Where to get a $5K loan

A $5,000 personal loan can be useful if you need to borrow money to consolidate high-interest debt or fund a large purchase

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Many lenders offer $5K loans — personal loans with a fixed rate that you repay over time. Learn where to get a $5K loan.  (iStock)

If you need to borrow cash to cover home improvement projects, medical bills, debt consolidation, or an unexpected expense, personal loans are a popular choice. Many people look to personal loans when they want to fund a large expense because they typically come with lower interest rates than other financial products, like credit cards. 

Here’s where to get a $5K personal loan and how to qualify for one.

Where to get a $5K loan

Borrowing $5,000 is fairly common, so you likely won’t have any problems finding a lender who offers loans for this amount. Interest rates, terms, and fees can vary widely depending on where you get a $5,000 loan, so it’s important to shop around and compare lenders to ensure you’re getting the best rate and loan terms for your situation.

Online lenders

Online lenders are convenient because they typically allow you to complete the entire borrowing process online, from application to funding. They also often offer quick funding — often within a business day or two of approval. Interest rates tend to be lower with online lenders since they don’t have the costs associated with maintaining physical branches.

Visit Credible to see your prequalified personal loan rates from various lenders, without affecting your credit.

Banks and credit unions

If you have an existing relationship with a traditional bank that offers personal loans (not all do), you may be able to get a better deal on your interest rate. You may also find better rates and terms with a credit union, since they’re not-for-profit organizations. But you’ll need to be a member of the credit union before you apply for a loan from one.

How much will a $5K loan cost?

How much a $5,000 loan costs depends on the interest rate and repayment terms. Let’s say you’re taking out a $5,000 loan with a 10-year repayment term. Lender A offers you a 9% interest rate and Lender B offers you an 11% interest rate. The graphic below shows how even an interest rate difference of one or two percentage points can make your loan more expensive:

When it only takes a few minutes to rate shop online, it makes sense to see what different lenders can offer. You can also use a personal loan calculator to get a sense of what your monthly payments on a $5K loan might be.

How to get a $5,000 loan with bad credit

Even if you have bad credit, it’s possible to get a $5,000 loan. Some lenders offer loans specifically for people with bad credit, but you’ll probably get a higher interest rate than someone with good to excellent credit. When you apply for a loan, lenders look at your credit score. A lower credit score indicates that you might have trouble repaying your loan, so lenders charge a higher interest rate to offset their risk of lending you money.

Some lenders may base your rate on more than just your credit score. They may also look at your income, employment, debt-to-income ratio, and more. 

Take these steps to increase your chances of getting a $5,000 loan:

  • Improve your credit. Your credit score indicates to lenders how you’ve managed your finances over time. Paying down outstanding debt and making all your bill payments on time can help boost your credit score, making it easier to qualify for a loan with better rates.
  • Get a cosigner. One way to boost your approval odds or get a lower rate on a loan is to add a cosigner with good or excellent credit. Because your cosigner is responsible for making the loan payments if you aren’t able to, adding one to your loan application makes you seem less risky in a lender’s eyes.
  • Shop around. Compare rates and loan terms from at least three to five different lenders to make sure you’re getting the best loan for your financial situation.

Credible makes it easy to compare personal loan rates from various lenders, so that you can find one that works best for your needs.

What to consider when comparing $5,000 loans

If you need a $5,000 loan, it pays to shop around. Here are some things you’ll want to consider as you compare your loan options. 

Loan amount

Not all lenders offer loans for $5,000, so be sure to shop around for a lender that offers $5,000 loans. When you apply, you may be tempted to ask for more than $5,000. But keep in mind that you’ll pay interest on the amount you borrow, so it’s important not to borrow more than you actually need. 

Interest rates

The interest rate is the cost you’ll pay to borrow money, expressed as a percentage. Interest rates are generally higher for people with poor credit than those with high credit scores. Even people with identical scores may qualify for different rates. The lower your interest rate, the lower your monthly payment will likely be. So, it’s a good idea to compare rates with different lenders to find the best one for your situation. 

Repayment terms

Generally, the longer a loan’s repayment term, the lower your monthly payment will be. On the flip side, the shorter your term, the higher your payments may be. But you’ll pay less interest and your loan will be paid off sooner. If you can make room in your budget for higher monthly payments, shopping for a loan with a shorter term is best.

Fees and total cost

Some lenders charge fees that add to the overall total cost of your $5,000 loan, such as application fees, origination fees, late payment fees, or prepayment penalties. When deciding on a lender, look at which fees it charges, if any, so you know what the total cost of your loan will be.

Personal loan FAQs 

Here are answers to some frequently asked questions about personal loans.

What is a personal loan?

A personal loan is a fixed-rate installment loan offered by banks, credit unions, and online lenders. Many personal loans are unsecured, meaning you don’t have to put up collateral in order to receive the loan. You repay whatever amount you borrow, plus interest, in fixed amounts over a set period of time (typically 12 to 48 months).

What is the monthly payment on a personal loan? 

Each personal loan has a predetermined monthly payment amount, which depends on how much you borrow, the interest rate, and the length of your repayment term. You can use a personal loan calculator to estimate your monthly payment based on the amount you want to borrow and the interest rate.

What are personal loan fees? 

Many loans come with fees. Some common fees you’ll see when taking out a personal loan include an origination fee for disbursing the loan, late payment fees, and a prepayment penalty fee for paying off your loan early. 

What are personal loan repayment terms? 

Depending on your individual financial situation, you’ll want to look at repayment terms closely. For example, a shorter loan term, like a three-year term, would have a lower interest rate but higher monthly payment. If you wanted a lower monthly payment in order to keep your budget more flexible, you could opt for a lengthier loan term, like seven years. Typically, the longer the loan term, the higher the interest rate.

What is personal loan principal and interest? 

The principal is the total amount you borrow, but this isn’t the total amount you pay on the loan because it doesn’t include interest.

The interest is the total amount you’ll pay to the lender for borrowing money. This is different from the annual percentage rate, which is the total cost of borrowing money, including both interest and fees. When comparing lenders, look at the APR to get a more accurate picture of how much a loan will cost.  

To see what rates you may qualify for, use Credible to compare personal loan rates from various lenders.