Key Takeaways
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Online lenders, credit unions and traditional banks are all potential sources for personal loans, but each has different eligibility requirements and financing terms.
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It’s important to carefully weigh the costs and benefits of taking out a $10,000 personal loan and evaluate your spending habits before making a decision.
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There are alternatives to a personal loan, such as using a credit card or a home equity loan, but these also come with their own risks and considerations.
Traditional banks, credit unions and online lenders are all likely to offer $10,000 personal loans. In fact, most personal loan lenders offer loans up to $50,000. You can usually apply online, even at traditional banks, which can make the process quick and easy.
Before you apply, make sure you know why you need a personal loan, whether it is the best financing choice and whether you would be better off borrowing a smaller amount. Research the eligibility requirements of the lenders you are considering and shop around to determine if you are getting the best deal available.
How to Get a $10,000 Personal Loan
The process of getting a personal loan is the same for any loan amount. You need to consider your credit, compare lenders and apply. Once you have an idea of how much you need to borrow, check the lender’s requirements, such as credit score, debt-to-income ratio, and collateral if it is a secured loan. The better your credit score, the more competitive your rate will be.
The average interest rate on personal loans was between 10.73 percent and 12.5 percent for borrowers with excellent credit. These figures are significantly higher for borrowers with poor credit scores, with average interest rates ranging from 28.5 percent to 32 percent. The higher interest rates make it especially important to shop for the best rates on bad credit loans.
Once you have an idea of your creditworthiness, compare personal loan rates and focus your search on lenders that meet your underwriting and financing needs. quantity.
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- Proof of identity: Driver’s license, passport, state-issued ID card, birth certificate or certificate of citizenship.
- Proof of address: Rental agreement, mortgage statement, property tax receipt, proof of insurance, utility bill, bank statement or voter registration card.
- Proof of income: Recent pay stubs, W-2, 1099, income tax returns or bank statements.
Where can you get a $10,000 personal loan?
There are several options available when considering where to secure financing for your personal loan. Traditional banks, online lenders and credit unions all offer different experiences and underwriting requirements.
Banks
If you have an existing relationship with a bank that offers personal loans, this is an excellent place to start. If you already have an account, you may be able to avoid fees or take advantage of an autopay discount.
Citi
Bankrate’s opinion
With loan amounts up to $30,000, Citi is a great option for a $10,000 personal loan. The bank stands out for its zero fees and fast funding timeline, which is just two days or faster for those with a Citi deposit account.
Plus points
- Discounts for account holders.
- Fast financing.
- No fees.
Disadvantages
- High credit requirement.
- No joint applications allowed.
Credit unions
Like a bank, a credit union is a financial institution that offers banking services, including personal loans. The main difference is that credit unions are not-for-profit institutions and require membership. These loans often have more competitive rates and less strict underwriting requirements compared to banks.
Alliance
Bankrate’s opinion
Alliant, formerly known as United Airlines Employees’ Credit Union, offers online-only services to its members and remains one of the nation’s largest credit unions. It offers loans for as little as $1,000 or as much as $100,000 with terms of up to 60 months.
Plus points
- Fast financing.
- Wide range of loan amounts.
- Minimal costs.
Disadvantages
- Higher than average minimum APR.
- No prequalification.
Online lenders
Working with an online lender can be a good solution if you feel comfortable navigating your finances online. Many of these lenders offer fast financing and an easy application process.
Upstart
Bankrate’s opinion
Upstart stands out from other online lenders because of its flexible eligibility criteria and wide range of financing amounts – perfect for a $10,000 loan. The minimum credit requirement is 300, the lowest a credit score can be, and you may qualify even if you don’t have enough credit history to generate a score.
Plus points
- Flexible credit requirements.
- Fast financing.
- Low minimum APR.
Disadvantages
- Steep maximum APR.
- Potential costs.
Cost of a $10,000 personal loan over the long term
The interest rate and term of your loan determine the total cost of your loan. If you choose a shorter term, you will pay less interest in total. The downside is that the monthly loan payments can stretch your budget.
You can also opt for an extended loan term to avoid financial challenges down the road. But keep in mind that you could get stuck with a higher interest rate – and even with the same interest rate, you’ll pay more interest over the life of the loan.
Use a personal loan calculator to estimate the total cost of a loan. Here’s an example of how interest rates and loan terms affect the borrowing cost of a $10,000 personal loan:
| Loan term | Interest | Monthly payment | Interest |
|---|---|---|---|
| Term of 3 years | 11 percent | $327.39 | $1,785.94 |
| Term of 3 years | 13 percent | $336.94 | $2,129.82 |
| Term of 5 years | 11 percent | $217.42 | $3,045.45 |
| Term of 5 years | 13 percent | $227.53 | $3,651.84 |
Alternatives to $10,000 Personal Loans
A personal loan of this amount is a major commitment and may not be the best route for everyone. Before taking out a personal loan, it is important to consider alternatives.
- Credit card: If you don’t need access to the money all at once, applying for a credit card may be a good option. Be aware of potentially steep APRs that often come with this route. Additionally, you’ll likely need decent credit to get approved for a line of credit that can withstand a $10,000 purchase.
- Mortgage interest deduction or HELOC: Risking your home comes with some notable risks, but can result in financing at longer terms than personal loans allow. This option is only best suited for those with strong credit and significant equity in their home.
- Peer-to-peer (P2P) lending: You may be able to find a $10,000 peer-to-peer loan if a traditional personal loan doesn’t meet your needs. Instead of being provided by a financial institution, a P2P loan is funded by individual investors. The qualification requirements may be more lenient, but the rates and fees are often higher.
How to Determine If You Need a $10,000 Loan
Ideally, you should have a good understanding of the costs you need to cover with a personal loan. If you haven’t already done so, write down the cost of each expense. The total amount you come up with will give you an idea of how much you need to borrow.
If it is just under $10,000, taking out a loan for this amount may be ideal, especially if the costs are higher than expected. However, an amount well under $10,000 indicates that you may need to apply for less.
Weigh the risks and benefits
Determine whether the benefits you receive outweigh the costs of borrowing. It’s a personal decision, but using the money to consolidate debt, cover a medical emergency, or upgrade your home to increase its value are all more compelling reasons than financing a vacation trip with friends or doing random purchases.
Look at your expenses
When deciding whether you need a $10,000 loan, evaluate your spending habits. If you are not looking for a short-term need and can save by being more disciplined or cutting back, it may be best to pass on a personal loan.
Or, if money is already tight, a loan payment could stretch your budget. You risk damaging your finances and credit rating by borrowing more than you can easily afford to pay back on time.
