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Yahoo
2 days ago
- Business
- Yahoo
How much can I borrow with a personal loan?
If you need to finance an unexpected cost, such as a high medical or auto repair bill, a personal loan is worth considering. These loans offer flexibility, fairly low rates, and a simple application process — plus, lenders often disburse the money within a couple of business days after you're approved. This makes them a useful alternative to credit cards, which often have high rates and stricter approval requirements. While personal loans have several benefits, an important question remains: How much can you borrow with a personal loan? Here's what to know. The amount you can borrow varies based on the lender, your credit profile, and what you will use the money for. It's common to see minimum loan amounts of $1,000 to $5,000 up to a maximum of $50,000 or even $100,000. However, some lenders offer wider ranges. For example, Navy Federal Credit Union offers personal loans ranging from $250 to $150,000 for qualified borrowers. But just because you can qualify for a large loan doesn't mean you should borrow the full amount. Instead, consider the cost you're covering and how much you actually need to take out. This will help you keep your debt manageable, allowing you to set aside extra funds for things like savings, investing, or other beneficial purposes. Several factors influence how much you can borrow with a personal loan, including: Lender: There's no standard minimum or maximum loan amount. Instead, some lenders may let you borrow as little as $1,000 or as much as $50,000 or $100,000. You may need to shop around to find a lender that offers the amount you need. Credit score: You'll generally need a credit score of at least 580 to qualify for a personal loan, but again, requirements vary by lender. The better your credit, the more likely you are to qualify for a low rate and a large loan. Debt-to-income ratio: Lenders also look at your debt-to-income ratio, or DTI, when you apply for a personal loan. This measures your total monthly debt payments compared to your total monthly income, and it helps lenders determine if you can afford to borrow more money. You may be eligible for a larger loan if you have a low DTI. Income: You need a consistent income to qualify for a personal loan, and how much you earn affects how much you can borrow. High income and low debt could increase your likelihood of qualifying for a large loan. Collateral: Most personal loans are unsecured, meaning collateral isn't required to borrow. However, some lenders allow you to secure a personal loan with something valuable, such as a car, bank account, or investment portfolio. You can likely borrow more if you put down collateral, but the lender can seize your pledged asset if you default on the loan. Loan purpose: How you plan to use the personal loan can also affect how much you qualify for. Lenders may lend you more money for a home improvement project or debt consolidation than they might for a vacation or other discretionary spending. Read more: How to get approved for a personal loan If you're concerned you won't qualify for a large enough loan, there are a few things you can do to increase your borrowing power: Improve your credit: One of the best ways to increase your likelihood of a larger loan is to improve your credit. Ensure you make your monthly debt payments on time, pay down your debt as much as possible, keep your old accounts open, and avoid applying for new credit. Increase your income: Increasing your income might also make you eligible for a larger loan. Besides finding a higher-paying job, you can also request a raise or pick up a side gig to supplement your full-time earnings. Consider a co-borrower: Some lenders let you apply for a personal loan with a co-borrower or co-signer. This is a trusted person in your life — and ideally, someone with great credit — who has equal access to the loan funds and shared responsibility for repaying the debt. If your co-borrower is well qualified, you're likely to get better loan terms and lower rates. If personal loans don't seem like the best fit for your situation, there are alternatives. Here are some options. Some credit cards offer a 0% introductory APR for as long as 18 or 21 months, allowing you to borrow money interest-free during this time. These cards are often reserved for people with excellent credit, but if you can qualify for a card like this, it could give you the flexibility to pay off a large balance without incurring interest charges. Just ensure you pay your card off before the intro period ends, or you could end up with hefty interest charges on any remaining balance. Here are some top 0% APR cards to consider: Chase Freedom Unlimited Capital One VentureOne Rewards Credit Card Blue Cash Everyday® from American Express If you need to borrow a large amount of money and have significant equity in your home, a home equity loan or home equity line of credit (HELOC) could be a good choice. With a home equity loan, you borrow a lump-sum amount and use your home equity as collateral. You'll then make monthly payments on your home equity loan until it's repaid. HELOCs are slightly more flexible. Instead of a lump-sum loan, you open a credit line against your home equity. You can then draw down on this credit line for a set period, often five or 10 years. During this time, you can make interest-only payments on your HELOC. After that, you'll enter a repayment period — often 20 years — during which you'll make full principal and interest payments. This article was edited by Alicia Hahn.
Yahoo
7 days ago
- Business
- Yahoo
Can I use a personal loan for anything? 6 expenses that are restricted.
Whether you want to consolidate debt, pay for expensive medical bills, or cover an unexpected home repair, a personal loan could fit the bill. These loans offer relatively low interest rates compared to credit cards, repayment terms as long as five or seven years, and flexible loan amounts. While personal loans are a versatile form of financing, lenders typically have restrictions on how borrowers can use the money. Here's what to know about potential restrictions before you apply. This embedded content is not available in your region. Every lender has different terms and conditions for their loans, so be sure to read the fine print if you're not sure what's allowed. However, these activities are commonly excluded in the terms of a personal loan. Many lenders prohibit investing your personal loan funds. While it can be tempting to do so if you're hoping the market will work in your favor, there's an inherent risk with investing. If the market underperforms, you could lose your investment entirely. Even if your investment pays off, the interest fees on the personal loan will eat into your potential gains. And if your financial situation changes due to job loss or another reason, it could make it difficult to afford your loan payments. Though not all lenders expressly prohibit it, using a personal loan for business expenses generally isn't advisable. Taking out a personal loan for business purposes blurs the line between your personal and business finances, which may complicate things like filing tax returns and keeping accurate records. Further, personal loans also appear on your personal credit reports and affect your personal credit, not your business credit. If you want to build business credit, a small business loan is likely a better choice. Read more: Is it a good idea to use a personal loan for business purposes? You can't use a personal loan for a home down payment either. Not only do most lenders prohibit this, but taking out a personal loan during your house hunt could hurt your ability to get a mortgage. The additional monthly payment will impact your debt-to-income (DTI) ratio, a key metric lenders evaluate when you apply for a home loan. Many mortgage lenders prefer a DTI below 36%. If a new personal loan pushes your DTI over 36%, you're unlikely to qualify for a mortgage. Most lenders also won't let you use a personal loan to cover college tuition or student loan repayment. In the rare case that they will, it's generally unwise to take out a personal loan for this purpose. That's because federal and private student loans typically have lower interest rates, making them a better borrowing option if you need to pay for higher education. Student loans also typically come with more protections and benefits than personal loans, such as a tax deduction for student loan interest. Read more: Can I pay off my student loans with a personal loan? Lenders typically don't allow you to use a personal loan for gambling or betting, which makes sense. Many forms of gambling are illegal in certain states, and lenders prohibit using personal loan funds for illegal purposes. Not to mention, you could have difficulty repaying your loan if you're struggling with a gambling issue, which presents a risk to the lender. Your likelihood of a default may be higher if that's the case. Related: Can you buy lottery tickets with a credit card? Lenders generally allow you to use a personal loan for non-essentials, but that doesn't mean it's a good idea. Taking on debt to pay for "wants" like a vacation or pricey concert tickets isn't advisable, as it could stretch your monthly budget and damage your credit if you can't afford your payments. Plus, the added interest costs will make the item even more expensive in the long term. Generally, it's better to set aside small amounts of money into a separate savings account to cover larger discretionary expenses. Read more:Should I use a personal loan to go on vacation?Vacation savings accounts: Are they worth it for families? If you're caught lying about a personal loan's purpose — or anything else on the loan application — you could face severe consequences. Doing so is illegal and likely to be considered fraud. If you've already received the funds, the lender could demand immediate repayment in full. That could be a big problem if you've already spent the money. You could also be sued by the lender, resulting in added fines and legal fees. In rare cases, you might even face jail time. Using a personal loan for the expenses above isn't advised, but they're a great option for covering other costs. Here are some popular uses for personal loans: Debt consolidation: Many people turn to personal loans to consolidate high-interest debt. They typically have lower rates than credit cards, meaning you could save money on interest when you consolidate. Medical bills: Medical bills are often unexpected and expensive. If you need to cover a trip to the ER or necessary dental work, a personal loan could be a good choice. Veterinary fees: If your pet needs emergency care, vet bills could set you back thousands of dollars. A personal loan could make this cost easier to bear. Home repairs: Planned and unplanned home repairs have one thing in common: They're often more than the average person has in their emergency fund. Covering a cost like this is a good use for a personal loan, especially if it will add value to your home. Car repairs: A personal loan could also help you pay for expensive car repairs, spreading the cost over several months instead of requiring you to pay a large sum up-front. Moving costs: Relocating can cost thousands of dollars, and that cost increases the further you move. Paying for a move can be a good use of a personal loan. Wedding costs: According to bridal website The Knot, weddings cost an average of $33,000 in 2024. While it's a good idea to turn to your savings first to pay for a wedding, a personal loan could help you cover any gaps. This article was edited by Alicia Hahn.
Yahoo
18-06-2025
- Business
- Yahoo
I'm a Financial Expert: 4 Hidden Advantages of Personal Loans
Personal loans don't have the best reputation, lumped in with predatory lending and debt traps. But they're not always a bad idea. In fact, financial experts say there are several hidden advantages that make personal loans a smart financial tool. The key? As with most things, you've got to use them correctly. Learn More: Read Next: GOBankingRates spoke with financial industry professionals to uncover the benefits most people don't know about when it comes to personal loans from traditional lenders. One of the biggest advantages of personal loans is that they're unsecured, according to Jared Navarre, CEO of and a serial entrepreneur who's worked with major companies like Reebok, Adobe and Capital One. 'The magic of an 'unsecured' loan means you don't have to risk losing your house, car or your signed headshot from the local weatherman,' Navarre explained. This is a huge benefit compared to secured loans like mortgages or auto loans, where the lender can repossess your property if you default. With personal loans, your assets remain safe even if you run into financial trouble. Be Aware: Personal loans shine as a safer option compared to predatory lending products that trap borrowers in cycles of debt. 'Personal loans typically have better terms and are a safer option than payday loans,' Navarre said. 'Aka, save your kneecaps.' While payday loans can carry interest rates of 400% or higher, personal loans from reputable lenders typically offer much more reasonable rates and longer repayment terms. When emergencies strike, personal loans can provide remarkably quick relief. Many lenders have streamlined their approval processes to get money into borrowers' hands quickly. 'Some personal loans can fund as quickly as 24 hours,' Navarre shared. 'Perfect for the inevitable emergency life may throw your way.' This speed advantage makes personal loans particularly valuable for urgent expenses like medical bills, car repairs or home emergencies that can't wait for traditional loan processing times. Here's where personal loans offer a hidden advantage that many borrowers overlook: They can actually help improve your credit score through diversification. 'Though the exact algorithm the credit bureaus rely on is buried 10,000 miles below Space X, a personal loan can be good to add to your overall credit picture and has a potential to boost your overall score,' Navarre said. The credit scoring algorithms favor having a mix of different types of credit. Think credit cards, mortgages, auto loans and personal loans. Adding a personal loan to your credit mix can demonstrate that you can handle different types of debt responsibly. 'I wouldn't advise using this as logic to get one, but the algorithm does favor diversity,' Navarre added. While traditional lender personal loans offer institutional benefits, some people turn to friends and family for financial help. This approach comes with its own set of advantages and considerations. Dutch Mendenhall, a bestselling author and founder of Omnico Golf, has experience with person-to-person lending and offered insights into this alternative approach. 'The advantage is, you can loan something to someone that you care about, and that you have a relationship with, and you can make a return,' Mendenhall explained, recalling his experience helping a friend buy a car 10-15 years ago. However, Mendenhall also talked about the importance of going into these arrangements with realistic expectations. 'You have to understand that if you're going to give a personal loan, there's a good chance that you may never get the money back,' he warned. 'And you have to determine whether that amount of money is worth ruining a relationship with the person you gave it to.' Mendenhall recommended evaluating several factors before lending to friends or family: Financial capability: 'I think you have to know what a person's personal finances are — are they living within their means? So, if you loan it to them, it would make sense that they can pay you back.' Life changes: 'The world changes; the world shifts. Things I thought I could do 10 years ago, I can't do now and things I thought I couldn't do 10 years ago, maybe I can do now,' Mendenhall said, highlighting how circumstances can change unexpectedly. Collateral options: 'What kind of collateral is there? What kind of way can you make sure that you're gonna get paid back or at least some portion or version of it no matter what?' More From GOBankingRates 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses This article originally appeared on I'm a Financial Expert: 4 Hidden Advantages of Personal Loans Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CBS News
18-06-2025
- Business
- CBS News
$50,000 HELOC vs. $50,000 home equity loan: Which is cheaper this June?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Before borrowing money from their home this June, homeowners should first calculate their potential repayment costs. Getty Images Borrowing $50,000 can't always be done easily or inexpensively. With the average credit card interest rate over 21% now, just shy of a record high, securing a $50,000 credit limit may not only be difficult, it'll be costly. Personal loans, meantime, come with interest rates much lower than credit cards, but at an average rate of 12.65%, they also may not be the most cost-efficient way to borrow a five-figure sum of money right now. If you're a homeowner, however, you may have an affordable way to access $50,000 or more at your fingertips. With a home equity line of credit (HELOC) or a home equity loan, homeowners can borrow from their accumulated equity with relative ease. And, right now, with home equity levels rising and the average amount comfortably over $300,000, this may be your optimal way to borrow. But these products don't operate in identical ways and, as such, don't have identical interest rates. So it's important to start your home equity borrowing journey by calculating the potential repayment costs associated with both products. Between a $50,000 HELOC and a $50,000 home equity loan, then, which will be cheaper if opened this June? We'll do the math below. See how much home equity you could borrow here now. $50,000 HELOC vs. $50,000 home equity loan: Which is cheaper this June? To determine the costs of each, borrowers will need three primary figures: the amount of money being borrowed, the interest rate associated with each and the length of the repayment period. Fortunately for homeowners, interest rates on both have declined significantly over the past year or so and could continue to fall in the months ahead if interest rate cuts are issued as many expect. That noted, HELOC interest rates are variable and can change monthly based on market conditions, while home equity loan rates are fixed and will remain the same unless refinanced by the homeowner. In other words, while rates on both products are similar now (8.22% for HELOCs and 8.25% for home equity loans), they're unlikely to remain as closely aligned over time. Here, then, is what each costs if secured now, for borrowers with good credit: 10-year home equity loan at 8.25%: $613.26 per month $613.26 per month 15-year home equity loan at 8.25%: $485.07 per month 10-year HELOC at 8.22%: $612.47 per month $612.47 per month 15-year HELOC at 8.22%: $484.20 per month So, by borrowing $50,000 with either option this June, your payments will essentially be the same. But the difference in the rate structures and repayments is critical to understand. HELOCs may or may not remain as inexpensive as they are right now, thanks to that changing rate. While HELOC rates are still down from where they were last September, for example, they've since jumped a bit in recent weeks. And, with a HELOC, borrowers will be required to make interest-only payments for the initial draw period, giving them more flexibility before full payments are required in the repayment period. Home equity loans, on the other hand, come with predictability thanks to the fixed rate, which could be welcome in today's unique economic climate. But payments here will be required immediately since the home equity loan funds will be disbursed in a single lump sum versus the HELOC's borrow-as-you-go structure. So, there's a lot to consider before getting started. To better determine which product makes the most sense for your financial circumstances, it can be beneficial to speak with a home equity lending expert who can answer your questions and guide you toward the more appropriate option. Speak with a home equity loan specialist today. The bottom line This June, a $50,000 home equity loan comes with similar monthly repayment costs as a $50,000 HELOC. That means borrowers will need to dig a bit deeper to determine the true, long-term affordability by evaluating the potential for HELOC rates to change over time and by measuring the interest-only payments that the product comes with versus the full repayment costs the loan does. By measuring these items closely and by calculating their costs against a variety of potential rates, they can better determine long-term affordability and, importantly, get started with the home equity borrowing process now while home values are high and rates are relatively stable.
Forbes
11-06-2025
- Business
- Forbes
This Week's Personal Loan Rates: June 11, 2025—Rates Inch Down Again
Personal loan rates dropped last week. This means if you're looking to finance a home remodeling project, large purchase or unexpected bills, you can still snag a reasonable rate, as long as you're a qualified applicant. From June 2 to June 7, the average fixed rate on a three-year personal loan was 13.88% for borrowers with a credit score of at least 720 who prequalified on personal loan marketplace. The rate was 13.93% the previous week, according to The average rate on a five-year personal loan rose 0.54 percentage point last week to 19.25% from 18.71%. The most qualified borrowers generally receive the best rates. In fact, well-qualified borrowers may receive a significantly lower rate than average. The rate you receive depends on various factors, including your credit profile and the loans available through your chosen lender. These rates are accurate as of June 7, 2025, and based on the three-year fixed rate. Related: Best Personal Loans Personal loan rates fluctuate frequently, and each lender determines and sets different rates. While your rate isn't guaranteed until you sign your loan agreement, you can get an idea of average lender rates below. The table below compares personal loan rates for three- and five-year terms to help you understand rate trends. Lenders typically consider your loan term and credit history to determine your interest rate. Your credit score plays a major role in the interest rate a lender offers for a personal loan. Lenders use your credit profile and other factors to evaluate your risk as a borrower. In general, the higher your credit score, the lower the interest rate you'll receive. The table below compares average personal loan interest rates by credit score, showing how much your score can affect your rate and how much you could save over time. Since each lender sets its own personal loan rates, use these three simple steps to compare personal loan interest rates: Related: 5 Personal Loan Requirements To Know Before Applying We recommend you get a personal loan only when it's necessary. If you're considering a personal loan, these steps can help you understand if it's the right choice: In some cases, getting a personal loan may not be the best decision. For example, we don't recommend a personal loan if you can't afford the monthly payments or if you can wait to save up the money you need. You can find a personal loan online or in person, depending on the institution. With varying lenders offering personal loans, you can find one that works best for you. Lenders offering personal loans include: While borrowers with strong credit typically get more favorable interest rates, lenders also rely on current market conditions to set interest rates. If you have good credit but your annual percentage rate (APR) is high, it may mean interest rates are generally high. That said, it can also mean your income isn't high enough to qualify for lower rates or your debt-to-income ratio (DTI) is too high. High personal loan interest rates are a result of current market conditions and/or low credit scores. Lenders set their interest rates based on the economy and your credit profile. If you want to get the lowest rates possible, work on improving your credit score and debt-to-income (DTI) ratio before applying.
