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Whether you’re making home repairs, planning a bucket-list trip, or consolidating debt, getting a $4,000 personal loan can be a flexible solution. As long as you meet the lender’s criteria, the process of applying for a loan is generally straightforward. However, before you apply, it’s a good idea to understand how personal loans work, where to find one, and what they offer.

Read on to learn about the pros and cons of a personal loan for $4,000 and the qualifications you’ll need to meet to get one.

How to Get a $4,000 Personal Loan

Knowing how to apply for a $4,000 personal loan can make the process a lot easier. Here are some steps to help you get the loan that’s right for you.

Check Your Credit

When you apply for a personal loan, lenders will check your creditworthiness, so you’ll want to review your credit report first. You can get a free copy from the three main consumer credit bureaus — Equifax®, Experian®, and TransUnion® — at AnnualCreditReport.com®.

After you receive your credit reports, read them over closely and report any inaccuracies. Errors could impact your loan terms and chance of getting approved.

Shop Around

Interest rates and terms vary by lender, so shop around and compare your options. Many lenders will let you prequalify first, which gives you a sneak peek at potential interest rates, terms, and fees before you submit your final application. Comparing at least a few different offers can help you find the one that suits your needs and budget.

Apply for the Loan

Once you’ve selected the loan you want, it’s time to apply. Once you send in your application, the lender will do a hard credit check to see how creditworthy you are. You may also be asked to provide certain documents, including:

•   Identification

•   Proof of income

•   Proof of residence

After your application and required documents are in, the waiting game begins. Some lenders may swiftly approve your application and get you the funds in a lump sum — minus any origination fees — in a few hours or days. But if you have a more complicated loan application, you could be waiting a week or more for a decision.

Pros of a $4,000 Personal Loan

There are several benefits to taking out a personal loan. These include:

•   Flexibility. You can use the funds for just about any purpose.

•   Lower interest rates. Personal loan interest rates are often lower than credit card rates.

•   Bad credit eligibility. You may still qualify for a $4,000 loan even with bad credit.

•   Fast approval. Certain lenders offer fast approval, with funds available to you in a matter of hours or days.

Cons of a $4,000 Personal Loan

While personal loans have plenty of selling points, they also come with some drawbacks. Here are ones to keep in mind:

•   High fees. Personal loans can come with fees, such as origination fees ranging from 1% to 8% of the total loan amount.

•   Prepayment penalties. Some lenders charge penalties if you pay off your loan early.

•   Increased debt: A personal loan can add to your debt load, especially if you spend the funds on big-ticket items instead of consolidating high-interest debt.

•   Negative credit impact: When you apply for a personal loan, the lender will perform a hard inquiry. This can cause your credit score to drop slightly, though the dip is temporary.

Recommended: Fee or No Fee? How to Figure Out Which Loan Option Is Right for You

Can You Get a $4,000 Personal Loan With Bad Credit?

As we mentioned, even if you have poor credit or no credit history at all, you might still be able to qualify for a $4,000 loan. If your FICO® Score is lower than 580, it’s considered poor and you’re generally seen as a high-risk borrower.

While there’s no set credit score you need for a personal loan, many lenders prefer that borrowers have a credit score above 580. You can still qualify if you have a lower score, but the terms may not be as favorable. You could be offered loans with higher interest rates and additional fees. And you may be required to put up collateral, such as a car or your home, in order to secure the loan.

How to Compare $4,000 Personal Loans

Personal loans are offered through online lenders, traditional banks, and credit unions. Just like you shop around for the best deal on a big purchase, it’s smart to compare lenders’ rates and terms before you apply.

Here are a few things you’ll want to consider as you review your options.

Fees and Penalties

Some $4,000 personal loans come with fees, while others don’t. Lenders also have different ways of applying these fees. For example, some lenders may include fees in the loan amount, increasing your total debt. Others deduct fees from the loan proceeds, reducing the amount you receive. Be sure to crunch the numbers because they can increase your borrowing costs.

Prequalification

When you apply for a loan, the lender often looks at your credit to help determine the rates and terms you qualify for. This requires a hard inquiry, which can temporarily lower your credit score by up to 10 points. If you prequalify with multiple lenders, you can compare different offers without harming your credit. You might also want to use a personal loan calculator to get a better idea of what your monthly loan payments may be.

Flexibility

What if you face financial difficulties and struggle to pay back the loan? Or if you miss a payment and incur a late fee? Some lenders offer financial protection programs for borrowers, which can give you peace of mind when choosing a $4,000 personal loan.

The Takeaway

A $4,000 personal loan can be a quick way to get money for almost any need. You can get these loans from banks, credit unions, and online lenders. Requirements vary by lender, and each might offer different interest rates and terms. However, having a good credit score typically gets you a better rate.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.

FAQ

How much would monthly payments be on a $4,000 loan?

The amount you’d pay each month for a $4,000 loan depends on the interest rate and loan term. For example, if you had a three-year loan at 12.00% APR, your monthly payment would be around $133. However, with a two-year term at the same rate, the monthly payment would be closer to $188.

What is the interest rate on a $4,000 loan?

According to data from Forbes Advisor, personal loan interest rates can vary widely, though they’re typically between 7.00% and 36.00%. Rates for a three-year loan are generally between 12.00% and 15.00%. But keep in mind that the rate you qualify for depends on your credit score and loan terms.

What credit score do you need for a $4,000 loan?

In order to qualify for a $4,000 personal loan, most lenders typically prefer a credit score above 580. However, borrowers with lower scores may also qualify for a loan depending on the lender’s criteria.

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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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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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No-interest loans offer borrowers a way to obtain financing without the additional cost of interest. Instead, you are only responsible for paying back the original amount you borrowed, or the principal.

That may sound like a great deal, but financing offers that tout a 0% annual percentage rate (APR) often come with a catch: If you don’t follow the terms outlined in your loan agreement to the letter, you can end up paying interest on the full amount that you borrowed. In addition, some lenders charge fees for short-term zero-interest loans, which means you’ll end up paying back more than you borrow.

Read on to learn what no-interest loans are, how they work, and any potential costs that may be involved.

Are Interest-Free Personal Loans Real?

Yes. It is possible to get a personal loan with no interest. Also referred to as zero-interest or 0% APR loans, no-interest loans are essentially loans that let you borrow money without additional interest charges, provided you closely follow the loan’s terms and conditions.

What you can use a no-interest personal loan for will depend on the lender and type of loan you apply for. For example, some zero-interest loans, like certain auto loans, can only be used for financing a car, while others are only available for a specific retail purchase.

Interest-free loans aren’t necessarily cost-free, however. Some of these loans come with fees, such as a set-up, origination, or application fee. Also, many so-called “interest-free loans” charge something called deferred interest.

Deferred interest is a delay in interest charges for a set time period. If you pay off your loan balance in full by the end of the zero-interest term, you won’t pay any interest. If you don’t pay the loan in full by that time, the lender may charge retroactive interest charges going back to the day you took out the loan, even if you’ve already paid off a good portion of your balance.

If you get hit with any of these charges, an interest-free loan could end up being more expensive than a regular personal loan.


💡 Quick Tip: Some personal loan lenders can release your funds as quickly as the same day your loan is approved.

How Do Interest-Free Personal Loans Work?

With a standard personal loan, you pay back both the principal amount plus interest in regular (fixed) installments over the term of the loan. Interest is the cost of borrowing the funds. With a no-interest loan, however, you skip that additional interest charge. Instead, you only repay the original amount borrowed in regular installments.

Typically, no-interest loans have introductory offers that provide 0% APR for a set period of time. For example, a furniture or appliance store may say you can get interest-free financing for 24 months. If you don’t pay the balance in full by then, you’ll pay interest on any remaining balance (and, in some cases, the full balance).

Zero-interest loans are typically facilitated through third-party lenders, not by the stores themselves. These lenders may have specific eligibility criteria that borrowers must meet to qualify for 0%-interest personal loans, such as a certain minimum credit score, income level, and employment history.

No-Interest Loan Options

Here’s a look at some of the different types of 0-interest loans available.

Nonprofit Loan With No Interest

Some nonprofit and local organizations offer no-interest loans to people in financial need, individuals who have experienced emergencies, or businesses that operate in low-income communities. In some cases, there are strings attached, such as having to use the loan for a specific purpose.

In addition, some universities offer 0% APR emergency loans to students that are experiencing a financial emergency.

Medical Loans

Medical care can be expensive, but medical loans can help. To help make the cost of treatments and procedures more manageable, some doctors and medical practices participate in a no-interest loan program. While these services can be helpful, some charge a high interest rate if you don’t pay your bill in full by a certain deadline.

Recommended: How to Pay for Medical Bills You Can’t Afford

Car Loans

Some auto dealerships offer no-interest car loans to attract buyers. They may only do this at certain times of the year (to clear out space for new models) or when they want to get rid of slower-selling cars.

While a 0%-interest car loan is tempting, these loans often have shorter repayment terms, which means monthly payments may be high. Taking the 0-percent car financing deal could also mean missing out on incentives such as generous manufacturer rebates. It’s important to compare this with the average car loan interest rate, which can help you determine if a low-interest or cash-back incentive might offer more overall savings.

Recommended: Smarter Ways to Get a Car Loan

Retail Loans

Stores that sell furniture, appliances, electronics, and other big-ticket items will often offer no-interest loans to incentivize buyers to close a deal. But borrower beware: These loans often charge deferred interest, which means that if you don’t pay off the entire amount by a set time period, you’ll pay interest on the entire amount, even if you’ve already paid off most of the balance.

Buy Now, Pay Later Programs

Some online retailers offer buy now, pay later (BNPL) programs that provide interest-free loans for any shopping you do on their site. These plans often split up costs over several payments scheduled two to four weeks apart.

As long as you make payments as agreed, you typically won’t pay interest. However, if you miss a BNPL payment, you may be charged late fees and/or interest on your unpaid balance. Depending on the amount charged by the BNPL lender and how these fees are structured, they can add up quickly.

Pros of a 0%-Interest Personal Loan

Interest-free personal loans come with some significant advantages. Here are some to consider.

Complete a Purchase Without Waiting

An interest-free loan can make it possible to buy something you need now, even if you don’t have the available cash to cover the cost. Often, these loans allow you to pay for a purchase in multiple installments over time without any added expense.

Potential Savings in Interest Charges

A 0%-interest loan could help you save a significant amount of money in interest compared to putting a purchase on a credit card and carrying a balance over several months.

Flexible Qualification Requirements

Some lenders offer interest-free loans with a low bar to entry. Some BNPL companies, for example, won’t run a credit check. As long as you have a checking account with a positive balance and a steady paycheck, you may be able to get approved.

Cons of No-interest Personal Loans

Interest-free loans also have several potential downsides. Here are some you’ll want to keep in mind.

Fees

Some interest-free loans and BNPL apps offer no-interest loans but charge fees. Lenders may charge set-up fees, account maintenance fees, and/or late payment fees.

Deferred Interest

If you don’t follow the terms outlined in your loan agreement, you could end up paying interest on the original amount that you borrowed, not merely your unpaid balance.

Encourages Impulse Buying

Zero-interest loans, where you only need to repay the principal balance, often lure people into impulsively buying expensive items, like cars, appliances, and other luxury goods, they can’t really afford.

Pros of a No-Interest Loan	Cons of a No-Interest Loan
Allows you to get a needed purchase right now	May come with fees that can increase the amount you have to repay
Saves money on interest	If you don’t pay in full by a set date, the lender may charge interest retroactively
May not require a credit check	Could encourage impulse purchasing

Interest-Free Loan Alternatives

Here are some alternatives you may want to consider, including exploring a debt consolidation loan
if you’re managing high-interest debt from multiple sources.

Personal Loans

One of the biggest benefits of a personal loan calculator is that they often charge lower fixed interest rates when compared to other forms of lending, like credit cards. Before applying, you can use a personal loan calculator to estimate your monthly payments and understand how different loan amounts and terms could fit into your budget.

A personal loan comes with a set repayment period and consistent monthly payments. Most personal loans are unsecured, but if you’re looking to secure a lower interest rate or need a larger loan amount, you might consider a secured personal loan, which uses collateral like a car or home to reduce the lender’s risk.


💡 Quick Tip: If you’ve got high-interest credit card debt, a personal loan is one way to get control of it. But you’ll want to make sure the loan’s interest rate is much lower than the credit cards’ rates — and that you can make the monthly payments.

0% APR Credit Card

With a 0% introductory purchase APR credit card, you won’t be charged interest on your purchases for a certain period of time, such as 12 or 18 months. If you use this type of card to make an expensive purchase and pay it off within the introductory period, it’s like an interest-free loan. At the end of the promotional period, however, any outstanding balance on your account would be subject to the regular purchase APR, and you’d be expected to pay the balance with interest.

Borrow Money From Loved Ones

Sometimes, asking a friend or family member for a loan might not be a bad option. As with any loan, you want to make sure you can repay it. Clear communication with a loved one in a strong financial situation — and perhaps a contract to define the terms of the loan, including whether or not interest will be charged — is a good way to keep money from hurting your relationship.

Recommended: Family Loans: Guide to Borrowing & Lending Money to Family

The Takeaway

Zero-interest loans do have their appeal. But they may cost you more than other financing alternatives in the end. Many zero-interest loan lenders charge fees. Plus, borrowers who fail to repay their balance before the interest-free period is over may face interest charges retroactive to the beginning of the loan term.

Before you jump at a 0-interest loan offer, it’s a good idea to take a close look at the terms of the deal, along with your budget. Are there any fees involved? If so, it may not be a great deal after all. Will you be able to meet the requirements necessary to maintain a 0% interest rate? If not, you may want to consider a more affordable alternative financing option.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

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Photo credit: iStock/MicroStockHub

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 .

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.

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Although many people haven’t heard of these policies, borrowers can get insurance coverage for a personal loan. In the event you get injured, sick, lose your job, or die, the insurer will make loan payments for you.

Personal loan protection insurance is available to borrowers for specific situations that prevent them from repaying their loan. Although costs vary and raise your monthly expenses, loan insurance can help you out in a tight spot, protect your credit, and prevent the financial burden from falling on your family. Read on to learn if loan insurance may be right for you.

What Is Loan Insurance?

Loan protection insurance is coverage borrowers can purchase for various loans — such as personal loans — to guard against situations where the borrower can’t repay the loan. Typically, personal loan insurance covers the borrower when they suffer a disability, injury, job loss, or death. The personal loan protection policy pays a prearranged amount to satisfy the borrower’s balance.

Is Personal Loan Insurance Required?

Personal loan insurance is not mandatory when you obtain a personal loan, and a lender can’t refuse to give you a personal loan because you don’t insure it. However, if you get a secured loan, you may have to insure the collateral you put up. Borrowers with unsecured loans won’t have these concerns, although they will likely have a higher interest rate.

If a lender ever tells you they won’t provide you a loan unless you purchase loan insurance from them, know that you have options. You can report the lender to your state’s attorney general, insurance commissioner, or the Federal Trade Commission.

How Much Is Insurance on a Loan?

You can pay for loan insurance either through a one-time payment or monthly premiums. Your premium will vary based on several factors. First and foremost is the loan balance, with bigger loans incurring higher insurance costs. Paying your premium with an upfront lump sum can decrease the cost.

Your coverage will also determine personal loan insurance costs. For example, you might purchase a $15,000 policy for a $20,000 loan because you have $5,000 in savings. This protection would cost less than a $20,000 policy.

Your location and lender will also influence how much your personal loan insurance costs. Therefore, it’s recommended to shop around for personal loan lenders, just as you would when looking for a new bank or investment firm.

What Are the Benefits of Personal Loan Insurance?

Personal loan insurance helps when you can’t repay your loan. Here are the specific ways a personal loan protection policy benefits you:

Prevent Delinquency or Default

If you suffer a severe injury that prevents you from working, any lost income could result in missed payments. If you have personal loan insurance, it will repay the loan, and you won’t need to worry about delinquent (late) payments or default (failure to repay the loan).

Protect Your Credit Score

Late payments and defaulted loans are reported to the credit bureaus, and that can negatively impact your credit report, causing your credit score to drop. A low credit score can hurt your chances of qualifying for competitive interest rates. You don’t need to worry about late payments and default if you have personal loan insurance, so you can feel confident your credit score won’t be damaged if you’re not able to pay the loan.

Protect Your Dependents and Coborrowers

Similar to life insurance policies, personal loan insurance can help your beneficiaries so your family won’t have to pay off the loan if you cannot. You can purchase a plan that covers coborrowers as well, protecting spouses, loved ones, and business associates from the financial burden.

Recommended: Types of Personal Loans

Types of Loan Insurance

Loan insurance goes beyond personal loans. You can purchase coverage for the following loan types:

Business Loans

Business loans can help small business owners get their companies off the ground or sustain operations. These loans can fund equipment purchases, scaling efforts, or fund payroll. As a result, they are crucial for small businesses in getting established or enduring a market downturn.

Business loan insurance will pay out if the owner or a crucial employee can no longer work. This policy names the lender as the beneficiary and repays the loan on the borrower’s behalf. Business loan insurance can keep a company afloat if it is struggling due to slowed operations and a hefty financial obligation.

Personal Loans

A personal loan is a flexible financial tool that a borrower can use for many purposes. For example, common personal loan uses include repaying high-interest debt or remodel your kitchen.

Personal loan insurance protects the borrower in case they can’t repay the loan due to a serious life event. You may want to consider purchasing insurance for a high-balance personal loan if your dependents and beneficiaries can’t afford to pay it without you.

Recommended: What Is a Personal Loan?

Student Loans

Student loans cover the cost of higher education. Borrowers can take out student loans from either the federal government or private lenders (or both), but these loans have different terms and conditions, and it’s important borrowers know the difference.

Federal student loans are canceled if the borrower dies. Similarly, Direct PLUS loans are canceled if the parent or student dies. As a result, insurance is usually unnecessary for federal student loans.

Private lenders don’t typically discharge student loans when the borrower dies. Instead, they may pursue family members, cosigners, or anyone mentioned in the contract for repayment. Therefore, student loan insurance can be a good investment if you’re concerned about resolving unpaid balances for borrowers who die or become disabled.

Home Loan

A mortgage loan, also called a home loan, is likely your highest debt balance, and the idea of not being able to repay it because of injury, illness, or death is scary. Mortgage protection insurance is for a specific balance your beneficiaries will receive if something happens to you.

For example, if you have $150,000 left on your mortgage, your policy will be for that same amount. If you pass away with $100,000 left, your coverage will pay the balance and transfer the leftover $50,000 to your family.

When applying for mortgage protection insurance, there are fewer health-related questions and standards than for life insurance, so it’s easier to get approved. However, wider accessibility comes with a higher premium cost.

Mortgage protection insurance policies come in all shapes and sizes. You might have coverage solely in the event of your death, or you can limit the payout to your mortgage balance to reduce costs. These policies vary depending on the lender and product type. It’s important to thoroughly understand the policy before committing so you understand exactly what you’re paying for.

Reasons for Getting Loan Protection

Loan protection insurance allows you to safeguard your finances when unexpected crises occur. For example, it ensures that loan repayment won’t be a burden if you’re struggling with illness or unemployment. Similarly, your family won’t have to repay your debts if you die. But it’s important to understand the coverage to determine if it suits your needs.

While loan protection is usually optional, its primary advantage is that it offers borrowers some peace of mind. It allows you to focus on your recovery or job search instead of worrying about meeting loan obligations and maintaining financial stability.

There are other kinds of insurance that are not directly tied to your financial products but can still help pay off debts if you get injured, have a long-term illness, or die.

Disability Insurance

You can also include disability as a condition for your loan insurance. While some policies only cover the borrower’s death, you can add disability to expand your coverage. Doing so means you’ll receive financial relief if you can no longer work due to an illness or injury.

Life Insurance

Your life insurance policy offers a payout if you die. However, it can specifically insure your personal loans and lines of credit if you have high balances. The advantage of the limited coverage is you don’t have to pass a medical examination as you would with a traditional life insurance policy. The drawback is the policy will be more expensive.

Pros and Cons of Loan Protection

Here is a comparison of the pros and cons of loan protection insurance:

Pros	Cons
Offers peace of mind	Increases the cost of the loan
Financial relief during hardship	Might accrue interest
Protects your credit score	Lenders may deny coverage
Avoids delinquency or default on loans
Flexibility for various situations and loan types
Protects dependents
Coverage is optional

The Takeaway

Loan insurance for a personal loan covers scenarios where you become disabled, unemployed, or deceased. This coverage allows you to maintain strong credit instead of missing payments. In addition, it protects your loved ones from unexpected debt. As a result, purchasing insurance when taking out a personal loan can grant peace of mind and help you focus on what matters most.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What is loan insurance?

Loan insurance is a policy from a lender providing a payout to cover your loan if you can’t repay it. You can purchase coverage for situations where you become disabled, lose your income, or die.

How much is insurance on a loan?

The cost of a loan insurance premium depends on multiple factors, such as the loan size, the lender, your location, and if you pay the premium in one shot. In addition, your insurance may have an interest rate, increasing its cost.

What is the benefit of personal loan insurance?

The advantage of personal loan insurance is that your loan will be repaid even if you lose your income or die. As a result, you don’t have to worry about a situation where your loved ones must dig their way out from under your debt. In addition, you’ll preserve your credit score because you won’t fall behind or default on the loan.

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Photo credit: iStock/Pekic

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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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. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

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.

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Recourse loans are secured loans in which the lender can seize a borrower’s collateral and, if necessary, other assets, should the borrower default on the loan. Common types of recourse debt are auto loans, credit cards and, in most states, home mortgages. Recourse loans are low risk to lenders so they tend to have lower interest rates than non-recourse loans.

Non-recourse loans are also secured by collateral but in this case, the lender can only seize the collateral pledged for the loan; they can’t take any other assets. Non-recourse loans are less common than recourse loans and tend to have higher interest rates due to their higher risk.

Read on to learn more about how non-recourse and recourse loans compare.

What Is a Recourse Loan?

A recourse loan is a secured loan for which the lender can seize more than just the collateral if the borrower defaults. The lender is also able to seize other assets the borrower didn’t use as collateral, including income and money in bank accounts.

How Recourse Loans Work

When a borrower defaults on a recourse debt, the lender can seize not only the loan’s collateral, but can also attempt to attach other assets to collect what’s owed. In essence, the lender has additional recourse to recoup their losses.

Between recourse vs. nonrecourse debt, recourse debt favors the lender while nonrecourse debt favors the borrower.

Examples of Recourse Loans

Hard money loans, which are typically based on the value of the collateral rather than just the creditworthiness of the borrower, tend to be recourse loans.

An auto loan is one example of a recourse loan. If an auto loan borrower defaults on the loan, the lender has the right to seize the vehicle and sell it to recoup its losses. If the vehicle has depreciated, however, and the sale doesn’t cover the loan balance, the lender can ask for a deficiency judgment for the difference. In that case, the borrower’s wages could be garnished or the lender could seize other assets.


💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

What Is a Non-Recourse Loan?

A nonrecourse loan is a secured loan for which the lender cannot seize assets that weren’t put up as collateral in the original loan agreement.

How Non-Recourse Loans Work

When a borrower pledges collateral on a secured loan, the lender can take that asset — but no others — if the borrower defaults on the loan. The lender will typically sell the asset to recoup their loss on the loan. The lender has no other recourse than seizing the collateralized asset, even if the sale of that asset doesn’t cover the balance of the loan.

Examples of Non-Recourse Loans

Lenders may be cautious about offering non-recourse loans because it limits their ability to recoup losses in the event of a default. Therefore, loans are typically classified as recourse loans.

Mortgages are classified as non-recourse debt as a matter of law in 12 states, meaning the lender cannot pursue a borrower’s other assets if they default and end up in foreclosure. The financial consequences would likely be limited to foreclosures of the home and damage to the borrower’s credit score.

A lender might be willing to offer a non-recourse loan to an applicant with excellent credit and steady, verifiable income if confident in their ability to repay the debt.

Recourse vs Non-Recourse Loans

Both recourse and non-recourse debt can be secured by collateral, which a lender can seize in the event of nonpayment.

The biggest difference between the two is that the lender is prevented from pursuing other assets owned by the borrower to repay what’s owed on a non-recourse debt. Basically, the lender has no other recourse for repayment of the debt other than the collateral that secures the loan.

Recourse Loan	Non-Recourse Loan
Lender can seize assets other than those put up as collateral	Lender can seize only assets that were put up as collateral
Borrower can lose collateralized and other assets if they default	Borrower can lose collateralized asset and have a negative entry on their credit report if they default
Loan rate and terms are based on the value of asset used as collateral and creditworthiness of applicant	Lender may consider creditworthiness of applicant greater than value of collateral when determining loan rate and terms
Less risky for lenders	Less risky for borrowers

Pros and Cons of Recourse vs Non-Recourse Debt

Depending on whose perspective the situation is being viewed from, recourse and non-recourse debt each has benefits and drawbacks.

Pros and Cons of Recourse Loans

Recourse debt is more favorable to the lender than the borrower because this type of debt gives the lender more avenues to collect when a debt goes unpaid.

Approval for recourse loans, on the other hand, may be easier since they pose less risk for lenders.

From the borrower’s perspective, here are some pros and cons of recourse loans:

Pros of Recourse Loans	Cons of Recourse Loans
Approval qualifications may be less stringent than for a nonrecourse loan	Lender can seize collateralized asset and other assets if the borrower defaults
Interest rates can potentially be low	Borrower assumes greater risk than lender

Pros and Cons of Non-Recourse Loans

A non-recourse loan is more favorable to the borrower in the case of default. In that situation, the lender could only seize the asset put up as collateral, but couldn’t lay claim to any of the borrower’s other assets.

Non-recourse financing is usually riskier for the lender since they’re limited to collecting only the collateral when a borrower defaults. As such, lenders may charge higher interest rates for non-recourse loans and/or require borrowers to meet higher credit scores and income requirements to qualify.

From the borrower’s perspective, here are some pros and cons of non-recourse loans:

Pros of Non-Recourse Loans	Cons of Non-Recourse Loans
Only the asset put up as collateral can be seized if the loan is defaulted on	Borrower’s credit can be negatively affected if the lender must write off uncollected debt
Personal assets are not at risk	Interest rates may be high

Managing Recourse vs Non-Recourse Loans

Generally, the only reason for a borrower to be concerned about whether they have recourse vs. non-recourse debt is if they’re in danger of default. As long as they’re keeping up with their payments, whether a debt is recourse or non-recourse shouldn’t be an issue.

But if there is a concern about potentially falling behind in paying a debt, then it helps to do some research before borrowing. For example, if trying to qualify for a home loan, asking upfront whether the loan is treated as recourse or non-recourse debt under a particular state’s laws will help in the decision making.

Making a larger down payment, for example, means less a borrower has to finance. Ultimately, though, a borrower should do what is right for their particular financial situation. It may be better for some borrowers to choose a home loan that allows for a lower down payment so they can keep more cash in the bank to cover financial emergencies down the line.

If you’re planning to apply for a car loan, you might consider buying a vehicle that tends to hold its value longer or making a larger down payment. Those could both help you avoid ending up underwater on the loan if you happen to default for any reason.

Credit cards are revolving debt, not a lump sum being borrowed, so the amount owed can change month to month as purchases are made and paid off. Some ways to manage this type of recourse debt include:

•   Keeping card balances low

•   Paying the balance in full each month, if possible

•   Setting up automatic payments or payment alerts as notification of when a due date is approaching

With any type of debt, recourse, or non-recourse, it’s important that you get in touch with your lender or creditor as soon as you think you’ll have trouble making payments. The lender may be able to offer options to help you manage payments temporarily. Depending on the type of debt, that may include:

•   Credit card hardship programs

•   Student loan forbearance or deferment

•   Mortgage forbearance

•   Skipping or deferring auto loan payments

Reaching out before a payment is missed can help you avoid loss of assets, as well as any negative impact on your credit.


💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

Is a Recourse or a Non-Recourse Loan Best for You?

It’s likely you won’t have much of a choice between a recourse and a Non-Recourse loan when looking at financing options. Lenders are likely to offer only recourse loans because they have more options to recover losses if the borrower defaults on the loan.

If you are presented with both options, choosing a recourse or Non-Recourse loan may depend on your financial situation.

•   A recourse loan may be a good option for those with a limited credit history because in exchange for additional avenues to recoup their losses, if necessary, a lender may offer low interest rates.

•   A non-recourse loan could be a good option for an applicant with good credit and steady income, as the lender may consider them a low-risk borrower and not feel the need to have additional assets to secure the loan.

SoFi Personal Loans Rates

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What does recourse mean in lending?

Recourse refers to a lender’s options when recouping losses when a borrower defaults on a loan. With a recourse loan, lenders can recoup defaulted loan balances by seizing both the loan collateral and — when necessary — the borrower’s other assets.

Are you required to pay a non-recourse loan?

Yes, borrowers are required to make payments on both recourse and non-recourse loans.

Are non-recourse loans more expensive?

Non-recourse loans can have higher interest rates than recourse loans because lenders may perceive them as having higher risk.

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About the author

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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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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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