When And How To Get A $10,000 Loan
A $10,000 loan can help you cover a wide range of expenses. While taking on a personal loan will add to your monthly expenses, getting your hands on a lump sum of cash upfront could help you resolve a pressing financial need.
Where You Can Get A $10,000 Personal Loan
If you’re looking for a $10,000 personal loan, you can find loan opportunities through banks, credit unions and online lenders. While personal loans are available through multiple lenders, not all lenders are created equally.
With that in mind, it’s a good idea to shop around and compare loan offers across lenders to find the best fit for your situation. You might focus on finding a lender with low interest rates or seek out a fast-funding timeline.
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Reasons To Get A $10,000 Personal Loan
Getting a $10,000 personal loan is a significant financial decision. While there are many reasons to consider a personal loan, we take a closer look at some of the most common reasons below.
Unforeseen Expenses
Life has a habit of throwing unexpected expenses our way. If you need money for an emergency, then a personal loan could cover the costs.
Some potential emergencies include extensive auto repairs insurance doesn’t cover or a sudden job loss that leaves you without enough income to cover the basics.
Debt Consolidation
Debt consolidation is a popular reason to take out a personal loan. That’s because you may be able to find a personal loan with a lower interest rate than the credit cards you’re currently paying off. If you can lock in a lower interest rate for your debts, it will cost you less to repay over time due to lower interest charges.
In general, this reason only makes sense if you can obtain a lower interest rate on your new personal loan than your current debt. For example, if you’re paying off a credit card balance of $10,000 with a 25% interest rate, taking out a personal loan with an 8% interest rate to pay off your credit card balance could make sense.
Home Repairs And Renovations
Homeownership often comes with many home renovations and repairs. If you don’t have enough equity in your home or a high enough credit score to pursue a home equity loan, then a personal loan could help you get the funds you need for necessary repairs.
Reasons Not To Get A $10,000 Personal Loan
While you can technically use a personal loan to cover almost any expense, it’s not the right solution for every financial concern. Below are some situations when opting for a $10,000 personal loan isn’t recommended:
- Medical bills: Many medical offices offer financing options for patients who cannot afford to pay the entire bill upfront. Make sure to ask about payment plans through the medical office before opting for a personal loan.
- Education expenses: If you or your child is going to college, federal and private student loans are usually an option. Typically, student loans offer lower interest rates than personal loans.
- Travel and event expenses: While you could use a personal loan to pay for a vacation or cover a wedding, it’s usually not a good idea to go into debt for these kinds of purchases.
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How To Apply For A $10,000 Loan
If you’ve decided that a $10,000 loan is the right fit for your situation, use the steps below to apply.
1. Check Your Credit Score
Before you start looking at loan options, check your credit history and credit score. In general, borrowers with higher credit scores have a higher chance of being approved for a personal loan. While borrowers with less-than-ideal credit scores may be approved for a loan, it’s worth noting that they usually pay higher interest rates.
If your credit score is relatively low, consider working to improve it before applying for a personal loan. For example, consistently making on-time payments on all your bills could help you improve your score.
2. Collect Your Documentation
Regardless of which lender you work with, you should expect to provide extensive documentation about your financial situation. Prepare by collecting the following paperwork:
- Proof of income: Most lenders expect to see W-2s, 1009s or recent pay stubs.
- Expense information: The lender may request bank and credit card statements to determine what other financial obligations you have. For example, most lenders will consider how much of your monthly income is already allocated to paying other debts.
- Identification: You’ll need to prove who you are with your Social Security number and a government-issued ID, like a driver’s license or passport.
3. Shop For A Lender
With your documents in hand, it’s time to shop around for a lender. Consider prequalifying for a loan from multiple lenders.
From there, compare your offers to find the most affordable option for your unique situation. Make sure to look at the fees, annual percentage rates (APR), and repayment timelines to land on the right option that fits your budget.
4. Submit An Application
Once you land on a lender, it’s time to submit an application. If you need to submit multiple applications, try to complete all of the applications within a 2-week window to limit the negative impact on your credit score.
5. Use Your Funds
If you’re approved for the loan, the funds should make their way to your bank account. The speed of funding varies based on the lender. With your hands on the funds, it’s time to put them to use.
6. Repay Your Loan
When the loan has been issued, the lender will expect you to start making scheduled repayments. In many cases, you’ll be expected to make monthly payments. Do your best to avoid missing any payments.
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$10,000 Loan: Monthly Payment And Interest Costs
The total cost of a $10,000 personal loan varies widely based on the loan term and attached interest rate. The tables below illustrate how the costs can change based on the interest rate. However, the costs in the tables don’t consider any additional fees or closing costs you might encounter.
3-Year Repayment (36 Months)
| Interest Rate | Monthly Payment | Total Interest |
|---|---|---|
| 10% | $322.67 | $1,616.19 |
| 12% | $332.14 | $1,957.15 |
| 14% | $341.78 | $2,303.95 |
5-Year Repayment (60 Months)
| Interest Rate | Monthly Payment | Total Interest |
|---|---|---|
| 10% | $212.47 | $2,748.23 |
| 12% | $222.44 | $3,346.67 |
| 14% | $232.58 | $3,960.95 |
Can You Get A $10K Loan With Bad Credit?
It may be possible to get a personal loan with bad credit, depending on your lender. However, borrowers with lower credit scores tend to pay significantly higher interest rates. With a higher interest rate attached, you could end up paying thousands of extra dollars in interest over the course of the loan. The table below illustrates how much a borrower would pay in interest with a 5-year loan term if they borrowed $10,000 with lower credit, resulting in a higher interest rate. In some cases, a sky-high interest rate could translate into paying more than $10,000 in interest over the course of the loan.
5-Year Repayment (36 Months) With Lower Credit
| Interest Rate | Monthly Payment | Total Interest |
|---|---|---|
| 10% | $264.94 | $5,896.33 |
| 12% | $323.53 | $9,412.04 |
| 14% | $387.52 | $13,250.99 |
$10,000 Personal Loan FAQs
You have questions about taking out a $10,000 personal loan. We have answers.
The Bottom Line
A $10,000 personal loan can resolve a cash crunch. If you have the cash flow to comfortably repay the loan, then pursuing a $10,000 personal loan could be the right move for your finances.
