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A personal loan can be a lifesaver. But what if you realize you should have taken out more than you did? In most cases, you can’t increase your loan after the fact. However, you may be able to take out a second personal loan.

If you want or need to borrow more, we’ll review your options, their pros and cons, and some alternatives to borrowing.

What if You Want to Borrow More in Personal Loans

If you’ve already taken out a loan but need additional funds, you might be wondering if you can add to your existing personal loan. In most cases, the answer is no. You can’t increase your loan amount, but you may be able to apply for a second loan. Technically, there’s no limit to how many personal loans you can have.

Lenders may approve a second or third loan if the borrower has paid off part of the first loan and has a history of on-time repayment. In some cases, you need to have made at least three consecutive scheduled payments on your existing loan.

To help your chances of getting approved for a new loan, it helps to understand the general process.

Considerations Before Applying for a New Personal Loan

If you’re looking into adding to an existing personal loan, you’re probably already familiar with the basics. While there are different types of personal loans, they all typically have lower interest rates than credit cards. According to the Federal Reserve, the average APR for personal loans was 8.73% as of September 2022, compared to the typical credit card interest rate of 16.65%.

Common uses for personal loans include covering medical bills, paying for home repairs, and consolidating debt. Plus, personal loans are widely available from a variety of sources, from banks and online lenders to credit unions and nonprofits.

But debt is still debt. Increasing debt can have negative consequences: lowering your credit score, raising your risk of defaulting, and adding to general financial stress. Plus, loans come with interest that accrues over time, so you are paying more for the borrowed money over the life of your loan. The last thing you want to do is dig yourself into a deeper financial hole.

Before you take out another loan, take a step back and consider whether you truly need to borrow the money. Ask yourself:

•   Can you save for your goal by trimming expenses or taking on a side hustle?

•   Can you work on paying off your existing debt first?

Applying for a New Personal Loan

Of course, we’d all like to have enough savings in the bank to cover a major expense. But reality is complicated and emergencies are, by definition, hard to plan for. (Hello, surprise medical bills!)

If you’ve decided that borrowing makes sense for you, it’s possible to apply for an additional personal loan. A personal loan calculator can help you find out what interest rate and term options you may qualify for. Generally, shopping around for a loan requires only a soft credit inquiry, which doesn’t affect your credit score.

Applying with a Co-Applicant

In some cases, you may realize that your existing debt is making it hard to qualify for a new loan. But you still have another option: You may be able to re-apply with a co-applicant. If the co-applicant has a strong credit history and income, you may be able to obtain a loan or qualify for a lower interest rate together.

Once you receive the loan, both you and the co-applicant (who typically becomes the co-borrower) will be responsible for paying it off. That means if you fail to live up to your agreement in making payments, the other can be held responsible for the full amount of the loan. A co-borrower typically can’t be removed from the loan unless they die or you pay the loan off entirely.

If you still don’t qualify, the biggest help for qualifying in the future might be time. Building up a history of making debt payments on schedule, paying down other debt, and increasing your income via a new job or side gig can all turn things around.

Recommended: Getting a Personal Loan with a Co-Applicant

The Takeaway

In most cases, borrowers can’t add to an existing personal loan. However, you may be able to apply for a second loan. Eligibility requirements vary by lender, but in some cases you need to have made several consecutive on-time payments before applying for a new loan. Whenever possible, borrowers should look into cutting back on expenses or trying to increase income before taking on more debt.

SoFi Relay can help you keep track of your budget while you’re paying off debt. If you’re looking to apply for a personal loan, consider checking out the options available at SoFi. SoFi Personal Loans have absolutely no fees — no origination fees required, no prepayment fees, and no late fees.

Whether it’s your first time or you’ve borrowed before, it’s easy to apply for a personal loan with SoFi.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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Thrift Savings Plans (TSPs) are retirement plans for federal employees and members of the uniformed services. They offer the same kinds of benefits and tax advantages that private employers can offer their employees through a 401(k).

Like 401(k)s, TSPs allow savers to take out loans from their own savings. Borrowing against your retirement can be risky business, so it’s important to understand the ins and outs of TSP loans before you make a decision.

What Are Thrift Savings Plan Loans?

A TSP loan allows federal workers to borrow from their retirement savings. They must pay interest on the loan; however, that interest is paid back into their own retirement account. In 2022, interest rates were 3%, typically lower than the rate private employees pay on 401(k) loans.

Before you can borrow from your account the following must be true:

•  You have at least $1,000 of your own contributions invested in the account.

•  You must be currently employed as a federal civilian worker or member of the uniformed services.

•  You are actively being paid, as loan repayments are deducted from your paycheck.

•  You have not repaid a TSP loan in full within the last 30 days.

How Do Thrift Savings Plan Loans Work?

There are two types of TSP loans. General purpose loans may be used for any purpose, require no documentation, and have repayment terms of 12 to 60 months.

Primary residence loans can only be used to buy or build a primary residence. They must be repaid in 61 to 180 months, and they require documentation to qualify. You cannot use primary residence loans to refinance or prepay an existing mortgage, add on to or renovate your existing home, buy another person’s share in your home, or buy land only.

Recommended: A Guide to Personal Loans to Buy Land

Pros and Cons of a Thrift Savings Plan Loan

As you weigh whether or not it’s a good idea to borrow from your retirement savings, consider these pros and cons.

Pros of a TSP Loan

Chief among the advantages of borrowing from a TSP are the relatively low interest rates compared to most other loans. Consider that the average interest rate for personal loans is 9.41% according to the St. Louis Federal Reserve.

What’s more, repayment is simple, coming from payroll deductions. There is no penalty for paying back the loan early. And you don’t need to submit to a credit check to qualify for the loan.

Cons of a TSP Loan

Despite the benefits, borrowing from a TSP is often considered a last resort due to certain disadvantages.

First and foremost, when you borrow from your retirement you are removing money from your account that would otherwise benefit from tax-advantaged compounding growth.

If you leave your job with an unpaid loan, you will have 90 days to repay it. Fail to meet this deadline and the entire loan may be reported as income, and you’ll have to pay income taxes on it.

TSP loans are not reported to the credit reporting bureaus, so they don’t help you build credit.

Does a Thrift Savings Plan Loan Affect Your Credit?

TSP loans are not reported to the three major credit reporting bureaus — TransUnion, Equifax, and Experian — so they do not affect your credit score.

Recommended: How Do I Check My Credit Score Without Paying? 

How Long Does a Thrift Savings Plan Loan Take to Get?

Applying for a TSP is a relatively simple process. You can fill out an application online on the TSP website . There is a $50 processing fee for general purpose loans and a $100 fee for primary residence loans. Borrowers who are married will need spousal approval before taking out a loan.

Once the application is approved, borrowers receive the loan amount via check within eight to 13 days.

How Much Can You Borrow From a Thrift Savings Plan?

The minimum you have to borrow with a TSP loan is $1,000. Rules for determining your maximum are rather complicated. You’ll be limited to the smallest among the following:

•  Your own contributions and their earnings in your TSP.

•  $50,000 minus your largest loan during the last 12 months, if any.

•  50% of your own contributions and their earnings, or $10,000, whichever is greater, minus your outstanding loan balances.

According to these rules, $50,000 is the most you can borrow, and you may be limited to as little as $1,000.

Should You Take Out a Thrift Savings Plan Loan?

Because a TSP loan can have a lasting effect on your retirement savings, be sure to exhaust all other loan options before deciding to apply for one. If you are experiencing financial hardship or poor credit has made it hard for you to qualify for another type of loan, a TSP may be worth exploring.

Thrift Savings Plan Loan Alternatives

Before choosing a TSP loan, take the time to research other alternatives.

Credit Card

Credit cards typically carry very high interest rates. The average interest rate is around 14.56%, according to the St. Louis Federal Reserve. That said, if you use a credit card to make a purchase and pay off your debt on time and in full at the end of the billing cycle, you will not have to pay interest on your debt.

Credit cards only get expensive when you carry a balance from month to month, in which case you’ll owe interest. What’s more, the amount of interest you owe will compound. In order to carry a balance, you must make minimum payments or risk late penalties or defaulting on your debt.

Recommended: Differences and Similarities Between Personal Lines of Credit and Credit Cards

Passbook Loan

Passbook loans allow you to borrow money at low interest rates, using the money you have saved in deposit accounts as collateral. That money must remain in your account over the life of the loan. And if you default on the loan, the bank can use your savings to recoup their losses.

Signature Loan

Unlike passbook loans, signature loans do not require that you put up any items of value as collateral. Also known as “good faith loans,” signature loans require only that you provide your lender with your income, credit history, and your signature. Signature loans are considered to be a type of unsecured personal loan.

Personal Loan

A personal loan can be acquired from a bank, credit union, or online bank. They are typically unsecured loans that don’t require collateral, though some banks offer secured personal loans that may come with lower interest rates.

Loan amounts can range from a few hundred dollars to $100,000. These amounts are repaid with interest in regular installments.

Personal loans place few restrictions on how loan funds can be spent. Common uses for personal loans range from consolidating debt to remodeling a kitchen.

The Takeaway

For borrowers in a financial pinch, TSP loans can provide a low-interest option to secure funding. However, they can also have a permanent negative impact on retirement savings, so it makes sense for borrowers to explore other options as well.

SoFi offers low fixed interest rates on personal loans of $5,000 to $100,000. There are no fees required, and borrowers only pay principal and interest.

SoFi’s Personal Loan was named NerdWallet’s 2022 winner for Best Online Personal Loan overall.

FAQ

What does TSP loan stand for?

TSP stands for Thrift Savings Plan, a retirement account the federal government offers to its civilian employees and members of the uniformed services.

What is a TSP loan?

A TSP loan allows Thrift Savings Plan holders to borrow from their retirement account. Loans are repaid automatically through payroll deductions, and interest payments are made back to the account.

How long does it take to get a TSP loan?

It takes eight to 13 days to receive a TSP loan from the time of application.

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Photo credit: iStock/SDI Productions
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Not only can you get a loan while on disability, sometimes it’s crucial for a borrower’s financial wellbeing. Such personal loans, often coined “disability loans,” can be useful for bridging the gap before benefits kick in or for funding medically important purchases, like a wheelchair.

But can a personal loan impact your disability benefits? Who qualifies for such benefits, and how do you get a loan on disability? Our disability loan guide answers these personal loan questions and more.

Can You Get a Loan While on Disability?

You can get a loan on disability as long as you have the credit score and income to qualify. Lenders cannot use your disability as a reason to deny you a loan. The Equal Credit Opportunity Act (ECOA) expressly prohibits lenders from denying loans or charging higher fees because you receive help from a public assistance program.

The ECOA protection extends to all loan types, including mortgages, car loans, credit cards, student loans, small business loans, and personal loans.

What Is a Disability Loan?

While “disability loan” is a common term used throughout the industry, there is technically no such thing. Instead, applicants and lenders use the term to refer to a type of personal loan for which a person applies while waiting for or actively receiving disability benefits from the government.

Often, a disability loan more specifically refers to loans that people take out to:

1.    Cover living expenses while waiting for disability benefits to kick in.

2.    Pay for medical equipment, like wheelchairs or medication, related to the disability.

If you want to dig deeper into this kind of loan, SoFi offers a guide to What Is a Personal Loan?

Who Qualifies for a Disability Loan?

The ECOA protects consumers from being discriminated against by lenders on the basis of race, sex, disability status, and public assistance, such as Social Security Disability Insurance (SSDI). That means lenders cannot deny your personal loan application just because you’re on disability.

As with any loan, you can improve your chances of approval with a good credit score and steady source of income. That said, even borrowers with bad credit or no credit history may be able to get approved for a loan with less favorable terms.

No lender can legally deny your loan application because you are receiving government assistance. If you believe a lender is violating the ECOA guidance, you can contact the Consumer Finance Protection Bureau at (855) 411-2372.

Recommended: What Is a Share Secured Personal Loan?

SSI vs SSDI

As a person with a disability, you may be receiving Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) from the Social Security Administration (SSA) — or maybe both. Knowing which type of disability benefit you receive is important, as loans can impact those benefits differently.

Supplemental Security Income

SSI eligibility is solely based on age, blindness, or disability. Recipients do not need to have contributed to Social Security via taxes on past income. Both adults and children with a qualifying disability and limited income and resources may receive SSI.

SSI benefits kick in faster — the first full month after your claim has been accepted. Maximum monthly benefits vary based on factors like marital status and income, but they are generally lower than SSDI.

Social Security Disability Insurance

To be eligible for SSDI, you must meet the SSA’s definition of disability — and you must also have paid Social Security taxes on past earnings. (Spousal and parental contributions can also apply.)

Recipients may be more likely to need a disability loan when anticipating SSDI benefits because they don’t kick in until the sixth full month of disability. However, the SSDI benefit is worth the wait because it has a higher potential monthly payout.

How Personal Loans Affect Disability Benefits

Knowing whether you receive SSI or SSDI benefits is important if you are considering applying for a personal loan.

If you don’t spend your personal loan in the same month that you receive it, the SSA will count the remaining funds toward your SSI resource limit for the month. This will reduce your overall benefit for the next month.

These restrictions do not apply to SSDI benefits.

Recommended: The Foundation of an Unsecured Personal Loan

The SSA Process: What Is a Disability?

To earn either disability benefit from the Social Security Administration, you’ll have to meet its strict definition of “disability.” Here it is in a nutshell:

Your physical or mental disability must preclude you from being able to work and must be expected to result in death or last continuously for at least 12 months. Children have separate criteria that they must meet to qualify.

To earn SSDI specifically, the SSA will also determine whether you have enough work credits (i.e., if you’ve made enough tax contributions from past income) to be eligible. If you have enough credits, the SSA will then utilize five questions to determine if you qualify:

1.    Are you working?

2.    Is your condition “severe”?

3.    Is your condition found in the list of disabling conditions?

4.    Can you do the work you did previously?

5.    Can you do any other type of work?

Head to the SSA website to learn more about qualifying for disability benefits.

The Pros and Cons of Getting a Loan on Disability Benefits

Wondering if taking out a personal loan while waiting for or receiving disability benefits is the right call for you? It can be helpful to weigh the pros and cons before applying:

Pros of Getting a Loan	Cons of Getting a Loan
You can get financial assistance to help with bills while waiting for benefits to start paying out.	Receiving a personal loan and not spending all the money can impact your SSI benefits.
Responsibly managing a personal loan can help boost your credit score.	Personal loans carry the potential for high interest and unfavorable terms, especially if you have a low credit score.

How To Apply for a Disability Loan

On disability and need a loan? Applying for a personal loan on disability benefits should follow the same process as applying for a personal loan under any other circumstances. Typical steps include:

•   Checking your credit score: Knowing your score before you start looking for lenders can let you know the interest rate and other terms you can expect. It might also help you narrow the field of possible lenders.

•   Finding a lender: Your personal bank or credit union may offer personal loans, but you can also research online to find personal loans that offer good terms for your specific credit score.

•   Compiling your info: The application process will typically require some basic info. Having identification, income verification (paystubs or a W-2 form), and proof of address handy can be helpful.

If you’re approved, the lender will work with you to ensure you receive funds as quickly as possible.

Disability Loan Alternatives

A disability loan isn’t your only option as you wait for disability benefits to kick in. If you need money while waiting for your SSDI, consider these alternatives:

•   Disability insurance: Some employers offer short- and long-term disability insurance as part of their benefits packages. Employees without such benefits or self-employed small business owners can also purchase individual policies through a broker. Either way, this insurance can be extremely helpful should you become disabled.

•   Worker’s compensation: If your disability originated from a workplace injury, you may be eligible for compensation through this government program. Benefits vary by state.

•   Other government assistance: Disability benefits are just one way the government is set up to help you out in your time of need. You may also be eligible for unemployment benefits, the Supplemental Nutrition Assistance Program (SNAP), or similar benefits.

•   Family and friends: Family and friends may be willing to offer monetary assistance — or even temporary housing — as you learn to manage a new disability.

•   Payday loans: If you need cash fast, personal payday loans may sound like the answer. But they can have interest rates of more than 600%. Protect yourself by staying away from these predatory short-term loans.

The Takeaway

Disability loans are personal loans that help someone with a disability get by until benefits kick in. The Equal Credit Opportunity Act protects people receiving public assistance from discrimination by lenders. Before applying for a disability loan, it’s important to determine how it might impact your disability benefit eligibility — and to shop around until you find a personal loan with favorable terms.

Are you ready to take out a disability loan? You can get a personal loan through SoFi for up to $100,000, at a fixed interest rate. Unlike some other lenders, SoFi won’t charge you any origination fees or pre-payment fees. You can even check out your rate without impacting your credit score.^*

Waiting for disability benefits to kick in? See how a SoFi personal loan can help.

FAQ

What kind of loan can I get on disability?

People who receive disability benefits are eligible for the same kinds of loans as anyone else, including home loans, auto loans, personal loans, and credit cards. In fact, some people take out personal loans to cover expenses until their Social Security Disability Insurance benefits kick in.

Can you get loans on disability?

Getting a loan while on disability is possible. The Equality Credit Opportunity Act ensures that people on disability cannot be rejected for any type of loan, including a mortgage, auto loan, credit card, or personal loan, based on their disability status.

Can I get a personal loan if I’m on disability?

You can still get a personal loan while receiving disability benefits. Like any other applicant, your approval will depend on your credit score or income. A lender cannot deny a loan based on your disability status.

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Photo credit: iStock/monstArrr_

^*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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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 website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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You might be wondering how easy it is to get approved for a $5,000 personal loan. In most cases, the process is straightforward and no collateral is required — though you might pay more in interest if your credit is poor. Overall, a $5,000 personal loan is a good way to access cash for unexpected bills and necessary expenses.

Learn more about the typical terms and requirements for a $5,000 personal loan.

Pros of a $5,000 Personal Loan

A personal loan is money that you borrow from a bank, credit union, or online lender that you pay back in regular installments with interest, usually over about two to seven years. Personal loans have several advantages over high-interest credit cards, making them a good option for a variety of borrowers.

Popular uses for personal loans include consolidating debt, covering medical bills, and home repairs or renovations.

Recommended: 11 Types of Personal Loans

Flexible Terms

With $5,000 personal loans, you can choose the repayment terms to fit your budget. For example, you can opt for a longer repayment term with a higher interest rate but a lower monthly payment. Or you can choose a shorter repayment term with a lower interest rate and a higher monthly payment.

No Collateral

Most personal loans are unsecured, meaning you aren’t required to provide collateral to be approved. That said, using collateral on a personal loan can increase your approval odds, especially if your credit is poor. Doing so could result in a larger loan amount, lower interest rate, and better terms.

Fixed Payments

The interest rate on a $5,000 personal loan is usually fixed, meaning your payments will stay the same for the life of the loan. Fixed payments are typically easier to budget for.

Cons of a $5,000 Personal Loan

Small personal loans of $5,000 or so have disadvantages that should be considered before you apply.

Debt

You’ll be going into debt when you take out a $5,000 loan, which is the biggest downside. If you struggle to repay the loan, you can end up in a worse financial position than before you took it on.

Origination Fees

Personal loans can have many fees, including origination fees. This fee is separate from the interest the loan charges and has no direct benefit to you as the borrower.

Some origination fees can be high, up to 15% of the loan principal. Even just a 5% fee on a $5,000 loan is $250 — just to receive the money. Fortunately, there are ways to avoid loan origination fees.

Interest Rates

While personal loan interest rates are usually lower than credit cards’, they can cost you hundreds (or even thousands) over the life of the loan. A personal loan calculator can help you figure out the total interest you’ll pay.

Personal Loan Pros	Cons
Flexible terms: Choose the repayment terms that suit you.	Debt: Personal loans increase your debt and the risks that come with it.
No collateral: Most personal loans are unsecured.	Origination fees: Personal loans often have fees for borrowing money.”
Fixed payments: Payments stay the same for the life of the loan	Interest: You’ll be charged interest, which can cost hundreds or thousands of dollars.

Requirements for a $5,000 Personal Loan

Requirements for a $5,000 loan vary by lender. But in general, you should have at least Fair credit, which is a score of 580 or above. Lenders may also look at other factors, such as your income and your debt-to-income ratio (DTI), during the application process.

Recommended: The Credit Score Required To Get a Personal Loan

$5,000 Personal Loan Terms

Repayment terms for a $5,000 personal loan are usually in the range of two to seven years. The length of the repayment term will play a role in determining the monthly payment amount and the interest rate.

Your credit score will also affect the interest rate. For example, the average interest rate for personal loans is 6.59% for those with Excellent credit. However, if you have Fair credit, the average jumps to 15.91%.

Payment on a $5,000 Personal Loan

The payment on a $5,000 personal loan depends in large part on the length of the loan term. For example, SoFi’s personal loan calculator estimates that the monthly payment for a two-year $5,000 personal loan ranges from $224 to $252. A $224 monthly payment over two years results in your paying $5,376 total: the $5,000 principal plus $376 in interest.

Increase the loan term to seven years, and you have a much lower monthly payment of $89 to $106. However, $89 paid over 84 months comes to $7,476. That’s a whopping $2,476 in interest for the same $5,000 principal.

The higher interest paid is due to both the longer repayment term and the higher rate that longer repayment terms usually come with.

Top $5,000 Personal Loan Lenders

There are many online lenders that offer $5,000 personal loans. Personal loan amounts can range from $1,000 up to $100,000. However, the requirements will be different for larger loan amounts. For instance, the credit score required for a $10,000 personal loan is 640, compared to 580 for a $5,000 loan. For a $50,000 personal loan, the credit score requirement jumps to 660.

Here are seven of the top lenders we find by searching online, along with their terms for a $5,000 loan:

1. LightStream

Lightstream is a division of Truist bank and offers some of the best APRs for $5,000 personal loans. APRs can be as low as 3.99% — the lowest on this list. While the exact APR will vary with your credit, Lightstream has some of the lowest fees overall, charging no fees to use its services. There is also a 0.50% discount for enrolling in autopay.

2. Discover

Discover offers personal loans with competitive rates and flexible terms. APRs on Discover personal loans range from 5.99% to 24.99%. Terms range from 36 to 84 months with no origination fees.

3. Marcus by Goldman Sachs

Marcus by Goldman Sachs offers personal loans of up to $40,000. APRs start at 6.99%, with repayment terms ranging from 36 months to 72 months. There are no origination fees, and there is a 0.25% discount for enrolling in autopay.

4. Best Egg

Best Egg offers personal loans of up to $50,000 and competitive interest rates. Loan terms are from 36 months to 60 months. However, Best Egg does charge an origination fee of at least 0.99% of the loan amount.

5. PersonalLoans.com

PersonalLoans.com does not lend money itself but instead connects you with lenders in its network or another third-party lender network. Personal loans from its lenders have competitive APRs, ranging from 5.99% to 35.99%. It has flexible repayment terms as brief as three months and up to 72 months. Most of the lenders in its network charge origination fees.

6. CashUSA

CashUSA offers personal loans of up to $10,000 with a competitive APR that starts at 5.99%. It has flexible payment terms which start at three months and can be as long as 72 months. Applying for a personal loan on CashUSA.com is simple, and you can have money as soon as the next day.

7. Happy Money

Happy Money offers the Payoff Loan, branded specifically as a personal loan meant for paying off credit card balances. Given that credit cards can have high APRs, Happy Money’s starting APR could be a good choice. Its term is from 24 to 60 months, and origination fees are included in the APR.

Lender	APR	Term	Origination Fee
LightStream	3.99% – 19.99%	24 – 84 months	$0
Discover	5.99% – 24.99%	36 – 84 months	$0
Marcus by Goldman Sachs	6.99% – 19.99%	36 – 72 months	$0
Best Egg	5.99% – 35.99%	36 months or 60 months	0.99% – 5.99% of loan amount
PersonalLoans.com	5.99% – 35.99%	3 – 72 months	1% – 5% of loan amount
CashUSA	5.99% – 29.99%	3 – 72 months	Varies
Happy Money	5.99% – 24.99%	24 – 60 months	Included in APR

The Takeaway

Many lenders offer $5,000 personal loans with competitive APRs and flexible terms. However, you are still charged interest and often additional fees, so you’ll want to shop around for the best deal you qualify for.

If you find yourself in need of quick cash, consider SoFi Personal Loans. SoFi has a competitive APR that starts at 6.99% for loans up to $100,000. There are no origination fees or hidden fees of any kind.

You can check your rate in 60 seconds without affecting your credit score, and get your loan funded as soon as the same day you’re approved.

FAQ

What credit score do I need for a $5,000 personal loan?

In most cases, the credit score needed for a personal loan is at least 580, considered a Fair credit score. If your score is lower than that, your borrowing opportunities will be limited. Lenders may also look at other factors, such as your income and your debt-to-income ratio (DTI), during the application process.

How much is the monthly payment for a $5,000 personal loan?

The amount you pay per month depends on the loan amount, the APR, and the length of the loan. You can opt for a longer repayment term with a higher interest rate but a lower monthly payment. Or you can choose a shorter repayment term with a lower interest rate and a higher monthly payment.

How can you get a $5,000 personal loan?

Online lenders tend to offer your best chance of approval, especially those that work with lender networks. This is because you can apply to more than one lender at a time.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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A personal loan is a strong option when you need to borrow money to cover a medical bill or home repair, or to consolidate debt. But before you decide that a personal loan will meet your needs, it’s important to understand the advantages and disadvantages that come along with them.

We’ll do a deep dive into interest rates, borrowing limits, fees and penalties, and lender requirements to get the best terms.

What Are Personal Loans?

A personal loan is money that you borrow from a bank, credit union, or online lender. It’s an installment loan, so you agree to repay the loan principal and interest at regular intervals — usually monthly.

When you apply for a personal loan, your lender will run a credit check, which will help determine your interest rate. Generally speaking, borrowers with higher credit scores have a better chance of being offered lower interest rates. The higher your interest rate, the more money it will cost you to borrow.

Recommended: 11 Types of Personal Loans

The Benefits of Personal Loans

Personal loans are a flexible option for borrowers looking to accomplish a variety of goals, from consolidating other debts to remodeling their home. Here’s a look at some of the advantages.

Comparatively Low Interest Rates

Personal loans offer relatively low interest rates when compared to other methods of short-term borrowing. The average personal loan interest rate is 9.41% according to the St. Louis Federal Reserve. Credit cards by comparison have average interest rates of 14.56% and up, and a personal line of credit can have interest rates that vary between 9.30% and 17.55%.

Some forms of predatory short-term lending, such as payday loans , can charge the equivalent of many times these rates to borrow.

	Average Interest Rates
Personal Loans	9.41%
Credit Card	14.56%
Personal Line of Credit	9.30% – 17.55%

Comparatively High Borrowing Limits

Small personal loans are usually for amounts of $3,000 or less. (Smaller loans often come with lower interest rates.) However, some lenders will offer loans of up to $100,000 to cover major expenses and life events, which may be quite a bit more than other credit options.

The average credit limit for credit cards, by comparison, is $30,365, according to credit reporting bureau Experian. Personal lines of credit have a range of limits from $1,000 to $100,000, similar to the range offered by personal loans.

	Borrowing Limits
Personal Loans	Up to $100,000
Credit Card	Average limit of $30,365
Personal Line of Credit	Up to $100,000

Personal Loans Can Be Used for Many Things

Some types of loans must be used for designated purposes. Auto loans must be used to buy a car, and a mortgage must be used to finance a house. Personal loans, on the other hand, have few restrictions on how you must use the money, and you can generally use it for any purpose.

Recommended: Common Uses for a Personal Loan

No Collateral Necessary

Unsecured personal loans are the most common type of personal loans. They are not backed by collateral, such as your car or home.

Some personal loans are secured, and require you to borrow against the equity in your personal assets, like a home or your savings. With a secured vs. unsecured personal loan, the lender can seize your property if you default, selling it to recoup their loss. As a result, secured loans present less risk for the lender and often come with lower interest rates than unsecured loans.

Simple to Manage

You can use personal loans to consolidate other, higher-interest debt, for example, by paying off the balance on several high-interest credit cards. A single personal loan can offer cheaper interest, lowering the cost of your debt over time. And it may be easier to manage, since you only have one bill to pay each month.

Can Help Building Credit

Your lender will likely report your personal loan and payment history to the three credit reporting bureaus — Experian, TransUnion, and Equifax. In fact, 35% of your FICO® score — the most commonly used credit score — is determined by your payment history. You can build up a strong credit history over time merely by avoiding late or missed payments.

The Disadvantages of Personal Loans

Without properly weighing the potential disadvantages, personal loans can be a bad idea for some borrowers.

Higher Interest Rates Than Some Alternatives

Personal loans may carry higher interest rates than some alternatives. For example, if you’re looking to remodel your home, you might consider taking out a home equity loan or a home equity line of credit (HELOC).

A home equity loan uses your home as collateral. As of June 2022, the average interest rate on a 10-year fixed home equity loan was 6.02%. A home equity line of credit, is a revolving credit line that uses your home as collateral. Borrowers with good credit can qualify for interest rates ranging from 3% to 5%. Those with below-average credit are likely to receive interest rates that range from 9% to 10%.

Fees and Penalties

Some lenders may charge fees and penalties in association with personal loans. For instance, an origination fee helps pay for the processing of your loan application and is usually equal to a percentage of the loan amount. Fortunately, it’s possible to avoid origination fees.

Lenders may also charge prepayment penalties if you pay off your loan ahead of schedule, to make up for profit they are losing on interest payments.

Can Increase Debt

Take out a personal loan only if you are sure you can pay it off and it makes financial sense. For example, a home remodel could increase the value of your home, and consolidating credit card debt could save you money in interest payments.

Avoid taking out a loan that is for more money than you need to avoid the risk of taking on more debt than necessary.

Alternatives to Personal Loans

In addition to personal loans, you may wish to explore other forms of credit that can help you finance big and small expenses.

•  Credit cards allow users to make purchases using credit, which they pay back at the end of each billing cycle. Borrowers must make minimum payments and owe interest on any balance they carry from month to month.

•  A personal line of credit (PLOC) is similar to a credit card. It allows you to tap your credit line as needed. Credit is replenished when you pay back your loan.

•  A home equity loan uses a borrower’s home as collateral. The value of the property determines the loan amount.

•  A home equity line of credit is a revolving source of credit, like credit cards and PLOCs. As with home equity loans, HELOCs use the borrower’s home as collateral.

Exploring Personal Loans Further

A personal loan is a type of installment loan, usually unsecured, that allows you to use the money for a variety of unexpected expenses. Borrowers with higher credit scores have a better chance of being offered lower interest rates. This is important because the higher your interest rate, the more money it will cost you to borrow. Also, some lenders charge extra fees and penalties.

If you’ve explored your options and decide that a personal loan is right for you, it’s wise to shop around to find the right loan. Consider personal loans from SoFi, which offers loans of up to $100,000 with no fees required. Check SoFi personal loan rates and your own personal loan rate. borrowers may receive funding as quickly as the same day it is approved.

Compared with high-interest credit cards, a SoFi Personal Loan is simply better debt.

FAQ

What is a personal loan?

A personal loan is a loan you receive from a bank, credit union, or online lender. Borrowers pay back the principal and interest in regular installments.

What can you use a personal loan for?

Personal loans have few usage restrictions. You can use them for everything from covering an unexpected medical bill to remodeling your kitchen.

How much money can you get from a personal loan?

Personal loan amounts may range from a few hundred dollars up to $100,000 from some lenders.

Photo credit: iStock/Anchiy
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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 website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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