Securing a $50,000 Loan: A Step-by-Step Guide (2024)

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• A $50,000 loan may come with a higher interest rate than a smaller loan because of the higher risk to the lender.
• Only borrowers with excellent credit scores and low debt-to-income ratios should take out a $50,000 personal loan.
• Make sure not to borrow more than is necessary or exceed your spending limits.

Most personal loans are unsecured, meaning that the lender issues them based on your creditworthiness. It may also be possible to work with a lender and get a secured loan backed by collateral, such as a savings account or a vehicle you own. While pledging collateral may improve your chances of being approved, remember that if you can't repay the loan, the lender has the right to take whatever it is you used to secure it.

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Eligibility criteria for a $50,000 loan

Qualification requirements vary by financial institution, and they may be more strict for larger loans. But most lenders look at the following:

• Credit score and history: The higher your credit score, the better your chances of getting approved for a loan with a low interest rate. Most lenders require a credit score that is at least in the mid-600s. Scores between 670 and 739 are considered "good." Lenders may also review your credit history for any potential issues such as previous bankruptcies, maxed-out credit cards, multiple new lines of credit, or a history of late payments.
• Income and employment: You should prepare to show proof of income and employment as lenders want reassurance that you will have the funds to pay back your loan. You can use pay stubs, W-2 forms, tax returns, or a job verification letter from your employer to verify these details. It is possible to get a personal loan when you're unemployed, though more difficult than it would be if you had steady work.
• Debt-to-income (DTI) ratio: A DTI ratio measures how much of your income goes toward paying debts. A DTI ratio of 36% or lower is ideal, but 43% may also be an acceptable level in some instances. You can calculate your debt-to-income ratio by adding up all your debt payments (including student loans, car payments, and credit card debt) and dividing it by your gross monthly income.

In preparation for your $50,000 loan application, make sure to have all the necessary personal and finanical documents on hand. You should also check your credit score and calculate your current debt-to-income ratio so you have a better idea of where you stand.

Applying for a $50,000 loan

Get prequalified for a $50,000 loan

You can prequalify with multiple lenders before submitting a formal application to compare all of your options. You can compare interest rates, terms, and fees from different lenders. Prequalifying won't hurt your credit score.

Lenders often give a cursory look at basic qualifications to see if you seem like you'll be a good fit for a personal loan. As $50,000 is a large amount of money, prequalifying can give you a better idea of if you're likely to be approved and the kind of rates lenders are willing to offer you.

Approval during the prequalification process won't guarantee your approval for the formal application. A lender may catch something they didn't when you prequalified and ultimately reject your application. You'll also have to agree to a hard credit inquiry, which can temporarily lower your credit score.

Next step: See if you're prequalified for a loan with no impact on your credit score.

Apply for the loan

After you've gotten prequalified with several lenders, compare the initial offers they made and choose one to submit a full application to.

You can complete the loan application process online for most lenders.To do so, you'll need a significant amount of documentation, including things like:

• Pay stubs/proof of income
• The last couple years of tax returns
• Documentation of 401(k)s and other financial accounts
• Photo ID
• Rent/mortgage history
• Proof of collateral, if you're pursuing a secured loan

Get these basics in order before applying for the loan, in order to speed up the process.

Your lender will review your full application and decide whether to approve you for the loan. If you are approved, you'll receive the final loan documents to sign off on. These will include all the details of your loan such as the interest rate, the amount of time you have to pay it off, the total amount you're borrowing, the monthly payments, and any fees. Be sure to fully understand the total cost of the loan and make sure you have a plan to pay it off before signing off on it.

$50,000 loan offers

If you're shopping around for a good deal on a $50,000 loan, here are some options worth considering:

LightStream Personal Loan

LightStream's interest rates are among the lowest available, ranging from 6.99% to 25.49% (with AutoPay discount, rates vary by loan purpose). It's a great option for personal loans up to $100,000, especially for borrowers with excellent credit scores. Most LightStream Personal Loans are approved for debt consolidation, home remodeling, or medical debt. It requires a minimum credit score of 660 and doesn't charge additional fees.

SoFi Personal Loan

SoFi is a good option for folks with at least a 680 credit score. SoFi rates range from 8.99% - 29.49% fixed (with all discounts). It has no additional fees and even offers benefits like unemployment protection.

You can take out a loan for as much as $100,000 with SoFi.

Wells Fargo Personal Loan

Wells Fargo is best for borrowers interested in in-person support as Wells Fargo offers around 4,700 locations throughout the country. It's also an ideal option for folks who are already signed up with Wells Fargo. You can take out a loan as high as $100,000, and you won't be charged an origination fee or prepayment penalty fee.

Wells Fargo loan rates range from 8.49% to 24.49% (with relationship discount). But it doesn't disclose a minimum credit score requirement. Wells Fargo does have a history of legal violations regarding deposit accounts, mortgages, auto loans, and more.

PenFed Credit Union Personal Loan

Although PenFed stands out as one of the best options for smaller loans, it does offer loans as high as $50,000 and only requires a minimum credit score of 580. So if you have poor credit, PenFed may be worth looking into. PenFed loan rates range from 8.99% to 17.99%.

You have to be a PenFed member to qualify for a personal loan. To become a member, you have to be a retired or active member of the military. Or you can open a PenFed savings account for a $5 minimum deposit.

Should you take out a $50,000 loan?

Personal loans can be a great way to pay medical bills, major life events, home renovations, or consolidate other debts. But only borrowers with excellent credit scores, low debt-to-income ratios, and a consistent source of income should take out a $50,000 loan.

You should only take out such a large loan if you're able to secure a great interest rate, reasonable loan terms, and avoid additional fees. If you're not able to get a good rate, you shouldn't take out a $50,000 loan. A large loan plus a high-interest rate is a recipe for disaster.

Consider borrowing money from a friend or family member, or talking with a financial advisor about your current financial situation and goals.

How to get a $50,000 loan FAQs