Taking out any loan requires thoughtful planning and consideration but obtaining a personal loan of $50,000 or more requires particular attention.
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Most personal loans range from a few hundred dollars to tens of thousands. Because you’re looking for a loan at the high end, loan requirements will be more stringent, and you may have to provide more documentation than with a smaller loan.
Some characteristics of a personal loan you should understand:
You can get a personal loan for almost anything. Unless you’re specifically requesting a personal loan to consolidate debt, you can usually use the loan for anything from vacations to medical expenses to redecorating your guest room.
Personal loans are often cheaper than credit cards. Most personal loan rates are lower than what you’ll get on a credit card. Many people opt to use personal loans to consolidate debt because it can lower monthly payments and make it easier to pay down debt fast.
A personal loan and line of credit are not the same. While a personal loan and a line of credit have similar functions, there are differences. A personal loan is a one-time payout. You can access that loan amount in a lump sum, and then you repay the total loan. A line of credit lets you access a fund repeatedly. Once you repay what you borrow you can use it again. You borrow as much or as little as you need. You simply need to pay back the line of credit as agreed.
Where to get a $50,000 loan
There are a few places to apply for a large personal loan. Three of the most common places include:
- Credit Union
- Online Lender
While banks and credit unions may be the most obvious choice for a personal lender, there are some benefits to choosing an online lender for your loan including a quicker application process and slightly less stringent qualifications.
When choosing a lender for your personal loan, make sure to do the following:
- Compare interest rates and the APR from several lenders.
- Ask potential lenders what type of loan fees they charge.
- Read reviews of personal loan lenders to get an idea of other people’s experiences.
- Consider how the lender has treated you during the research process. If they take a long time to respond or are hesitant to talk about fees, you should move on.
Qualifying for a $50,000 personal loan
All lenders have slightly different requirements, but the following information should give you a general idea of whether you’re likely to qualify.
Check your debt-to-income ratio. Most lenders prefer a total debt-to-income ratio of 36 percent or less, according to the Consumer Financial Protection Bureau. Your debt-to-income ratio represents the amount of your income that’s going to pay your debt.
Your credit score. Most lenders won’t offer personal loans to individuals with a credit score under 600, though some lenders may look at scores slightly lower. If you want to qualify for a personal loan of $50,000, your credit score should be 650 or higher.
Income. Your lender will want to know you make enough money to make your loan payment each month. They’ll want to look at your income statements and credit report to ensure that you have a steady stream of income each month. If you work as a freelancer or independent contractor, you may need to provide additional paperwork to show that your average income meets the lender’s requirements.
Before applying for a loan, make sure you can comfortably afford the payments. One way to get an estimated loan payment is to use a loan repayment calculator.
For example, using the calculator, we determined that a $50,000 personal loan with an interest rate of 10.45 percent and a 60-month repayment schedule would equate to about $1,073 per month. Your total monthly payment could differ based on the interest rate, location and loan fees.
A personal loan application should be simple and quick. You’ll want to make sure you have any relevant paperwork ready once you apply. Your lender will want to see samples of your pay stubs, references, and credit report. When applying for a personal loan, remember to think about your needs and your personal interest, and that may mean waiting or taking a step back before moving forward.