.90% | $6,881.93 |
580-619 | 89.86% | $4,811.89 |
560-579 | 125.18% | $3,147.46 |
While you'll generally need good to excellent credit to get approved for a $30,000 personal loan, you might still be able to qualify even if you have poor or fair credit.
What is the monthly payment on a $5,000 personal loan? The monthly payment on a $5,000 loan ranges from $68 to $502, depending on the APR and how long the loan lasts. For example, if you take out a $5,000 loan for one year with an APR of 36%, your monthly payment will be $502.
A personal loan can affect your credit score in a number of ways—both good and bad. Taking out a personal loan isn't bad for your credit score in and of itself. However, it may affect your overall score for the short term and make it more difficult for you to obtain additional credit before that new loan is paid back.
To increase your chance of qualifying for a $10,000 unsecured loan, you should have a credit score of 600 or higher. Some lenders start their minimum credit score requirements at 600, however, there are some lenders that require a credit score in the high 600s or low 700s.
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