Personal loans can be a great way to borrow money, whether you need to consolidate debt, finance a home improvement project or cover unexpected expenses. This type of loan often has favorable interest rates and a fixed repayment plan, so you know exactly what you’re getting into.
It’s common to seek out a personal loan for a four- or five-figure sum. As of the third quarter of 2022, the average personal loan debt per borrower was $10,749, according to a TransUnion report. But what if you need to access even more than that — say $100,000?
“While it is possible to take out a $100,000 personal loan, it will likely be harder to find than personal loans of up to $50,000,” says Kyle Enright, president of Achieve Lending.
Fewer lenders offer personal loans of this sum, and qualifications might be stricter.
What Qualifications Do You Need for a $100,000 Personal Loan?
Qualifying for a $100,000 personal loan is very similar to qualifying for a smaller sum, just on a heightened level. You’ll still need to provide proof of employment, an excellent credit history and a favorable debt-to-income ratio.
“Every lender’s qualification requirements will be different, but in general, lenders of that size personal loan will be looking for exceptional credit scores and credit histories,” says Enright.
He adds that while most personal loans don’t have a minimum income, that might change when you’re requesting such a large sum.
[See: Best Personal Loans for Credit Card Refinance.]
“Many lenders don’t have income requirements, but for a personal loan of $100,000, they may want to see a relatively high income, again given that there’s no collateral,” Enright says.
While most personal loans are unsecured, with such a large amount you might have to try for a secured personal loan, which would require putting up collateral.
Finally, Enright warns that larger personal loans might come with less favorable terms.
“Borrowers of such a large amount may find higher interest rates, too … Higher amounts mean higher risk,” he says.
Steps for Getting a $100,000 Personal Loan
To take out a $100,000 personal loan, follow the same steps as you would for a smaller amount. This includes gathering documentation showing your income and employment, as well as researching potential lenders. You could also check out prequalification tools to see if you qualify without a hard check to your credit.
The biggest difference between securing a $100,000 personal loan and securing a smaller loan will be in the research process. Since not all lenders offer personal loans of that amount, you’ll have to do your due diligence to find the right one for you.
For instance, SoFi offers personal loans up to $100,000, but Discover caps theirs at $40,000.
Is a Personal Loan the Right Choice for a Six-Figure Sum?
A $100,000 personal loan is achievable, but that doesn’t mean that it’s the best option for borrowers looking to score a six-figure sum.
“There’s one key problem: The people who genuinely need these loans either won’t qualify for them at all or will have to pay exorbitant interest rates,” says Jake Hill, founder and CEO of DebtHammer. “The people who will qualify — people with excellent credit scores and an income that’s more than double the U.S. average — will likely have access to lower-cost borrowing options like home equity loans, cash-out refinancing or 401(k) loans.”
[Read: Best Low-Interest Personal Loans]
Hill adds that options like a home equity line of credit might have more favorable interest rates and repayment terms.
Enright agrees, saying these secured loan options are preferable for those seeking a large amount of money.
“For a homeowner with substantial equity in their home, a home equity line of credit or home equity loan may be a better choice for cash needs of this amount,” Enright says. “Because these are secured loans — secured by the home as the collateral — interest rates are typically lower than for personal loans.”
Plus, there might be additional tax benefits, depending on why you need the money.
“If you plan to use the money for home improvements, the interest on a home equity loan may even be tax-deductible,” Hill says.
[Read: Best Low-Interest Personal Loans]
Should You Take Out a $100,000 Personal Loan?
As with any loan, it’s important to consider whether the need is worth the cost. According to Hill, you should do the math and consider how much you’ll pay in interest if you take out a $100,000 personal loan.
With such a large amount, you may end up paying a lot over time. If you have access to any other borrowing options with lower rates, it might save you quite a bit of money to go that route.
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How to Get a $100,000 Personal Loan originally appeared on usnews.com
