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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:

Unsecured Personal Loan	Secured Personal Loan
No collateral needed	Requires an asset to be used as collateral
May have higher interest rates than secured personal loans	May have lower interest rates than unsecured personal loans
Approval typically based on applicant’s income, credit score, and other factors	Approval typically based on value of collateral being used, in addition to applicant’s creditworthiness
Funds may be available in as little as a few days	Processing time can be longer due to need for collateral valuation

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):

Variable Interest Rate	Fixed Interest Rate
May have lower starting interest rate than a fixed-rate personal loan	Interest rate remains the same for the life of the loan
Monthly payment amount may vary during the loan’s term	Monthly payment amount will not change
Might be desirable for a short-term loan if current interest rate is low	May be a better option if predictable payments are desired for a long-term loan and/or interest rates are rising
Maximum interest rate may be capped	Potential to cost more in interest payments over the life of the loan if interest rates drop

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.

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

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.

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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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Large personal loans are typically defined as those in the range of $50,000-$100,000. Like personal loans of all denominations, the lump sum received for a personal loan can be used however you like: to pay off medical debt, say, or finance a major home renovation. They typically do so at a lower interest rate than would be charged if you used a credit card.

To understand whether this kind of loan is right for you, whether you would qualify for one, and how to apply, read on.

What Is a Large Personal Loan?

A large personal loan is exactly what it sounds like — a loan for a lot of money. There is no specific figure that makes a personal loan cross over into that “large” territory. To one person, $50,000 might be a large personal loan. To another, it might be $100,000. But typically, it’s a number that’s well into the five-figures realm. Typically, lenders don’t offer more than $100K for a personal loan.

A large personal loan is a form of credit that can be used to make large purchases or consolidate other high-interest debts. Personal loans generally have lower interest rates than credit cards and are sometimes used to consolidate high-interest debt.

To start with the basics, a personal loan is defined as a set amount of money borrowed from a lending institution. Unlike a mortgage loan or auto loan, which is used for a specific purpose, funds from a personal loan can be used to pay for a variety of expenses such as medical bills, K-12 private education costs, or to consolidate multiple debts. Typically, however, you can’t use a personal loan for business expenses, and using personal loans for higher education tuition is usually prohibited.

How Do Large Personal Loans Differ From Other Personal Loans?

Personal loans function in the same way, no matter their size because they are borrowed sums of money that are paid back with interest. This is true regardless of the amount of money borrowed.

However, there are some differences between larger personal loans and their smaller counterparts depending on the lender you choose.

Small Personal Loans	Large Personal Loans
Loan amounts approximately $1,000 to $5,000	Loan amounts approximately $50,000 to $100,000
Including fees, may not be cost effective compared to larger loans	With good to excellent credit scores, applicants may qualify for low interest rates
Typically have shorter repayment terms	Repayment terms are typically longer

Interest Rate Considerations

You’ll likely want to compare personal loan interest rates. Different lenders may specialize in different sizes of loans, and their rates may vary depending on what they consider their “sweet spot,” so it can pay to shop around.

One key point: Don’t just look at the interest rate on a loan. The APY, or annual percentage yield, will give you a truer sense of what you will pay over the life of the loan. The APY includes fees (such as origination fees) and other factors, rolled in with the interest rate.

Term Length Options

The length of the loan term will impact your payments in a couple of ways. First, a longer loan period typically means you will have a lower monthly payment, which can be helpful in terms of your budget and cash flow.

However, a longer loan term also usually means you are paying more in interest over the life of the loan. Consider your options carefully to make sure you are getting the right deal for your situation.

How long do you usually have to pay off a personal loan? Two to seven years is common for personal loans in general, and, for larger loans, you may find terms of 10 or even 12 years.

When Is a Large Personal Loan a Bad Idea?

A large personal loan may be a bad idea if you already struggle with your current debts or monthly expenses.

When considering financing, it’s important to know both the pros and cons of a personal loan. Whether a loan is a right choice for you depends on your unique financial situation. Here are some of the risks to consider:

•   If you fall behind on payments, your credit score could be negatively affected.

•   If you miss enough loan payments, your large personal loan may go to a collections agency. Some lenders will charge off a debt, meaning they gave up on being repaid, but you’re still legally responsible for the debt.

In the right situation, however, a large personal loan can be helpful. If you’re approved for the loan, you’ll have the funds to make a big purchase and can repay it over time. Those smaller, monthly installments mean that the burden is more manageable.

Top Uses for Large Personal Loans

One of the best features of personal loans is that they can be used for almost any purpose. Among the common uses of personal loans that are considered large are:

•   Medical debt

•   Home renovation projects

•   Debt consolidation

•   Wedding expenses

•   Vacations

•   Fertility financing

What Are Common $100,000 Loan Qualification Requirements?

Typically, lenders have stricter requirements to qualify for a larger loan than one with a smaller limit.

Credit Score

Generally, you need a minimum credit score of 670-720 to qualify for a $50,000-$100,000 loan. However, it may be ideal to have a score of 750 or above in order to get approved. Depending on your score, your lender may offer you varying loan terms.

Checking your credit report before applying for any loan is a good idea. You will be able to find any errors or discrepancies and have an opportunity to correct them before you begin applying for a loan.

Checking your credit score counts as a soft inquiry and doesn’t negatively impact your credit score. The Fair Credit Reporting Act guarantees you access to one free credit report from each of the three major credit bureaus, and these are currently available weekly. You can find yours at AnnualCreditReport.com.

Recommended: Does Checking Your Credit Score Lower Your Rating?

Employment Status

One of the factors your lender will consider is your employment status. They want to see how much income you earn and if you have the resources to repay the loan. In addition, the lender wants to be assured of your job stability. It may be a good idea to avoid making any sudden career changes while you’re applying for a loan.

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is a number that compares the total amount of debt you owe per month to your monthly earnings. You can find yours by taking your total recurring monthly debt and dividing it by your gross monthly income. Your recurring debt includes your mortgage, student loans, and other loans, and your gross income is everything you earn before taxes or other withholding.

Lenders use this number to help them predict a borrower’s ability to repay current and future debt. In general, lenders look for a DTI under 36%, but borrowers with a higher DTI may be approved if they are well qualified in other areas.

Assets and Collateral

As your application is reviewed, you may need to show assets in addition to a strong income and credit history. Assets include such things as real estate, cash in the bank, investments, vehicles, and art, antiques, and jewelry.

If you are getting a secured loan, meaning it involves collateral which can be claimed by the lender if you default, then these assets could help qualify you for that type of financial product.

What Is the Application Process for a Large Personal Loan?

Applying for a personal loan is a multi-step process. Different lenders may have different processes, but typical steps are as follows.

Compare Rates

Some lenders may offer loan prequalification. This allows you to see, based on a soft credit check, potential average personal loan interest rates and terms you might qualify for. It can be a good way to compare your lending options and find the best offer.

Gather Documents

As you move ahead with your personal loan application, collect all the paperwork you need.

Approaching this step proactively will help you streamline your application process, saving you time. It will also make it easier for your lender to review your eligibility and creditworthiness.

Personal loans usually require similar documents, no matter the lender, though. A few you should include are:

•   Proof of identity such as a driver’s license or passport.

•   Proof of current address such as a current lease agreement, utility bill, or proof of insurance.

•   Verification of stable income and employment such as W-2s, bank statements, paystubs, or tax returns.

Waiting for Approval

Once you submit all the necessary paperwork, the last thing to do is wait. Approval times vary between lenders and may be quick or lengthy depending on how complicated the application is. Some approvals happen within a day, while others may take up to 10 days.

After your lender approves your large personal loan, you’ll receive it in the form of a lump sum. Lenders may deduct any fees, such as origination fees, before disbursing the loan proceeds. A personal loan calculator can help you estimate your loan payments.


💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

What Can You Expect When Repaying Your Loan?

Regular installment payments begin once your large personal loan is approved and you receive the funds. The loan agreement will state the loan terms, interest rate, and what each payment will be, in addition to other details about the loan.

Monthly Payment Examples

Here are a few numbers to note that help you see how your loan payment might vary:

•   For a $50K loan at 7% APY and a 5-year term, your monthly payment would be $990.06

•   For a $50K loan at 9% APY and a 5-year term, your monthly payment would be $1,037.92

•   For a $50K loan at 9% APY and a 7-year term, your monthly payment would be $804.45

•   For a $100K loan at 7% APY and a 5-year term, your monthly payment would be $1,980.12

•   For a $100K loan at 9% APY and a 5-year term, your monthly payment would be $2,075.84

•   For a $100K loan at 9% APY and a 7-year term, your monthly payment would be $1,608.91

Early Repayment Options

Paying off a large personal loan early can help you save a bundle on interest. You might do this with a lump sum payment (say, you have a windfall such as an inheritance) or you could adopt a biweekly payment schedule to speed up your paying off the debt.

While uncommon, some large personal loans may have prepayment penalties. Check the fine print or contact your lender to learn more.

Can You Borrow $100,000 if You Have Bad Credit?

While it might not be impossible, borrowing a large loan with bad credit won’t be easy. Lenders tend to favor low-risk borrowers who are more likely to repay their loans on time and in full. A strong credit history provides some assurance that a borrower will do that. But poor credit or no credit at all may look to lenders like a likelihood to default.

Lenders willing to loan to borrowers with bad credit typically require different data to evaluate their application, however. For example, they might ask the borrower to show a history of utility payments or information from their bank account. Lenders may also limit borrowing amounts and charge higher interest rates to applicants with bad credit.

Additionally, borrowers with poor credit can improve their chances by opting for a secured personal loan, one for which they pledge collateral to guarantee the loan, as noted above. This may work well for someone who struggles with credit but has assets and sufficient income to make loan payments. If the borrower defaults on the loan, the lender has the right to seize the asset pledged as collateral.

Are There Alternatives to Large Personal Loans?

After some research, you might decide a personal loan isn’t right for you. Or, you may struggle to get the level of financing you want. In that case, there are alternatives to a personal loan. For example, you could consider these choices if you have equity in your home or other real estate:

•   Cash-out refinancing: A cash-out refinance allows you to replace your existing mortgage with a new, larger loan. After the original mortgage is paid off, you can use the difference as you like. This option works best if you have a significant amount of equity built up in your home and have a high credit score.

•   Home equity loan: Like a cash-out refinance, a home equity loan depends on your built-up home equity. However, it is a second, additional, mortgage, rather than one new mortgage. By borrowing against your equity, the loan has collateral behind it, making it a secured loan.

•   Home equity line of credit (HELOC): Like a home equity loan, you use your home equity to access a HELOC. It acts as a line of credit you can tap into when you need it, and you only pay interest when you borrow. This works best for a homeowner who needs smaller amounts of money over a longer-term, rather than just one lump sum.

•   401(k) loans: If you have a 401(k) plan, you may be able to borrow money from your retirement account. Depending on your plan’s specifics, you might be able to borrow up to 50% of your account’s vested balance or $50,000, whichever is less. If your balance is less than $10,000, you may borrow up to the full amount. Then, you pay the funds back with interest within a period (usually five years).

•   Securities-based loans: Another option could be a securities-based loan, often called a securities-based line of credit, or SBLOC. In this case, a lender allows you to borrow up to a certain percentage (say, 70% to 90%) of the value of stocks, bonds, or other non-retirement assets. The assets pledged as collateral are held in a separate account, and you are charged interest as you use your line of credit. Fees are typically quite low.

The Takeaway

A large personal loan is one that is typically in the range of $50,000-$100,000. It can allow you to pay off debts or make significant purchases. However, it may require a high credit score, a solid employment history, and other factors to qualify, and it can bring its own set of pros and cons as well.

Finding the right large personal loan for your financial needs and situation may take some time, but comparing lenders is a good way to get started.

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

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

FAQ

What’s the highest personal loan amount I can get?

Typically, the highest personal loan amount is $50,000-$100,000, though some lenders may offer up to $200,000 for some borrowers.

How long does it take to get approved for a large personal loan?

The time it takes to get approved for a large personal loan can vary. In some cases, it could happen within a day; in others, it might take a couple of weeks.

Do all lenders offer $100,000 personal loans?

Not all lenders offer $100,000 personal loans. Some do; others offer large loans up to $20,000-$50,000; and still others only offer loans up to, say, $5,000 or less.

What happens if I default on a large personal loan?

If you default on a large personal loan, your debt can be turned over to collection and your credit score can be negatively affected.

Can I get a large personal loan with a co-signer?

Yes, you can get a large personal loan with a co-signer from some lenders. In some cases, a co-signer with a strong income and/or credit history could help you qualify.

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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.

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 .

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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.

This article is not intended to be legal advice. Please consult an attorney for advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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It can be challenging to qualify for a personal loan after a bankruptcy, A bankruptcy will remain on your credit reports for up to seven to 10 years, but with effort, your credit scores can be built during that time and beyond.

If you are approved for a personal loan, you likely will pay fees or a higher interest rate than you might have without having a bankruptcy on your credit report.

Read on to learn how bankruptcy works, the pros and cons of filing for Chapter 7 vs Chapter 13 bankruptcy, and how to get approved for a loan with a bankruptcy in your credit history.

How Does Bankruptcy Work?

When a person can’t make payments on their outstanding debts, despite trying to do so, bankruptcy may be an option to have a fresh financial start.

Bankruptcy can be either a liquidation of the debtor’s assets to satisfy creditors or the creation of a repayment schedule that will satisfy creditors and allow the debtor to keep their property instead of liquidating it.


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

Filing for Bankruptcy

Bankruptcy petitions are filed with the bankruptcy court in the debtor’s judicial district. The process is mostly administrative, with minimal time spent in front of a judge — often no time at all unless there is an objection by a creditor. A court-appointed trustee oversees the case.

The debtor must attend a “341 meeting” (named for section 341 of the Bankruptcy Code), at which creditors can present questions and concerns. For Chapters 7 and 13 bankruptcies, which are being discussed here, the remainder of the process differs slightly.

Common Reasons to File for Bankruptcy

Among the reasons people may file for bankruptcy are the following:

•   Medical debt

•   Job loss

•   Credit card debt

•   Divorce or separation

•   Unexpected events (natural disasters, pandemics, etc.)

Can I Get a Loan With a Discharged Bankruptcy?

It’s not impossible to get a loan after bankruptcy, but interest rates may be high and loan terms less favorable than for someone who hasn’t been through a bankruptcy. The negative effect a bankruptcy has on a person’s credit lessens over time, but lenders may not be willing to offer their best rates to someone they perceive as not having been financially responsible in the past.

Factors That Impact Loan Approval After Bankruptcy

There are a few forces that impact getting approved for a loan after bankruptcy:

•   Credit score and history. A bankruptcy can lower your credit score by 100 or 200 points, which can make it challenging to build credit to the level needed to qualify for a personal loan or a loan with a favorable rate.

•   Timing. As noted, a bankruptcy can stay on your credit report for seven to 10 years. There can be a waiting period of one to two years or longer before you can qualify for a loan.

•   Lender requirements. Different lenders have different guidelines. There are some who specialize in lending to those with poor credit.

•   Type of bankruptcy. Some lenders may look more favorably upon those who have a Chapter 13 bankruptcy, which involves repayment of debt, vs. Chapter 7. (Learn more below.)

Two Main Types of Bankruptcy Filings

There are two main types of bankruptcy available to individuals, Chapter 7 and Chapter 13. With both, typically a bankruptcy trustee reviews the bankruptcy petition, looks for any red flags, and tries to maximize the amount of money unsecured creditors will get.

Chapter 7 is the most common type of bankruptcy for individuals, followed by Chapter 13.

Chapter 7 Bankruptcy

This is often called liquidation bankruptcy because the trustee assigned to the case sells, or liquidates, nonexempt assets in order to repay creditors.

Many petitioners, though, can keep everything they own in what is known as a “no-asset case.” Most states allow clothing, furnishings, a car, money in qualified retirement accounts, and some equity in your home if you’re a homeowner to be exempt from liquidation. (Each state has a set of exemption laws, but federal exemptions exist as well, and you might be able to choose between them, a subject a bankruptcy attorney should be able to provide insight on.)

After the bankruptcy process is complete, typically within three to six months, most unsecured debt is wiped away. The filer receives a discharge of debt that releases them from personal liability for certain dischargeable debts.

Are Personal Loans Covered Under Chapter 7?

In most cases, personal loans may be discharged in a Chapter 7 bankruptcy proceeding. A secured personal loan for which collateral has been pledged is included in discharged debts, but the asset put up as collateral will likely be sold to satisfy the debt.

Recommended: Secured vs. Unsecured Personal Loans — What’s the Difference?

The Pros and Cons of Chapter 7 Bankruptcy

A Chapter 7 bankruptcy can create a fresh start for someone struggling to repay their debts, but it’s not a magic wand. Here are some pros and cons:

Pros of Chapter 7 Bankruptcy	Cons of Chapter 7 Bankruptcy
Debtors are free of personal liability for discharged debts.	Some types of debt, such as student loan or tax debt, cannot be discharged.
Certain assets may be exempt from bankruptcy, giving the debtor some property to sustain themselves.	A trustee takes control of the debtor’s assets.
If all of a debtor’s assets are deemed exempt, the bankruptcy is termed a no-asset bankruptcy.	Creditors will not receive any funds from the bankruptcy because there won’t be any assets to liquidate.

Chapter 13 Bankruptcy

This form, aka reorganization bankruptcy or a wage earner’s plan, allows petitioners whose debt falls under certain thresholds to keep their assets if they agree to a three- to five-year repayment plan.

There are three types of claims in a Chapter 13 bankruptcy: priority, secured, and unsecured. The plan must include full repayment of priority debts. A trustee collects the money and pays the unsecured debts, with the individual debtor having no direct contact with the creditors. Secured debts can be handled directly by the debtor.

Once the terms of the plan are met, most of the remaining qualifying debt is erased.

The U.S. Bankruptcy Code specifies that if the debtor’s monthly income is less than the state median, the plan will be for three years unless the court approves a longer period. If the debtor’s monthly income is greater than the state median, the plan generally must be for five years.

Certain debts can’t be discharged through a court order, even in bankruptcy. They include most student loans, most taxes, child support, alimony, and court fines. You also can’t discharge debts that come up after the date you filed for bankruptcy.

Are Personal Loans Covered Under Chapter 13?

Personal loans can be discharged in Chapter 13 bankruptcy, but whether a creditor is likely to be repaid in full depends on if the personal loan is secured or unsecured. Priority claims are paid before any others, followed by secured, then unsecured claims.

The Pros and Cons of Chapter 13 Bankruptcy

Debtors who have assets they’d rather not have liquidated might opt for Chapter 13 bankruptcy vs. Chapter 7, which involves liquidation of most assets. But like any type of bankruptcy, there are pros and cons.

Pros of Chapter 13 Bankruptcy	Cons of Chapter 13 Bankruptcy
Debtors may be able to save their assets, such as their home, from foreclosure.	If the repayment plan is not followed, the bankruptcy could be converted to a liquidation under Chapter 7.
Debtors may opt to make payments directly to creditors instead of through the trustee.	Living on a fixed budget for the duration of the repayment plan will take some adjustment.
Debtors have more options to repay their debts than they might under Chapter 7.	Chapter 13 bankruptcy is more complex than Chapter 7, and may lead to higher legal costs.
Debtors can extend repayment of secured, non-mortgage debts over the life of the plan, likely lowering their payments.	Taking more time to repay the secured installment debt may lead to more interest before it’s paid in full.

Recommended: What Is an Installment Loan?

Will Bankruptcy Ruin My Credit?

A bankruptcy will be considered a negative entry on your credit report, but the severity depends on a person’s entire credit profile.

Someone with a high credit score before bankruptcy could expect a significant drop in their credit score, but someone with negative items already on their credit reports might see only a modest drop.

The good news is that the negative effect of the bankruptcy will lessen over time.

How Long Bankruptcy Stays on Your Credit Report

Lenders who check credit reports will learn about bankruptcy filing for years afterward. Specifically:

• For Chapter 7, up to 10 years after the filing.

• For Chapter 13, up to seven years.

Still, filing for bankruptcy doesn’t mean you can’t ever get approved for a loan. Your credit profile can be positively impacted if you stay up to date on your repayment plan or your debts are discharged — among other steps that can be taken.

You may even be able to begin building your credit during bankruptcy by making the required payments on any outstanding debts, whether or not you have a repayment plan. Of course, everyone’s circumstances and goals are different so, again, always consult a professional with questions.

Some lenders may specialize in offering loans to people who have a bankruptcy on their record (though rates and terms may be less favorable). That said, some lenders may deny credit to any applicant with a bankruptcy on a credit report.

Recommended: What Is Considered a Bad Credit Score?

How Long After Bankruptcy Discharge Can I Get a Loan?

As long as you can find a lender willing to approve you for a loan, there is no specific amount of time needed to wait until applying for one. Often, waiting one or two years will be enough. However, your credit report will reflect a discharge for seven to 10 years, and lenders may not offer favorable terms or interest rates.

Should I Apply for a Loan After Bankruptcy?

Making sure you are in a stable financial situation after bankruptcy is a good idea before thinking about applying for a loan at that time. Having a repayment plan that you can stick to before taking on more debt is imperative. That being said, taking out a loan and repaying it on time and in full can be a good way to help rebuild your credit.

Some pointers:

• Before applying for an unsecured personal loan, meaning a loan is not secured by collateral, it’s a good idea to get copies of your credit reports from the three major credit reporting agencies: Equifax®, Experian®, and TransUnion®. Make sure that your reports represent your current financial situation and check for any errors.

• If you filed for Chapter 7 bankruptcy and had your debts discharged, they should appear with a balance of $0. If you filed for Chapter 13, the credit report should accurately reflect payments that you’ve made as part of your repayment plan.

• Consider getting prequalified for a personal loan and comparing offers from several lenders. They will likely ask you to supply contact and personal information as well as details about your employment and income.

• If you see a loan offer that you like, you’ll complete an application and provide documentation about the information you provided. Most lenders will consider your credit history and debt-to-income ratio, among other personal financial factors.

• You may want to think carefully before considering “no credit check” loans: They typically have high fees or a high annual percentage rate (APR).

💡 Quick Tip: Fixed-interest-rate personal loans from SoFi make payments easy to track and give you a target payoff date to work toward.

If You’re Approved for a Personal Loan

Before you sign on the dotted line, it’s smart to take the following steps:

Read the Fine Print

If you’ve had a bankruptcy on your record, the terms of your offer may be less than favorable, so consider whether you feel like you’re getting a reasonable deal.

People with credit scores considered poor might see APRs on personal loans running into the triple-digits. Make sure you are clear on your interest rate and fees, and compare offers from different lenders to make the choice that works for you.

Avoid Taking Out More Than You Need

You’re paying interest on the money you borrow, so it’s generally better to only borrow funds that you actually need. Further, it’s probably wise to only take out as much as you can afford to repay on time, because paying on time is an important key to rebuilding your credit. Having a focused plan for what you’ll spend the personal loan funds on may give you some incentive to manage it responsibly.

If You’re Not Approved for a Personal Loan

If you are denied a personal loan, don’t despair. You may have options for moving forward:

Appealing to the Lender

You can try to explain the factors that led you to file for bankruptcy and how you have turned things around, whether that’s a record of on-time payments or improved savings. The lending institution may not change its mind, but there’s always a possibility the lender can adjust its decision case by case.

You likely have the best chance at an institution that you’ve worked with for years or one that is less bound to one-size-fits-all formulas — a local credit union, community bank, online lender, or peer-to-peer lender.

Looking Into Applying With a Co-signer

A co-signer who has a strong credit and income history may be able to help you qualify for a loan. But both parties should keep in mind that the co-signer is typically responsible for paying back the loan if the primary borrower can’t do so.

Building Your Credit

You may need to take some time to try to build your credit profile before reapplying for an unsecured personal loan. You still have a chance to work toward reducing your other debt. There are many types of personal loans available, and a little waiting time to consider what’s right for you isn’t a bad thing.

There are several important habits to adopt when building your credit, but the most important one is your payment history, meaning whether you pay bills on time. This contributes 35% to your credit score, so it’s wise to be diligent about it as you move past bankruptcy. Setting up autopay can be a good move as it ensures you won’t accidentally pay a bill late or miss it.

Alternatives to Personal Loans After Bankruptcy

If you don’t qualify for a personal loan after bankruptcy or feel that’s not the best option, here are other ways to access credit and/or build your credit score:

• Secured credit cards, which involve putting down a deposit that usually serves as your credit limit.

• Secured loans, in which collateral (such as a savings account or a vehicle) is needed and can lessen the lender’s risk.

• A loan from a trusted friend or family member.

The Takeaway

Getting approved for an unsecured personal loan after bankruptcy isn’t impossible, but it may take some time to qualify and your rates and fees will likely be less favorable. It’s a good idea to compare offers from several lenders and gauge whether it’s the right time to borrow.

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

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

FAQ

Can I get a loan with a discharged bankruptcy?

Yes, it is possible to get a loan after bankruptcy, but it may take time and the rates and terms may be less than favorable.

Are personal loans covered under Chapter 7?

Yes, personal loans can be discharged under Chapter 7 bankruptcy.

Are personal loans covered under Chapter 13?

As with Chapter 7, personal loans can be discharged under Chapter 13 bankruptcy, typically after the court-approved repayment period of three to five years. Secured personal loans will take priority over unsecured personal loans, however.

How long after bankruptcy discharge can I get a loan?

There is no set time a person must wait in order to apply for a loan after bankruptcy discharge. Each lender will have its own conditions for approval. However, a typical period might involve waiting one to two years.

What are the best ways to rebuild credit after bankruptcy?

To build credit after bankruptcy, it’s wise to be especially diligent about paying bills on time, every time, since that’s the single biggest contributing factor to your score. You also want to be cautious about your credit utilization rate when you are able to access credit again, and not apply for too many forms of credit at one time.

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*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

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.

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.

This article is not intended to be legal advice. Please consult an attorney for advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOPL-Q225-027

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A financial coach works with clients to help them better manage their money and to develop healthy, long-lasting, finance-related habits.

If you need help getting your finances organized or setting up a plan to effectively work towards your financial goals, you might benefit from the help of a financial coach. These professionals can help clients pay off debt, create an emergency savings fund, stabilize their finances, and develop an overall financial plan.

Unlike financial advisors, financial coaches generally spend more time helping their clients understand the fundamentals of finances, rather than recommending investments and managing their investment portfolios.

Read on to learn more about financial coaches, what they do, how much they cost, and how to find one.

What Does a Financial Coach Do?

According to the Consumer Financial Protection Bureau, a financial coach is a trained professional who collaborates with and guides their clients to reach their financial goals, including:

•   Better money management skills

•   Improved savings, debt levels, and credit

•   More financial confidence

Financial coaches typically individualize their approach based on the needs of each client, with the goal of helping them make progress in the area of their financial life that they identify as most important. For example, a financial coach might help you reach your financial goals by teaching you how to build savings, avoid overspending, or pay down debt.

Financial coaches also often assist their clients with the behavioral and emotional components of managing money. A coach can help you uncover what drives your financial decisions, so you can create a healthier attitude that leads to better money habits.

Coaches often work with their clients over the period of several weeks to several months and may meet weekly or biweekly to provide advice and check on progress. The full coaching process may include:

•   Building awareness around spending habits (usually by tracking daily, weekly, and monthly spending)

•   Defining the client’s financial goals

•   Developing a budget and a financial plan to achieve those goals

Accountability is also typically built into the process. So rather than managing a person’s finances, a financial coach gives clients the tools to help make informed and responsible financial decisions.

What a financial coach can’t do: offer investment recommendations or help clients manage their investment portfolios. While coaches can provide basic advice on the concept of investing, they are not licensed to provide financial advice like financial advisors are, and therefore cannot provide specific product recommendations.

💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

How Much Does a Financial Coach Cost?

Coaching rates typically run between $100 to $300 an hour. But because of the wide range of fees charged by coaches, it’s a good idea to ask about costs upfront.

Unlike financial advisors, who typically charge their fees based on a percentage of the assets under management, financial coaches generally work on a fee-only basis. Some may charge a flat fee based on how long you plan to work together (such as three or six months), while others might charge per session.

How do I Find a Financial Coach?

While there is no required coursework or license, and there are no certifications to become a financial coach, there are training programs run by the Association for Financial Counseling and Planning Education (AFCPE).

You can begin looking for financial coaches in your area at AFCPE.org. It’s also a good idea to ask for personal referrals from friends and family, as well as other financial professionals you know or work with (such as an accountant or financial advisor).

Before selecting a coach, it can help to consider specifically what you are looking for in a financial mentor. This can involve thinking about your own financial strengths and weaknesses, and what your goals are. Are you, for example, struggling to save enough money for a down payment on a house? Or, do your credit card balances keep going up? Identifying your needs can help you suss out the best coach for your situation.

Once you’ve gathered a list of financial coaches, you may want to reach out to each candidate to get a sense of their personality, methods, and coaching style.

Some questions to consider asking:

•   How long have you been a coach?

•   What’s your business specialty?

•   How long do you typically work with clients?

•   What’s your plan to help me reach my goals?

•   What is your availability?

•   What are your fees?

💡 Quick Tip: If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

The Takeaway

Maybe you’ve tried to make a budget but just can’t stick to it. Or perhaps you’ve run up so much debt between credit cards and loans that you don’t know the best way to pay it off. A financial coach can help you structure your budget, build a financial plan, and hold you accountable throughout the process.

Financial coaches also help clients understand and work through deep-seated emotions around money that may be preventing them from being “good with money,” building up savings, and reaching their financial goals.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What Exactly Does a Financial Coach Do?

A financial coach helps you set and achieve financial goals by providing personalized guidance and support. They assist with budgeting, debt management, setting goals, saving, and investing. Coaches often work one-on-one, offering accountability and motivation to help you make informed financial decisions and improve your overall financial health.

What Is the Average Cost of a Financial Coach?

The average cost of a financial coach ranges from $100 to $300 per hour, depending on the coach’s experience and the services offered. Some coaches offer package deals or flat rates, which can be more cost-effective. Shop around and compare prices to find a coach that fits your budget.

What Is a Financial Coach Not Allowed to Do?

A financial coach is not allowed to manage your investments, provide legal advice, or act as a fiduciary. They cannot make financial transactions on your behalf or offer specific investment recommendations. Their role is to provide guidance and support, not to handle your money directly.

What is the Difference Between a Financial Coach and a Financial Advisor?

A financial coach focuses on behavior and mindset, helping you set and achieve personal financial goals through accountability and support. A financial advisor, on the other hand, provides professional advice on investments, retirement planning, and wealth management. Advisors often manage your investments and offer more technical financial planning services.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

SOBNK-Q225-049

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Renting out part, or all, of your home on a rental platform can be a lucrative sideline. Just keep in mind that it can take an investment of time, effort, and money to create and maintain a welcoming space for guests. And the plan could potentially backfire if you side-step some key legal and insurance steps.

To help ensure your venture is a success, here are some things you may want to consider before you start renting on Airbnb or a similar site.

1. Understanding Local Rental Laws

Before listing your home on a home-sharing site, it’s a good idea to research and make sure you fully understand local laws regarding renting out your home.

Laws that govern home shares vary around the country. In some cities, for instance, it’s illegal to rent a home as an Airbnb unless it’s your primary residence. In others, hosts can only rent out a portion of their home, and must be present during the guests’ stay. Laws about short-term rentals are also constantly changing.

If you own a condo or belong to a HOA, there may be other legal hoops to jump through, since you will likely need to get permission before opening your doors.

2. Checking With Your Landlord (if You’re Renting)

Looking to rent out a room in your home you rent? It can be wise to first carefully read through your own rental agreement.

Leases and agreements can contain language barring renters from subletting the home outright or without the express consent of the landlord. If you’re unsure even after reading the fine print, you may want to have a conversation about it with your landlord.


💡 Quick Tip: Help your money earn more money! Opening a high-yield bank account online often gets you higher-than-average rates.

3. Talking to Your Neighbors

While neighbors can’t tell you what you can and can’t do on your own property, they can make things difficult for you.

Prior to renting out your home, you may want to do the neighborly thing and pop in or give them a call to let them know what you are planning and do your best to ease any of their concerns. Who knows — they might even end up keeping an eye on the property for you while you’re away.

4. Being Prepared to Pay Taxes

Sure, renting your home on Airbnb may bring in a nice source of passive income. Like all income, however, this may be subject to state and federal taxes.

According to the IRS, third-party settlement organizations (like Airbnb and other vacation rental host sites) are required to issue a Form 1099-K when the amount of total transaction payments exceeds $2,500 in tax year 2025 and $600 in tax year 2026 and beyond.

5. Considering All the Expenses Involved in Renting

While it may be more fun to think about the extra income that could result from your home rental, it can also be important to think about all the expenses involved.

For example, you may have to purchase items to get the space ready, along with any amenities you will offer guests (like toiletries or coffee), and cleaning supplies (or, pay for a cleaning service), and more.

You may want to make a list of all your potential expenses and consider how it will affect your potential profits.


💡 Quick Tip: If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

6. Finding a House Manager if You’d Rather Not do all the Work

Does managing your listing, bookings, and maintaining your rental property sound like a lot? You might consider hiring a manager to do it for you.

There are a number of property management companies around the country. that specialize in managing short-term home rentals.

These agencies will handle everything from writing (or boosting the exposure of) your listing to communicating with guests to cleaning and taking care of repairs. Some charge a commission (i.e., a percentage of bookings), while others charge a flat monthly service fee.

7. Making Space for Guests

Prior to accepting your first guests, it’s a good idea to make sure you have room for them — and that typically means more than just a clean, freshly made bed.

You may also want to offer some empty drawers so that guests can unpack their clothing, and possibly also a free shelf in the bathroom for their toiletries.

8. Putting Away Valuables

While it’s nice to think that everyone is trustworthy, that may not always be the case. It can be a good idea to safely stow away any valuables when you are opening your home to people you don’t know.

You can do this by getting a heavy-duty safe. Or, you might want to lock off one room of the home as an “owner’s closet” that guests cannot access.

9. Checking With Your Insurance Company

Airbnb offers its hosts its own liability insurance. Though this covers a wide array of potential issues, including bodily injury to guests and any damage to the property, it may not cover everything. Plus, different home rental platforms may offer different levels of insurance coverage.

It can be a good idea to also check in with your own homeowners or renters insurance to see what type of coverage these policies offer.

10. Writing a Detailed Description

Ready to list? When it’s time to write a description of your home, it’s a good idea to make your listing as detailed as possible, and even include the flaws of your home. A home need not be perfect to list on Airbnb. However, the company suggests that honesty is the best policy.

It can be a good idea to tell guests exactly what they’ll find when they arrive, as well as highlight your home’s special features, such as the location or unique amenities of your space. For more ways to make your listing stand out, you may want to check out Airbnb’s “writing tips.”

11. Taking High Quality Photos

Before taking photos of your space, you may want to spend some time arranging everything as if you were getting ready to welcome your first guest. This can help showcase your space to its best advantage, and also help set your guests’ expectations before they book.

It’s also a good idea to shoot in landscape format (photos in search results are typically displayed in landscape, so vertical photos won’t showcase your space as well), shoot in the middle of the day when there is plenty of light, and to highlight any unique features or amenities.

12. Creating an Information Binder

It can be helpful to make a packet of information for your guests which includes key information, such as the Wi-Fi password, your contact number, and house rules (such as check-out time and anything that guests need to take care of before they leave).

You may also want to include instructions on how to work on anything quirky, such as the television or coffee maker, as well as local entertainment and restaurant options.

13. Offering A Few Extra Amenities

There are millions of listings on Airbnb. If you’re hoping that your rental will make financial freedom a reality, you’ll want it to stand out from the crowd.

Throwing in some extras can help encourage guests to choose your home over others. Are you near a popular beach? You may want to consider keeping some beach chairs and sand toys stored in the garage for guests to use.

Simple add-ons, like the use of your bicycles or a parking tag, may not cost you much (or anything) to offer, yet significantly increase the popularity of your listing — along with your earnings.

💡 Quick Tip: Bank fees eat away at your hard-earned money. To protect your cash, open a checking account with no account fees online — and earn up to 0.50% APY, too.

14. Making a Decision about Pets or No Pets

Before you list your property it’s a good idea to decide if you want your home to be a space for pets or not.

This is a personal decision, but you may want to consider whether or not your space is well-suited for pets (a light suede couch, for example, might not last very long). If you do decide to make your home pet-friendly, you could add in an additional fee for cleaning.

15. Learning How to Price a Property Right

You may think your home looks and feels like a million bucks, but that doesn’t mean travelers will pay a premium.

To understand how to price an Airbnb listing correctly, it’s a good idea to comb through comparable listings in your area to get a sense of what other people are charging.

You can also use a free online calculator like airDNA. You just need to input all your data, including home size, if it’s pet-friendly, location, etc., to get a recommended price for your listing.

Recommended: 33 Ways to Make Income From Home

16. Deciding How You Want to “Screen” Guests

It is against Airbnb’s nondiscrimination policy to decline a booking based on “race, color, ethnicity, national origin, religion, sexual orientation, gender identity, or marital status” or impose different standards for specific guests.

What hosts can screen for are people who may not be a good fit for their property by being as descriptive as possible in their listing. If your home is not a good fit for children, you may want to make that clear in your listing.

Do you want to limit the noise after specific hours to respect neighbors? You may want to be specific about that in your listing so you bring in the type of customer you are hoping to attract.

17. Learning About Enhanced Cleaning Standards

Airbnb, along with many other rental platforms, require hosts to use an enhanced five-step cleaning process between guests.

The protocol includes special measures, such as using disinfectants approved by your local regulatory agencies for use against Covid-19 on all high-touch surfaces (and letting them stand for the amount of time specified on the label) and washing all dishes and laundry at the highest heat setting possible.

18. Thinking About Turnover Time

Before you rent all or part of your home on a rental platform you will want to think about not only when you want to rent your home out, but also how long it will take you to get it properly cleaned (using the five-step protocol) and ready for the next guests.

Will you need 24 hours between guests or can you get the home ready in just a couple of hours? This will determine exactly what dates you are able to accept guests, as well as what check-in time you want to put in your listing.

19. Testing Your Rental With Friends

When you’re getting close to listing your space, you may want to try testing out the system with a few friends.

Inviting people you know and trust to rent your space (free of charge or for a low fee) won’t do much to get that extra income stream flowing, but it can help you work out the kinks, as well as garner you some (hopefully positive!) reviews.

Friends can also tell you honestly what you might do differently or change to improve the rental experience. This way, you’ll feel confident once people you don’t know arrive.

20. Being Ready for Bookings Right Away

With millions of users all over the world, it may be a good idea to go into listing your property believing you’ll receive guests right away.

While this may not happen, it’s better to be prepared for visitors, then wait to see how your listing performs before readying your space for guests.

21. Looking At Your Reviews

After guests depart they may leave you a review of their stay. It’s a good idea to not only look at the reviews but to take them to heart. Reviews can make or break Airbnb rentals.

While it can be tough to digest criticism of your home, if guests complain about something that can be easily fixed, it can be in your best interest to fix it.

Reading positive reviews can be a good way to see your rental from an outsider’s perspective and make changes to improve your listing.

22. Accepting the Fact You Can’t Please Everyone

Sometimes, people are just difficult, or nitpicky, or just aren’t the right match for your listing and will leave a nasty review that feels unwarranted.

If you see a review that falls into that camp, it can be wise to just forget it and move on. This can often be a better approach than starting a fight in the comment section, which may only end up making you look bad to potential future guests.

23. Working Toward Superhost Status

Becoming an Airbnb superhost can increase your earnings by giving your more visibility and letting guests know that they can expect the best when staying with you.

Superhosts are featured in search results and get a Superhost badge on their profiles and listings to help them stand out. After each year as a Superhost, they’ll get a $100 travel coupon.

To become a Superhost, hosts must complete at least 10 stays in the past year (or 100 nights over at least three completed stays), have a 4.8 or higher average overall rating, respond to 90% of new messages within 24 hours, and cancel bookings less than 1% of the time.

Recommended: Money Management Guide

24. Deciding If Airbnb Is the Only Platform for You

After deciding to list on Airbnb, it’s then time to decide if that’s enough. There are, after all, a number of other home rental platforms to choose from, including Vrbo, Booking.com, and Flipkey. It’s up to you how many different listings you’re willing to maintain.

25. Keeping Your Calendar Up to Date

Once you list your home on Airbnb (or any other rental platform), it can be wise to keep your rental calendar as up-to-date as possible. This way, guests don’t accidentally book a stay when you have your in-laws visiting or when you otherwise want to use your own space.

If a date looks to be free to a potential guest but you forgot to mark it as unavailable, it can become a frustrating experience for both parties.

The Takeaway

If you have an extra room, or your home is vacant for several months out of the year, you may be tempted to list it on a home rental site.

But before you start posting photos on Airbnb, there are several things you may want to think through — from legal and insurance issues to the time and expense involved in getting (and keeping) your space ready for guests.

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FAQ

What should you know before renting your home on Airbnb?

Before renting your home on Airbnb, it’s important to understand local laws and regulations, as some areas have restrictions on short-term rentals. It’s also a good idea to check your homeowner’s insurance to ensure it covers Airbnb rentals, and carefully read Airbnb’s host liability coverage. Finally, you’ll want to familiarize yourself with Airbnb’s host policies and prepare your home for guests by ensuring it’s clean, safe, and well-stocked with essentials.

Do I Need Permission to List My House on Airbnb?

Yes, you may need permission to list your house on Airbnb. Check your local laws and regulations, as some cities and neighborhoods have restrictions on short-term rentals. If you rent rather than own your home, you’ll want to review your lease agreement, as it may prohibit subletting or short-term rentals. Additionally, consult your homeowner’s association (HOA) if applicable, as they might have specific rules. Always ensure you have the necessary permits and approvals to avoid legal issues and fines.

Is Renting out an Airbnb Worth It?

Renting out an Airbnb can be worth it if you manage it effectively. It can provide a steady income stream, especially in high-demand areas. However, it requires significant effort, including maintaining the property, managing bookings, and dealing with guest issues. It also comes with costs, such as cleaning, utilities, and potential wear and tear. You’ll want to weigh the benefits against the time and financial investment. If you enjoy hosting and are willing to put in the work, however, it can be a rewarding venture.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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