A $10,000 personal loan might come in handy if you want to consolidate debt or cover a substantial expense, like a home improvement project. Chances are you’ll need good credit to borrow such a large amount of money and/or lock in a good interest rate.
Before you take out a $10,000 loan, it’s important to understand the costs involved and how it may affect your finances and credit.
- Where to get a $10,000 personal loan
- What credit score do you need for a loan of this size?
- What to consider when comparing loans
- Cost to repay a $10,000 loan
- How to apply for a loan
- What are the eligibility requirements?
- Frequently asked questions
Where to get a $10,000 personal loan
There are several types of places you can go to for a $10,000 personal loan, including:
Online lenders
Many online lenders offer large personal loans of $10,000 and up. Compared to banks and credit unions, they usually come with an easier, faster application process. Depending on your credit, you might even be able to score lower rates. Some lenders can get you your funds in as little as one business day.
Banks
If you’re already a customer at a bank, consider inquiring about a $10,000 personal loan. As long as you already have a savings or checking account with the bank, you might land an interest rate discount. But keep in mind that the application and funding process may take longer than it would with online lenders.
Credit unions
Although you have to be a member to get a $10,000 loan from a credit union, many credit unions are easy to join. Like banks, they sometimes offer interest rate discounts if you already have an account with them. Some credit unions will also give you a discount if you set up automatic payments.
What credit score do you need for a $10,000 loan?
To qualify for a $10,000 loan, you’ll usually need a good credit score (670 or higher) as well as stable income and a low debt-to-income (DTI) ratio. Some lenders might be willing to lend to you if you have a lower credit score, but you’ll pay a higher interest rate. Try to improve your credit before you apply so you can get approved for better rates and terms.
What to consider when comparing $10,000 loans
As you shop around for a $10,000 loan, keep these factors in mind:
1. Interest rates
The lower the interest rate, the less you’ll spend on your loan. If your credit’s in the poor or fair credit range, you may have to settle for higher interest rates that increase your overall cost of borrowing.
2. Fees
Some lenders charge fees, like origination fees, late fees, and prepayment penalties. The best personal loan lenders pride themselves on offering minimal to no fees. Try to choose a loan that comes with few or no fees.
3. Repayment terms
Repayment terms typically range from one to seven years. While longer terms mean lower monthly payments, typically, they’ll cost you more in interest.
4. Monthly payment
Your monthly payment will depend on factors like your interest rate and fees. Be sure to pick a loan with a monthly payment that fits your budget. You need to be able to pay your other bills too.
5. Total repayment costs
Total repayment costs refer to the total amount you’ll pay to take out a $10,000 loan. They include interest plus fees and can give you an idea of what you’ll pay over time, as long as you stick to your repayment schedule.
Cost to repay a $10,000 loan
The cost to repay a $10,000 loan depends on your interest rate and loan term. Here are a few examples of what you may pay.
| Loan term | Interest rate | Monthly payment | Total interest | Total cost of loan |
|---|---|---|---|---|
| 2 years | 5.4% | $441 | $572 | $10,572 |
| 3 years | 8.3% | $315 | $1,331 | $11,331 |
| 5 years | 11.69% | $221 | $3,253 | $13,253 |
How to apply for a $10K personal loan
If you’re ready to get a personal loan, follow these steps:
- Check your credit: It’s a good idea to know where you stand credit-wise. This way you’ll understand what types of loans you might qualify for. Go to a free credit scoring website or AnnualCreditReport.com to pull free copies of your credit reports.
- Get prequalified: Prequalify for loans from at least a few lenders. Then, compare their interest rates, terms, and fees. Note that prequalifying won’t hurt your credit as most lenders perform a soft credit pull as opposed to a hard pull.
- Choose your lender: Ideally, you’d pick a lender with the lowest interest rates and fees. If you don’t have the best credit, your options may be limited.
- Complete the application: Fill out the formal loan application on the lender’s website. Be prepared to submit documents like your driver’s license, pay stubs, and tax returns.
What are the eligibility requirements for a $10,000 loan?
While eligibility requirements for a $10,000 loan vary by lender, most lenders look at the following:
Debt-to-income ratio
Your debt-to-income ratio compares your debt payments to your income. To find your DTI, add up all your monthly debt payments and divide that amount by your gross monthly income (what you earn before taxes). Then, multiply that number by 100. Most lenders prefer a DTI at or below 36%.
Credit score
Your credit score is one of the most important factors lenders consider. It shows them how responsible you are when you borrow money. The higher your credit score, the more likely you are to get approved with low rates and favorable terms. A credit score of 670 or higher is ideal.
Annual income
Your annual income also determines how much you might qualify for. Lenders usually look at your pre-tax income. They want to see that you earn enough to make your monthly payments and avoid default.
You’ll have to prove your income through documents like pay stubs and tax returns. You may be able to get a low-income loan but it might be for less than you’d like.
How to increase your chances of approval
These tips can boost your likelihood of getting a $10,000 loan:
- Dispute credit errors: Visit AnnualCreditReport.com to pull free copies of your reports from Experian, Equifax, and TransUnion. Carefully review each report and dispute any errors and inaccuracies that may have a negative impact on your credit.
- Pay your bills on time: Even one missed payment can hurt your credit score. That’s why you should pay all your bills, including your mortgage, car loans, credit cards, and student loans on time, every time.
- Lower your credit utilization ratio: Your credit utilization ratio is how much credit you’re using vs. how much credit is available to you. The lower your credit utilization, the better. To bring it down, pay down debt and ask for higher limits.
- Apply with a cosigner: A cosigner can be a family member or close friend with good credit and stable income. You might ask them to apply with you as long as they don’t mind being responsible for your loan if you were to default.
What documentation is needed to apply for a $10,000 loan?
To apply for a $10,000 loan, you’ll likely need pay stubs and tax forms to verify your income. Lenders will also ask for personal identification, like a copy of your driver’s license, passport, or Social Security card. You might have to enter your bank account number and routing number too.
Personal loan FAQs
What can you use a personal loan for?
Personal loans are versatile so you can use them for just about any expense. They can help you fund home improvements, medical expenses, car repairs, wedding costs, or even a vacation. You may also use a personal loan to consolidate high-interest debt.
Can you get a personal loan with bad credit?
It’s possible to get a personal loan with bad credit. But you’ll need to shop around to find the best options. While some lenders offer loans for fair credit or bad credit, they usually cost much more. You may want to explore cosigned and secured loans that can help you qualify for a lower rate and better terms.
How fast can you get a personal loan?
The lender you choose and their approval process will determine how quickly you’ll receive your funds. In general, it will take anywhere from one day to one week. Online lenders are typically fast and some offer same-day or next-day approvals and funding. You’ll likely have to wait longer if you choose a loan from a bank or credit union.
APR vs. interest rate: What’s the difference?
Interest rate is the price you pay to borrow money, usually expressed as a percentage and charged on the principal loan amount. Annual percentage rate, or APR, shows the total cost of borrowing on a yearly basis; it includes the interest rates plus fees.