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Guide to Getting a $5,000 Personal Loan

Guide to Getting a $5,000 Personal Loan
Sulaiman Abdur-Rahman
Sulaiman Abdur-RahmanUpdated January 2, 2024
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Getting a $5,000 personal loan may not require good or prime credit. Subprime borrowers with fair credit scores between 580 and 669 can qualify for $5,000 personal loans in some cases.Lenders assess credit risks based on key factors, including a borrower’s credit history and debt-to-income ratio, but lenders may approve any $5,000 personal loan request if the borrower can afford monthly payments on the loan. Getting a $5,000 loan can be easier than getting a larger loan size.Lenders may view $5,000 loans as less risky than larger loan requests that could expose lenders to greater losses if the borrower defaults. Below we provide more details about the qualifying criteria for a $5,000 personal loan and list certain lenders who offer these loans to consumers with weak credit scores.

What Are Some Reasons to Get a $5,000 Loan?

Here are some reasons to take out a $5,000 loan:
  • Borrowers receive the funds in one lump sum and may spend the money on major purchases
  • The loan can help borrowers cover unexpected expenses
  • Borrowers may use the money for debt consolidation
  • $5,000 installment loans may feature lower interest rates than credit cards
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What Are Some Reasons Not to Get a $5,000 Personal Loan?

When deciding whether to get a $5,000 personal loan, consider the following pros and cons:
The interest rate you can get on a $5,000 personal loan might be lower than the average credit card interest rateThe loan may increase your burden of debt and can trigger anxiety due to financial stress
You may spend the $5,000 on almost any personal expenseLenders may charge high rates of interest
Many $5,000 personal loans are unsecured lending products that do not require collateralYour credit score may drop a few points if the lender conducts a hard pull inquiry into your credit report
To qualify for a $5,000 loan, you may need to meet the following criteria:
  • You may need a driver’s license, passport, or other government document verifying your identity
  • You may need a gross monthly income and supporting evidence of your income sources, such as recent pay stubs, W2s, and tax returns
  • You may need a debt-to-income ratio below 36%
  • You may need a credit score of 580 or higher to qualify on your own merits
  • Borrowers with high debt-to-income ratios may need a cosigner
  • Borrowers with poor credit scores of 300 to 579 may need a cosigner
  • Deep subprime borrowers with credit scores of 300 to 499 may need a cosigner and may be required to pledge collateral

Typical $5,000 Loan Terms

A $5,000 loan may have the following terms:
  • Principal loan amount: The $5,000 you receive in one lump sum represents the principal amount. Borrowers are expected to repay the principal amount in full by the end of the loan’s term.
  • Interest rate: The interest rate on a $5,000 loan is the amount that a lender charges a borrower for taking out the loan. Lenders may offer a fixed rate that never changes or variable rates that may fluctuate over the life of the loan. Interest rates are typically expressed as an annual percentage of the loan balance.
  • Repayment term: The repayment term on a $5,000 loan refers to the length of time a borrower has to repay the principal and interest in full. Some lenders may offer $5,000 personal loans with repayment terms ranging from 12 months to seven years.
  • Collateral: Some lenders may require subprime borrowers to pledge collateral for a $5,000 personal loan. Collateral is an asset or personal property, such as a vehicle or savings account, that can secure a loan. The unsecured and secured loan differences are polar opposites, for unsecured loans do not require collateral while secured loans do.
  • Origination fees: Some lenders may charge an origination fee for processing your $5,000 loan. The origination fee could be 1% to 10% of the loan amount, or $50 to $500 in this case.
  • Application fees: Some lenders may charge an application fee to review your $5,000 loan request. The fee could range from $25 to $50.
  • Prepayment penalty: Some lenders may charge prepayment penalty fees if you choose to pay your loan off early. This can occur if you repay your loan in full before the repayment term ends. These prepayment fees could equal 2% to 5% of the loan amount.
  • Late fees: A lender may charge late fees if it receives a monthly payment after its due date. This fee could be $25 to $50.
  • Loan grace period: A $5,000 personal loan may include a grace period that could give borrowers more time to make a payment without being charged a late fee. Some lenders may provide a grace period of 10 days after the payment due date before charging a late fee.
  • Nonsufficient funds fee: Some lenders may charge a nonsufficient funds fee, also known as a returned check fee, if your checking account had insufficient funds to cover a monthly payment. These fees could range from $20 to $50 and are also known as NSF fees.
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$5,000 Personal Loan Monthly Payments

Monthly payments on a $5,000 personal loan are based on your interest rate, repayment term, and any applicable fees.A longer repayment term can lower your monthly payment but expose you to more interest charges over the life of your loan, whereas a shorter repayment term can increase your monthly payment but expose you to fewer interest charges over the life of your loan.For example, a $5,000 personal loan with a 10% interest rate, seven-year repayment period, and no extra fees would feature 84 monthly payments of $83.01 and $1,972.50 in total interest. A similar loan with a 12-month repayment period would feature 12 monthly payments of $439.58 and $274.95 in total interest.Recommended: ATV Prices & Expected Maintenance Costs to Know

Top $5,000 Personal Loan Lenders

Here are some top lenders to consider if you’re looking for $5K online personal loans. (The following information on APR range, loan amounts, and maximum term lengths will be updated weekly, every Monday.)
LenderLoan amountsAPR rangeMaximum term
Avant$2,000 to $35,0009.95% to 35.99%60 months
Best Egg$2,000 to $50,0007.99% to 35.99%60 months
LendingClub$1,000 to $40,000 9.57% to 36% 60 months
OneMain Financial$1,500 to $20,00018% to 35.99%60 months
Prosper$2,000 to $40,0007.95% to 35.99%60 months
Universal Credit$1,000 to $50,00011.69% to 35.99%60 months
Upgrade$1,000 to $50,0008.49% to 35.99%60 months

The Takeaway

A $5,000 personal loan can provide borrowers with the financing to cover unexpected expenses. Whether you have excellent credit or poor credit, lower loan amounts are usually easier for anyone to qualify for and can help borrowers pay for essential goods and services.Lantern by SoFi can simplify the research of comparing online personal loans. Just provide basic information about yourself and the loan you need, and Lantern can guide you in the process to apply for a personal loan with the lender of your choice.Compare personal loan rates and apply in minutes.
Photo credit: iStock/AlexSecret

About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and served as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.
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