How much will you pay for a $40,000 personal loan?

Whether you need to consolidate credit card debt, pay for a medical procedure, or cover another major personal expense, a personal loan might be a good option.

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as "Credible" below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

If you’re looking for a $40,000 personal loan, be sure to compare rates and terms from as many lenders as possible.  (iStock)

Whether you need to consolidate credit card debt, pay for a medical procedure, fund a home improvement project, or cover another major expense, a personal loan might be a good option. If you decide to take out a large personal loan — such as a $40,000 personal loan — it’s important to carefully consider your lender options to find a loan that best suits your needs. 

Here’s what you should know before getting a $40,000 personal loan. 

Credible makes it easy to compare personal loan rates from multiple lenders.

How much is the monthly payment on a $40,000 personal loan?

How much you’ll pay for a $40,000 personal loan mostly depends on your credit, the repayment term you choose, and the interest. 

Generally, the higher your credit score, the lower the interest rate you might qualify for — which means you’ll pay less in interest over the life of your loan.

For example, here’s how credit scores affected average personal loan interest rates and payments offered to borrowers applying for three-year personal loans through the Credible marketplace in October 2021:

  • 720 to 779 — Borrowers with credit scores in this range were offered an average APR of 12.30%. If you took out a $40,000 loan at that rate with a three-year term, you’d pay $8,035 in interest over the life of the loan, and your payments would be $1,334 per month.
  • 640 to 679 — Borrowers with scores in this range received an average APR of 23.97%. On a $40,000 personal loan with a three-year term, you’d pay $16,473 in total interest charges and have a payment of $1,569 per month.
  • 600 to 639 — Borrowers with these credit scores were offered 29.41% APR. On a $40,000 personal loan with a three-year term, you’d pay $20,666 in total interest charges and have a payment of $1,685 per month.
  • 599 or lower — Borrowers with low credit scores in this range were offered APRs that averaged 32.16%. On a $40,000 personal loan with a three-year term, you’d pay $22,846 in total interest with a monthly payment of $1,746.

As you can see, your credit score can make a huge difference in how much a personal loan will cost you overall. If you decide to take out a personal loan, it’s a good idea to consider how much that loan will cost you — this way, you can prepare for any added expenses. 

A personal loan calculator can help you understand how different interest rates and loan terms will affect your monthly payment amount and overall cost.

Where to get a $40,000 personal loan

Different types of lenders offer personal loans, from banks and credit unions to online lenders. Your personal financial situation and needs will help determine which type of lender is the right choice for you. 

Online lenders

Online lenders can be one of the most convenient options for getting a loan. You can often apply in just a few minutes, and will likely get a quick approval decision. If you’re approved for an online personal loan, you can generally expect to get your funds within five business days — though some lenders will fund approved loans as soon as the same or next business day

If you decide to take out a personal loan, be sure to consider as many lenders as possible to find the right loan for you. An online platform like Credible makes this easy — you can compare your prequalified rates from these and other partner lenders in minutes.

  • LendingClub is a peer-to-peer lending marketplace that offers loans of up to $40,000. You can apply for a LendingClub loan with a co-borrower, and this could be a good option to consider if you have less-than-perfect credit. 
  • LightStream offers some of the lowest interest rates around for borrowers with good credit, and you may be able to get your loan funded within one business day.
  • Marcus provides personal loans of up to $40,000 with loan terms ranging from three to six years. You may also qualify to defer a monthly payment after making 12 or more consecutive on-time payments.
  • Payoff specializes in funding loans to help borrowers consolidate high-interest credit card debt. You can borrow up to $40,000 to pay off your credit cards, and loan terms range from two to five years.
  • Prosper is a peer-to-peer lending platform where you can borrow up to $40,000 from peer investors. Loan terms of three or five years are available.
  • SoFi offers competitive rates to borrowers who have good credit or better. You can borrow up to $100,000, and loan terms range from two to seven years.
  • Upgrade may approve borrowers with credit below 600, so it could be an option if you have bad credit. With Upgrade, you can borrow up to $50,000, and loan terms range from two to seven years.
  • Upstart may approve borrowers with no credit or less-than-perfect credit. Loans of up to $50,000 are available with loan terms ranging from three to five years. 

Banks and credit unions

Banks and credit unions can be another option for getting a $40,000 personal loan. Some banks and credit unions also offer online loan applications — though in some cases, you might need to apply in person at a local branch.

If you already have an account with a bank, you might be able to qualify for a rate discount if you also take out a personal loan with them. But keep in mind that you might get a better rate and more favorable terms on a credit union loan since credit unions are not-for-profit organizations. You’ll need to meet certain criteria in order to join a credit union.

Credible makes it easy to compare your prequalified rates by filling out just a single form.

How to apply for a $40,000 personal loan 

If you’re ready to apply for a $40,000 personal loan, follow these four steps:

  1. Check your credit. Lenders will review your credit report and scores to make a decision on your application and interest rate. It’s a good idea to check your credit before you apply to make sure it’s in good shape. You can use a site like AnnualCreditReport.com to review your credit reports for free. If you find any errors, dispute them with the appropriate credit bureaus to potentially boost your credit score.
  2. Compare lenders and pick a loan option. Be sure to compare as many lenders as you can to find a loan that’s right for you. Consider not only loan amounts and rates but also repayment terms and any origination fees charged by the lender. After you’ve compared lenders, choose the loan option that works best for you.
  3. Complete the application. Once you’ve chosen a lender, you’ll need to fill out a full application and submit any required documents, such as tax returns or pay stubs.
  4. Get your funds. If you’re approved, the lender will have you sign for the loan so the funds can be sent to you. The time to fund personal loans is usually about one week — though some lenders will fund approved loans as soon as the same or next business day.

Before you apply for a personal loan, remember to shop around and compare as many lenders as possible. This way, you can find a loan that suits your needs.

What credit score do you need for a $40,000 personal loan?

To qualify for a personal loan, you’ll generally need at least a fair credit score — usually 620 or higher. But keep in mind that lenders might have more stringent credit requirements if you’re looking to borrow as much as $40,000 through an unsecured personal loan.

Besides affecting your ability to get approved, also remember that your credit score will affect your interest rate — the higher your score, the more likely you’ll land a better interest rate. You’ll typically need good to excellent credit to qualify for the lowest rates available.

Personal loan FAQs

If you have questions about loan requirements and what you can use a personal loan for, here’s what you need to know. 

Can you get a personal loan with bad credit?

Yes, there are several lenders that work with borrowers who have bad credit. But it might be difficult to qualify for a personal loan amount as large as $40,000. 

If you’re struggling to get approved, consider applying with a cosigner to improve your chances. Not all lenders allow cosigners on personal loans, but some do. Even if you don’t need a cosigner to qualify, having one could help you get lower interest rates than you’d get on your own.

What are the requirements for a personal loan?

Requirements to qualify for higher loan amounts will vary between lenders. But there are some common eligibility criteria that you’ll likely come across, including:

  • Good credit — To qualify for a personal loan as large as $40,000, you’ll typically need good to excellent credit.
  • Verifiable income — Lenders want to see that you can afford to repay the loan, which means you’ll need to provide information about your income as well as documentation to verify it. For example, you might need to submit pay stubs or tax documents.
  • Low debt-to-income ratio — Your debt-to-income (DTI) ratio is a percentage that shows how much of your monthly income goes toward debt payments. Lenders will check your DTI ratio to make sure you have enough income to cover the new loan payments on top of your other commitments — in general, lenders like to see that your DTI ratio is below 40%. You can calculate your debt-to-income ratio by dividing your total monthly debt payments by your monthly income.

Keep in mind that lenders might also have other requirements to qualify for a personal loan. Be sure to double-check with the lender before you apply, so there aren’t any surprises.

What can a personal loan be used for?

You can generally use personal loans for almost any personal expense, such as a home improvement project, medical costs, or debt consolidation. 

But some lenders might impose certain restrictions, so be sure to read the fine print before borrowing. For example, you often can’t use personal loan funds for education or business expenses.

If you’re ready to find your $40,000 loan, remember to do your research and compare as many lenders as possible. This way, you can find a personal loan with terms that work for you. This is easy with Credible — you can see your prequalified rates from multiple lenders in minutes.

How do personal loans compare to credit cards?

A personal loan might be a better option than a credit card if you need to borrow $40,000. This is because the interest rates on personal loans tend to be lower compared to credit card rates

The average interest rate on three-year personal loans of all sizes that were offered through the Credible marketplace was 11.34% in February 2021 while the average rate for a new credit card was 16.13% APR as of March 31, 2021. 

If you took out a three-year personal loan with the average rate of 11.34%, you’d pay $7,376 in interest over time. In comparison, a $40,000 credit card balance paid over three years with a 16.13% APR would cost $10,719 in interest — assuming you charge nothing else to the card. 

Also, keep in mind that personal loan rates are fixed, which means you’ll have a set monthly payment and future payoff date. This can help keep you from falling into the long-term debt cycle that sometimes happens with credit cards.