Getting a personal loan of $ 100,000 is not easy, but it is possible. How to qualify

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Most personal loans are for relatively small amounts: according to Experiential, the average personal loan balance is $ 16,458, and Ted Rossman, senior industry analyst at CreditCards.com, says most personal loans are likely between $ 5,000 and $ 25,000. But some lenders, like Lightstream and Sofi – offer personal loans up to $ 100,000.

Rossman says that in order to benefit from it, these factors are the most important: your credit score, your income, your debt-to-income ratio (which looks at how much you owe each month versus what you earn), and other factors that influence the likelihood that you will repay them. “You’re even more likely to be approved at 720+ or ​​even 740+. The lender will also want to make sure that you have a high enough income to pay the monthly payments and that your overall debt ratio is not too high, ”says Rossman.

While lenders will often ask you why you are getting a personal loan, they are much more concerned with whether you are paying it off, so the same things that get you approved will also be the key to a bigger loan. A great credit score, consisting of multiple credit accounts with long histories, is a big green light for many lenders, experts say. And Annie Millerbernd, Personal Loan Expert at NerdWallet, adds, “Strong, consistent income and low debt will also show the lender that you can afford to pay that large amount of money back.

Rossman says people are the most likely to receive these larger loans for major renovations. “I could also imagine scenarios involving debt consolidation and maybe even something like financing a business or paying for a wedding – not necessarily a $ 100,000 wedding, but part of the appeal of personal loans is that the “borrower has a lot of flexibility with how they use the money,” says Rossman.

What are personal loans best used for?

In general, personal loans, which are a one-time lump sum, tend to be best for large one-time expenses. “Debt consolidation, a single sweep of all your unsecured debt, is a great use for a personal loan if you get a lower rate than you were paying before,” says Millerbernd. Rossman says the best reasons to take out a personal loan are if you can consolidate your credit card debt at a much lower rate or if you can qualify for a low rate (ideally lower than what you could get with, say , a home equity loan) to finance home improvements. “Eligible borrowers should have no problem securing a large loan to pool or consolidate their credit card debt,” says Millerbernd.

“I would be less enthusiastic about using a personal loan for discretionary, temporary and intangible things like weddings and vacations,” says Rossman.

That said, while every lender is different, in general, lenders don’t give too much importance to the reason for your personal loan. “It’s more of a record keeping formality. You shouldn’t lie, of course, but they probably won’t stay in close contact with you specifically about how you used the money, ”says Rossman. “Of course, if you tell them you want $ 10,000 to hit the craps tables in Vegas, that might be a reason to refuse you.”

How to choose a personal loan lender

Choose the lender with the lowest rates and fees. Note that some personal lenders are more specialized than others. “Payoff, for example, focuses on personal loans as a way to consolidate credit card debt. And LightStream announces lower rates for personal loans used to buy cars than those intended to pay for tuition, ”says Rossman.

Note that a personal loan is not always your best option. “The average HELOC rate is 3.88% and if you have a good credit rating you could probably get close to 3%. With great credit you are probably looking at around 5% for a $ 100,000 personal loan, so the HELOC might be a more affordable choice even if you put your home as collateral, so that’s a risk to consider, ”explains Rossman.


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