$40,000 Personal Loans: How And Where To Get Loans This Size

Not everyone can pull $40,000 out of their pocket for a major expense. For those who need such a large sum of cash quickly, a personal loan can be a great option. Because $40,000 is on the higher end of the typical personal loan amount, you may need to meet certain borrower requirements that don’t come with loans of smaller sizes.

Let’s explore the places where you can find a $40,000 loan, how to get approved for one and some alternatives that you might consider.

Where Can You Find $40K Personal Loans?

Many traditional banks, credit unions and online lenders offer personal loans, which can range from $1,000 to $50,000 and on rare occasions go even higher.

Applying in person at a bank or a credit union can give you the benefit of asking questions and confirming details related to the loan. Some institutions will also offer discounts to longtime clients or members.

Getting a loan online, however, may offer a faster approval and processing time. Make sure you’ve researched an online lender thoroughly before providing them with any of your personal or financial information.

Qualifying For A $40,000 Loan

A $40,000 loan is a lot of money by most standards, so lenders will expect you to meet their eligibility requirements. Most lenders will look closely at your:

• Credit profile: Your credit history and credit score typically play a big role in your personal loan approval – especially if you’re seeking an unsecured personal loan, which is the most common type of personal loan and, unlike a secured loan, doesn’t require collateral. The minimum credit score will vary between lenders, but you’ll typically need a score of 650 or higher for a good interest rate.
• Debt-to-income ratio (DTI): Your DTI measures how much of your gross monthly income goes toward your current monthly debt obligations, such as recurring payments on a car loan or a student loan. Lenders will prefer borrowers with a low DTI, generally at or below 36%.
• Income verification: Since most personal loans are unsecured, lenders will require proof of income so they’ll know you can afford monthly payments. Most likely included with your application will be pay stubs, bank statements and perhaps other income documentation. 

How To Get A $40,000 Loan

If you decide to get a personal loan, follow these steps for what should be a straightforward and easy application process.

1. Review Your Credit Score

You should start the process by checking your credit score. You can see your score by checking with your credit card company or using a credit monitoring service. It may also help to request your credit report from a credit bureau so that you can spot and correct any possible errors impacting your score.

2. Confirm That You Need $40,000

It’s important to know exactly how much you need before applying for a loan, as your loan amount can directly affect the length of the loan, your interest rate and other conditions of the loan.

Borrowing too little money will require using your own money to make up for what you lack, while taking too much money out will mean paying interest on money you didn’t need.

Make sure the lender or platform you choose can offer just the amount you need. Rocket Loans℠ can offer borrowers a personal loan ranging from $2,000 – $45,000.

3. Compare Lender Offers

Even if a tentative offer from one lender looks good to you, you should shop around to compare interest rates and repayment terms from multiple lenders.

Lender origination fees can vary, too, and some lenders may charge prepayment penalties. It’s often helpful to read customer reviews so you’ll get an idea of a lender’s reputation.  

4. Prequalify For A Loan

Getting prequalified with a lender can give you a clear albeit tentative estimate of the repayment term and interest rate you’ll qualify for. It’s recommended that you prequalify with multiple lenders during this stage – prequalification shouldn’t affect your credit score.

Being prequalified doesn’t guarantee approval or any particular interest rate or repayment term, but it can help you decide which lender to go with.

5. Submit A Full Application

When you’ve settled on a lender and your loan, it’s time to fill out the formal loan application. Make sure you have all the correct documentation together and that you don’t make any big changes to your finances (changing jobs, taking out new credit, etc.) right after applying.

Lenders run a hard credit check when reviewing your application, so your credit score will take a small hit.

6. Consider And Accept Your Loan Offer

Within 1 – 7 business days of you submitting your application, a lender should let you know whether you’ve been approved or denied a loan. If approved, you’ll receive an official loan offer stating your approved loan amount, interest rate, repayment term and other details.

If you accept the conditions of this loan offer, you should receive your funds in your bank account within a few days.

7. Prepare For The Repayment Period

Most loan repayments begin 30 days after you’ve received your funds. If you haven’t already, adjust your budget to account for the additional monthly expense. To make repayment even easier, you can set up automatic payments so that you’ll never miss a due date.

Comparing $40,000 Loan Payments

How much you pay per month on a $40,000 personal loan will depend largely on your credit score, because your score strongly influences your interest rate. The length of your loan will also factor into your total monthly payment.

The tables below illustrate how much your monthly payment might be based on your credit score.

36-Month Fixed Personal Loan

60-Month Fixed Personal Loan

Alternatives To A $40,000 Personal Loan

A personal loan may not be your only borrowing option if you need $40,000. Here are a few other possibilities that can be worth looking into.

Home Equity Loan

A home equity loan is like a personal loan in that it’s a lump-sum loan that you can use for almost any reason (consolidating credit card debt, making home improvements, etc.). Unlike a personal loan, though, a home equity loan is only available only to homeowners. Your loan amount, interest rate and the length of your loan are determined in part by the equity you have in your home.

Because a home equity loan is secured by your home itself, your lender may take your home through the foreclosure process if you’re unable to make your payments on time.

HELOC

A home equity line of credit, or HELOC, also uses your home equity to determine your loan amount and approval. It’s not a lump-sum loan like a home equity or personal loan, but it’s a line of credit you can borrow from on multiple occasions over a certain period of time. Once this withdrawal period closes, your repayment period begins.

As with a home equity loan, you’ll be securing the loan with your home itself and you could lose your home if you can’t make your payments.

0% APR Credit Card

Some credit card companies offer a 0% annual percentage rate (APR) promotional period for new cards. People who sign up for a new card can enjoy a short period – usually from 6 to 21 months – of interest-free payments.

If you can’t repay your full balance before your promotional period ends, you’ll have to pay interest on all your remaining payments.

Savings

If you can spare $40,000 from your current savings, you don’t have to worry about getting a good interest rate or making monthly payments. However, savings accounts and emergency funds are meant to act as a safety net for when you need them, and draining your account of $40,000 could be very unsettling.

Consider using your savings if you deem this $40,000 expense to be an emergency, or you’re confident you can recoup that amount.

Final Thoughts

If you need $40,000 quickly, a personal loan can be a great option. You’ll need excellent or good credit to qualify for an attractive interest rate, so be sure your credit is in good standing before you apply. Otherwise, you might consider other options that could suit your situation better.

Want to know if you prequalify for a personal loan? Start an application online today with Rocket Loans.