Consumers in the U.S. have access to a variety of financing options from sources including traditional banks, local credit unions, and online lenders. Personal loans provide borrowers with funds in an initial lump sum, which is typically paid back in monthly payments. In the market currently, lenders are offering personal loans ranging from $1,000 up to much larger amounts in the $100,000 range.
Personal loans are generally categorized as a type of installment loan along with auto loans, student loans, and others. Each installment paid to the lender is allocated between the principal amount and interest based on the specific rates and conditions in the loan agreement.
The majority of personal loans are unsecured, meaning that the agreement is not backed by an asset that serves as collateral. For example, the financial institution that provides a car loan has the security of knowing that they can repossess the vehicle to offset losses if the borrower fails to make the payments as required by the agreement.
Personal loans are largely distinct from most types of installment loans such as car or student loans because the funds can be used for a variety of discretionary purposes.
Reasons to Get a $10,000 Personal Loan
Many prospective borrowers are attracted to personal loans because of the freedom and flexibility that they offer compared to some alternatives. Some people will seek a personal loan when an unforeseen expense arises, such as costly car repairs or major medical expenses. A borrower may use a $5,000 personal loan for a vacation or wedding, for example.
In many cases, a personal loan may be used as a tool for consolidating other debts. For example, assume you have a $10,000 balance between two credit cards, each having an interest rate of 17%. A consumer might be able to secure a $10,000 personal loan with a 9% interest rate to pay off the much higher interest credit cards.
Unlike credit cards, recipients of a personal loan will often find that they have more options when spending their funds because they are not limited exclusively to retailers, contractors, or other service providers that have chosen to accept credit cards. Many small businesses or companies operating in highly competitive sectors with meager profit margins are often reluctant to accept credit cards and incur the required processing fees that may range from 1.5% to 3.5%. The funds from a personal loan are usually deposited directly into your checking account, which allows you the flexibility of paying with cash or a check.
$10,000 Personal Loan Terms
Depending on the lender, the repayment periods typically range from 12 months to 84 months — but longer terms are possible. For example, a $50,000 personal loan could potentially have a 120-month (10-year) term.
Personal loan applicants generally can find a personal loan with terms that are sufficient for maintaining affordable monthly payments. Keep in mind that ongoing affordability should be considered with the understanding that more total interest will accrue when the repayment term is extended.
When calculating the overall costs of a personal loan, considering several factors including the principal amount borrowed, interest rate, fees, and the loan term is a good idea.
$10,000 Personal Loan Monthly Payments
Personal loans are typically repaid over a multi-year term through monthly payments. The cost of the monthly payments is influenced by the interest rate that applies to the specific loan. Interest rates are essentially the fees charged by the lender for providing the loan.
The lowest interest rates are typically offered to consumers with a good to excellent credit history and may also be influenced based on other factors including their current income. Generally speaking, lenders may increase their interest rates based on their perception of the applicant’s heightened risk.
The following chart shows the impact that interest rates have on the monthly payment and also how choosing a longer-term loan can increase the overall cost of the loan.
| Principal | Interest Rate | Loan Term | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|
| $ 10,000 | 6.0% | 24 months | $ 443.21 | $ 636.95 |
| $ 10,000 | 10.0% | 24 months | $ 461.45 | $ 1,074.78 |
| $ 10,000 | 6.0% | 48 months | $ 234.85 | $ 1,272.81 |
| $ 10,000 | 10.0% | 48 months | $ 253.63 | $ 2,174.04 |
The interest rates that apply to personal loans are generally fixed, which means the monthly payment will remain the same. To a lesser extent, variable personal loan rates also are offered by lenders.
Variable-rate loans are influenced by a variety of market conditions such as median personal loan interest rates and index changes. While borrowers may prefer fixed-rate options, some variable-rate loans may have low interest rates and be very attractive.
$10,000 Personal Loan Fees
In addition to interest, some lenders charge origination fees that will also increase the overall cost of the loan.
The combination of the interest rate and any applicable fees is the Annual Percentage Rate (APR) of the loan. Calculating the APR is necessary for determining the true cost of the loan. Recent federal data indicates that the average APR of a 24-month personal loan is 9.09%.
It’s important for applicants to closely review the terms of any potential loan agreement. For example, a lender may charge a late fee when payments are not received on time, and some may have prepayment penalties that apply if a borrower pays off the loan ahead of schedule.
What Credit Score Do You Need To Get a $10,000 Personal Loan?
A consumer’s credit score is a three-digit number that a lender will reference to determine an applicant’s creditworthiness. Although some specialized, industry-specific credit scoring models might vary slightly, the currently accepted scale ranges from 300 to 850. Your credit score is calculated largely based on your credit history because past consumer behavior tends to be a reasonable indicator of future performance.
Transunion, one of the three primary credit reporting agencies or bureaus, summarizes credit scores as follows:
• 300 to 600: Very Poor
• 601 to 657: Poor
• 658 to 719: Fair
• 720 to 780: Good
• 781 to 850: Excellent
No universally accepted or standard credit score needed for getting a personal loan. Keep in mind that $10,000 represents a larger than average personal loan amount, which recently has varied from $5,000 to $7,500 among different lenders. Because lenders recognize the increased risks associated with larger amounts, they are much more likely to scrutinize an applicant’s credit history and might boost the interest rates accordingly.
Can You Get a $10,000 Personal Loan With Bad Credit?
Lenders that provide personal loans usually have internal policies and guidelines pertaining to what they deem as bad credit and any limitations or thresholds. Fox Business recently reported that borrowers seeking a $10,000 loan “typically need a score of 620.”
To summarize, applicants with bad credit that are seeking to secure a loan in the $10,000 range may have significantly fewer options and could expect to encounter APRs of 20% or more.
How Long Does It Take to Get a $10,000 Personal Loan?
Personal loans are known for offering fast processing — or funding — times, particularly among online lenders. Many lenders today offer same-day or next-day funding of personal loans. Applicants should be properly prepared with the documentation necessary to confirm their identity, address, and income, as well as current bank statements.
Requirements for a $10,000 Personal Loan
Requirements will vary across lenders. However, qualifying for a $10,000 personal loan typically requires a credit score that exceeds 600, an active checking account that facilitates electronic transactions, and a steady, verifiable income source.
Top $10,000 Personal Loan Lenders
| Lender | Minimum Credit Score | APR Range | Loan Amounts |
|---|---|---|---|
| SoFi | 680 | 4.99% to 18.13% | $5,000 to $100,000 |
| LightStream | 660 | 2.49% to 19.99% | $5,000 to $100,000 |
| Marcus | N/A | 6.74% to 19.74% | $3,500 to $40,000 |
| Upgrade | 580 | 5.94% to 35.97% | $1,000 to $35,000 |
| Discover | 660 | 5.99% to 24.99% | $2,500 to $35,000 |
The Takeaway
If you’re considering a personal loan, it’s a good idea to take the time to compare the various options available, as the market is competitive. Those with less-than-perfect credit are likely to encounter significantly fewer choices when seeking a $10,000 loan and may receive offers with high interest rates and fees.
SoFi Personal Loan rates are competitive with other lenders in today’s market. With fixed rates and a variety of terms to fit many budget constraints, a personal loan from SoFi might work for you.
Check your personal loan rate at SoFi
FAQ
What is the monthly payment on a $10,000 personal loan?
The monthly payment on a $10,000 personal loan will fluctuate based on your credit score, the loan’s interest rate and fees, and the term of the loan, among other factors.
Do I need at least a 620 credit score to get a $10,000 loan?
There is no formal minimum credit score needed for getting a personal loan. Different minimums may apply across the various institutions that offer personal loans in the $10,000 range. Those with a 620 credit score are likely to find some options for a $10,000 personal loan; however, the interest rates and fees may be high.
How long will it take to get a $10,000 loan?
Fast-funding options including same-day and next-day loans are common in today’s personal loan market. As long as you are prepared with some basic documentation that verifies your identity, address, and income, rapid approval and funding may be available.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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Source: sofi.com