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There are at least 11 different types of personal loans out there, but one you may not have heard of yet is the share secured loan.

An accessible option for those who might not qualify for a traditional unsecured personal loan, a share secured loan uses the funds in your interest-bearing savings account as collateral — which means you can pay for a big expense without wiping out your entire savings.

Here are the basics about share secured loans — how they work, the benefits, allowed uses, requirements, and more.

What Is a Share Secured Loan?

A share secured loan, which may also be known as a savings-secured loan, cash-secured loan, or a passbook loan, is a type of personal loan.

However, unlike many other types of personal loans, these loans are — as their name implies — secured: The bank or other lending institution uses the money in your savings account, Certificate of Deposit (CD), or money market account as collateral to lower their risk level when offering the loan. This can make qualification less onerous for the applicant.

In addition to making it easier to qualify for a loan, share secured loans also allow you to fund an expensive purchase or cost without depleting your savings. They can also help you build credit, which is particularly important if your existing credit history or credit score could use some work.

Of course, like all other loans, share secured loans do come with costs and limitations of their own, and it’s worth thinking carefully before going into any kind of debt.

Recommended: What Is a Certificate of Deposit?

How Does a Share Secured Loan Work?

In order to take out a share secured loan, you must first have money saved in an interest-bearing savings account. Your savings account balance will be used as collateral. Money invested in the stock market cannot be used as collateral for this kind of loan, since it isn’t FDIC- or NCUA-insured and is at some amount of risk.

Banks that offer share secured loans will cap the loan at some percentage of the amount of money you have in your account, usually between about 80% to 100% of those funds. They may also list a loan minimum.

When you apply for the loan, the money in your savings account will be put on hold and made inaccessible to you, and the loan funds will be issued to you as a check or directly deposited into your checking account.

You’ll then be responsible for paying the loan back in fixed monthly installments over a term that may last as long as 15 years, and which will include an interest rate of about 1% to 3% more than your savings account earns. For example, if you secured the loan with a money market account that earns 2.00% APY, your loan interest rate might be 3.00% to 5.00%. Typically, share secured loans come with lower APRs than unsecured loans, since they’re less risky for lenders.

Once the loan is paid off, you’ll regain access to the funds in your savings account, which will still have been earning interest the entire time.

Benefits of a Share Secured Loan

It may seem a bit strange to borrow money you already have, which is pretty much how a share secured loan works. But there are certain benefits to this approach if you need to pay down an expensive bill or fund a costly project up front.

Cost

Of the different types of personal loans that are available, share secured loans have some of the lowest interest rates — precisely because the bank has your money as collateral if you don’t repay the loan.

Still, even if the loan interest rate is only a few percentage points over the amount of money you earn in interest on your savings account, you’ll pay more than you would if you were able to use cash to fund your expense.

Eligibility Requirements

One of the biggest benefits to share secured loans is their relatively lenient eligibility requirements. Since they are secured, lenders consider them less risky.

If your credit score is on the low end of the range, you may not qualify for other types of personal loans, and if you do qualify, their interest rates may be high (as in the case of a payday loan or pawnshop loan). A cash-secured loan offers an accessible and relatively inexpensive alternative.

Flexible Repayment Options

With a share secured loan, you can often choose a repayment term that suits your needs and financial plans. Many lenders offer terms within the 36- to 60-month range.

Credit Building

Finally, one of the most important benefits of share secured loans is their power to help you improve or build your credit, which can help you qualify for other types of loans in the future. Credit building and credit improvement are two of the best reasons to seriously consider a share secured loan to fund an expense you might otherwise be able to pay for in cash.

Are Share Secured Loans a Bad Idea?

There are some risks to using your existing funds as collateral to go into debt. Namely, if you fail to pay back the loan, the lender can seize the funds in your savings account — and you’ll still be responsible for repaying the loan, which can have a negative effect on your credit score.

Additionally, even a low-cost loan isn’t free, and depending on the loan amount and its term, you may end up spending a significant amount of cash on interest over time.

That said, there are times when a share secured loan may make sense:

•   You’re a first-time borrower. A share secured loan offers you access to credit without requiring you to have a lengthy credit history.

•   Your credit is poor. By making consistent payments on the loan, you can rebuild and repair your credit.

•   You need help paying for an emergency expense. A share secured loan helps you cover unexpected bills without depleting your savings.

Common Uses of a Share Secured Loan

Share secured loans are used for a wide variety of reasons and share many of the common uses of a personal loan.

For example, a borrower might use a share secured loan to cover an unexpected medical bill or car repair payment. Share secured loans can also be used to cover moving expenses, home improvement costs, or even debt consolidation to pay off other forms of high-interest loans, like credit cards, which could help you get back on track financially.

Who Is a Share Secured Loan Best For?

While it’s important to consider all your options before going into any form of debt, a share secured loan might be an attractive choice for borrowers who already have a substantial amount of cash in savings but might not have the liquidity to pay for a large expense comfortably.

Additionally, if you have a poor or fair credit score, a share secured loan may help you qualify for the funding you need while also building up your credit score over time.

Qualifying for a Share Secured Loan

The good news about qualifying for a share secured loan is that so long as you have the money in your account saved up, this financial product is very accessible. Many share secured loans are available for borrowers with poor credit or even no credit history — though it’s always a good idea to shop around and compare rates and terms available from different lenders.

Share Secure Loans: Alternative Loan Options

While share secured loans can be a good option for certain borrowers, there are other alternatives worth considering as well:

•   A secured credit card works in a similar way to a share secured loan. You’ll only be able to use as much cash as you put on the card, and it can help you build credit.

•   If you don’t have substantial savings built up quite yet, a credit-builder loan might work for your needs, though it’s likely to come at a higher interest rate since there’s no collateral involved.

•   A guarantor loan, on which someone cosigns with you and agrees to repay the debt if you default, may make it possible for you to qualify for better terms than you otherwise would with poor to fair credit.

Other Types of Secured Loans

Share secured loans are far from the only type of secured loans out there. Any loan that involves some form of collateral is considered a secured loan. Some of the most common forms of debt fall into this category, such as:

•   Mortgages, which utilize the home and property as collateral.

•   Auto loans, which utilize the vehicle as collateral.

•   Secured credit cards, as mentioned above, which require cash collateral.

Recommended: Using Collateral on a Personal Loan

The Takeaway: Is a Personal Loan Right for You?

Share secured loans are a secured type of personal loan that can be used for a wide variety of expenses. Share secured loans are available for low-credit borrowers, so long as they have substantial cash savings — but there are other options available, too.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Are share secured loans a bad idea?

Share secured loans are not an inherently bad idea, but they can cost the borrower more in interest than if they had paid cash for the purchase.

Why would someone take out a share secured loan?

The reasons people take out a share secured loan are much the same as reasons for taking out a personal loan: medical expenses, moving costs, home repairs and improvements, and more.

How do share secured loans work?

The borrower uses funds in their interest-bearing savings account as collateral to secure the share secured loan. If they fail to repay the loan, the lender can seize the savings account as repayment on the loan.

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Photo credit: iStock/Julia_Sudnitskaya

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If the kitchen is the heart of the home, what does it say when yours is falling apart? Shabby fixtures, failing appliances, or a dysfunctional layout might have you daydreaming about a full gut reno — but how much does an average kitchen remodel cost? A minor kitchen update by DIY-savvy homeowners may come in around $7,000, while a major remodel can balloon to $50,000, or even $100,000+.

Before you begin your kitchen update, it helps to consider why you’re remodeling and whether it will add value to your home. We’ll help you scope out the average cost of a kitchen remodel — including cabinetry, countertops, and labor — and where you can save money without sacrificing function or design.

Factors Affecting Kitchen Remodel Costs

Before you start a kitchen remodel, it’s important to consider what you want to get out of it and what your return on investment (ROI) might be. You’ll also want to understand what factors can impact your costs so you know just how far your kitchen remodeling budget can go. Here are some factors to keep in mind:

Size of the Kitchen

The more square footage you’re remodeling, the more expensive the project tends to be. After all, you’re not only buying more materials (think cabinets, flooring, or tile), you’re also paying more in labor costs to have everything installed.

Scope of the Remodel

Generally speaking, the more extensive the work, the higher the price tag. For example, knocking down walls will set you back anywhere from $1,000 to $10,000. Want to relocate your sink? Expect to pay between $500 to $1,000. Compare that to the cost of smaller jobs, like replacing cabinet pulls (around $300) or adding new kitchen lighting ($100-$200 per fixture).

You may be interested in this story on the difference between a renovation vs. remodel.

Quality of Materials and Finishes

The average kitchen remodel cost can vary a lot depending on a few key items: cabinetry, countertops, and appliances. And the quality and type of materials of those items can have a significant impact on how much you’ll pay.

Take, for example, the cost of countertops, which is determined by the material. Typical materials include granite, marble, quartz, stainless steel, and butcher block wood. Granite, stainless steel, and butcher block are good budget options, ranging from $850 to $6,750 depending on the size of your kitchen. Marble and quartz command $1,500-$10,000.

Level of Customization

The more complex the design — and the more customized features you include — the more you’re likely to pay for a kitchen remodel. Consider cabinetry, which typically eats up 25% of a kitchen budget. There are three types of kitchen cabinet construction, each priced per linear foot:

•   Stock cabinets, the least expensive, run $100-$300 per linear foot.

•   Semi-custom are $100-$650 per linear foot.

•   Custom will set you back $500-$1,200 per linear foot.

Custom cabinets are made to order, based on your kitchen’s precise measurements, and are made of solid wood. Stock are ready-made and mostly constructed of engineered wood, and semi-custom are a hybrid of stock and custom.

Installation and Labor Costs

Labor is a major cost that can be hard to predict. But count on spending 20%-35% of your budget on contractors and installers. Your price will depend on where you live, how large your space is, and the features being installed.

Regional Variations in Kitchen Remodel Costs

Bargain hunters should be aware that some factors influencing budget are not within their control — like where in the U.S. you live. Homeowners on the West Coast generally pay more for materials and labor than in the South. Prices also tend to run higher in and around major cities. There are several reasons for this, including the cost of shipping materials to your area, local permits and fees, and your cost of living.

Notice how the overall costs vary by region, according to 2024 data from the home services website Angi.

Region	Average Cost of Kitchen Remodel
Mountain Prairie	$6,000-$37,400
Midwest	$10,300-$34,300
Northeast	$10,800-$40,400
Southeast	$12,000-$32,200
Southwest	$12,350-$33,950
Rocky Mountains	$12,700-$39,600
Mideast	$13,600-$37,650
Northwest	$25,600-$61,100

Budgeting for Your Remodel

Deciding what your new-and-improved kitchen will look like is important, but so is figuring out how to pay for it. Here are some strategies to keep in mind:

Set a Realistic Budget Based on Your Goals

Money.com recommends spending between 10% and 15% of the value of your home on a kitchen remodel to get the best ROI. A major reno for a $400,000 home, then, would cost between $40,000 and $60,000.

Look for Ways to Save

In a full-scale kitchen remodel, new kitchen cabinets are typically the biggest expense, accounting for up to 40% percent of the project budget. If your cabinets are in good shape and fulfill your storage needs, refacing them can slash your bill. Refacing can mean either stripping and repainting or staining existing doors, adding stick-on veneers, or replacing the doors while preserving the cabinet shelves. Add new hardware for a more modern look.

You may also be able to trim some costs by doing simple things yourself: picking up items instead of paying for delivery, painting walls instead of paying contractors for the labor, or replacing your own backsplash.

Understand the Potential Return on Investment

The truth is you probably won’t recoup the total cost of a kitchen remodel in a home sale. According to Remodeling Magazine’s 2024 Cost vs. Value Report, the national average ROI for a minor remodel with mid-range materials is 96%. A major remodel with upscale materials, on the other hand, yields just a 38% ROI.

Clearly, the best bang for your buck will be less costly but visually impactful minor updates: replacing cabinets fronts, countertops, faucets, and lights, plus painting and perhaps new flooring. But if you want to change the layout or add all new appliances, you’re looking at five figures. More on that in a minute.

Consider a Loan to Help Cover Costs

It can be tempting to throw all your kitchen purchases on a credit card, but keep in mind that high-interest rates can inflate your renovation costs. These days, many homeowners are turning to a flexible personal loan to fund home renovations and remodels.

With home improvement loans, you receive a lump sum payment to cover your kitchen remodel cost. You can pay back the loan over a term of your choosing in equal monthly installments. The interest rate is determined by your credit history and credit score, but is typically lower than credit card interest.

Our Home Improvement Cost Calculator can give you an idea of how much you’ll need to borrow.

Maximize Value and ROI in Your Kitchen Remodels

Want to get the most bang for kitchen remodel buck? Here are a few places to start:

•   Choose durable, timeless design elements. Trends come and go, so to get the most mileage out of your remodel, stick with upgrades that can stand the test of time (and appeal to future buyers). If your budget allows, select a durable, classic countertop material like granite or marble, and opt for a neutral color palette and go-with-anything fixtures and handles.

•   Optimize layout and functionality. The kitchen isn’t just a natural gathering spot — it’s also a place for work. Whether it’s prepping meals or cleaning up afterward, a functional space is key. As your remodeling vision starts to take shape, be sure above all it enhances the workflow and offers you plenty of countertop and storage space.

•   Select energy-efficient appliances and fixtures. Sure, energy-efficient appliances and lighting use less energy and can lower utility bills. But they also have the added bonus of attracting potential eco-conscious buyers.

Choosing the Right Kitchen Remodeling Contractor

When you’re starting the home remodel process, it’s important to find a contractor you can trust. That means doing your research, speaking with and getting quotes from multiple contractors, and reaching out to their previous clients for referrals. You’ll also want to check licenses and certifications.

It’s also a good idea to request detailed project proposals and cost estimates to avoid any surprises. And when entertaining bids, remember that an experienced, in-demand contractor will likely charge more than less capable competitors, but will almost certainly be worth it.

Popular Kitchen Remodel Ideas

The Internet can be your best friend if you want to spruce up your kitchen but have no idea what to tackle first. As you’re browsing, keep an eye out for projects that will improve the functionality of the space and increase the value of your home.

Updating cabinets and countertops, for instance, can give your space a whole new look and provide more room for meal prep. Both upgrades also tend to deliver a high ROI.

Adding more functional storage solutions can make cooking more enjoyable and also make your home more attractive to potential buyers down the line. Similarly, adding or improving the lighting in your kitchen — or freshening up the fixtures — can also breathe new life into your space.

The Takeaway

The average kitchen remodel cost can vary widely from $7,000 to $50,000 or more, though you can get a fair return on your investment by spending between 6% and 10% of your home’s value. Your cost will depend on a number of factors such as kitchen size and whether you choose bargain, mid-range, or high-end materials and appliances. The major kitchen remodel cost drivers are cabinets, countertops, appliances, and labor. The good news is that the ROI for a smart, mid-range remodel is 96%.

When you’re ready to take the next step, there are various ways to finance the remodel, including a personal loan. Your credit history and credit score will help determine your interest rate, but it will likely be lower than the interest you’d pay on a credit card.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What is a realistic budget for a kitchen remodel?

When setting your budget for a kitchen remodel, a good rule of thumb is to plan to spend between 6% and 10% of your home’s value.

Is $10,000 enough for a kitchen remodel?

On average, a kitchen remodel can cost as little as $7,000 or as much as $50,000 or more. With a budget of $10,000, you’ll likely have enough to cover a cosmetic refresh or even a more substantial upgrade for a small kitchen.

Is $30,000 enough for a kitchen remodel?

Depending on the size of your kitchen and the work you want to do, a budget of $30,000 should easily cover a mid-range remodel.

What is the most expensive part of a kitchen remodel?

Generally speaking, the most expensive line item in a kitchen remodel is the cabinets. Stock cabinets are the least-expensive option, typically running around $100-$300 per linear foot. Custom cabinets are the most-expensive option and cost around $500-$1,200 per linear foot.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.

Dealing with medical bills can be stressful, especially when the charges are unexpectedly high. However, the “amount due” on a medical bill is not necessarily set in stone. Negotiating medical bills is a common practice, and many health care providers are open to discussions about reducing costs or setting up a manageable payment plan.

Whether you’re dealing with a large hospital bill or an unexpected charge from a doctor’s visit, these six steps can help you effectively negotiate your medical bills and potentially save you thousands of dollars.

1. Ask for an Itemized Bill

A good first step in negotiating a hospital bill you can’t afford, or any type of medical bill, is to ask for a complete breakdown of charges. An itemized bill will list every service, procedure, and medication you’re being charged for, providing full transparency. This can be particularly helpful if you’re looking to negotiate a medical bill after insurance. You can compare the itemized bill with your Explanation of Benefits (EOB) document and verify that the charges align with your coverage and what you’re responsible for paying yourself. Reviewing your bill can also identify any billing mistakes (more on that next).

2. Check for Billing Errors

Billing inaccuracies — from duplicate charges to incorrect billing codes — are surprisingly common in the medical industry and can be highly costly to consumers. When reviewing your itemized bill, you’ll want to keep an eye out for these common billing errors:

•   Duplicate charges: Ensure you haven’t been billed multiple times for the same service or medication.

•   Incorrect services: Verify that you’ve been billed only for treatments and procedures you actually received.

•   Incorrect billing codes: Mistakes in medical coding can lead to inflated charges. Look over your bill (you may have to look up the CPT codes online) and ensure the charges accurately reflect your treatment.

•   Unbundled charges: Sometimes a group of procedures that occurred together (and should be charged under a single code) get listed as separate services. Keep an eye out for any services that appear to have been “unbundled.”

If you spot errors, you’ll want to contact the billing department immediately to have them corrected. Be sure to document your conversations and keep copies of all correspondence for reference.

Recommended: How Does Debt Consolidation Work?

3. Ask About Financial Assistance Programs

Many hospitals and health care providers offer financial assistance programs to help patients struggling to pay their bills, but they may not make you aware of them unless you ask. These programs are often based on income and can provide significant discounts or even forgive a portion of the debt entirely.

When speaking to the billing department, ask if you might qualify for any of the following:

•   Charity care programs: Designed for low-income patients, these programs can reduce or eliminate medical debt.

•   Sliding scale discounts: Some providers adjust fees based on your income level.

•   Hardship waivers: If you’ve experienced financial difficulty due to a job loss or medical emergency, you may qualify for reduced bills.

If assistance is available, you’ll likely need to apply. This typically involves submitting information about your budget, the assets you own, recent tax returns, and proof of income (e.g., pay stubs).

4. Ask for a Lower Bill

Sometimes, all it takes to reduce your medical bill is to ask for a discount. Many health care providers have flexibility in their billing and are willing to negotiate with patients, especially if you’re uninsured or paying out of pocket.

When negotiating your medical bill, keep these tips in mind:

•   Be calm and polite: Getting angry or becoming emotional generally won’t work in your favor. For your best chance of success, you’ll want to explain your financial situation in a clear and calm way, then politely (but assertively) ask if the provider can offer a discount.

•   Offer to pay right away: Many providers are willing to offer a reduced price — or “settlement amount” — if you agree to pay immediately, as it saves them the hassle of pursuing collections. You might ask if they can offer a self-pay discount if you pay all or part of the bill that day. This strategy could result in as much as 30% to 50% off.

•   Compare market rates: Research what other providers charge for similar services in your area. Websites like FAIR Health Consumer and Healthcare Bluebook can help you determine if a provider overcharged you for a service.

If the first person you speak with isn’t helpful, ask to speak to a supervisor or someone in the billing department who is authorized to make adjustments.

5. Negotiate a Payment Plan

Even providers who won’t budge on price are often willing to offer payment plans, allowing you to pay off your debt in smaller, more affordable installments. Here are some tips for how to approach setting up a payment plan:

•   Determine your budget: Before you ask about payment plans, it’s a good idea to look at your monthly cash flow and calculate how much you can realistically afford to pay toward your medical bill each month.

•   Propose a plan: A good negotiating tactic is to start by offering a lower monthly payment amount than you can afford, as this leaves room for negotiation.

•   Request interest-free terms: Many providers offer payment plans without added interest, making this option more affordable than making monthly payments on your credit card.

It’s a good idea to get the terms of your payment plan in writing to avoid confusion later. Sticking to the agreed schedule can also help you avoid additional fees or collection efforts.

Recommended: Can Medical Bills Go on Your Credit Report?

Employer Resources

Many employers offer benefits that can help reduce medical costs, such as health-related savings accounts (HSAs), health reimbursement arrangements (HRAs), and stipends. These resources can significantly reduce the financial strain of medical bills, so it’s worth exploring any options offered by your employer.

Possible benefits you might be able to tap:

•   Health Reimbursement Arrangements (HRA): Employers fund HRAs to help employees cover qualified medical expenses. You may want to check with your HR department to see if this benefit is available and how to access it.

•   Health Savings Accounts (HSA): If you have a high-deductible health plan, an HSA can be used to pay for eligible medical expenses with pretax dollars. This account can also be used to cover deductible costs, prescriptions, and certain treatments.

•   Flexible Spending Accounts (FSA): Similar to HSAs, FSAs allow you to use pretax funds for medical expenses, but they usually have a “use it or lose it” policy, meaning funds must be spent within the plan year. You’ll want to use your FSA funds strategically to cover eligible medical costs.

•   Health stipends: Some employers offer additional financial support in the form of taxable health stipends, which can be used for medical bills or health-related expenses. Contact your HR department to explore this benefit.

What to Do If You Can’t Negotiate Lower Medical Bills

If you’re unable to negotiate your medical bills to an affordable price and your employer doesn’t offer benefits like HRAs or stipends, you’re not necessarily out of options. Below are two ways you may be able to affordably finance your medical bills.

•   Personal loan: An unsecured personal loan can be used for virtually any purpose, including paying medical bills. Interest rates can be significantly lower than those of credit cards, particularly if you have strong credit. And unlike credit cards, personal loan rates are typically fixed, allowing you to pay off your debt on a fixed payment schedule. If you can qualify for a personal loan with a good rate and manageable monthly payment, you might use it to pay off your medical bills immediately and avoid accruing late fees or having the bill move into collections. A personal loan calculator can help you run the numbers.

•   Zero-interest credit card: If you have strong enough credit to qualify for a credit card with a 0% introductory rate, you may be able to put the bill on your card then make interest-free payments for 12 to 21 months. Additionally, some providers offer medical credit cards with interest-free promotional periods, which may be anywhere from six to 24 months. These can help you pay off large bills over time, but be cautious of high interest rates once the promotional period ends.

Recommended: Personal Loan vs Credit Card

The Takeaway

Medical bills can be overwhelming, but they aren’t necessarily the last word. You may be able to negotiate the amount due by requesting an itemized bill, checking for errors, exploring financial assistance programs, and simply asking for a lower bill. Other tools that can help make medical bills more manageable include setting up an interest-free payment plan, tapping employer health benefits, and taking advantage of low-interest financing options.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Do medical bills affect your credit?

If the medical bill stays with your provider, it won’t impact your credit. If your payment is several months past due, however, the provider may sell your debt to a collections agency. Unpaid medical debt in collections (over $500) can be reported to credit bureaus after one year.

If medical debt does end up on your credit reports, it can lower your FICO® score. However, due to recent changes in how FICO calculates scores, medical debt generally has less impact on your scores than other types of debt.

Should I pay a medical bill that’s gone to collections?

Paying a medical bill in collections can protect your credit and resolve the debt, but you’ll want to first verify it’s legitimate. To ensure the debt amount is correct and has not already been paid, ask for documentation from the collection agency.

If the debt is valid, consider negotiating a reduced payoff amount or setting up a payment plan. Once paid, it’s a good idea to ask for written confirmation that the account will be marked as resolved. Under new guidelines, paid medical collection debt is no longer included in credit reports.

How long do I have to pay a medical bill?

The timeline to pay a medical bill varies depending on the provider’s policies. Many hospitals and health care providers expect payment within 30 to 90 days of issuing the bill and will charge late fees and/or interest if you miss the due date.

The statute of limitations — how long a provider or collection agency has to sue you for an unpaid medical bill — typically ranges from three to 10 years, depending on the state. However, the debt remains collectible even after that period.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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From unemployment benefits to hardship programs, there are a number of options out there when it comes to managing money during difficult times. One option that people may consider during unemployment is a personal loan. But one important question is: Can you get a loan while unemployed?

While there are personal loans for the unemployed available, it’s important to carefully assess the downsides and the benefits before moving forward. You’ll need to ensure you’ll be able to pay back the loan even if money gets tighter, and you should also be prepared for a more challenging approval process.

Personal Loan Basics

At its most simple, a personal loan is when a lending institution pays out a lump sum of money to a borrower, who then pays back the amount owed plus interest over a predetermined period of time.

Unlike a mortgage or student loan, personal loans aren’t tied to a specific expense. In other words, someone might take out a personal loan to cover the cost of paying for a dream wedding, to remodel a kitchen, or to cover living expenses during a time with low cash flow.

Personal loan amounts can range from $1,000 to $100,000, depending on the lender’s guidelines, the amount a borrower requests, and the borrower’s creditworthiness. While the lender pays out the amount of the loan in one lump sum to the borrower (minus any origination fee), the borrower pays back the loan over time in installments, often over a period of 12 to 60 months.

Personal loans are generally unsecured loans, which means they do not use collateral to secure the loan. Instead, lenders may look at borrowers’ creditworthiness to determine the risk in lending to them and their personal loan interest rate.

Interest rates vary for different borrowers depending on a borrower’s creditworthiness. Average personal loan interest rates can range anywhere from around 5% to over 35%. Interest is paid back alongside the principal amount in monthly payments that are made over the life of the loan.

Recommended: Personal Loan Guide for Beginners

When Should You Consider Taking Out a Personal Loan While Unemployed?

Ideally, you’d avoid taking on debt while you’re unemployed and don’t have regular income coming in from a job. You might first explore any other options available to you to free up funds, whether that’s taking on a side hustle, getting a roommate, or reassessing your budget. However, there are some circumstances when taking out a personal loan while unemployed may be doable, and it can be a better option than resorting to a high-interest payday loan or expensive credit card debt.

If you’re considering a personal loan while unemployed, you should first assess whether you’ll realistically be able to make on-time payments on your loan each month. Not doing so can lead to late fees and impacts to your credit score. You may even consider crunching the numbers using a personal loan calculator to determine if a personal loan would net you any savings over another borrowing option.

It’s also important to understand what lenders will look for when determining whether to approve you for a loan while unemployed. You’ll generally need a strong credit history and credit score to qualify. Additionally, lenders will want to see some income in order to prove you’ll be able to make monthly payments. Without a regular paycheck coming in during unemployment, this could be Social Security benefit payments, disability income, money from investments, or even your spouse’s income, among other alternatives.

Pros and Cons of Unemployment Loans

Taking out a personal loan may seem appealing to someone who is temporarily out of work because it might be relatively quick to secure and can come with lower interest rates than credit cards. But as with all financial decisions, it’s important to understand the pros and cons of taking out a personal loan while unemployed before applying.

Pros of Personal Loans for Unemployed Individuals

•   Personal loans can be more flexible than other types of loans. The money from a personal loan can be used for almost anything.

•   It may be less costly than other borrowing options. A personal loan may come with lower rates than a credit card, which can be a major benefit when it comes to saving money. Additionally, the fixed rate of a personal loan can help borrowers budget for monthly payments.

•   You could consolidate existing debt. Sometimes called debt consolidation loans, this type of personal loan can help borrowers save money if they can secure a lower interest rate than they’re currently paying on their credit cards. Additionally, debt consolidation loans can streamline multiple payments into one monthly payment. Keep in mind, however, that continuing to use credit cards after obtaining a credit card consolidation loan can lead to debt continuing to pile up.

•   They can help you deal with unexpected expenses. Personal loans may be an option for borrowers facing unexpected expenses, like medical bills or moving costs.

Cons of Personal Loans for Unemployed Individuals

•   It will likely be harder to qualify for a loan while unemployed. Lenders look at a variety of factors when determining whether to offer a borrower a loan, like income, debt-to-income ratio, credit history, and credit score. If a borrower is unemployed, they won’t necessarily have income to show, and their debt-to-income ratio might be much lower than it would be with a stable income.

•   Lenders may charge higher interest rates. Some lenders may offer higher interest rates to unemployed personal loan borrowers. This is because of the additional perceived risks of lending to someone who is unemployed.

•   Borrowers are taking a risk. Consider your ability to pay a higher interest rate or make monthly payments while you’re unemployed. Borrowers could face late fees for missed payments and more fees if the loan is sent to collections, not to mention a hit to their credit score if they’re unable to make payments.

Does SoFi Offer Personal Loans for Unemployed People?

SoFi does offer personal loans for unemployed individuals, assuming applicants meet other conditions. If you are not currently employed, it’s necessary to meet one of the two following eligibility criteria:

•   Have sufficient income from other sources

•   Have an offer of employment to start within the next 90 days

Beyond these conditions regarding employment and income, SoFi also has a number of other requirements that borrowers must meet. Additionally, SoFi will consider an applicant’s financial history, credit score, and monthly income vs. expenses.

Improve Your Chances of Getting Approved for a Personal Loan While Unemployed

If you’re hoping to get a personal loan as an unemployed person, there are steps you can take to increase your odds of getting your loan approved.

For one, it helps to familiarize yourself with your own financial situation. Check your credit score to see if it falls within a lender’s requirements, assess your current sources of income now that you’re unemployed, and take a look at how your current monthly debt payments compare to your monthly income. These are all factors that lenders will take into account when determining whether to approve the loan application, so the better they look, the better your chances that the lender’s answer will be a yes.

If you’re not confident you can get approved for a personal loan with your financial situation as is, you might consider taking some of the following actions:

•   Minimize your debts: If your debt-to-income ratio is way out of whack, that could lower your odds of approval. Consider ways you could cut costs, whether that’s downsizing your home, moving in with a friend or family member in the meantime, or selling off a car that’s saddling you with monthly payments.

•   Consider adding a cosigner: Another option could be to ask a friend or family member with good credit and a steady income to serve as a cosigner. Adding them to your application may make it likelier that a lender will view you favorably. (Cosigning can also help build your credit.) Just remember that if you fail to make timely payments on your loan, you could damage your cosigner’s credit and stick them with the payments — not to mention the harm it could do to your relationship.

•   Consider adding a co-borrower: There are some similarities between a cosigner and a co-borrower. For instance, when you use a co-borrower, you leverage that person’s income, credit score, and financial history to help you qualify for a loan. But unlike a cosigner, a co-borrower is equally responsible for paying back the loan and will share ownership of any property the loan is used to purchase.

•   Increase your income: While this might seem like an impossibility if you’ve recently lost your job, there are other ways to approach adding sources of income while you’re on the job search. You could pick up a side hustle or get a roommate. Also take the time to review what counts as income for credit card applications — you might find you’ve forgotten to include something. (Remember, unemployment benefits count as income.)

Recommended: Guarantor vs. Cosigner: What Are the Differences?

The Takeaway

If you’re interested in personal loans for unemployment, you might want to consider all the pros and cons before taking one on. If a personal loan sounds like it might be the right solution, do a little bit of preparation beforehand. It’s never a bad idea to figure out exactly how much you want to borrow in advance. But remember — you should only borrow the amount you need.

Taking a look at the affordability of monthly payments may also help you determine how much to borrow. Additionally, you may wish to pull up your financial documents and take a peek at your current credit score and overall financial health before applying for a personal loan.

If you’re ready to apply for a personal loan, it’s important to look for one that meets your specific needs and to find a lender willing to work with unemployed borrowers, if that’s your current situation.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Can you use a personal loan as an unemployment loan?

Yes, it is possible to use a personal loan as an unemployment loan. However, in order to qualify for a personal loan while you’re unemployed, you’ll still need to meet a lender’s eligibility requirements. This generally includes demonstrating some type of regular income.

What are the benefits of using an unemployment loan?

While risky, a loan for an unemployed person does offer a number of benefits, including flexibility in how the funds are used, potentially lower costs than other borrowing options, and the choice to consolidate existing debt. A personal loan could also come in handy if unexpected expenses arrive, such as a surprise medical bill or an unanticipated move.

Are there any fees associated with unemployment loans?

Personal loans for unemployed people can absolutely carry fees. Which fees apply will depend on the lender. Common fees you could face include origination fees, late fees, and prepayment penalties.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPL-Q424-010

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Riding around on a jet ski offers a fun way to explore the shore that is more budget-friendly than many boats. Still, top models can come with a hefty price tag, ranging from about $7,000 to $25,000.

If you’re considering buying your very own personal watercraft (PWC), jet ski financing could be the way to go. Let’s take a look at several financing options, maintenance costs, and factors to consider when choosing the solution that’s right for you.

Types of Jet Ski Financing Options

If paying cash for a jet ski or other PWC upfront isn’t in the budget, financing is always an option. Here are some jet ski financing solutions that can help make your purchase more manageable.

Personal Watercraft (PWC) Loan

Generally available from a bank, credit union, or online lender, a PWC loan is a secured loan with the watercraft as collateral. This means if you miss your monthly loan payments, the lender could repossess your jet ski.

The terms for a PWC loan depend on your credit score, debt-to-income (DTI) ratio, down payment amount, and loan amount.

Credit Card

If you plan to pay off your jet ski soon, using a credit card with a 0% APR promotional period may be an avenue worth exploring. These promotions usually last around 12 to 21 months. However, if you don’t pay off the full amount by the end, you’ll start paying the regular interest rate, which can be high.

Note that the credit card company can cancel your 0% rate if certain conditions aren’t met. They might even add a penalty rate, which is often higher than the regular rate on your card.

Financing Through a Manufacturer

Some watercraft manufacturers, like Sea-Doo, offer financing options. Some may even offer qualifying borrowers deals like 0% interest for a limited time, such as 12 months. As with a no-interest credit card, this could be a good financing option to consider if you’re able to pay off the charge before the promotional period ends. Otherwise, when it ends, you could get hit with high interest rates.

Personal Loan

Personal loans, another option for financing a jet ski, are typically offered through banks, credit unions, and online lenders.

You receive a lump sum of money upfront, and the funds can be used for nearly any reason. You’ll pay the money back in fixed monthly payments with interest. The loan terms and interest rate usually depend on factors like your credit score, income, and the amount of debt you currently have.

Unlike, say, many auto loans, personal loans are often unsecured, which means you won’t need to use your watercraft or any other asset as collateral.

Recommended: Does Loan Purpose Matter?

Factors Affecting Jet Ski Loan Terms

Planning on using a loan to pay for a jet ski? Personal loan requirements can differ by lender but commonly include the following:

•   Credit score: This three-digit number helps lenders decide how likely you are to pay back the loan. A higher credit score, such as 670 or above, can show lenders that you’re a less-risky choice, which could help you get better rates and terms.

•   Down payment: Some loans require a down payment, which is the amount you pay upfront toward the purchase.

•   Debt-to-income ratio (DTI): Your DTI shows lenders how much of your income goes toward monthly debt payments. To find yours, add up your minimum monthly debt payments and divide by your monthly income before taxes. Lenders generally prefer to see a DTI less than 36%.

•   Loan term: Lenders often offer terms from two to seven years for financing a personal watercraft. Larger personal loans usually have longer repayment terms.

How to Apply for Jet Ski Financing

Before you apply for PWC financing, check your credit score, as it’s one of the key factors in getting approved. You can check yours for free through your bank, credit card company, money tracker app, or credit counselors.

You’ll also want to review your credit report, which likely won’t include your credit score but does contain personal information like your credit account history, credit inquiries, collections, and bankruptcies. You can access your credit report for free each week from each of the three main credit bureaus via AnnualCreditReport.com. Review the report, and be sure to dispute any errors you see.

Required Documents

Some lenders let you prequalify, which can give you an idea of the rate and terms you may be eligible for. They’ll usually do a soft credit check, which doesn’t impact your credit score.

To prequalify, you’ll typically need to provide the lender with basic information, including your:

•   Name and address

•   Employment details

•   Income

•   Social Security number

Whether you’re shopping for a jet ski loan or vacation loans, it’s best to gather several different quotes so you can compare options and find the best fit for your needs and budget.

Application Process

Once you’ve determined which loan you want, you’ll submit a formal application. The lender will then perform a hard credit check, which may cause a temporary dip in your credit score. They’ll also review your debt-to-income ratio (DTI), which shows how much of your monthly income goes toward paying debts.

Once approved, you’ll receive your loan agreement. Carefully review it, and ask your lender about anything you don’t understand before signing on the dotted line.

Recommended: Pros and Cons of Personal Loans

Comparing Financing Options

When it comes to paying for a jet ski, you have no shortage of options. Parsing the choices available to you — and figuring out which one fits your needs and budget — can take some work. Here are some questions to consider as you compare your jet ski financing options:

•   What is the APR?

•   What will my monthly payments be? (A personal loan calculator can show you how your monthly payment can change based on your interest rate and loan terms.)

•   How long will I have to repay the loan?

•   Are there any extra fees?

•   Is there a prepayment penalty?

•   Will I need to use the jet ski or another asset as collateral?

Costs Associated with Jet Ski Ownership

Buying a jet ski is just the beginning of the costs involved. At a minimum, it requires routine maintenance, a safe place to be stored, and insurance.

Here are some of the jet ski ownership costs to include in your budget:

•   Insurance: You’ll need to buy insurance to protect yourself, your jet ski, and cover any liability. The cost of insurance typically depends on factors like the make and model of your jet ski, your past claims, and the purchase price. Liability-only starts at $100/year.

•   Maintenance: From basic servicing to simple repairs, you’ll want to budget for the cost of upkeep on your watercraft. Additionally, if you live in a colder area, you might need to pay for winterizing and storing your jet ski during the off-season.

•   Gas: Fuel costs depend on your location, how often you ride, and the type of fuel you need. On average, you can expect to pay around $45 to fill up a watercraft with a 15-gallon tank.

•   Trailer: To transport your jet ski from home to the marina, you’ll need a way to move it. A trailer can help you do that. Trailer costs can range from a few hundred to a few thousand dollars, depending on the features you want.

Tips for Getting the Best Jet Ski Loan

When you’re looking to finance a jet ski, it can be helpful to remember that terms, rates, and extra benefits vary from lender to lender. The following strategies can help you position yourself for more favorable terms.

Improve Your Credit Score

Lenders pay close attention to your credit score when deciding if you qualify for a loan and what interest rate you’ll get. Generally speaking, a higher credit score often translates to better rates. To help build up your score before applying, consider strategies like making consistent, on-time payments, paying down as much debt as possible, keeping old accounts open, and lowering the amount of available credit you use.

Save for a Down Payment

Setting aside money for a down payment can reduce how much you need to borrow. Moreover, a larger down payment could help you get a better rate and reduce your monthly payments. Some lenders may require a down payment of 10% to 20% of the purchase price, so it’s a good idea to check the lender’s requirements.

Shop Around

While it might be tempting, try to avoid settling for the first loan offer you see. It’s best to take your time to compare a few different lenders to find the best rates and terms. Exploring your options can help you feel confident that you’re getting the best loan available.

Alternatives to Jet Ski Financing

Financing a jet ski or watercraft isn’t the only way to enjoy some fun on the water. Here are a few other options to consider:

Save up: Instead of financing your jet ski, try saving up for your purchase. Start by deciding how much you’ll need, and set up a savings plan. Opening a high-yield savings account can help your money grow while you work toward your goal of buying your new ride.

Buy used: Even though it may take a little extra research, buying a used jet ski can help you get out on the water for less money. New jet skis and other watercraft typically lose value as soon as they hit the waves, so a well-kept used jet ski can be a sound alternative. J.D. Power recommends looking for a used model that is less than five years old or with only around 100 hours of use.

Rent: Deciding to rent a jet ski is a much cheaper option than buying one, especially if you jet ski only occasionally. This way, you pay only for the time you use it and avoid yearly maintenance and storage costs.

Considerations Before Financing a Jet Ski

Cost isn’t the only thing to think about when buying a jet ski. Other things to consider include where you will store your watercraft. Jet skis need a secure place when they’re not in use, whether it’s in your garage, at a marina, or in a storage facility. Consider both your available space and the storage costs.

Also think about how often you’ll realistically use the jet ski and where you’ll take it. Will it be a weekend hobby, or are you planning to use it just a few times a year? Knowing how often you’ll use it can help you decide if financing a jet ski is worth the investment.

The Takeaway

Buying a jet ski is exciting, but it’s important to think about how you’ll pay for it. Before you dive in, check out all your jet ski financing options so you can find one that fits your budget. It’s also a good idea to shop around to compare the rates and terms offered by different lenders.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What credit score do I need for jet ski financing?

Most lenders look for a credit score above 600 to approve a jet ski loan. However, having a score over 670 may help you qualify for better rates, which could help you save money on interest in the long run.

How long are typical jet ski loan terms?

Loan terms vary by lender, but you can usually find terms up to seven years. Note that while longer terms can lower your monthly payments, they may also increase the total interest you pay over the life of the loan.

Can I get jet ski financing through a dealership?

Yes, many dealerships offer financing options, but they may work with a third-party lender to provide the financing. This means you’ll still need to meet the third-party lender’s approval requirements to qualify for a loan.

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Photo credit: iStock/Andrija Dobras

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPL-Q424-009

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