Here’s How to Get a $50,000 Personal Loan

A personal loan can be an excellent way to finance any number of purchases or projects. Whether you’re looking to consolidate debt, cover unexpected expenses or pay for major purchases, a personal loan can offer the flexibility and freedom you need.

Personal loans provide borrowers with a lump sum of money, usually at a fixed rate, to be repaid over a predetermined time frame. Personal loans can be sought through a variety of lenders, including banks, credit unions and online lenders. They are typically unsecured loans, meaning they do not require collateral.

Personal loan terms typically require repayment over a 12- to 84-month period, with annual percentage rates, or APR, varying widely, from roughly 7% to more than 23%. This can vary depending on the amount borrowed, borrower qualifications and the length of repayment.

Lenders offer personal loans for amounts as low as $1,000 to up to $100,000. To secure a personal loan of $50,000, borrowers will need to meet certain criteria, with credit score and history, proof of income and debt-to-income ratio among the most important factors.

Given the variety of financing options available, borrowers should “take a good assessment of your personal finances before you do any kind of loan because there’s lots of options out there,” says Elizabeth Thorley, founder and CEO of Thorley Wealth Management.

Lenders have varying criteria for borrowers seeking a $50,000 loan, but in general the process is similar to smaller loans. Borrowers will need to provide proof of employment or income, a favorable debt-to-income ratio and a credit score and history that meets the lender’s minimum qualifications.

Before pursuing a personal loan, borrowers should access their credit report, Thorley says. Credit scores, which range from 300 to 850, are based on a number of factors and impact your ability to borrow. Credit scores above 700 can secure more favorable borrowing terms, Thorley says, while those below 620 may make it difficult to access credit.

Although personal loans are typically unsecured, using some form of collateral, such as a retirement account or borrowing against an insurance policy, can often lower the interest rate or help the borrower qualify for a larger loan amount, Thorley says.

Borrowers may find that the larger the personal loan amount, the less favorable the credit terms become, Thorley says. That’s because lenders perceive a higher risk that the borrower will be unable to pay back the full amount.

Improving your credit score is always a good idea, according to Bill Shaheen, president and CEO of wealth management firm Whitney & Company. Since payment history is the most significant factor in an individual’s credit score, Shaheen says it’s important to always make payments on time.

If you determine that a large unsecured personal loan is something you need, these steps can help you successfully obtain a loan:

The first step in securing a personal loan of any size should be to check your credit score. Thorley says some credit card issuers and lenders allow customers to access their credit scores for free, but if none of your financial institutions provide this service, anyone can request their credit score through the major consumer credit agencies – TransUnion, Experian and Equifax – once each year for free.

Credit score and credit history are among the most important factors in qualifying for a loan. For a $50,000 personal loan, lenders will likely want to see a strong credit score and history.

Requirements vary from lender to lender, but a relatively high credit score may be a prerequisite to qualify for a sizable loan. High credit scores can also lower your interest rate and secure improved loan terms.

For individuals who do not have a high credit score or an extensive credit history, it may be prudent to delay your personal loan until you can improve your score.

Before applying for a personal loan, determine the right amount to borrow. Borrowing a larger amount means higher payments and can lead to higher interest costs.

“When you’re taking out a loan, it’s important to not take out any more debt than you really need because the interest starts accumulating on the loan as soon as it’s issued,” says Tiffany Soricelli, a financial advisor and the principal and CEO of Virtuoso Asset Management.

Once you’ve decided how much you need to borrow, make sure that the resulting payments can be absorbed into your budget.

Lowering the repayment terms can reduce your interest costs, but it will increase your monthly payments. Finding the right balance for your budget is critical.

Many lenders will allow you to check whether you prequalify with only a soft credit check. This allows borrowers to understand the likely interest rates and loan terms before formally applying and receiving a hard inquiry, which can impact your credit score.

Once you’ve determined the amount you need to borrow, “do your research and compare different lenders,” says Soricelli, adding that finance charges and consumer feedback are important considerations.

When evaluating loans, Shaheen advises considering the interest rate, the length of the loan and whether the rate is fixed or variable. If it is variable, consider how often the rate can change and whether there is a cap on how much it can increase at any given time. Borrowers should also be cognizant of whether the lender plans to continue to service the loan or sell it to another institution, and whether there are any prepayment penalties, he says.

“You have to shop around when you’re looking for credit. It’s a competitive industry,” says Thorley. “Every lender has their own criteria, so you might want to check with various institutions because they might treat you differently depending on your credit score and other criteria.”

Also check with any institutions that you already do business with, Thorley says. Sometimes lenders are willing to offer better terms to borrowers that have an existing relationship with the financial institution.

Lenders have varying policies, but nearly all lenders will ask for some or all of the following documentation:

You can fill out a loan application online or in person at a bank or credit union. To avoid delays, make sure you provide complete and accurate information on your application.

Interest rates, loan amounts, repayment periods and other terms can change after you submit an application. Once the lender performs a credit check and completes the underwriting process, you’ll get a final determination of the lending terms. Lending decisions may be instantaneous or take several days.

If your application is approved, lenders will provide an official loan offer, which should include a loan amount, interest rate and repayment terms. Before accepting the offer, review it to ensure the details accurately portray the offer you were expecting.

“When you have a loan offer from a company, it’s very important to read the terms,” Soricelli says.

If everything looks accurate, you can accept the offer and sign the documentation your lender provides. Lenders then distribute funds, which could come in a matter of hours or several days.

When considering a loan of this size, it’s important to do your homework and look into all your options, Soricelli says.

“If you’re considering a personal loan for home improvement, one might want to contact their bank or current mortgage lender to see what options are available for a home equity loan or line of credit,” Soricelli says. “You may save on closing costs and appraisal fees by working with a company that has completed those assessments for you in the past.”

For medical bills, Soricelli says there may be more cost-effective options than a personal loan, such as 0% financing available through a hospital.

“A personal loan is a good idea if you are trying to consolidate debt to pay down high interest rate credit cards,” Shaheen says. “It is not a good idea to use it for starting up a business, paying for vacations or other personal expenses that have no later value.”

When looking at any loan, Thorley says it’s important to consider things like the current economic conditions, the interest rate environment, how secure your job is and whether you need the money for short- or long-term borrowing.

“Those objectives are really important to lay out before you start looking at the types of loans that you want to take,” Thorley says.

Also consider your personal financial picture. “Look at your budget. See what your income is and what your expenses are, so that you have an idea of what you can afford in a monthly payment before you borrow money,” Thorley says.