Loan Maturity Date: How to Find It for a Personal Loan

Loan Maturity Date: How to Find It for a Personal Loan

The maturity date for an installment loan like a personal loan is the date on which you’ll be finished paying off your loan. It’s important to mark this day on your calendar, not only to celebrate successfully paying back your debt, but also because it can tell you important information like how much you’ll ultimately end up paying in interest.

Here’s a look at how to figure out the maturity date for your personal loan, and other important loan terms you should know.

What Is the Loan Maturity Date?

The term “maturity date” can refer to loans or investments. In investing, it refers to the day on which you’ll receive the money you invested, for example, in a savings bond or certificate of deposit (CD). You’ll get your investment back, plus any remaining interest that’s due to you.

If you’re a borrower, the maturity date of a loan is the day your lender has scheduled for your loaned funds and any interest to be paid off in full. Provided you’ve made regular and timely payments throughout the term of the loan, you’ll have no further obligation to the lender after the maturity date.

If, for whatever reason, you still have a balance after your loan maturity date, you’ll want to talk to your lender and work out a plan to pay off the remainder of your loan.

Recommended: What Is a Personal Loan?

How Does the Loan Maturity Date Work?

Your loan’s maturity date is a part of your initial loan agreement. You can find it on your loan contract. For example, say you take out a $10,000 personal loan on June 1, 2024 with a 36-month term. The loan maturity date will be 36 months later, on June 1, 2027.

It is possible to pay off your loan early before the loan maturity. This can save you money in interest payments. However, be mindful of whether your lender charges prepayment penalties. These penalties can outweigh the advantages of paying off your loan early.

Length of a Personal Loan Maturity Date

A loan term is the amount of time you’ll have to pay it off before you reach the maturity date, usually calculated in months. You can often find personal loans with terms from 12 to 60 months, and some lenders will offer loans with terms of up to seven years or longer.

The longer your term, the longer you’ll be paying interest, which generally makes these longer-term loans more expensive for borrowers. When choosing a loan, you may want to consider one with the shortest term (and closest maturity date) possible, as long as you can comfortably afford the monthly payments.

Calculating Your Loan Maturity Value

A loan’s maturity value is the sum of the principal plus all of the interest you’ve paid on the loan. The maturity value (MV) formula is:

MV = P + I

Where “P” is the principal amount of the loan and “I” is the loan’s annual percentage rate (APR).

For example, say you take out a $10,000 personal loan with a 36-month term and 12% APR. In this case P = 10,000 and I = 12%. You can use a personal loan calculator to determine how much interest you will pay on the loan over the 36-month term, then add that to the principal loan amount. Here, the equation would look like:

MV = $10,000 + $1,957.15
In this case, MV = $11,957.15

What Happens at the Personal Loan Maturity Date?

At the personal loan maturity date, you will make your final loan payment. Provided you have stayed up-to-date with all of your payments, you will have fully paid off all of your loan principal and whatever interest you owe and have no further obligation to your lender.

However, this may not be possible if you’ve fallen on hard financial times. If you think you’ll have trouble making any of your loan payments on time, it’s a good idea to reach out to your lender immediately and see if there’s anything they can do to help. They may allow you to pay at a later date.

Recommended: What Happens If You Default on a Personal Loan?

Other Important Information on the Personal Loan Agreement

In addition to maturity, you’ll find other useful information on your personal loan agreement.

Loan Principal

Your loan principal is the initial amount of money that you borrow, and it is the amount you agree to pay back with interest. So if you take out a $30,000 personal loan, the loan principal is $30,000.

The total amount of interest that you pay will be determined by the principal, as well as the interest rate. When you make a payment each month, part of the total is applied to your interest while the remainder goes to your principal. Typically, as you make more monthly payments, a larger portion of your payment each month will go toward the principal, until your loan is repaid in full on the maturity date.

Recommended: What Is an Installment Loan and How Does It Work?

Loan Interest Rates

The interest rate is the amount that your lender charges you to borrow, and it’s the main way that lenders make money. Most personal loans rates are fixed interest rates, meaning the rate will not change over the life of the loan. The average personal loan interest rate is currently 12.21%. But rates will vary depending on your credit score.

Variable rate loans, on the other hand, carry interest rates that are usually pegged to a market interest rate. As a result, they can change over the life of the loan.

There may also be hybrid situations in which a loan starts with a fixed interest rate for a period of time, after which it switches to a variable rate. If market rates have gone down, this can be a good thing for borrowers. But if they’ve gone up, a variable-rate loan could be more expensive than its fixed-rate counterpart.

Monthly Loan Payments

You’ll be able to find the amount you owe each month on your personal loan agreement. Your loan payment should be the same over the course of your loan unless you have a variable interest rate.

The Takeaway

For an installment loan like a personal loan, the maturity date is the day of the final loan payment. This date is set based on the loan’s repayment period — how long you have to repay the loan, including both principal and interest. A personal loan is typically considered to have short- to medium-term maturity, since terms generally run from a few months to seven years.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What happens if the loan is not paid by the maturity date?

If your loan is not paid by the maturity date, you’ll need to work with your lender to come up with an extended repayment plan. If your last loan payment is late or your loan is in default, you may face penalties and your credit score may be negatively affected.

What is the maturity date on a loan?

The maturity date on a loan is the date by which a borrower has agreed to pay off the loan principal and interest in full. You generally make your final loan payment on the maturity date.

When is the maturity date on a loan?

The maturity date on a loan is the date when your final payment is due. It is based on the term of your loan. If you take out a personal loan on June 1, 2024 and the loan has a 36- month term, for example, the maturity date will be June 1, 2028.


Photo credit: iStock/Pekic

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.

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.

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 .

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What Are Loans Based on Income?

What Are Loans Based on Income?

There are many different types of loans. And when you need money quickly, it can be challenging to assess the pros and cons of different options. It can also be challenging to assess which loans are right for you if you’re still building credit.

Many loans require a credit check, and your credit score may affect the interest rate and terms you are able to qualify for when borrowing a loan. But what if you have no credit or bad credit? There may be other loans available outside of personal loans from banks. Income-based loans, which evaluate your income as a primary deciding factor, may be an option to consider. These loans could give you the cash you need but also have some potential drawbacks. Here is what to know about loans based on income.

How Does a Loan Based on Income Work?

Personal loans can be used to pay for nearly any type of expense. In addition to the flexibility for use of funds, other advantages of personal loans include convenience, lower rates than credit cards (typically), and quick turnaround times. Generally, lenders will evaluate an applicant’s credit history in order to make lending decisions.

Loans based on income, also known as income-based loans, work differently. Instead of focusing on an applicant’s credit score and history, these loans take your income into account. While “income-based loans” and “loans based on income” are terms you may see when researching personal loans, these are primarily marketing terms. The companies who use these may be using income as a method of evaluating loan applications, making them an option for borrowers looking for no credit check loans.

With a loan based on income, the lender may ask for proof of income, such as a W-2, paystub, tax returns, and/or recent bank statements. You’ll also need to share personal information on the loan application, such as your address and social security number. But unlike a traditional personal loan, the evaluation may not include a credit check.

Because the lender isn’t considering credit, the terms of the loan may be different from a traditional personal loan. For example, the loan may have a high interest rate or require collateral. Collateral is when you, as a borrower, put up an item of value to back the loan in case you are unable to pay back the loan. This might be something like your car or even your house.

Whether a loan requires collateral determines whether it is a secured or unsecured loan. Both options may be part of an income-based personal loan.

Recommended: Using Collateral on a Personal Loan

Secured Loan

A secured loan is a loan that requires the borrower to put up collateral and can be an option for borrowers with poor or thin credit. These loans can take several forms:

Pawn loan. A pawnshop loan is where you put an item of value up as collateral, such as jewelry or electronics, in exchange for the loan. In addition to collateral, you’ll also have to pay the loan back with interest. If you are unable to do so, the pawn shop will then own the collateral and may sell it. Pawn loans can also be an option for those looking for no bank account loans.

Title loan. If you own your vehicle, you may be able to take out a loan for the valued amount of your car. In a title loan, you physically keep possession of your car, but the lender can hold the title of your vehicle. Interest rates for this type of loan can be very high — up to an APR equivalent of 300% — and can be risky. After all, if your income depends on your ability to drive to work, losing ownership of your car may mean that your ability to work is in jeopardy, too.

Home equity loan. If you own your home, you can borrow against the value of your home’s equity through different types of loans, including cash-out refinance, a home equity line of credit (HELOC) or a fixed-rate home equity loan. These types of loans can require a relatively lengthy approval process, and may not be appropriate if you need cash quickly, or if you need a relatively small loan.

Unsecured Loan

An unsecured loan does not require collateral. For this reason, this type of loan poses more risk to the lender. If you do not pay back the loan, the process to get back their money can take a long time, involve the legal system, and may be fruitless if you declare bankruptcy.

That’s why lenders may require a more extensive application, including performing a credit check on the potential borrower. If you, as a borrower, know that your credit history isn’t great or you are still building your credit, you may have fewer unsecured personal loan options.

Still, there may be some available. Knowing the pros and cons, reading the fine print, and having a clear plan for how to pay back the loan can be important in assessing which one is the right one for you.

Payday Loans

One type of loan that might be accessible for people with no or bad credit is a payday loan. This is usually a short-term, high-cost loan that is due on your next payday. Typically, payday loans are relatively small (generally under $500) and some states may have a limit as to how much people can borrow.

Payday loans are, like their name, due on your next payday or when you next get income. A payday loan typically has a relatively high interest rate may have fees as well. To ensure your loan is paid back, the lender may ask for a postdated check or money order. One of the problems with a payday loan is that if you can’t repay it on time and have to renew the loan, you can end up falling into the payday loan cycle. This can cause debt to snowball, and cost a lot of money in the long run.

Alternatives to Loans Based on Income

If you need money quickly, you may have some other options available. These could include:

Using a credit card or credit line. If you have access to credit, utilizing a credit card or credit line could help you through a financial rough patch. But because interest rates can be high, having a plan to pay back what you borrow or taking advantage of a card with a low APR can be a good strategy.

Borrowing from friends or family. Sometimes a loan from a friend or family member can be more flexible than borrowing from a lender. It can be a good idea to consider drafting an agreement, even if it’s relatively informal, regarding expectations, any interest agreements, and other conditions.

Selling things. Selling things you no longer need may help you raise cash quickly. Using local online marketplaces can be a quick way to unload things you’re not using and raise money.

Starting a side hustle. While it can take time to onboard onto a new job, applying for part-time jobs could be a potential long-term strategy to access more money. In the short-term, informal jobs such as babysitting, tutoring, or other work could help you raise the cash you need.

The Takeaway

Finding yourself in a financial lurch can be scary. But taking the time to weigh pros and cons of options may be helpful in choosing a sustainable path forward. Understanding the benefits and risks of loans based on income can help you assess whether this type of loan makes sense for your current financial circumstances.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.


Photo credit: iStock/Khosrork

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.

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.

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 .

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Applying for a Loan Online vs. In-Person: Comparing the Differences & Similarities

Applying for a Loan Online vs In Person: Comparing the Differences & Similarities

As you’re shopping around for the best terms and rates on a personal loan, you may wonder: Is it better to apply for a loan online or in person? While both options can lead you to securing a personal loan, the process and even the fees and rates can differ for an online loan application vs. in-person.

If you need help deciding which option to go with, this guide can help you figure out whether you should look at applying for a loan online vs. in person.

What Is an Online Personal Loan?

An online personal loan is a type of installment loan that you borrow and agree to pay back with interest. Personal loans are usually unsecured loans, which means you don’t have to put up collateral (such as a house) to be able to get the loan. Since unsecured loans pose more risk to lenders, interest rates tend to be higher compared to secured loans.

Personal loans are known for being flexible, and there are several ways to use a personal loan. You can use one to consolidate credit card debt or pay for home renovations, medical expenses, a vacation, a large purchase, or just about any other personal expense.

An online personal loan acts like a regular personal loan with the only difference being that the lender has a presence online. Online loans can come from traditional banks, or they may come from lenders who only operate online.

What Is an In-Person Personal Loan?

Getting an in-person personal loan allows you to obtain a personal loan with the assistance of a bank or credit union employee. They can help you through the process. From collecting documents to submitting your loan application, there’s a lot of attention that an employee can give you when you apply for one of the different types of personal loans.

Applying for a Loan Online vs In-Person

Applying for an online personal loan has never been easier or faster. Technology automates much of the process so you can know what the lender’s decision is fairly quickly — often on the same day.

Beyond the ease with which you can apply for a loan online or in person, there are a number of other factors you’ll want to consider.

Fees

Fees and rates can differ from loan to loan. Shopping around for rates and fees is going to help you compare personal loan interest rates and find the lowest personal loan origination fees and APRs out there.

While you might see low rates for online lenders, you may also be able to negotiate a low rate with the bank representative. Sometimes, having an existing relationship with the bank can help you get a lower interest rate, or even help with getting approved for a personal loan.

Approval Process

When you get to the approval process, an online loan application vs. in-person is going to be faster. This is because technology automates much of the process for approval when you apply online. Sometimes, you can receive a decision — or even funding — on the same day.

With an in-person application, you can expect to wait several days or even longer for loan approval and disbursement. Plus, not as many banks and credit unions allow you to prequalify like online lenders often do, which can give you an idea of your odds of approval and your potential rate without impacting your credit score.

Convenience

If you’re the type that can quickly fill out information online and upload documents with ease, you may just want to apply online. However, if you would prefer some help through the process of applying for a personal loan, you may consider finding a physical location of the bank or credit union instead.

Security

When it comes to security, applying online for a personal loan is as safe as any other online transaction. Yet, that might not make you feel comfortable enough to do it. If you’re not confident in transmitting personal information over the web, you might consider visiting a branch location to apply for a personal loan.

Personalized Support

Support can be seen as more attentive at an in-person branch. You can have your issues heard and the bank employee can explain things like the personal loan principal and the personal loan maturity date so they make sense.

Online support can be hit or miss, depending on the company. This is one area where an in-person experience might make you happier.

Which Is Better: Applying for a Personal Loan Online or In-Person?

If you value personalized attention, you might prefer to apply for a personal loan in person. On the other hand, if you’re tech-savvy and appreciate the speed and savings an online lender can offer, you may prefer to apply for a personal loan online instead.

At the end of the day, you’ll see advantages with each option whether you choose to apply for a loan online or in person. What’s really important is to find a loan with the most competitive terms and the lowest rate.

The Takeaway

Applying online for a personal loan may allow for a faster approval and funding process, plus you can complete the entirety of the application from the comfort of your home. If you’d rather have someone there to walk you through the process, and you have a longstanding relationship with your bank or credit union that you think could favorably impact the terms you receive, then applying in-person might be better. Ultimately, it comes down to personal preference — and where you can get the best offer for a loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Is applying for a loan online safer than applying for a loan in person?

Applying for a loan online is considered as safe as applying for a loan in person. If you’re worried about sharing your personal information online, you can go into a credit union or bank branch and apply in person.

Is there a difference in cost when applying for a loan online vs in person?

Whether you’re applying for a loan online or in person, it’s a good idea to shop around for the best rates and terms. Online lenders may have lower overhead costs and be able to pass those savings on to customers. On the other hand, banks where you apply in person may be able to offer rate or fee discounts for existing customers.

Is it quicker to apply for a loan online or in person?

In most situations, it is quicker to apply for a loan online than in person. Processing is generally faster, too.


Photo credit: iStock/fizkes

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.

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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Getting a $3,000 Personal Loan

Getting a $3,000 Personal Loan

The funds from a personal loan can be used for anything from paying off high-interest credit card debt to buying a new spinning bike. But how hard is it to qualify for a $3,000 personal loan? And what if you have bad credit?

Online lenders tend to cater more to borrowers with bad credit. They may also charge higher interest rates and financing fees because a borrower with bad credit is considered higher risk.

Read on to find out how to get a personal loan, what credit score you need for a personal loan, and where to go to get a loan if you have bad credit.

Can I Get a $3,000 Personal Loan with Bad Credit?

A personal loan is money borrowed from a bank, credit union, or online lender. Loan amounts range from $1,000 to $50,000, and the principal is paid back with interest in fixed monthly payments, typically over several months to seven years. Personal loans are flexible, meaning they can be used for virtually any purpose, from a cross-country move to home improvements.

Getting approved for a personal loan that is $3,000 with bad credit may mean you have to jump through a few hoops to qualify. What is bad credit? According to FICO®, someone with a score of 580 or below is considered to have “poor” credit (their lowest rating tier) and poses a high risk to a lender.

When calculating an individual’s credit score, FICO and other rating agencies will look at a variety of factors, including whether you pay bills on time, how long you have held credit lines or loans, how much of your available credit you are currently using, how often lenders have pulled your credit report, and your history of bankruptcy or foreclosure.

A low credit score indicates that you could be at a higher risk of defaulting on a loan. To compensate for that risk, a lender may charge you a higher interest rate for a loan or credit card, or you may have to put down a deposit or provide collateral.

What Is the Typical Credit Score Required for a $3,000 Personal Loan?

While some personal loan lenders allow you to apply with a very low credit score, many require a minimum credit score of 660 or 700 to be considered for a $3,000 personal loan. Generally, the higher your credit score, the less interest you will pay.

Benefits of a $3,000 Personal Loan

The benefits of a $3,000 personal loan include flexibility and predictability. The loan can be used for pretty much anything you need, and the payments will be the same each month until the loan is paid off.

Interest Rates and Flexible Terms

The interest rate for a personal loan will typically be fixed for the term of the loan, and the repayment terms are flexible, ranging between a few months to seven (or more) years. Personal loans typically have a lower interest rate than a credit card, and the rates can be much better if you have excellent credit. You might also be able to borrow more using a personal loan versus a credit card.

No Collateral Required

An unsecured personal loan does not require any collateral. Some loans require the borrower to use their car or home as an asset to guarantee the loan. The interest rate may be a little higher for an unsecured loan than it would be for a secured loan because the lender assumes more risk, but you won’t risk your car or home if you default.

Recommended: Secured vs. Unsecured Personal Loans

Fixed Monthly Payments

A personal loan will have fixed monthly payments for the life of the loan, which makes budgeting for bills easier.

Cons of a $3,000 Personal Loan

A personal loan might not be the best option depending on your situation and the loan’s purpose. Here are some of the downsides to a personal loan.

Debt Accumulation

Many people use personal loans to pay off credit card debt because the interest paid on a credit card is generally more than the interest paid on a personal loan. However, this can be a double-edged sword if clearing your credit card balances tempts you to use those cards again and rack up even more debt.

Origination Fees and Penalties

Personal loans may come with significant fees and penalties that can drive up the cost of borrowing. Though some lenders don’t charge origination fees, these fees are common and can run as high as 10% of the loan amount. If you decide to pay off the balance before the term ends, you may have to pay a penalty.

Interest Rates May Be Higher Than Other Options

This is particularly true for people who have a low credit score. In that case, a credit card might charge a lower rate than a personal loan.

If you have equity in your home, another option is a home equity line of credit (HELOC). Alternatively, a balance transfer credit card might charge a lower interest rate than you’re currently paying on your credit card balance.

Where Can I Get a $3,000 Personal Loan?

You can get a personal loan from online lenders, commercial banks, and credit unions. Online lenders offer a streamlined application process and loans are often funded within two days. You can also typically get prequalified and see your potential loan terms before you apply. An online lender might do a soft credit check to prequalify you for a loan, but your credit rating will not be affected.

Credit unions may offer lower interest rates and more flexible terms for members. Federally chartered credit unions cap annual percentage rates (APRs) at 18%, so borrowers with imperfect credit may receive lower rates than they would elsewhere. A history with a credit union might boost your eligibility.

A bank will typically require good credit to qualify for a personal loan. You may also need an account with the bank. Account holders are likely to qualify for the lowest interest rates and bigger loans. You may have to visit a branch and complete the application in person.

How to Apply for a $3,000 Personal Loan

1.    Check your credit reports. You may find errors on your reports that you can fix to boost your eligibility for lower-rate loans.

2.    Compare the terms and conditions offered by lenders. A personal loan calculator can help you determine what your payments will be.

3.    Prequalify if you can, because it won’t affect your credit score and will help you with your comparison.

4.    Consider using your car or other collateral to get a better rate with a secured loan.

5.    Use a cosigner (with good credit) to get a better rate. The cosigner’s credit rating is considered along with your own, but they must agree to pay the loan if you cannot.

6.    Gather the documents you need and apply to the best lender. Examples of documents you may be asked to provide are W-2s, paystubs, and financial statements.

$5,000 Personal Loan

Here’s an example of what your costs would be if you took out a $5,000 loan with a three year term at various APRs:

APR

Monthly Payment

Total Interest Cost

8% $157 $640.55
12% $166 $978.58
16% $176 $1,328.27

$10,000 Personal Loan

The monthly payment on a personal loan of $10,000 with an 12% APR and a three-year term would be $332.13. The loan’s total interest cost by the end of the term would be $1,957.15.

If you were to opt for the same loan amount and rate but a five-year (rather than three-year) term, the monthly payment would be $222.44 and total interest cost would be $3,346.67.

The Takeaway

A personal loan is a way to get flexible financing quickly. A personal loan can be used for nearly any purpose, and the term of the loan can range from a few months to seven or more years. Banks, credit unions, and online lenders offer these loans at varying interest rates.

Personal loans are popular for people who want to consolidate their debt or pay off credit cards that charge a higher interest rate. The requirements for a $3,000 personal loan depend on the lender, but a good credit score will typically get you a better rate.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What credit score is needed for a $3,000 personal loan?

A score of at least 610 to 640 is typically required to qualify for an unsecured personal loan. To qualify for a lender’s lowest interest rate, however, borrowers generally need a score of at least 800.

Is it possible to get a $3,000 loan with bad credit?

Some lenders, particularly online lenders, will extend personal loans to people with bad credit. In fact, some online lenders will specifically advertise personal loans for borrowers with bad credit. However, the terms may include high interest rates and fees.

What’s the monthly payment on a $3,000 personal loan?

The monthly payment on a $3,000 personal loan will depend on the loan term and the interest rate. For example, the monthly payment on a two-year $3,000 loan with an annual percentage rate (APR) of 12% would be $141.22.The monthly payment on a $3,000 loan with a six-year term and an APR of 12% would be $58.65.


Photo credit: iStock/nortonrsx

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.

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.

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 .

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Pawnshop Loan: What Is It & How Does It Work?

Pawnshop Loan: What Is It & How Does It Work?

If you’re strapped for cash and have a hard time qualifying for traditional loans, or you live in an underbanked area, you may be considering a pawnshop loan. They appear to be a convenient option for fast cash, but they can also come with significant disadvantages, including high fees.

Before putting your valuables down in pawn, learn more about what pawnshop loans are and how they work.

What Is a Pawnshop Loan?

A pawnshop loan is a secured, or collateralized, loan. To borrow the money, you must produce an item of value as collateral – such as a piece of jewelry, a musical instrument, electronics, or an antique – that provides backing for the loan. You and the seller agree to a loan amount and a term. If you don’t pay back the loan (plus fees) within the agreed amount of time, the pawnshop can sell the item to recoup their losses.

Pawnshops will typically offer you 25% to 60% of the resale value of an item. The average size of a pawnshop loan is $150 with a term of around 30 days.

Aside from the need for collateral, there are few other requirements to qualify for a pawnshop loan. You typically don’t need to prove your income or submit to a credit check.

Recommended: No Credit Check Loans Guide

How Do Pawnshop Loans Work?

Pawnshops don’t charge interest on the loans they offer. However, the borrower is responsible for paying financing fees that can make the cost of borrowing higher than other loan options.

Regulations around what pawnshops can charge vary by state, but you could end up paying the equivalent of many times the interest charged by conventional loans.

Say you bring in a $600 guitar to a pawnshop, and they offer you 25% of the resale value, or $150. On top of that, let’s say the pawnshop charges a financing fee of 25% of the loan. That means you’ll owe $37.50 in financing fees, or $187.50 in total.

If you agree to the loan, the pawnbroker will typically give you cash immediately. They’ll also give you a pawn ticket, which acts as a receipt for the item you’ve pawned. Keep that ticket in a safe place. If you lose it, you may not be able to retrieve your item.

You’ll usually have 30 to 60 days to repay your loan and claim your item. According to the National Pawnbrokers Association, 85% of people manage to do this successfully. When a borrower pays off a pawnshop loan, they can retrieve the item they put in pawn. For those who don’t, the pawnshop will keep the item and put it up for sale. There is no other penalty for failing to pay off your loan, but you do lose your item permanently.

Recommended: Can You Get a Loan Without a Bank Account?

The Pros and Cons of Pawnshop Loans

In general, it’s best to seek traditional forms of lending, such as a personal loan from a bank, credit union, or online lender, if you can. These loans tend to be cheaper and can help you build credit. However, if you need cash the same day and you don’t qualify for other loans, you might consider a pawnshop loan. Carefully weigh the pros and cons to help you make your decision.

Pros of a Pawnshop Loan

•   Access to cash quickly. When you agree to a pawnshop loan, you can typically walk out with cash in hand immediately.

•   No qualifications. The ability to provide an object of value is often the only qualification for a pawnshop loan.

•   Failure to pay doesn’t hurt credit. While you will certainly lose the item that you put in pawn if you don’t pay back your loan, there are no other ramifications. Your credit score will not take a hit.

•   Loans aren’t sent to collections. If you don’t pay back your loan, no collections agency will hound you until you pay.

Recommended: How Do Collection Agencies Work?

Cons of a Pawnshop Loan

•   High fees. The financing fees associated with pawnshop loans can be much more expensive than traditional methods of obtaining credit, including credit cards and personal loans. Consider that the average annual percentage rate (APR) on a personal loan is currently 12.21%, whereas pawnshop financing fees, when converted into an APR, can be 200% or more.

•   Loans are relatively small. The average size of a pawnshop loan is just $150. If you need money to cover a more costly expense, you may end up scrambling for cash elsewhere.

•   You won’t build credit. Pawnshop loans are not reported to the credit reporting bureaus, so paying them off on time doesn’t benefit your credit.

•   You may lose your item. If you can’t come up with the money by the due date, you’ll lose the item you put in pawn. (Same if you lose your pawn ticket.)

Pros and Cons at a Glance

Pros

Cons

Quick access to cash. Monthly interest rates can be as high as 20% to 25% and contribute significantly to the cost of the loan.
No qualification requirements, such as credit check or proof of income. Pawnshop loans aren’t reported to the credit reporting bureaus, so they won’t help you build credit.
Failure to pay doesn’t hurt your credit. If you fail to pay back your loan on time, or you lose your pawn ticket, you can’t reclaim your item.
Loans can’t be sent to collections. Loans are relatively small, just $150 on average.

What Is a Pawnshop Title Loan?

A pawnshop title loan is a loan in which you use the title of your car as collateral for your loan. You can typically continue driving your vehicle over the course of the loan agreement. However, as with other pawnshop loans, if you fail to repay your loan on time, the pawnbroker can seize your car.

Typical Requirements to Get a Loan Through a Pawnshop

There are typically few requirements to get a pawnshop loan, since the loan is collateralized by the item you put in pawn and the pawnbroker holds on to that item over the course of the loan. However, pawnbrokers do want to avoid dealing in stolen goods, so they may require that you show some proof of ownership, such as a receipt.

Alternative Loan Options

There are a number of benefits of personal loans that make them a good alternative to pawnshop loans. Personal loans are usually unsecured, meaning there is usually no collateral required for a personal loan. Lenders will typically run a credit check, and borrowers with good credit scores usually qualify for the best terms and interest rates. That said, some lenders offer personal loans for people with bad credit.

If you qualify for a personal loan, the loan amount will be given to you in a lump sum, which you then typically repay (plus interest) in monthly installments over the term of the loan, often two to seven years. The money can be used for virtually any purpose.

Personal loans payments are reported to the credit reporting bureaus, and on-time payments can help you build a positive credit profile.

The Takeaway

If you only need a small amount of money, you don’t qualify for other credit, or if you’re looking for a loan without a bank account, you may consider a pawnshop loan. Just beware that they are potentially costly alternatives to other forms of credit.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

How is a loan obtained through a pawnshop?

To borrow money from a pawnshop you must present an item of value that can act as collateral for the loan. The pawnbroker may then provide a loan based on the value of that item.

What happens if you don’t pay back your pawnshop loan?

If you fail to pay back your pawnshop loan on time, you won’t be able to reclaim the item you put up as collateral for the loan. The pawnshop will sell it to recoup their losses.

What’s the most a pawnshop loan will pay?

On average, a pawnshop will loan you about 25% to 60% of an item’s resale value. The average pawnshop loan is $150 and is repaid in about 30 days.


Photo credit: iStock/miriam-doerr
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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.

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