In the financing world, personal loans are unique in that the funds aren’t tied to a specific purpose. A personal loan offers freedom and flexibility to spend your funds as you see fit, with few exceptions.
With the extra funds a large personal loan provides, you could cover higher-cost expenses like a single, substantial expense or several smaller debts consolidated into one large one. For example, If you plan to purchase real estate, which could be a large purchase, you might choose to finance it with a personal loan.
Here’s a breakdown of large personal loans and how they work.
What Is a Large Personal Loan?
A large personal loan is exactly what it sounds like – a loan for a lot of money. It’s a form of credit that can be used to make large purchases or consolidate other high-interest debts. Personal loans generally have lower interest rates than credit cards and are sometimes used to consolidate high-interest debt.
Let’s start with the basics, i.e., a personal loan. A personal loan is defined as a set amount of money borrowed from a lending institution. Unlike a mortgage loan or auto loan, which is used for a specific purpose, funds from a personal loan can be used to pay for a variety of expenses such as medical bills, K-12 private education costs, or to consolidate multiple debts. Typically, you can’t use a personal loan for business expenses or higher education tuition.
Recommended: What Are Personal Loans Used For? And How to Apply
How Do Large Personal Loans Differ From Other Personal Loans?
Personal loans function the same no matter their size because they are borrowed sums of money that are paid back with interest. This is true regardless of the amount of money borrowed.
However, there are some differences between larger personal loans and their smaller counterparts depending on the lender you choose.
| Small Personal Loans | Large Personal Loans |
|---|---|
| Loan amounts approximately $1,000 to $5,000 | Loan amounts approximately $50,000 to $100,000 |
| Including fees, may not be cost effective compared to larger loans | With good to excellent credit scores, applicants may qualify for low interest rates |
| Typically have shorter repayment terms | Repayment terms are typically longer |
Average personal loan interest rates may change depending on the size of the loan.
When Is a Large Personal Loan a Bad Idea?
A large personal loan may be a bad idea if you already struggle with your current debts or monthly expenses.
When considering financing, it’s important to know both the risks and benefits of a personal loan. Whether a loan is a right choice for you depends on your unique financial situation.
If you fall behind on payments, your credit score could be negatively affected. If you miss enough loan payments, your large personal loan may go to a collections agency. Some lenders will charge off a debt, meaning they gave up on being repaid, but you’re still legally responsible for the debt.
In the right situation, however, a large personal loan can be helpful. If you’re approved for the loan, you’ll have the funds to make a big purchase and can repay it over time. Those smaller, monthly installments mean that the burden is more manageable.
What Are Common $100,000 Loan Qualification Requirements?
Typically, lenders have stricter requirements to qualify for a large loan than one with a smaller limit.
Credit Score
Generally, you need a minimum credit score of 720 to qualify for a $100,000 loan. However, it’s ideal to have a score of 750 or above. Depending on your score, your lender may offer you varying loan terms.
Checking your credit report before applying for any loan is a good idea. You will be able to find any errors or discrepancies and have an opportunity to correct them before you begin applying for a loan.
Checking your credit score counts as a soft inquiry and doesn’t negatively impact your credit score. The Fair Credit Reporting Act guarantees you access to one free credit report from each of the three major credit bureaus annually. You can find yours at AnnualCreditReport.com .
Recommended: Does Checking Your Credit Score Lower Your Rating?
Employment Status
One of the factors your lender will consider is your employment status. They want to see how much income you earn and if you have the resources to repay the loan. In addition, the lender wants to be assured of your job stability. It may be a good idea to avoid making any sudden career changes while you’re applying for a loan.
Debt-to-Income Ratio
Your debt-to-income ratio (DTI) is a number that compares the total amount of debt you owe per month to your monthly earnings. You can find yours by taking your total recurring monthly debt and dividing it by your gross monthly income. Your recurring debt includes your mortgage, student loans, and other loans, and your gross income is everything you earn before taxes or other withholding.
Lenders use this number to help them predict a borrower’s ability to repay current and future debt. In general, lenders look for a DTI under 36%, but borrowers with a higher DTI may be approved if they are well qualified in other areas.
What Is the Application Process for a Large Personal Loan
Getting approved for a personal loan is a multi-step process. Different lenders may have different processes, but typical steps are as follows.
Compare Rates
Some lenders may offer loan prequalification. This allows you to see, based on a soft credit check, potential interest rates and terms you might qualify for. It can be a good way to compare your lending options and find the best offer.
Gather Documents
Applying for a loan requires several documents. Before completing your personal loan application, collect all the paperwork you need.
Approaching this step proactively will help you streamline your application process, saving you time. It will also make it easier for your lender to review your eligibility and creditworthiness.
Personal loans usually require similar documents, no matter the lender, though. A few you should include are:
• Proof of identity such as a driver’s license or passport.
• Proof of current address such as a current lease agreement, utility bill, or proof of insurance.
• Verification of stable income and employment such as W-2s, bank statements, paystubs, or tax returns.
Waiting for Approval
Once you submit all the necessary paperwork, the last thing to do is wait. Approval times vary between lenders and may be quick or lengthy depending on how complicated the application is. Some approvals happen within a day, while others may take up to 10 days.
After your lender approves your large personal loan, you’ll receive it in the form of a lump sum. Lenders may deduct any fees, such as origination fees, before disbursing the loan proceeds. A personal loan calculator can help you estimate your loan payments.
What Can You Expect When Repaying Your Loan?
Regular installment payments begin once your large personal loan is approved and you receive the funds. The loan agreement will state the loan terms, interest rate, and what each payment will be, in addition to other details about the loan.
Can You Borrow $100,000 if You Have Bad Credit?
While it might not be impossible, borrowing a large loan with bad credit won’t be easy. Lenders tend to favor low-risk borrowers who are more likely to repay their loans on time and in full. A strong credit history provides some assurance that a borrower will do that. But poor credit or no credit at all may look to lenders like a likelihood to default.
Lenders willing to loan to borrowers with bad credit typically require different data to evaluate their application, however. For example, they might ask the borrower to show a history of utility payments or information from their bank account. Lenders may also limit borrowing amounts and charge higher interest rates to applicants with bad credit.
Additionally, borrowers with poor credit can improve their chances by opting for a secured loan, one for which they pledge collateral to guarantee the loan. This may work well for someone who struggles with credit but has assets and sufficient income to make loan payments. If the borrower defaults on the loan, the lender has the right to seize the asset pledged as collateral.
Recommended: What Is Considered a Bad Credit Score?
Are There Alternatives to Large Personal Loans?
After some research, you might decide a personal loan isn’t right for you. Or, you may struggle to get the level of financing you want. In that case, there are other options. For example, you could consider these choices if you have equity in your home or other real estate:
• Cash-out refinancing: A cash-out refinance allows you to replace your existing mortgage with a new, larger loan. After the original mortgage is paid off, you can use the difference as you like. This option works best if you have a significant amount of equity built up in your home and have a high credit score.
• Home Equity Loan: Like a cash-out refinance, a home equity loan depends on your built-up home equity. However, it is a second, additional, mortgage, rather than one new mortgage. By borrowing against your equity, the loan has collateral behind it, making it a secured loan.
• Home Equity Line of Credit (HELOC): Like a home equity loan, you use your home equity to access a HELOC. It acts as a line of credit you can tap into when you need it, and you only pay interest when you borrow. This works best for a homeowner who needs smaller amounts of money over a longer-term, rather than just one lump sum.
Recommended: How Do Home Equity Lines of Credit Work?
Does SoFi Offer Large Personal Loans?
Not every lender offers large personal loans. If you are looking for a sizable loan, consider SoFi Personal Loans, which range from $5,000 to $100,000 for eligible applicants.
By choosing personal loans by SoFi, you opt for convenience. You can complete the application online from the comfort of your home, with customer support available seven days a week.
The Takeaway
Finding the right large personal loan for your financial needs and situation may take some time, but comparing lenders is a good way to get started.
SoFi Personal Loans have competitive, fixed interest rates and don’t include any fees, even for a large personal loan. With SoFi, you only pay interest, avoiding costly origination fees and prepayment penalties. With a range of low rates available to you, find out your personal loan rate and the personal loan fit for your needs today.
Photo credit: iStock/vladans
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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. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
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