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Most people could use a cash injection at some point in their lives. Perhaps they need to cover major home repairs, a big-ticket purchase, or emergency expenses. Whatever the reason, a personal loan may be a good idea, especially for borrowers with a strong credit history.

Read on to learn about $50,000 personal loans. Find out why they might be right for you (and when they may be wrong), how the terms are decided, and possible alternatives to a personal loan for $50K.

What Are Personal Loans?

Personal loans are a convenient way to fund a short-term cash flow problem or consolidate credit card debt. In many cases, once the loan is approved, the funds are deposited to your account within a day or two.

Banks, credit unions, or online lenders can all provide personal loans. The amount of a personal loan typically ranges from $1,000 to $100,000. Payback terms are flexible, running from 12 months to several years, and loan payments are due monthly. Personal loan rates vary depending on the credit score of the borrower: A higher credit score will be rewarded with better terms and a lower interest rate.

Despite their flexibility and convenience, there are pros and cons to personal loans that a borrower should be aware of before they opt for this financing option.

Recommended: How To Create a Personal Cash Flow Statement

Pros and Cons of Getting a $50,000 Personal Loan

One of the biggest advantages of an unsecured personal loan is that no collateral is required, which means you don’t risk losing your home or car. On the other hand, interest rates can be high if your credit score is low, and fees and penalties often apply.

Considerations When Looking for a $50,000 Personal Loan

Borrowers should pay special attention to these factors when comparing loans.

Types of Lenders

Three types of lenders offer personal loans: traditional banks, credit unions, and online lenders. Each lender will offer different loan terms, interest rates, and fees.

Online lenders will deliver funds faster, and they may offer lower rates because they have fewer overhead costs, such as physical branches to maintain. Banks and credit unions may offer discounts to their customers who hold checking or savings accounts.

Interest Rates

The biggest consideration for a $50,000 personal loan is the interest rate, because the rate and the length of the loan will determine the total cost of the loan. The shorter the loan, the less interest you will pay, and the lower the total cost.

In most cases personal loans have a fixed interest rate, but some do have variable rates. Variable rate loans often start out with a relatively low interest rate, but the rate can rise significantly later, increasing the monthly payments.

Fees

Origination fees can be hidden in the fine print, so make sure you understand how they impact the annual percentage rate (APR) that you are charged. Also check if there’s a prepayment penalty for paying off your loan early.

Total Repayment Cost

The total repayment cost of a $50,000 loan will depend on the interest rate and the length of the loan. You will make more payments over a longer term, racking up more interest and increasing the total cost of the loan. A shorter term will lower the total repayment cost. To minimize total repayment costs, select a loan with the biggest monthly payment you can comfortably afford and the shortest repayment term.

Monthly Payment Amount

The monthly payment is critical. If a monthly payment offered by a lender seems like a stretch, try to negotiate a longer repayment period. For instance, if a five-year loan is extended to a seven-year loan, you’ll make 84 smaller payments compared to 60 larger payments. Just remember, you’ll pay more interest over the life of the loan.

Credit Score

The minimum credit score to qualify for a $50,000 personal loan will depend on the lender. For such a significant loan amount, a traditional bank or credit union may require a credit score of 650 or more, which is considered a fair credit score. Other lenders may require a credit score of 600. Take steps to improve your score by removing any inaccuracies before you shop for a loan.

Recommended: What Is the Minimum Credit Score Needed To Get a Personal Loan

Debt to Income Ratio

A lender will consider your debt-to-income ratio when qualifying you for a personal loan. This ratio shows what proportion of your income is already used for existing debt, and whether you have enough income to pay the additional personal loan monthly payments. According to Investopedia, a debt-to-income ratio of around 36% or lower is desirable. A higher ratio may mean you’ll pay a higher interest rate.

Collateral

A personal loan is usually “unsecured,” which means that it doesn’t require collateral, such as your home, car, or savings account. If you have bad credit, however, the lender may ask you to provide collateral for a large loan.

Cosigner

One option for a borrower with bad credit is to apply with a cosigner that has good credit. This balances out the credit score calculation. The cosigner agrees to make the payments if you cannot.

How To Qualify for a $50,000 Personal Loan With Bad Credit

A $50,000 loan will be expensive if you have bad credit (read more on the bad credit score range). The best thing to do is to boost your credit score to at least 650. Check for any errors on your credit report, use credit cards sensibly, and pay bills on time.

It is possible to get $50,000 with a lower credit score, but you may have to resort to a secured loan, such as a home equity line of credit (HELOC), or find a cosigner.

Questions To Ask Yourself Before Taking Out a Large Personal Loan

A $50,000 personal loan is a huge financial commitment. Ask yourself the following questions before signing on the dotted line.

How Much Do I Really Need?

Minimizing your debt load means you pay less to lenders in fees and interest. Consider whether you can borrow money from another source at a lower cost and reduce the amount that you need from a personal loan.

Can You Afford the Monthly Payment?

If the monthly payment is going to take a big bite out of your paycheck each month, you may find yourself unable to meet the payments. Make sure your cash flow is sufficient to meet your monthly payments.

Is a Personal Loan Your Best Financing Option?

Look at other options before you settle on a $50,000 personal loan. If you have equity in your home, refinancing your mortgage or obtaining a HELOC might be a better choice. Credit cards and borrowing from family or friends are also good alternatives.

How Will the Loan Affect Your Credit?

When you are shopping for a loan, whether it be for $5,000, $10,000, or $100,000, a lender may pull a soft credit check to prequalify you. This will not affect your credit score. When you formally apply for your loan, the lender will do a hard credit check. This may reduce your credit score by around five points for one year.

Aside from credit checks, personal loans can help build your credit history or seriously hurt it, depending on how you manage your payments. If you make a payment that’s over 30 days late and it gets reported to the credit bureaus, it could lower your credit rating from excellent to fair. But if you use your loan to consolidate existing debt, your score might actually rise because your credit utilization ratio has improved.

Recommended: What’s the Difference Between a Hard and Soft Credit Check?

Alternatives to $50,000 Personal Loans

As we already mentioned, two alternatives to a $50,000 personal loan are a home equity loan or a HELOC. A home equity loan uses your home’s equity as collateral. This type of loan may have longer repayment terms and lower interest rates than personal loans because your home is used as security. However, you risk losing your home if you can’t make the payments.

A HELOC is a revolving line of credit that you can draw from when you need to. It works like a credit card but uses your home as collateral. Again, you risk losing your home if you cannot make the payments.

The Takeaway

Personal loans for $50,000 are easy to find. Traditional banks, credit unions, and online lenders all provide flexible personal loans. The terms of a personal loan will depend on your credit score, and the higher your score the lower your interest rate.

An online lender can prequalify you and deliver funds in a day or two to your account. A bank or credit union may take longer, but they may also offer better terms to their customers. Borrowers should find out the average personal loan interest rate, shop around with different lenders, and look out for origination fees and prepayment penalties hidden in the small print.

Consider a personal loan with SoFi. SoFi personal loans have absolutely zero fees required. No prepayment fees. No late fees.

FAQ

What credit score do I need to get a $50,000 personal loan?

Most lenders will require a credit score of 650 or more, which is considered a fair credit score. Other lenders may require a credit score of 600, but they will charge higher fees and a higher interest rate.

How can you qualify for a $50,000 personal loan?

In general, to qualify for a $50,000 personal loan you will need to show you have sufficient income to make the monthly payments and have a credit score of 650 or higher. You also must be 18 years old and a U.S. citizen, legal resident, or visa holder.

Is it hard to get a 50k personal loan?

It is not difficult to get a $50K personal loan if you have good credit. If you have poor credit, the number of lenders available to you will be limited, and you will likely face higher interest rates and high fees, making the loan quite costly.

Photo credit: iStock/undefined undefined

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.

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.

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.

SOPL0222009

It’s not possible to take a loan from an IRA or Roth IRA. Making an early withdrawal from an IRA is an option, but that comes with taxes and penalties. You can borrow money from a 401(k) plan, however, without any penalties.

Read on to learn the impact of an early withdrawal from an IRA and some other ways to find the cash for unexpected expenses.

Can You Borrow from Your IRA?

An individual retirement account (IRA) is a savings account with tax advantages that is designed as a long-term investment vehicle for your retirement. The money that people invest in IRAs goes to a wide range of financial products, including stocks, bonds, exchange-traded funds (ETFs), and mutual funds. Banks and investment companies rely on holding the funds for a long time, so lawmakers created strict rules around withdrawing money from traditional and Roth IRAs. There is usually a 10% penalty and an income tax bill.

IRA loans and Roth IRA loans are not allowed. You cannot borrow money from these accounts, but you can withdraw cash from your IRA if you have to, at a cost.

Recommended: What Is the Credit Score Required to Get a Personal Loan?

What Is Possible: Early IRA Withdrawals

Here’s what you can and can’t do regarding withdrawing cash from traditional and Roth IRAs.

Traditional IRAs

If you are 59 ½ or older, you can take money out of your traditional IRA with no penalty, but you’ll owe income taxes on the money you pull out.

Account holders of any age can withdraw funds from an IRA and roll them over into another IRA or redeposit them into the same IRA within 60 days. This amounts to a 60-day loan, and you can do this once every 12 months. If you don’t roll over the funds within 60 days, the action will be considered a withdrawal or lump-sum cash distribution. That means paying federal and state taxes plus an additional 10% federal tax fee.

There are some exceptions that will allow you to avoid the additional 10% federal tax:

•   First-time homebuyers can withdraw $10,000 for a downpayment.

•   The funds are used for higher education expenses.

•   The funds are used for the birth or adoption of a child.

•   You have become permanently disabled.

Recommended: Personal Loan Glossary

Roth IRAs

If you’re at least 59 ½ and you’ve owned your Roth IRA for five years or more, you can take tax- and penalty-free Roth withdrawals of contributions. However, if you withdraw earnings, such as dividends or interest, you might have to pay the 10% penalty and income and state tax on that portion of the withdrawal.

Drawbacks of Early IRA Withdrawals

Disadvantages of early IRA withdrawals are penalties and missed earnings on the money taken out.

Penalties

Before age 59 ½, you are subject to a 10% penalty on any amount withdrawn. The same penalty holds if you fail to redeposit a rollover within 60 days.

Taxes

Before age 59 ½, you are subject to federal and state taxes on early withdrawals.

Lack of Growth Potential

If you take funds out of your IRA, you will lose the earnings from that money that would otherwise go toward your retirement. In that sense, a $10,000 withdrawal could cost you much more than $10K in the long run.

Early IRA Withdrawal Alternatives

There are alternatives to withdrawing funds from an IRA. The best option for you depends on how much cash you need, the taxes and penalties you might pay, and the interest and fees you might pay on the alternative. Here’s a look at some of them.

401(k) Loan

Borrowing from your 401(k) is allowed. If your plan is amenable, you can take out as much as 50% of your savings, up to a maximum of $50,000, within 12 months. You will have to pay back the money, plus interest, within five years. However, the interest is paid back into your own account.

The advantage of a 401(k) loan is that there are no taxes or penalties. The disadvantage is that if you leave your current job, you may have to repay your loan in full. If you cannot, you’ll owe both taxes and a 10% penalty if you’re under 59 ½.

Family Loan

A family loan could be the best option if you can negotiate favorable terms. This route is also the most flexible but can affect family relationships if not handled well. Be sure to set expectations and draw up a contract to protect both parties.

Credit Card Cash Advance

A credit card cash advance is a quick way to get funds. No hard credit inquiry is needed, so there is no effect on your credit score. You can pay small fixed monthly payments, but there will be interest that accrues daily as well as fees.

The interest charges and fees will need to be weighed against the cost of an early withdrawal from an IRA. There may be a charge of up to 5% for a cash withdrawal. There may also be a flat charge for a withdrawal in addition to the percentage charge.

Depending on your credit line, the amount you can withdraw may be less than your credit limit.

Personal Loan

Most of the time, if you are looking for a specific sum of money that you would like to repay over time, a personal loan is a good choice. Current personal loan interest rates are generally much lower than for a cash advance.

Early IRA Withdrawal vs Personal Loan

Your decision may come down to an early IRA withdrawal versus a personal loan. Let’s look at the pros and cons of each.

Pros of Early IRA Withdrawal

•   If you have a Roth IRA, you can withdraw contributions (but not earnings) free of tax and penalties.

•   Early withdrawals provide emergency funds without interest and fees.

Cons of Early IRA Withdrawal

•   You cannot repay the money you withdraw, so you will have less of a nest egg for retirement.

•   If you withdraw gains from a Roth IRA, you may have to pay taxes and fees.

•   You miss out on earnings from the amount that you withdraw.

Pros of a Personal Loan

•   There are no withdrawal penalties with a personal loan.

•   Your retirement savings stay intact, and you will continue to earn money on the funds.

•   A personal loan can put cash into your bank account within one to two business days.

Cons of a Personal Loan

•   Some shopping around is required, and there is an application process.

•   A minimum credit score might be required.

•   Average interest rates and fees could be high depending on your credit score.

The Takeaway

Account holders may not take out loans from an IRA or Roth IRA. Making an early withdrawal from an IRA is an option, but that comes with taxes and a 10% penalty. Because you cannot pay the funds back, a withdrawal loses out on the investment gains those funds would have earned. However, you can withdraw money from your IRA as long as you redeposit it or roll it over into a new account within 60 days. And you can borrow money from a 401(k) plan without any penalties.

Before you consider withdrawing from your IRA, consider a personal loan. SoFi offers competitive personal loans with no origination, prepayment, or late fees. Getting a personal loan is usually straightforward, and funds can be deposited as soon as the same day.

FAQ

Can I take a loan from my IRA?

There is no such thing as an IRA loan because you cannot pay the money back. You can withdraw funds from an IRA and roll them over into the same or another IRA within 60 days, and you can do this once every 12 months. If you don’t roll over the funds within 60 days, the action will be considered a withdrawal or lump-sum cash distribution. That means you will have to pay federal and state taxes plus an additional 10% penalty.

How do I get an IRA loan?

You can’t borrow from your IRA. However, if you’re 59 ½ or older, you can request a distribution from your traditional IRA without any penalty. Since your original contributions were tax-deductible, you’ll need to pay income tax on the funds you withdraw.

If you have a Roth IRA, you can withdraw both contributions and earnings tax-free and penalty-free, but only if you are 59 ½ or older and have owned your Roth IRA for five years or more. If you withdraw earnings early, you’ll have to pay a 10% penalty and income tax on the amount you withdraw.

Lastly, you can use the 60-day rollover rule to your advantage if you can repay the borrowed money in 60 days or less and avoid paying taxes and penalties.

Photo credit: iStock/Geber86

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

SOPL0222013

Personal loans used to be considered a last resort to resolve cash flow issues. Today, according to the U.S. Chamber of Commerce, personal loans are the fastest growing lending vehicle in the nation. Personal loans are appealing partly because of their flexibility. They can be used for almost any purpose, whether to fix up a home or consolidate credit card debt. Borrowers can receive anywhere from $1,000 to $100,000, choose a fixed or variable interest rate, even select the length of the loan.

Read on to find out more about how personal loans work, how to qualify, their advantages and disadvantages, and whether a personal loan is right for you.

What Is the Required Credit Score for a $15,000 Personal Loan?

You will likely need a credit score of at least 660 for a $15,000 personal loan. Many lenders don’t state a minimum required credit score because they will vary the terms for each borrower depending on their credit history. The higher your score, the more money you can qualify for and the better the interest rate.

Benefits of a $15,000 Personal Loan

A $15,000 personal loan is a sizable amount that can serve many purposes. Common personal loan uses include making large purchases, covering living expenses for a defined period, consolidating debt, and paying off a credit card with a higher interest rate. Here are some other benefits:

Interest Rates and Flexible Terms

There are many types of personal loans, and interest rates can be fixed or variable. The interest rate that a lender charges will depend on the borrower’s credit rating and the length of the loan, but rates are typically lower than for other forms of debt. Loan lengths can vary from a few months to a few years.

No Collateral Required

Personal loans are typically unsecured, which means no collateral is required. If you don’t qualify only for an unsecured loan, you may select a loan cosigner with a stronger credit rating to help you get approved.

Recommended: Guarantor vs Cosigner

Fixed Monthly Payments

Most personal loans have fixed monthly payments based on the amount borrowed, the interest rate, and the term. This makes budgeting easier because the borrower knows how much they must pay each month.

Recommended: Try Our Personal Loan Calculator

Cons of a $15,000 Personal Loan

One disadvantage of a $15,000 personal loan is that it can be expensive, especially if you have bad credit or need to spread the payments out over many years. The longer the term, the more you will pay in interest. Here are some other issues to consider:

Taking on Debt

If you already have trouble paying your monthly bills, taking on more debt may not be a good idea. Some borrowers use a personal loan to consolidate other debt that charges higher interest, such as credit cards. For people who have a tendency to overspend, freeing up their credit may just encourage them to spend more again.

Higher Payments Than Credit Cards

Credit cards do not have a deadline to pay off the entire debt. For that reason, the monthly minimum payment is typically less than the payment on a personal loan. If a personal loan is used to consolidate credit card debt, some borrowers may find it difficult to make the higher payments of a personal loan.

Origination Fees and Prepayment Penalties

Some lenders will charge an origination fee to cover the cost of setting up the loan. Additionally, if the borrower wants to pay off the loan before the payoff date, the lender may charge a penalty. Borrowers should find out about any fees and penalties before deciding on a lender.

Interest Rates May Be Higher Than Other Options

For borrowers with poor credit, the interest rate on a personal loan can be high. In this case, a credit card might be a better option.

Where Can I Get a $15,000 Personal Loan?

Online lenders, traditional banks, and credit unions all provide $15,000 personal loans. Some online lenders pre-qualify borrowers so they can see the terms, and many will deposit funds into a bank account within one to two days.

Traditional banks or credit unions may offer better terms to their members because there is a pre-existing relationship. But they may also want to meet with a borrower in person to negotiate the loan.

How to Get a $15,000 Personal Loan

The steps to get approved for a personal loan are typically the same regardless of the lender. The first step, before you even apply, is to review your credit history. You can pull a report for free from each of the three major credit bureaus — Equifax, Experian, and TransUnion — from the website AnnualCreditReport.com. Then you can file a dispute online to have any inaccuracies removed. This can boost your credit rating and ensure you get the best terms from a lender.

Here are the basic application steps you’ll need to be prepared for:

1. Check Your Eligibility

Shop around for the best loan terms and find out if you qualify. Check both online lenders and traditional lenders, paying special attention to origination fees and prepayment penalties.

2. Get Pre-qualified

Getting pre-qualified will show you what terms the lender is offering based on your credit history. Fill out the online form, including how much you want to borrow and your desired payoff time frame.

Lenders will pull your credit report to pre-qualify you, which may ding your credit score. Focus on lenders who will perform a “soft inquiry” for pre-qualification, which will not affect your credit rating.

Recommended: What’s the Difference Between a Hard and Soft Credit Check?

3. Check the Terms

Once you are pre-qualified, review the pre-approval letter and check the loan amount. Check whether it is an unsecured or secured loan, the annual percentage rate (APR), and whether the interest rate is fixed or variable. Pay attention to the monthly payment and the payback term. Also look for fees, penalties, and other potential charges.

4. Apply for the Loan

Gather the documents that you will need to apply for the loan. Borrowers typically need to upload a pay stub, mortgage or rent agreement, debt documentation, proof of identity, and their social security number.

Applying for Other Small Loan Amounts

Loan amounts can range from $1,000 up to 100,000. The terms for a small $3,000 personal loan will vary with those for a larger loan. Here are some examples of loan interest rates, terms, and monthly payments.

$5,000 Personal Loans

Here’s a typical scenario for a borrower with average credit (700–759 credit score): The monthly payments on a $5,000 personal loan, paid back over five years at an APR of 15.75% to 18.25%, would be around $121–$128.

$10,000 Personal Loans

For a $10,000 personal loan paid back over five years at an APR of 12.75% to 15.25%, a borrower with average credit would pay $226 to $239 per month.

$20,000 Personal Loans

For a $20,000 loan paid back over five years at an APR of 12.75% to 15.25%, a borrower with average credit would pay $452 to $478 per month.

The Takeaway

Personal loan interest rates are determined by a borrower’s credit rating and financial history. The higher the credit rating, the lower the interest rate. For consumers with good credit, a $15,000 personal loan can be a more affordable form of debt than credit cards. For consumers with bad credit, the higher interest rate may make a $15,000 personal loan less attractive.

SoFi offers competitive personal loans. There are no origination, prepayment, or late fees as there are with some other lenders, and our competitive interest rates are fixed, making budgeting easier.

FAQ

What credit score is needed for a personal loan for $15,000?

A credit score of at least 660 is typically required for a $15,000 personal loan. Some lenders that cater to people with poor credit will charge higher interest rates and fees to cover their elevated risk.

How long can I get a $15,000 personal loan for?

Personal loans are typically for three, five, or seven years. The shorter the repayment period, the less interest you will pay over the life of the loan.

What would payments be on a $15,000 personal loan?

The monthly payments on a $15,000 loan depend on the interest rate and repayment terms. If you know how much you want to borrow, over what period, and at what interest rate, an online loan calculator can tell you what your payments will be.

Photo credit: iStock/fizkes

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.

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.

SOPL0322014

A personal loan is a type of loan offered by many banks, credit unions, and online lenders. Unlike a mortgage loan or car loan, which specifies what the money should be spent on, a personal loan doesn’t have as many restrictions. Typically, you can use the funds from a personal loan to pay for a wide range of expenses.

Various factors will influence which type of personal loan is right for you, like how much money you plan to borrow, your credit and income, and how much debt you already have. To make the best selection for your unique needs, however, it’s important to understand the different types of personal loans there are.

Unsecured or Secured

A common type of personal loan is an unsecured personal loan. This means there’s no collateral backing up the loan, which can make them riskier for lenders. Approval and interest rates for unsecured personal loans are generally based on a person’s income and credit score, but other factors may apply.

Unlike an unsecured loan, there is some sort of collateral backing up a secured personal loan. For example, think of a home mortgage — if the borrower does not make payments, the bank or lender can seize the asset (in this case, the home) that was used to secure the loan.

Since secured loans involve collateral, lenders often view them as less risky than their unsecured counterparts. This can mean that secured personal loans might offer a lower interest rate than a comparable unsecured loan.

Here’s a comparison of some of the features of unsecured and secured personal loans:

Recommended: Choosing Between a Secured and Unsecured Personal Loan

Variable or Fixed Interest Rate

A personal loan with a fixed interest rate will have the same interest rate for the life of the loan. This also means you’ll have the same fixed payment each month and, based on your scheduled payments, can know upfront how much interest you’ll pay over the life of the loan.

On the other hand, the interest rate on a variable rate loan may change over the life of the loan, fluctuating based on the prevailing short-term interest rates. Typically, the starting interest rate on a variable rate loan will be lower than on a fixed rate loan, but the interest rate is likely to change as time passes. Variable rate loans are generally tied to well-known indexes.

If you’re trying to decide on a variable or fixed-rate personal loan, this summary might be helpful (you might also consider crunching the numbers using a personal loan calculator):

Debt Consolidation Loan

This type of personal loan refinances existing debts into one new loan. Ideally, the interest rate on this new debt consolidation loan would be lower than the interest rate on the outstanding debt. This would allow you to spend less in interest over the life of the loan.

With a debt consolidation loan, you may only have to manage one single monthly payment. This streamlining of monthly debt payments is another major perk of this type of loan.

Cosigned Loan

If you’re struggling to get approved for a personal loan on your own, there are circumstances in which you can apply for a loan with a cosigner. A cosigner is someone who helps you qualify for the loan but does not have ownership over the loan. In the event that you are unable to make payments on the loan, your cosigner would be responsible.

Co-borrowers and co-applicants are other terms you might hear if you’re interested in borrowing a personal loan with the assistance of a friend or family member. A co-borrower essentially takes out the loan with you. Unlike a cosigner, your co-borrower’s name will also be on the loan, so they’d be equally responsible for making sure payments are made on time.

Meanwhile, a co-applicant is the person applying for a loan with you. When the loan application is approved, the co-applicant becomes the co-borrower.

Personal Lines of Credit

Slightly different from a personal loan, a personal line of credit functions similarly to a credit card. It’s revolving credit, which typically means there is a maximum credit limit, a required monthly minimum payment, and when the debt is paid off, money can be withdrawn again.

The funds in a personal line of credit are generally accessed by writing checks or using a card, or by making transfers into another account.

Interest rates on a personal line of credit may be lower than the interest rates on a credit card. Like personal loans, there are both unsecured and secured personal lines of credit.

Credit Card Cash Advances

Some credit cards offer the option to borrow cash against the card’s total cash advance limit. This is called a credit card cash advance. The available cash advance amount may be different than the total available credit for purchases — that information is typically included on each credit card statement.

Depending on the credit card company’s policy, there are a few ways to secure a cash advance: you can use your credit card at an ATM to withdraw money, borrow a cash advance from a credit union or bank, or request a cash advance from the credit card company directly.

Cash advances typically have some of the highest rates around. There are often additional credit card fees associated with a cash advance transaction. Check your credit card disclosure terms for full details before taking a cash advance.

Different Types of Personal Loan Uses

The common uses for personal loans are wide-ranging. Here are some of the reasons why people consider borrowing money with a personal loan.

Planning a Wedding

The dress, flowers, catering, photographer, venue fees — the list of wedding expenses can go on and on. A personal loan for weddings is one option that you can use to cover all or part of costs. Just keep in mind that this will involve going into debt, and you will pay interest.

Moving Expenses

Whether you’re moving across the country or just across town, the cost of moving can add up quickly. A personal loan could potentially help you make ends meet as you’re relocating.

And if you want to do a few renovations or upgrades on your new place once you’re moved in, a personal loan could help with that too.

Consolidating Debt

Another reason people use personal loans is to consolidate debt. Debt consolidation could allow you to simplify your repayment since you may have just one payment to keep track of every month after consolidating.

Depending on the rate and terms you qualify for, consolidating your debt could potentially help you save money on interest payments while you pay down your debt.

Taking a Vacation

Planning a vacation? Maybe your niece is getting married in Greece or you and your partner are planning a honeymoon. If budgeting and saving aren’t enough to get you to your vacation goal, a vacation loan could be one option to help you fill in the gaps. Just make sure you’re not taking on debt that you won’t later be able to pay back.

Making a Large Purchase

Whether it’s a new furnace, new patio furniture, or an engagement ring, if the cost of your dream item is a little out of your budget, a personal loan could help you afford the option you really want.

The Takeaway

Armed with some knowledge about types of personal loans, you may be ready to make an educated decision about whether or not a personal loan is right for you.

As you consider your options, take a look at SoFi. You can find out if you pre-qualify for a personal loan, and at what rates, in just a few minutes. Plus, as a SoFi member, you’ll be eligible for additional membership benefits like career coaching.

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.

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.

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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Credit cards and personal information can (and do) get hacked or stolen. Because of this unfortunate reality, it’s important to know how to freeze your credit. A credit freeze can help prevent identity theft or obstruct bad actors from taking out new loans or accounts in a borrower’s name.

Freezing credit isn’t as scary as it might sound. In fact, once you know how to freeze (and unfreeze) your credit, it can be quite useful in the right situations.

What Is a Credit Freeze?

A credit freeze, also known as a security freeze, allows individuals to limit access to their individual credit report. By freezing their credit, the person makes it more difficult for an identity thief to open a new credit account or loan in their name. This is due to the fact that creditors generally review credit reports before okaying new lines of credit, known as a hard credit inquiry.

However, freezing one’s credit does not prevent a person from viewing their free annual credit report. Moreover, it won’t restrict a person from opening a new account in their own name. They’ll simply need to unfreeze their credit to do so (more on unfreezing later).

Recommended: What’s the Difference Between a Hard and Soft Credit Check?

What Does Freezing Credit Actually Do?

A credit freeze does not actually freeze all outstanding accounts, such as credit cards and loans. Instead, it simply limits others from viewing a person’s credit reports. Under a credit freeze, only a limited number of entities will still be able to view a person’s file, including creditors for accounts that individual already holds and certain government entities.

This means that credit bureaus can’t give out personal information about a borrower with a frozen account to new lenders, landlords, hiring managers, or credit card companies. Typically, this halts the lending, renting, and hiring process — as well as anyone attempting to steal a person’s identity and open a new account in their name.

Freezing Credit: What’s the Process?

If a person wants to freeze their credit, they need to reach out to at least the three major credit bureaus:

•   Equifax : 1-800-349-9960

•   TransUnion : 1-888-909-8872

•   Experian : 1-888-397-3742

People can take it one step further by reaching out to two lesser-known credit bureaus, Innovis (800-540-2505) and the National Consumer Telecom & Utilities Exchange (866-343-2821).

Typically, the agencies will ask for a Social Security number, birth date, and other information confirming a person’s identity prior to freezing their account. The bureaus will then give the person a password, which they may use to unfreeze their account. Make sure to store this information in a safe place.

Does Freezing Credit Cost Anything?

It costs nothing to freeze and unfreeze one’s credit. This is thanks to the Economic Growth, Regulatory Relief, and Consumer Protection Act, which mandates that credit bureaus must offer the service free of charge to everyone.

The credit bureaus must fulfill the request within one business day when a consumer requests a freeze through any method aside from mail. When consumers request to lift the freeze by phone or online, however, the credit bureaus must do so within one hour. This frees up the consumer to quickly do what they may need to do, whether that’s applying for a new apartment or one of the various types of personal loans.

Differences Between a Credit Lock and a Credit Freeze

A credit lock works in much the same way as a credit freeze, allowing consumers to protect their credit reports against bad actors. But, a credit lock can come with a bit more convenience, as borrowers can opt to open and close their locked credit via an app (rather than needing to reach out to each credit bureau with their password to unfreeze it).

While a credit freeze is complimentary thanks to the federal mandate, a credit lock may require paying a small fee. For example, Equifax offers credit locks for free, while TransUnion offers a free lock with its TrueIdentity product or as an add-on to other subscription services. Experian, meanwhile, only offers credit lock as part of a paid subscription.

Just as you’d crunch the savings numbers with a personal loan calculator, make sure to weigh the costs and benefits between these two options as well.

When to Consider a Credit Freeze

It’s really up to individual consumers and their own risk tolerance to decide when it’s time to freeze their credit report. That being said, if a person isn’t actively shopping for a personal loan or a new credit card, for instance, it may be a good idea to freeze their credit preemptively. This way, a consumer can feel a bit more confident that their credit information is in safe hands.

Another time to consider a credit freeze is when a borrower believes their data may have been breached, or if their Social Security number was recently disclosed, made public, or stolen.

How to Unfreeze Your Credit

Unfreezing credit is simple. All a consumer has to do is reach out to the credit bureaus by phone or online and plug in the password or PIN provided to them when they first froze their credit. Generally, it takes a few minutes for the account to become unfrozen.

A person can choose to unfreeze their report at one or all of the credit bureaus, but they will have to contact each individual credit bureau separately. They also need to go through the entire process again if they ever want to re-freeze their credit down the road.

Individuals can ask to unfreeze their credit for a specific amount of time, such as if they are applying for and hoping to get approved for a personal loan or need someone else to access their account temporarily. Then, the freeze should return automatically when that period ends.

Alternatives to Freezing Credit

While not overly complex, freezing and unfreezing one’s credit can be time-consuming. Additional options are available to consumers.

Setting Up Credit Monitoring

Those who aren’t interested in freezing their accounts might instead consider signing up for a credit monitoring service. While these services charge a fee, they’ll alert users to any and all activity on their credit report. So, any time someone requests information, the person would find out and could then confirm or deny the authenticity of the request.

This could help stop any potential identity theft in its tracks. Still, it should be noted that this service cannot fully prevent theft, and the consumer may not know their identity was stolen until after the fact.

Requesting a Credit Report

For those interested in monitoring their credit for free, it’s possible to request a no-cost copy of one’s credit report each year from all of the major credit bureaus. The consumer might then review the report, in detail, to ensure they recognize all of the activity and accounts described.

If the consumer spots anything out of line, they can then take steps to flag and fix it.

Consolidating Credit Card Debt

Another way that some consumers choose to keep track of their credit is by consolidating credit card debt with a personal loan from a private lender. Taking out an unsecured personal loan with SoFi, for instance, could help substantially lower the amount a person pays each month to different credit card companies.

By consolidating credit card debt into a single personal loan — one of the common uses for personal loans — a borrower may be able to take advantage of a single fixed-rate debt rather than juggling several high-interest rate cards. Additionally, having a single loan to repay each month can make it easier to monitor payment activity.

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.

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.

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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