Personal loans are not the only option when you need to borrow $10,000.
Loans are available for almost any amount. If you’re considering a loan, research why you need the money to determine what type of loan will work best for your situation, and how much to borrow.
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What types of loans work for $10,000?
The type of loan you apply for determines the minimum and maximum amounts you can borrow. If you choose to take out a property loan (a loan that uses your car as collateral), the lender will usually not loan you more than a quarter to half of the car’s resale value. Likewise, payday loans are limited to a percentage of your regular salary. Neither of these options are good if you need $10,000.
To get a $10,000 loan, you have several options.
Types of loans amounting to $10,000
- car loan: This is a secured loan only for the purchase of a car.
- business loans: This type of loan, intended to finance your business or purchase equipment, often requires a personal guarantee. So even though it is a business loan and you may qualify based on your business income and needs, you are personally responsible for paying it back. If you default, your personal balance may be affected.
- Debt Consolidation Loan: This is an unsecured personal loan aimed at repaying multiple debts, reducing the number of monthly payments, lowering the total interest cost, lowering the total monthly payment, or any combination of these debts.
- Home Equity Loan (or Home Equity Line of Credit): This loan is secured by your home, and you must have the capital to qualify. If you choose a line of credit (called a HELOC), you can withdraw from the amount of credit to borrow exactly what you need as you need it, rather than guessing at a lump sum up front. There are usually no restrictions on how you use the money.
- Healthcare loan: This loan is for specific healthcare needs, such as orthodontics, and is sometimes offered at the front desk of the provider’s office. Similar loans are available for some veterinary expenses.
- personal loan: A personal loan can be used for almost any purpose. Secured personal loans are secured by collateral, such as a valuable item or bank account balance. Unsecured personal loans are not tied to any collateral, and are based on your credit eligibility alone.
Minimum and maximum loan amount
All lenders set minimum loan amounts.
Auto loans and health care loans are usually limited to the exact amount of purchase.
You may be able to borrow the largest amount of money with a home purchase loan or HELOC, because the limit is tied to your equity. On the low end, it is possible to find a $10,000 home purchase loan, but most lenders set the minimum at $25,000 or more. If you want to borrow less than that, a personal loan or personal loan from HELOC may be the best option. You can borrow a smaller amount through HELOC simply by not reaching the total amount of credit available to you. If you choose a personal loan, note that it usually comes with a higher interest rate than a home purchase or HELOC loan.
The minimum personal loan amount is often between $1,000 and $2,000. The maximum loan amount is usually between $10,000 and $50,000, but it can be over $100,000.
How to Qualify for a $10,000 Loan
Get your credit ready
Lenders offer the lowest interest rates and fees for people with excellent credit. Also, the amount of personal loan you can get may depend in part on your credit score.
So if you have a financial need on the horizon, check your balance and see what you can do to maximize your score. You can check your balance for free online. Get your credit reports from AnnualCreditReport.com, and check them for errors. Some mistakes can lower your score, so correct any discrepancies immediately.
Check your score (usually not included in the report). Your bank or credit card issuer may offer free credit scores, or you can check out some of the more popular websites that are set up for this. What you see online may not be exactly the same result as the lender, but it should give you an idea of your neighborhood. Free credit score websites always provide an analysis of your score, letting you see what factors influence it. Use this information to improve your credit to the extent that you can.
Once you’re ready to apply, get as much information about the lenders as you can so you don’t spend more than you have to. For some types of loans (auto loans, home equity loans), you can apply with multiple lenders to compare offers without hurting your credit score. This is not true for personal loans or health care loans. With these, every time you apply your score can drop a few points.
Here are some details you might want to know:
- What is the interest rate?
- Is there a setup fee?
- If there is a fee, can it be added to the loan balance if I don’t have cash to pay up front?
- How long does it take to pay off the loan?
- What is the monthly payment amount?
- What is the total cost of the loan?
- Can I access more funds if I need it?
- What is the minimum credit score required?
- What is the interest rate for someone with a better credit score than me?
After finding the best loans and choosing a lender, applying is simple.
After you get your loan, make each payment on time. A loan can help you build good credit, which may reduce the cost of financing in the future. But this is only true if you consistently make your payments as agreed.
Ascent’s Best Personal Loans for 2021
The Ascent team has scanned the market to bring you a shortlist of the best personal loan providers. Whether you’re looking to pay off debt faster by lowering your interest rate or need some extra cash to tackle a large purchase, these best-in-class choices can help you reach your financial goals. Click here for the full summary of The Ascent’s top picks.