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Getting a large personal loan up to $100,000 will call for a steady source of income and a strong credit score of at least 720.
What Is a Large Personal Loan?
The largest personal loan most people can get is $100,000. A loan of $50,000 and more is considered large by many lenders.
When to Consider a $100k+ Personal Loan
People who seek a loan of this size usually have a considerable expense they want to pay for, whether it’s a medical expense, a debt consolidation, or a dream vacation.
Why Are Large Personal Loans Harder to Get?
The application requirements for a $100,000 personal loan can be demanding. Lenders like to review a consumer’s ability to manage debt and make timely repayments before approving any loan application. Especially important is a low debt-to-income ratio, Large personal loans are harder to get because borrowing large amounts of money can present far greater risks than borrowing small sums of money.Lenders can lose significantly more money if a borrower defaults on a $100,000 personal loan compared to a smaller amount, so lenders may require applicants to have an excellent credit history and a sufficient source of regular income before approving large loan amounts.Recommended: How Much Can You Borrow With a Personal Loan?
How Are Large Personal Loans Different From Other Personal Loans?
The larger loans obviously have bigger installment payments and are often harder to be approved for.
Finding a Large Personal Loan Lender
Consumers can take these steps when attempting to find a large personal loan lender:
1. Compare rates
Lenders who offer $100,000 personal loans will offer different rates of interest. Consumers need to shop around and compare rates to see which lender offers the lowest rate of interest on large personal loans.Higher interest rates add to the cost of the loan, so borrowers can spend less money over time by borrowing money at the lowest rate of interest they can find.
2. Compare terms
The terms of taking out a $100,000 personal loan vary across lenders. Some lenders may charge origination fees for processing the loan application. Other lenders may charge prepayment penalties if the borrower pays off the loan early.Personal loans are installment loans that provide borrowers with a lump sum of money to be repaid over a set period. Some lenders may have terms as low as 12 months and as high as seven years.Comparing terms can help you make an informed decision, because the costs of repaying a $100,000 personal loan can be higher or lower depending upon the terms and conditions of a loan agreement.
3. Compare monthly payments
Monthly payments can vary depending on the length of the loan term. Shorter terms can translate into higher monthly payments, and longer terms can translate into lower monthly payments.How personal loans work is that borrowers receive a lump sum of money with an obligation to repay the loan over a set term. Getting a $100,000 unsecured personal loan with a term of seven years and 10% interest would result in monthly payments of $1,660.12, whereas a $100,000 unsecured personal loan with a term of 12 months and 10% interest would result in monthly payments of $8,791.59.Borrowers with a 12-month personal loan term would be expected to make monthly payments for each of those 12 months, while borrowers with a seven-year personal loan term would be expected to make 84 total monthly payments over the life of the loan.Lenders may consider your monthly income and creditworthiness when determining whether to approve your personal loan application and what term length to offer. Comparing monthly payments can help you make an informed decision.
4. Compare total repayment costs
The total repayment cost of a loan could be influenced by several factors, including the rate of interest and the length of the term. Borrowers are responsible for repaying principal, interest, and any fees associated with the loan.Borrowers seeking the lowest total repayment cost for a $100,000 personal loan can shop around for the lowest rate of interest and the shortest term length they can afford. Longer terms can minimize your monthly repayment burden, but they may also saddle you with more interest payments over the life of the loan and leave you with a total repayment cost far above the amount you borrowed. For example, the total repayment cost for a $100,000 personal loan with a term of seven years and 10% interest would be $139,449.95. Shorter terms can maximize your monthly repayment burden, but they may also soften your total debt repayment obligation by minimizing the amount you’ll pay in interest over the life of the loan. The total repayment cost for a $100,000 personal with a term of 12 months and 10% interest would be $105,499.06.
How to Qualify for Large Personal Loans $100,000+
As mentioned earlier, qualifying for large personal loans may require borrowers to have a low debt-to-income ratio (DTI), a steady source of income, and a strong credit score of at least 720 on the FICO® base scale ranging from 300 to 850.
Credit score
Credit scoring models, such as FICO Scores and VantageScore®, rate your credit risk based upon your reported credit history. Consumers who pay their bills on time and manage their debt well may have a strong credit score.Equifax, a major consumer reporting agency, also has a credit scoring model ranging from 280 to 850, and according to that model:
Poor credit scores range from 280 to 559
Fair credit scores range from 560 to 659
Good credit scores range from 660 to 724
Very good credit scores range from 725 to 759
Excellent credit scores range from 760 to 850.
Getting a $100,000 personal loan may require you to have a good credit score or better.
Get the required documentation
Getting approved for a $100,000 personal loan may require you to provide lenders with the following documentation:
Recent pay stubs, W2s, or tax returns to verify your employment and sources of income
Utility bills to verify your residential address
A copy of your driver’s license or Social Security card to verify your identity
Demonstrate repayment ability
Putting together your application, keep in mind that you must make a case for being able to repay this large loan on time and in full. Your income, bank accounts, and credit history are the components.
Managing the Loan
Paying back a $100k+ loan will require creating a well organized system that includes deadlines.
Loan repayment terms
Typical personal loan terms vary. Usually they are spread over two to seven years, with monthly payments. If you borrow a large amount, your lender may offer a term of 10 years or even more.
Impact on Credit Score
Preoccupied with how to get a 100k loan? Beyond the “how,” you should consider the effect on credit. When you apply for a personal loan, your credit score will dip a few points because the lender will need to do a “hard check.” This reduction in your score should only last a few months.Getting a personal loan can both help and hurt your credit rating. It will increase the amount of debt you carry, which is generally not favorable. But having a variety of different types of credit can actually help your score. A personal loan is an installment loan. If most of your credit is revolving credit, such as credit cards, a personal loan can improve your mix of credit. That’s another thing that credit agencies like to see.Also if you make all your payments on time, it will certainly help you build credit.
Additional Considerations
Although most personal loans are unsecured, meaning they don’t require collateral, some lenders require personal loans, particularly large ones, to be backed by something of monetary value. Consider if you want your car, home, or cash in a savings account put at risk as collateral if you pursue a secured personal loan.
Pros and Cons of $100k Personal Loans
Here are some advantages and disadvantages to taking out a 100k personal loan:
Pros
Cons
You can finance major purchases
You could end up paying tens of thousands of dollars in total interest
The loan could be used for debt consolidation
Your debt-to-income ratio could increase substantially
What Are Large Personal Loans Used for?
Large personal loans can be used for financing sizable purchases, consolidating debt, and rebounding from a personal emergency. Borrowers can use the $100,000 for virtually any personal expense, including vacations.It’s important to note that personal loans generally cannot be used for business purposes. Make sure you check for any restrictions against using a personal loan for business purposes before submitting your application.
Can You Get a Large Personal Loan With Bad Credit?
It’s highly unlikely. Consumers with bad credit scores face huge barriers to getting approved for large personal loans. A 100k personal loan can expose lenders to high losses if the borrower defaults on the loan, so lenders generally require applicants to have an excellent credit history and a sufficient source of regular income before approving large loan amounts.Detailing what is a bad credit score, the Equifax scoring model defines poor credit scores as those ranging from 280 to 559.Some borrowers with fair or even good credit still may have difficulty getting approved for large personal loans, depending on their DTI.
Alternatives to Large Personal Loans
If you’re daunted by the reality of how to get a 100k loan, here are some other options:
Personal lines of credit
A personal lines of credit (PLOC) is a revolving form of credit that can allow you to withdraw funds from the account up to the credit limit. Borrowers may use a personal line of credit for personal expenses. And some consumers may qualify for personal lines of credit with borrowing limits that exceed $100,000.
Home equity loans
Home equity loans can provide homeowners with a lump sum of money to use for personal expenses. A home equity loan is essentially a second mortgage in which homeowners borrow against the equity of their home. Borrowers are expected to repay the home equity loan over a set term.
Home equity lines of credit
Home equity lines of credit are revolving lines of credit that allow homeowners to borrow against the available equity in their homes during a draw period. The home equity line of credit is also known as a HELOC. Homeowners can use a HELOC to help finance large purchases, and the available credit on the HELOC replenishes as the borrower repays the outstanding balance.
The Takeaway
Whether large or small, personal loans can provide consumers with funding to meet a variety of needs. Vacations, emergency expenses, and major purchases can be financed with personal loans.Lantern by SoFi can help you explore personal loans. Lantern has a user-friendly interface that can guide you in the process of finding and applying for a personal loan of your choosing.
Frequently Asked Questions
What credit score is typically required to qualify for a $100k+ personal loan?
What documentation do I need for a large personal loan application?
How long does it take to get approved for a $100k+ personal loan?
Photo credit: iStock/ilkercelik
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About the Author
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.
