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Identity theft happens when someone steals your personal information and uses it to take money out of your bank account, open credit accounts in your name, or receive benefits (such as employment, insurance or housing benefits). Identity theft can have a negative impact on your finances, as well as your credit. And it can happen to anyone, regardless of age or income.

Fortunately, there are many things you can do to protect yourself from identity theft and minimize the fallout if your personal or account information ever does get compromised. Read on to learn what steps you can take if you think your identity has been stolen or notice any fraudulent activity on any of your financial accounts.

Contacting Your Creditors

You’ll want to report any potentially fraudulent credit card activity to the creditor involved as quickly as possible. This can help stop any further fraudulent use of your card and also limit your liability for any unauthorized charges. There may be a phone number printed on the back of the card for this purpose.

You may also want to review the last few months of card statements carefully, identify any transactions you believe to be fraudulent, and write a follow-up letter to the credit card issuer with these details and copies of your statements.

There are federal protections provided to consumers in the case of credit card fraud. A consumer’s liability is limited to the lesser of $50 or the amount of the theft if the actual credit card was used fraudulently. If only the credit card number was used fraudulently, there is no consumer liability.

For debit card or ATM card fraud, the quicker you report the card loss, the less they are potentially liable for. If you report a missing debit or ATM card before any unauthorized charges are made, you’ll have zero liability. The amounts increase the longer the missing card goes unreported.

•  Maximum loss is $50 if the card is reported within two business days of the loss or theft.

•  Maximum loss is $500 if the loss or theft is reported more than two business days, but less than 60 calendar days after the account statement is sent to the account holder.

•  If the loss is reported more than 60 calendar days after the statement is sent, you can be responsible for all the money taken from your account. If money from linked accounts was also stolen, the maximum loss can be more than the account balance.

•  If the ATM or debit card number, but not the physical card, was used to make unauthorized charges, the account holder is not liable for those charges if the fraud is reported within 60 days of the account statement being sent.

Recommended: Different Types of Bank Account Fraud

Reporting Identity Fraud to the FTC

If you think your social security number or other important personal information has been stolen and used fraudulently, you’ll want to report it to the Federal Trade Commission (FTC) online at IdentityTheft.gov.

Once you create an account and file an identity theft report, you’ll receive a personalized recovery plan with tools like form letters to send to credit bureaus. The site also allows you to update your identity theft account and track your progress. If you were affected by a company-specific data breach, you can get advice from the FTC on how to protect yourself.

When you file an identity theft report, you’ll also get an FTC identity theft affidavit that you can print out and retain it for your records. You may need this affidavit if you file a police report. Banks and credit card companies may also request a copy of this FTC report.

Consider Filing a Police Report

If you believe you know who was responsible for the fraudulent activity, or can provide evidence for an investigation, you may want to file a police report. Filing a police report might also be necessary if a creditor requires the report as part of its investigation. Having a police report can also be helpful when requesting an extended fraud alert on your credit reports (more on that below).

Recommended: How Credit Card Frauds Are Investigated and Caught

Notifying Credit Bureaus

You may also want to contact one of the three credit major consumer bureaus — Experian®, TransUnion®, and Equifax® — and ask them to place a fraud alert on your credit report. This notifies lenders that you’ve been a victim of identity theft so they can take extra measures to verify your identity when they get an application for credit in your name. Contacting just one of the credit bureaus is fine. That bureau will contact the other two automatically.

Fraud alerts are free. If you have a police report or a FTC Identity Theft Report, you may be able to get a free extended fraud alert, which lasts seven years.

You can also request a freeze or lock on your credit report by contacting each credit bureau individually. Putting a freeze on a credit report blocks all access to the report, making it more difficult for a bad actor to use information fraudulently. Credit freezes are regulated by state laws, and credit bureaus are required to offer credit freezes at no charge. A credit lock also acts to protect your financial information from potential identity thieves, but is a program offered by an individual company, which may charge a monthly fee for the service. Credit locks are typically not regulated by state laws.

Disputing Errors Caused by Identity Theft

Whether you’ve been a victim of identity theft or not, it’s a good idea to periodically request copies of your credit report and read them carefully, checking for any errors or evidence of fraud.

Having misinformation on your reports can have a negative impact on your credit, making it harder for you to qualify for credit cards, mortgages, and personal loans with favorable terms.

Federal law allows consumers to request a credit report at no charge from each of the three credit bureaus once a week via AnnualCreditReport.com. If you notice an error on a credit report, you can contact that credit bureau to file a dispute. All three major credit bureaus provide information on their websites for filing a dispute. It can take up to 30 days for the results of any investigation to be made available.

The Takeaway

Identity theft can happen to anyone, and it can wreak havoc on your finances. However, if any of your personal or financial account information is stolen and used fraudulently, don’t panic. If you report the fraudulent transaction to the appropriate financial institution quickly, you likely won’t be responsible for the charge or loss. You can also help stop any further fraud by locking or freezing your credit, filing an identity theft report with the FTC, and filing a police report.

If you’re thinking about applying for an online personal loan but are hesitant to share your information, know that SoFi takes the privacy and security of its members’ financial and personal information very seriously. We maintain industry-standard technical and physical safeguards designed to protect your information’s confidentiality and integrity. Also keep in mind that checking your personal rate won’t affect your credit.

FAQ

How do I check if my identity has been stolen?

If you suspect your identity has been stolen, check your credit reports, bank statements, and mail for unfamiliar charges, accounts, or debt collection notices. You may also want to consider requesting a fraud alert or credit freeze with the three main credit bureaus.

What can I do if someone filed a tax return using my Social Security number?

A good first step is to report identity theft to the IRS. This typically involves filling out the identity theft affidavit (Form 14039) and submitting it to the IRS online, by mail, or by fax. You can also call the IRS at 800-908-4490 with questions for help resolving tax account issues that resulted from identity theft.

How common is identity theft in the U.S.?

Unfortunately, identity theft is common. According to Federal Trade Commission data released in 2025, the agency received fraud reports from 2.6 million consumers in 2024. More than $12.5 billion were lost to fraud in 2024, which is a 25% increase over the prior year.

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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.

SOPL-Q225-014

That’s a good question. And the short answer, for now, is that a 2024 legal settlement created sweeping change to the real estate industry, putting the protocol for paying agents in flux. Planning to buy or sell a home in the near future? You’ll want to read up so you don’t overpay.

How Do Real Estate Agents Get Paid?

For agents — on the seller’s or buyer’s side — it’s long been business as usual to receive compensation via commission, as opposed to a set fee. Sellers typically paid commissions of 5% to 6% of a house’s price after what is known as the “closing” of a home they sold, and that money was split between the seller’s and buyer’s agents, plus other pros involved in the transaction. The higher the sales price, the more agents got paid.

But in 2024, the National Association of Realtors® (NAR), a trade association, and a number of real estate brokerages, settled a group of lawsuits. The settlements totaled nearly $2 billion. NAR paid $418 million in damages. The payout resulted from a legal filing contending that the real estate commission structure violated antitrust laws. NAR agents, it claimed, were receiving inflated commissions.

The lawsuits brought changes to the way homebuyers and sellers work with real estate agents on home purchases — and the way those agents are compensated.

Agents and Buyers or Sellers

In the lawsuit, homesellers from Missouri alleged that commission rates had been shared secretly and inappropriately among those who stood to profit. The sellers stated that the exchange of information had resulted in a lack of transparency about who homesellers were responsible for paying, and how much. They also said that this led to agents’ fees being inflated.

The lawsuits sparked NAR to revise protocols for the way homebuyers and -sellers work with real estate agents when a home goes up for sale. NAR Realtors® handle a huge percentage of U.S. home sales, so the reboot may significantly impact their transactions, and agent commissions, going forward. The changes could even save buyers and sellers money — but the details are still shaking out.

How will a Realtor you hire get paid in this new world? If you plan to buy or sell a home, it’s important to ask them, and to understand the details of compensation before entering into an agreement. Most likely, sellers will continue to pay their agents a commission for selling their house. Buyers who want to work with a buyer’s agent may have to pay for that expert’s assistance themselves, but only if the agent won’t receive any other commission.

Let’s take a closer look at how the changes affect costs for both homebuyers and sellers, beginning with examples of Realtors getting paid.

Real Estate Commission: Before the Settlement

We’ll start with how it used to work. Say a home sold for $500,000, with the commission being the formerly typical 6%:

Total commission fee: $500,000 X 6% = $30,000

The commission was generally split evenly between the two sides:

•   Listing agent side = $15,000

•   Buyer’s agent side = $15,000

Real estate agents also shared commissions with brokers who represented them. (A broker is an agent who has an additional license to supervise other agents.) The broker’s fee might have been 1% of the sales price, or $5,000, subtracted from the total to leave the seller’s agent with a commission of $10,000.

•   Listing agent = $10,000 (2% of sales price)

•   Listing agent broker = $5,000 (1% of sales price)

•   Buyer agent = $10,000 (2% of sales price)

•   Buyer agent broker = $5,000 (1% of sales price)

Real Estate Commission: A Changing Approach

For a long time, agent commissions were more or less built into a home’s asking price. The seller’s agent would offer a percentage of the total commission amount to the buyer’s agent, normally mentioning it in the home listing’s fine print on the multiple listing systems (MLS). After closing, the seller’s agent would disperse the fee. That changed a little in 2024, when the court prohibited sellers’ agents from stating the buyers’ agent’s percentage share on the MLS.

The MLS comprises databases of homes for sale that only Realtors, agents, brokers, and other real estate industry people can access — and that is what caused concerns about transparency.

Now, conversations about commissions must take place outside the MLS. Sellers may offer to pay commissions to buyer’s agents, but an agent for the homebuyer may also request a percentage of the home price or a flat fee from their own client. A buyer using an agent is required to have a representation agreement with the agent, defining compensation, before touring homes.

Listing agreements now must specify the amount the seller will pay to the listing agent, as well as what the seller will pay to a buyer’s agent. With these revisions, sellers have some newfound control. They can offer equal commissions to both sides, or different amounts. A seller may decide not to offer a buyer’s agent a commission, leaving the buyer responsible for paying for their services.

An Agent’s Responsibilities

To earn a commission, real estate agents often take on a lot of tasks and responsibilities. Their duties include:

•   Providing market data and helping to set a listing price

•   Placing ads and putting up yard signs

•   Photographing the property

•   Listing the property in the MLS listings database

•   Scheduling showings

•   Placing lock boxes

•   Guiding first-time homebuyers

•   Smoothing over difficult relationships

•   Navigating offers and counter offers

•   Negotiating home contracts

Recommended: How to Find a Real Estate Agent

The State of Agent Commissions

Making a living through commissions can be challenging for real estate agents. But it can also be unmistakably rewarding.

With the changes, average rates of commission among Realtors and agents decreased somewhat, dropping from 5.64 percent to 4.96 percent in early 2025. This might mean a decrease in commission of a few thousand dollars for a median-priced home, according to a RISMedia survey of 1,300 agents.

Sellers’ agents may continue to receive their commissions, negotiated with the seller, who pays the real estate agent commission fee out of the payment they receive when the home sale closes. Since buyers’ agents are no longer entitled to payment from this money, homebuyers may need to negotiate with and pay their agents. This could in some cases make buying a home even more costly.

How Does It All Affect the Bottom Line?

If the sales price of a home is $500,000 and the sellers owe $250,000 on their mortgage, then the commission and other fees would be subtracted from the $250,000 that remains after the sellers pay off their mortgage.

To keep it simple, let’s say the total commission negotiated is 5%:

Total commission fee: $500,000 X 5% = $25,000

•   Listing agent side = $25,000

•   Buyer’s agent side = $?

Buyer’s agent commissions are simply in flux — both how much they should be and where they will come from. This agent’s commission might need to come out of the buyer’s pocket — although word on the street is that some brokers on the seller side have found workarounds.

Can a buyer come out ahead in this changed compensation structure? Maybe. A buyer’s extra costs could be compensated by lower listing prices on homes for sale. But that remains to be seen.

Can You Negotiate Who Pays the Real Estate Agent?

Yes. Realtor fees on both sides are negotiable. These ideas may help you reduce your fee if you are selling your home:

•   Barter. Do you have a photographer friend who can take photos of your home? Offer up skills in exchange for a lower commission.

•   Hire a newer agent. A newer agent may accept a lower commission to gain experience.

•   Pay attention to market conditions. If homes aren’t moving in your market, you may be able to negotiate a lower commission.

Take time to interview potential Realtors using these suggested questions. Be sure the commission stated in the listing agreement matches what you’ve agreed on before you sign.

How Should a Buyer Agent’s Commission Be Set?

If you are in the market for a new home, you may still decide to seek a buyer’s agent to guide you through the process and represent you in closing. Their efforts may be well worth their fee.

Look for an agent with a strong network — they may hear about quiet “whisper listings” before anyone else. Once you’ve chosen someone, be sure to discuss a fee structure and payment process with them before you sign on.

Whether these real estate agents will charge for their time by the hour or bill customers a flat rate — or if some will keep working on commission that is perhaps paid by the buyer — is a developing story under the new rules. But they are quite likely to want to be paid.

In lieu of a commission, buyers’ real estate agents might charge fees for showing homes, shepherding clients through making offers, signing contracts, negotiating inspections, and more. For buyers, this would add to a home’s cost.

Of course, if agent commission fees have all along been a component of a property’s price, then buyers were already paying them. But in that scenario, buyers could cover those baked-in costs with their home mortgage loan. New fees paid by a buyer to the agent would come from the buyer’s pocket.

This switcheroo may lead some homebuyers to think about shopping for a home without an agent’s help. If you go this route, be aware that you’ll need to spend significant time researching potential properties, scheduling viewings, and self-advocating, especially if you are attempting to buy in a seller’s market.

When Do Sellers’ Agents Receive Their Commission?

Sellers’ agents usually receive their commission after the home mortgage loan has been funded and the sale closes. Their brokerage receives a wire with the funds, and the agent’s portion of the commission is released to them shortly thereafter.

What Is Dual Agency?

Dual agency is when a real estate agent represents both the seller and the buyer in a transaction. It must be disclosed to both parties because real estate agents are bound by a fiduciary duty to serve their clients. An agent who represents both seller and buyer will earn more commission.

Buyers faced with having to pay a buyer’s agent out of pocket might choose to look at properties on their own. When they find a home they would like to buy, they may decide to make an offer directly with the listing agent. In this scenario, the listing agent becomes a dual agent. They may accept a lower fee, since they are also getting a commission paid by the seller. It might appear to everyone to streamline the process. It also creates a possible conflict of interest.

Many experts discourage buyers and sellers from entering a dual-agency sale with an agent. It’s also worth noting that the practice is illegal in several states.

Is Paying a Real Estate Commission Worth It for the Seller?

Hiring an agent is not required. And for many sellers, it’s painful to look at the closing documents and see how much of the sales price goes to different agents, title insurance companies, concessions, and so forth. But a lot of sellers find it worthwhile having someone to guide them through the complexities of real estate law, and sensitive issues that the sale of a home creates.

Recommended: How to Buy a House Without a Realtor

Alternatives to a Percentage-Based Commission

There are real estate brokerages that advertise services for a flat fee. Usually, the flat fee is very low and may only include a listing on the MLS with photos. They usually don’t offer to schedule showings or manage the listing in any other way.

The Takeaway

Working with a real estate agent when you’re a buyer requires asking a lot of questions and understanding the terms of compensation before you sign on for representation. You might be tempted to go it alone, and it can be done. But having an agent on your side to help you negotiate can give you peace of mind and, in many cases, help you land a better deal.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Do sellers pay Realtor fees?

Yes, sellers pay Realtor fees to the seller’s agent.

How long have the new rules been in place?

The post-settlement NAR rule change became official in August 2024. While aspects of it were immediately implemented, it also left some room for interpretation. New agent practices are slowly rolling out.

How much does a new Realtor make in Illinois?

According to ZipRecruiter.com, the average pay for a real estate agent in Illinois is $83,135. Salaries can range from as low as $58,100 up to $124,519 per year.

Photo credit: iStock/RyanJLane

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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.

SOHL-Q225-018

A personal loan origination fee is a one-time, upfront charge that a lender collects to cover the costs of processing and setting up a loan. They typically range from 1% to 10% of the loan amount, but you may see ads for zero origination fees. The specific amount depends on factors relating to both the lender and the borrower.

Personal loans can be a good way to receive a lump sum of cash to be used for almost any purpose, but it’s worth noting that there are usually fees beyond the interest you pay. Learn more about origination fees here.

Personal Loan Origination Fees Defined

Personal loan origination fees are an upfront, one-time charge by the lender that covers the costs of processing the loan, including the application, underwriting, and funding.

Typically, lenders charge origination fees as a percentage of the total loan amount. It’s usually 1% to 6% of the principal, but origination fees may go as high as 8%, 10%, or even 12% of the loan amount. In some instances, a lender may charge a flat fee instead.

Not every personal loan has an origination fee, and lenders may differ in how they require consumers to pay it, if it’s included.

Recommended: Should I Get a $5,000 Personal Loan?

How Do Personal Loan Origination Fees Work?

If a lender charges an origination fee for a personal installment loan, it’s usually a percentage of the loan amount, somewhere between 1% on the low end and 10% on the high end. For example, if you take out a personal loan for $15,000 and there’s a 5% origination fee, you’ll pay $750 in fees.

Lenders typically subtract this fee from the total loan amount. In our example, that means they’d offer you a loan for $15,000, subtract $750 from the amount, and give you $14,250. But you’d still have to repay $15,000, plus interest. If you truly need the full $15,000, it’s a good idea to request more than $15K to ensure that you have enough funds after the origination fee is deducted.

In other cases, a lender may require that origination fees be paid out-of-pocket by the borrower, or the fees are added to the loan total. Ask your lender to be sure of their policy.

In this case, the personal loan origination fee would be reflected in the APR, or annual percentage rate, calculation. That’s why experts often suggest comparing loans by their APRs. The APR, which includes the interest rate plus fees, represents the annual cost of a loan and will give you a true picture of what you’ll pay over the life of the loan.

How Much Are Personal Loan Origination Fees Usually?

Personal loan origination fees typically vary between 1% and 10% of the total loan amount. Depending on how much you’re borrowing, this fee can get extraordinarily high.

For example, if you borrow $100,000 with an 8% origination fee, that’s an extra $8K you’re paying on top of the loan amount and interest.

Recommended: What to Know Before You Borrow Money Online

How Are Origination Fees Calculated?

Lenders may advertise a set origination fee or a percentage range. If it’s the latter, how exactly do they determine the percentage you’ll pay?

1. Credit Score and Financial History

Unsurprisingly, lenders primarily consider your credit score and debt-to-income (DTI) ratio. The stronger your credit score and the lower your DTI ratio, the lower origination fees you might be offered. Lenders that don’t charge origination fees at all may have strict requirements that only borrowers with good or excellent credit can meet.

2. Loan Amount and Term Length

Lenders may also consider the length and size of how the personal loan works. Having a cosigner with good credit can help reduce your fees. In addition, lenders may ask your reason for borrowing or use other information from your application when setting your fees.

3. Lender Policies and Market Conditions

The lender’s policies may impact how much you’ll pay in origination fees. Some may feature a 0% offer to attract new clients; others may earn money by charging a double-digit fee.

Market conditions can also impact rates. When lenders need to compete aggressively to win customers, they may drop their fees. Conversely, when rates are high and it may seem riskier to lend, financial institutions may raise the origination fees they charge.

Recommended: Personal Loan Calculator

When Is an Origination Fee a Dealbreaker?

It’s wise to compare the loan APRs, which represent your total annual costs. A loan with no origination fee but a higher interest rate may wind up costing you more in the long run; comparing APRs can help you figure it out.

So when is a personal loan origination fee a dealbreaker? If the fee makes your total cost of borrowing higher than another offer, you should consider the better loan offer.

All lenders are required to disclose their fees as part of the Truth in Lending Act. If a lender advertises no origination fees, it’s a good idea to check the fine print to see if they’ve disguised the fee with a look-alike fee, like an “administrative” or “application” fee. If a lender does this and it gives you bad vibes, go with your gut — you should always feel good about the lender you choose.

Ways to Minimize or Avoid Origination Fees

If you, like most people, want to pay as little in terms of origination fees as possible while still getting a good overall deal, consider the following.

1. Comparing Lenders and Shopping Around

Don’t sign on with the first quote you get, nor assume that a “no origination fees” offer is the best. Shop around, and see the total cost of a loan: what you will pay in terms of interest and fees. That way, you can feel confident that you are getting the best deal.

2. Negotiating Loan Terms

You can ask a lender to work with you on loan costs. They may be willing to make reductions in fees in order to snag your business. This can be especially true if you have a solid credit profile.

3. Considering No-Fee Loan Options

As noted above, some lenders offer no-fee loan options, which can help with affordability. But do your research: Take a close look to make sure that the overall cost of the loan suits your needs. You don’t want to sign on to a no-fee loan with a higher interest rate that makes the loan more expensive overall. Also read to fine print to see if origination fees are actually being charged but appear under a different name, such as application fees.

The Takeaway

When you are thinking about getting a personal loan, origination fees may be charged; these are typically between 1% and 10% of the loan amount, though some no-fee loans may be offered (and flat fees as well). The origination fee you are assessed may vary with the lender’s policies, your credit profile, and market conditions. It’s important to consider how origination fees can impact the overall cost of your personal loan.

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.

FAQ

How much are personal loan origination fees typically?

Personal loan origination fees typically range between 1% and 10% of the loan amount. Factors that impact rates include the lender’s policies, your credit score, and market conditions.

Do private loans always have origination fees?

Many private lenders charge origination fees, but that is not always the case. Before taking out any loan with a private lender, it’s a good idea to compare origination fees and APRs.

Can origination fees be negotiated?

You can often negotiate origination fees for certain types of loans, such as mortgages and personal loans. Just be sure that lower origination fees don’t mean higher interest rates and negate any savings. You’ll be in the best position to negotiate fees with a solid credit profile.

Are origination fees refundable if I pay off my loan early?

Generally, origination fees are not refundable if you pay off a loan early, according to Experian. However, you may be able to get a partial refund from some lenders.

What are other personal loan fees to consider?

In addition to interest and origination fees, personal loans may collect application fees, late fees, and returned payment fees.

Photo credit: iStock/lechatnoir

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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.

SOPL-Q225-034

A certificate of deposit (CD) can be a useful tool for saving money for an upcoming goal. The downside is that you need to wait until the CD matures in order to access your money. If you withdraw some or all of your funds early, you typically get hit with a hefty penalty fee.

If you’re in a pinch and need cash quickly, however, you may be able to get a CD loan. Also known as a CD-secured loan, this is a type of personal loan that uses the value of a CD account as collateral. CD loans are offered by some banks and credit unions. Typically, the lender needs to be the same institution that holds your CD. (Note: SoFi doesn’t offer CD loans at this time, but we do offer unsecured personal loans.)

Here’s a closer look at how CD loans work and how they stack up against unsecured personal loans.

What Is a CD Loan?

A CD loan is a type of personal loan that is secured by the money you have in a CD. Since the collateral lowers the risk for the lender, these loans can be easier to qualify for and have lower interest rates than unsecured loans. However, if you don’t repay the loan, the bank can take the money out of your CD to cover their losses.

Of course, to get a CD loan, you need to have a CD, which is a type of savings account that pays a fixed interest rate over a set amount of time, or term. You must leave the money untouched for the CD term, which can range from three months to five years. If you withdraw your funds before the end of the CD’s term, you usually have to pay an early withdrawal penalty. CDs generally pay a higher annual percentage yield (APY) than regular savings accounts. And the longer the CD’s term, usually the higher the APY. Similar to other types of savings accounts, CDs come with FDIC protection, up to the applicable limits.

Recommended: What Is APY and How Is It Calculated?

How Do CD-Secured Loans Work?

If you take out a CD loan, the lender will charge interest. So you’ll be earning interest on the CD but paying interest on the CD-secured loan. In some cases, a bank or credit union will set the minimum annual percentage rate (APR) on their CD loans at 2% over the CD rate. So if your CD pays 3.00%, your CD loan rate would start at 5.00%. Your actual rate would depend on your credit and the term of the loan, among other factors.

How much you can borrow with a CD-secured loan depends on the lender. Often, you are able to borrow up to 100% of the value of your CD principal. The term of the loan can generally be as long as the term of the CD.

While you can typically access money in a CD if absolutely necessary and pay a penalty, that may no longer be the case if you get a CD loan. Typically, the funds being used as collateral are sealed even in the event of an emergency.

Who Might CD Loans Be Right For?

The idea of paying interest on a loan backed by an interest-bearing CD may seem counterintuitive. However, there can be some logical reasons for taking out a CD-secured loan. One is that you may be able to build your credit by taking out a CD loan and then making a series of on-time payments on the loan. More common ways to do that include getting a secured credit card or becoming an authorized user on another person’s credit card. But if those options aren’t available, and you have a CD, you might use a CD loan for that purpose.

Another reason you might opt for a CD loan is that you need access to your funds for an emergency before it matures. However, you’ll want to first check what your CD’s early withdrawal penalty is. It might be cheaper and easier to simply break open a CD early and pay the penalty. However, if the penalty would be more than what you’d pay in a CD loan’s fees and interest, you might consider a CD loan.

Before taking out a CD loan, it makes sense to weigh the pros and cons.

CD Loan Pros

•   Lower interest rates. CD-secured loans often have lower interest rates compared to credit cards and unsecured personal loans, making them an attractive option for borrowers seeking lower borrowing costs.

•   Building credit. CD loans offer an opportunity to establish or improve your credit history if you currently have limited or no credit.

•   Retaining CD benefits. Despite using the CD as collateral, you can still earn interest on the deposited amount.

•   Fast access to funds. If you apply for a CD loan with the bank or credit union that holds your CD, you can often get approved quickly and receive funds within a day or two.

•   Good for those with bad credit. Borrowers with poor credit often qualify for CD-secured loans.

CD Loan Cons

While CD loans have their benefits, there are also some drawbacks to keep in mind.

•   Frozen funds. The funds in the CD are tied up as collateral, limiting access to the money until the loan is repaid.

•   Potential loss of CD. If you default on the loan, the lender can seize the CD, resulting in the loss of the deposited funds.

•   Limited loan amount. CD loans are typically limited to a percentage of the CD’s value, which might not meet your full borrowing needs.

•   Fees. Your bank may charge fees, such as an origination fee, for issuing you a CD loan.

•   Hard to find. CD loans aren’t as common as other types of personal loan, so your bank or credit union may not offer them.

CD Loan vs Personal Loan

While CD-secured loans and unsecured personal loans have some similarities, they also have some significant differences.

With both types of loans, you typically get a lump sum of money up front and can then use those funds for virtually any type of expense. Both also typically offer fixed interest rates and a set repayment term so payments are easy to predict and budget for.

Unlike a personal loan, however, a CD-secured loan can be hard to find. Also with a CD loan, you need to put your savings on the line to secure the loan. With an unsecured personal loan, you don’t need to provide any funds or personal assets as collateral, making them accessible to borrowers without a CD or other assets.

CD loans also tend to have lower interest rates than unsecured personal loans due to the collateral, while personal loans tend to offer more flexibility in loan amount and repayment terms.

Recommended: Is There a Minimum Credit Score for Getting a Personal Loan?

The Takeaway

CD loans can be a viable option for someone who has a certificate of deposit and needs access to funds while keeping their deposited amount intact. The lower interest rates and potential credit-building opportunities make CD loans attractive for some borrowers.

However, these loans aren’t widely available, and the cost of the loan could potentially exceed the CD’s early withdrawal fee. Also, you could lose the money in your CD if you have difficulty making payments. It’s crucial to weigh the pros and cons, consider your personal financial goals and needs, and compare loan options before deciding on the best borrowing solution. (Note: SoFi doesn’t offer CD loans at this time, but we do offer unsecured personal loans.)

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.

FAQ

Where can I get a CD loan?

CD loans are typically offered by banks and credit unions. It’s best to start by contacting your current financial institution to inquire about their CD loan options. They can provide you with specific details about their loan terms, interest rates, and application process. Typically, you need to take out a CD loan from the same institution that holds your CD.

What are CD loan interest rates?

CD loan interest rates vary depending on the lender, current market conditions, and your qualifications as a borrower. Rates tend to be lower than those of unsecured personal loans, since the loan is backed by the funds in the CD.

Some banks and credit unions will set the minimum annual percentage rate (APR) on their CD loans at 2% over the CD rate. So if your CD pays 3.00%, your CD loan rate would start at 5.00%. Your actual rate would depend on your credit and the term of the loan, among other factors.

Do you get money back from a CD loan?

When you take out a CD loan, you do receive money from the lender. However, it’s important to note that the funds received are borrowed money that you are obligated to repay, typically with interest. The funds from the loan are separate from the funds you have deposited in a certificate of deposit. The CD itself remains intact and continues to earn interest, but it is held as collateral until the loan is repaid. Once the loan is fully repaid, you regain full access to your CD and any interest it has earned during the loan term.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

SoFi Loan Products
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A personal loan is a type of loan offered by many banks, credit unions, and online lenders, and there are an array of options to suit different needs. Personal loans typically don’t specify how you can use the lump sum of cash you receive, which means the money could go toward anything from medical debt to wedding costs to home renovation expenses.

Deciding which kind of personal loan best suits your needs can depend on such factors as how much money you plan to borrow, how soon you plan to pay it back, and your creditworthiness and income. To make the best selection, learn more about the different types of personal loans available.

1. Unsecured Personal Loan

A common type of personal loan is an unsecured personal loan. This means there’s no collateral required to back 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. In terms of how your credit score impacts a loan, you can expect higher credit scores to snag more favorable (or lower) interest rates.

2. Secured Personal Loan

Unlike an unsecured loan, there is some sort of collateral backing up a secured personal loan. For example, think of it working in the same way a home mortgage does — 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.

In terms of accessing this kind of personal loan, collateral could include such assets as:

•   Cash in the bank

•   Real estate

•   Jewelry, art, antiques

•   A car or boat

•   Stocks, bonds, insurance policies

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

3. Fixed Rate Loan

A personal loan with a fixed interest rate will have the same interest rate for the life of the loan. This 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. This can help people budget appropriately as they put funds towards the common uses for personal loans, such as a major dental bill or travel plans.

4. Variable Rate 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):

5. 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 versus, say, paying multiple credit card bills. This streamlining of monthly debt payments can be another major perk of this type of loan.

6. 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, however, 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.

•   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.

Recommended: Typical Personal Loan Requirements

7. Credit Card Cash Advance

Some credit cards offer the option to borrow cash against the card’s total cash advance limit. Doing so is called taking 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 could 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 interest rates around, higher still than your regular annual percentage rate (APR). 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.

8. Medical Loan

A medical loan is usually an unsecured loan that can be applied to medical expenses, such as out-of-pocket costs, copays, hospital bills, and the fees for emergency and elective procedures, among others. You can often find them through banks and online lenders, and they may offer features that make them appropriate for those recovering from health issues, such a period of 0% interest. Check the terms carefully, though, to make sure you understand what interest rate will be charged after the introductory period.

You may also see family planning loans, which help cover the cost of fertility and IVF expenses.

9. Vacation Loan

Hoping to take a big trip with your partner to Paris? Or dreaming of going to Disney with your toddler and your parents? A vacation loan is a kind of personal loan that is designed to fill that need. When you want to travel, have an adventure, or get away from it all but don’t have the cash, this sort of loan provides financing.

As with other personal loans, you’ll need to qualify based on your credit history, income, and other factors.

10. Wedding Loan

Wedding loans are a kind of personal loan designed to finance the big day. These are typically unsecured installment loans that can help a couple pay for their venue, catering, music, photography and videography, flowers, decor, and the wedding dress and rings.

You receive the lump sum of cash, and then pay it back over time, with interest.

The Takeaway

Personal loans can offer a source of cash to be used in a variety of ways. There are various kinds of loans available, such as secured and unsecured, variable and fixed interest rate, and more. Doing research on these different sources of funding can help you make an educated decision about whether a personal loan is right for you and, if so, which type suits your needs best.

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.

FAQ

How many types of personal loans are there?

There are many different types of personal loans. Some popular options include secured vs. unsecured (meaning no collateral is needed) loans; fixed- vs. variable-rate loans; and personal loans designed for specific purposes, such as a debt consolidation, medical, or credit builder loan.

How much is a $20,000 loan for 5 years?

The cost of a $20,000 loan for five years will depend on a variety of factors, such as the interest rate and whether it’s fixed or variable. As an example, a personal loan of $20,000 for 5 years at a fixed rate of 8% would have a monthly payment of $472 for a total repayment of $23,584, meaning you’d pay $3,584 in interest over the life of the loan.

What is the largest personal loan I can get?

How large a personal loan you can get will usually depend on your credit score, income, and debt-to-income (DTI) ratio. Many lenders offer personal loans at up to $40,000–$50,000, but some may approve loans for up to $100,000 or even higher if a prospective borrower qualifies.

Is a personal line of credit the same as a personal loan?

A personal line of credit is different from a personal loan. With a personal loan, you receive a lump sum of cash and then make installment payments to repay it over time. With a personal line of credit, you are approved up to a certain credit limit, and you can then borrow against and pay back the debt with interest over time, much like a credit card.

Are certain types of personal loans easier to get than others?

Some personal loans may be easier to get than others. For instance, a secured loan can be easier to obtain since it requires collateral, which the lender knows they can claim if the borrower defaults. Also, personal loans for small amounts (say, $1,000) can be easier to obtain than larger sums. It’s also worth noting that personal loans can be easier to get when you have a strong vs. a poor credit score.

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.

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