Medical expenses

How to Get a Loan for $40,000


Get approved for a $40,000 loan to pay down debt, renovate your home, or pay off your medical expenses.
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  • A $40,000 personal loan can be used for major life events, debt consolidation, medical bills, and more. 
  • You can get the best rates on a personal loan with a high credit score, low debt-to-income ratio, and reliable income.
  • Getting approved for a personal loan may temporarily hurt your credit score. 

Personal loans can help you cover costs that you might otherwise not be able to afford out of pocket. Whether you’re looking to pay down existing debt, fund a home renovation project, go on an extravagant trip, or pay your medical bills, a $40,000 loan can be a big help to cover large expenses. 

However, a $40,000 personal loan comes with significant risks, and you may want to consider your other financial options before borrowing that much money.

See Insider’s picks for the best personal loans >>

How to get a $40,000 loan

Most personal loans are unsecured loans. That means that lenders need to carefully scrutinize your current financial situation and history before approving your loan request in order to make sure you’re creditworthy enough to repay the debt in full. Banks, credit unions, and online lender often have similar qualification requirements. The most include:

  • Income and employment: Lenders need proof of your current employment status and that you have a reliable monthly income. Some lenders may set a minimum salary requirement, but that’s not always specified. You can show proof of income and employment with pay stubs, W-2 forms, tax returns, or a letter from your employer verifying your hire date, job title, salary, and other details. 
  • Credit score and history:  One of the most important things lenders look for is a good credit score and a solid credit history. They’ll look for “red flags” such as late payments, new credit lines, history of bankruptcy, or maxed-out cards. Having no credit is just as bad, if not worse. These days, there are many places where you can check your credit score for free. You can also get free credit reports from each of the three major credit bureaus.  
  • Debt-to-income (DTI) ratio: Your debt-to-income ratio measures the percentage of your income that goes toward monthly debt payments, like credit and car payments. You can calculate your DTI ratio by adding up all your monthly debt payments and dividing that amount by your gross monthly income. 

Make sure to all of your documents lined up before setting a meeting with a lender or starting the application process online. You’ll have the most luck getting approved for a $40,000 loan with at least a very good credit score (at least 740), and a DTI ratio of 36% or lower. 

Get prequalified for a $40,000 loan

When choosing between different lenders you can compare the different kinds of loans available to you, the terms, interest rates, and any fees with prequalifying. This way you can also get a better idea of whether you’re likely to get approved for your loan. However, prequalification doesn’t always guarantee that you’ll get approved for a $40,000 personal loan. 

Lenders examine employment status, income, existing debt, the purpose of your loan, and other items during the prequalification process. At this point, they’ll will do what’s known as a soft credit pull, which has no affect on your credit score. A hard credit inquiry, which comes when you formally apply for a loan, is likely to temporarily reduce your credit score.

Most credit unions, banks, and online lenders will offer prequalification to potential borrowers. 

Next step: See if you’re prequalified for a loan without impacting your credit score.

How to qualify for a $40,000 loan with bad credit

You’ll get the best deal on a $40,000 loan if you have a good or excellent credit score. But there are plenty of lenders that will approve a larger loan for fair or bad credit borrowers. However, even the best best personal loans for bad credit often have very high-interest rates and other costly fees attached. So if you have a bad credit score, you may want to reconsider taking out a loan and seek out other options

Personal loans through a credit union are often a good option for folks without the best credit. APRs are capped at 18% by the National Credit Union Administration, and they’re often more flexible with rates and terms than other lenders.

$40,000 loan offers

If you’re looking for a $40,000 personal loan, here are some lenders offering competitive rates and perks for all kinds of borrowers:

LightStream Personal Loan

LightStream offers some of the best rates compared to similar lenders. Its APRs range from 7.99% to 24.99% (with AutoPay discount, rates vary by loan purpose) and is best for borrowers with excellent credit scores. You need a minimum score of 660 to qualify.

LightStream offers loans of as much as $100,000. 

SoFi Personal Loan

SoFi is another lender offering some of the best rates on personal loans, with APRs from 8.99% to 25.81% (with all discounts). You need a credit score of at least 680 to qualify. But if you have an excellent credit score, you may be able to get a better rate with LightStream. 

PenFed Credit Union Personal Loan

You only need a credit score of 580 to get approved with PenFed. Although it’s usually recommended for small loans, it may be a good option for borrowers with lower credit scores. PenFed offers loans up to $50,000 and its rates range from 7.74% to 17.99%.

But you must meet the membership requirement to take out a loan with PenFed. You are automatically considered a PenFed member if you’ve served in the military. Otherwise, you’ll need to open a PenFed savings account with a minimum deposit of $5 to become a member.

Upstart Personal Loan

Upstart is another decent option for borrowers with bad or limited credit. It only requires a minimum credit score of 300, and is usually best for small loans. However, if you have a really low credit score, this may be a feasible option for a $40,000 loan. Upstart only offers loans up to $50,000. 

Rates range from 4.60% to 35.99%. 

Wells Fargo Personal Loan

Wells Fargo is a good option for borrowers looking for in-person support, especially for existing bank customers. It makes loans of as much as $100,000 and doesn’t charge a lot of additional fees. (It does charge significant late fees). 

You’ll be able to get a good interest rate on your loan if you have very good or excellent credit as range from 7.49% to 23.74% (with relationship discount). However, non-Wells Fargo customers can’t apply online for a loan. 

 How to get a $40,000 loan FAQs

The cost per month for a $40,000 loan can vary greatly based on the regular annual percentage rate (APR) and the terms of your loan. For example, a $40,000 loan, with a 10% interest rate over three years would cost you $1,014.50 per month. But the same amount with the same rate over 10 years would cost you $528.60 per month. 

If you meet your lender’s qualification requirements, it probably won’t be hard to get approved for a loan. However, if your lender doesn’t believe you’re in a good enough financial situation to afford a $40,000 loan, you may be turned away. Folks with fair or limited credit will have a harder time getting approved for such a large loan. 

The credit score you need to get approved for a $40,000 loan depends on your lender. But typically, lenders are looking for higher credit scores, such as those in the very good to excellent range. 

Should you take out a $40,000 loan?

A $40,000 personal loan is a large chunk of cash, so only borrowers with the highest credit scores and the income to afford it should pursue one. Although there are lots of reasons to take out a loan, including medical bills and debt consolidations, there are also significant risks involved. 

Loan payments charge interest and accruing interest on a $40,000 loan could end up costing you hundreds to thousands of dollars more. If you are able, consider all your other financial options before taking out a loan with a bank, credit union, or online lender. Also, make sure to prequalify to compare rates and terms. 

If you’re in a tricky financial situation consider meeting with a financial planner or advisor about your current situation and goals. 

 



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