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- A $10,000 loan can pay for major life events, debt consolidation, and more.
- You can take out a $10,000 loan with a bank, credit union, or online lender.
- Make sure to budget accordingly and set a goal before taking out a personal loan.
Introduction to $10,000 loans
Qualified borrowers can get approved for a $10,000 personal loan from most banks, credit unions, and online lenders. Personal loans can be used for almost any reason, such as debt consolidation, medical bills, major life events, or even paying your taxes.
But a $10,000 loan can be risky if you don't make smart budgeting decisions. Your financial situation and ability to borrow in the future can be badly damaged if you aren't able to repay your loan. So make sure you've considered all your options before turning to the nearest lender.
Here's how you can get approved for a $10,000 personal loan.
See Business Insider's picks for the best personal loans >>
Eligibility criteria for a $10,000 loan
Credit score requirements
Your credit score and history are key to getting your loan approved for a personal loan. Lenders will look for things like late payments, multiple new credit lines, history of bankruptcy, or maxed-out cards to assess the risk of you not repaying your $10,000 loan. Having no credit is just as bad, if not worse. Ideally, to get a loan you should have a minimum credit score in the mid-600s. These days it's easier than ever to check your credit score for free.
Income and employment verification
Most lenders require you to show proof of where you work as well as details like how long you've had your job and what your title is. Some may set a minimum salary requirement. You can show proof of income and employment with pay stubs, tax returns, a job verification letter from your employer, and W-2 forms.
Debt-to-income (DTI) ratio
Your debt-to-income ratio, or the percentage of your income that goes toward monthly debt payments, is also key to getting approved for a $10,000 loan. You can calculate your DTI ratio by adding up all your debt payments, such as credit, car payments, and other loan payments, and dividing that amount by your gross monthly income.
Types of $10,000 loans
Unsecured vs. secured loans
Personal loans are typically unsecured loans, which means that lenders need to review your income and credit before approving your loan request. A secured loan is a type of loan that's held up by your own collateral, such as your home or car, or other valuable assets.
Fixed-rate vs. variable-rate loans
A variable-rate loan is a loan in which the interest rate changes based on a benchmark, such as market volatility. A fixed-rate loan is a loan where the interest stays the same for the entirety of the payoff period.
Applying for a $10,000 loan
Choosing the right lender
When selecting the lender for you, the terms, interest rates, and any fees the lender charges should be taken into consideration. The best way to review loan offers is through prequalification. By prequalifying, you cancompare the different kinds of loans available to you. Many credit unions, banks, and online lenders will offer prequalification to potential borrowers.
Prequalification can provide borrowers with a better idea of whether or not they are likely to get approved. Keep in mind that getting approved through prequalification does not mean you've been approved for a loan. It just indicates that you're likely to be approved unless issues that didn't appear in the prequalification process present themselves in the more thorough formal approval process.
Application process
To prequalify for a personal loan, lenders will examine things such as employment status, household income, monthly debt payments, the purpose of your loan, and personal identification documents. Make sure to have your ID, Social Security number, address, and similar documents on hand. At this point, lenders will do what's known as a soft credit pull, which has no impact on your credit score.
Keep in mind, however, that if you follow through with a formal loan application, ther will be a hard credit inquiry, which will temporarily reduce your credit score slightly.
Repaying a $10,000 loan
Repayment strategies
When deciding whether or not you should take out a $10,000 personal loan, the decision essentially comes down to whether or not you can afford it. Often the larger your loan, the higher the risk, so devising a repayment plans for your $10,000 loan is crucial.
If you're unable to get a good rate, you may end up paying hundreds to thousands of dollars in interest. Moreover, missing a loan payment can put you in a bad financial situation.
If you're financially able, try reducing the cost of your loan by making more payments more frequently. Or, try making larger payments in the same cadence you've already been paying.
Refinancing options
Refinancing your loans can help you get a lower interest rate, which will save you money in the long run. You can also try to shorten the term of your repayment length. This will make your monthly payments higher, but ultimately cost you less in interest.
Avoiding common mistakes
Borrowing beyond means
If you have bad credit, taking out a $10,000 loan can prove difficult and you'll likely get stuck with a poor interest rate. You may be better off searching for loan alternatives or talking with a financial advisor about your current financial system.
Overlooking terms and conditions
Loan terms typically range from 12 to 96 months. When you complete the loan terms, that loan is considered closed. If more money is needed, you must apply for a new loan.
$10,000 loan offers
If you're looking to take out a $10,000 loan, here are some lenders worth considering:
LightStream Personal Loan
LightStream is best for borrowers with excellent credit scores, but you can still qualify with a score as low as 660. These loans are mainly used for medical debt, debt consolidation, and home remodeling.
One perk of LightStream is that it offers one of the lowest annual percentage rates (APRs) even compared to similar lenders. Its APRs range from 7.99% to 25.49% (with AutoPay discount, rates vary by loan purpose). LightStream also doesn't charge fees.
SoFi Personal Loan
SoFi is great for folks with a credit score of at least 680, but those with excellent credit scores may be able to get a better rate.
SoFi offers competitive loan rates, ranging from 8.99% - 29.49% fixed (with all discounts). Like LightStream Personal Loan, SoFi doesn't charge additional fees and offers added benefits like unemployment protection. Although most borrowers approved for a loan with SoFi have generally had an annual income of $100,000 or more (as found by Credible), you may still be able to get approved with lower annual incomes.
PenFed Credit Union Personal Loan
PenFed Credit Union is best for folks with fair credit scores as the minimum requirement is a score of at least 580. If you're looking to take out a very small loan — such as one as low as $600 — PenFed may be a good fit. Rates range from 7.99% to 17.99%. There is a membership requirement for personal loans. Folks who served, or are currently serving, in the military can qualify for membership on that basis. Otherwise, you'll need to open a PenFed savings account, which requires a $5 minimum deposit.
Avant Personal Loan
Avant is a great loan option for borrowers with low credit scores. Avant has a minimum credit requirement of 600. This lender is popular with borrowers looking to get a small loan, such as a $2,000 personal loan. The highest loan you can get with Avant is $35,000. Rates range from 9.95% to 35.99%.
Avant does offer loans to borrowers with bad credit, but its APRs are generally high compared to other lenders. Avant also charges multiple fees, such as an up to 4.75% in administration fees with an undisclosed late fee and returned payment fee.
Upstart Personal Loan
If you have bad credit or a limited credit history, Upstart may be a good fit. It has a minimum credit score of 300 and is a great option for small loans. Uphold not only looks at your credit score but also other factors like education and employment history.
With Upstart, you can get a loan as small as $1,000, and rates range from 6.40% - 35.99% fixed. But residents of Massachusetts, Ohio, New Mexico, and Georgia will have higher loan minimums.
FAQs
What is the minimum credit score you need for a $10,000 loan?
The minimum credit score for a $10,000 loan varies by lender, but a score of 600 or above is generally preferred.
Could I get a $10,000 loan without any collateral?
Yes, you can get a $10,000 personal loan without putting up any collateral. However, it may have higher interest rates compared to secured loans.
How long does it take to get approved for a $10,000 loan?
Getting approved for a loan often takes a few days. Approval times vary, but many online lenders may provide faster approval, sometimes within 24 hours.
What is the average interest rate for a $10,000 loan?
The average interest rate on a $10,000 loan will vary based on creditworthiness, loan type, and lender, but they generally range from 6% to 36%.
Can I pay off a $10,000 loan early without penalties?
Often, lenders allow for early repayment without any penalties, but it's crucial to confirm this with your lender.
Junior Investing Reporter
Tessa Campbell is a Junior Investing Reporter for Personal Finance Insider. She reports on investing-related topics like cryptocurrency, the stock market, and retirement savings accounts. She originally joined the PFI team as a Personal Finance Reviews Fellow in 2022.Her love of books, research, crochet, and coffee enriches her day-to-day life.
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