Where to get a $40,000 personal loan

To get a $40,000 personal loan, it’s vital to research different types of lenders and shop around for the best offer. While there are quite a few lenders to choose from, qualifying may be more difficult than with smaller loans. Comparing lenders that offer the best personal loan rates may help you save thousands of dollars in interest.

Lenders that offer $40,000 personal loans

You can get a personal loan from a credit union, local bank, online lender or peer-to-peer lender. Before applying, compare offers from top lenders to find the loan with the most competitive terms.

Prosper

Rating: 4.6 stars out of 5

4.6

Learn more in our Bankrate review

Bankrate's view

A peer-to-peer lender, Prosper works a bit differently than traditional lenders. Funds come from “peers” — other individuals who evaluate your request for funding and decide if they want to lend you money.

The application process remains similar to traditional online lenders, though. You fill out an application online, and if approved, often get funds within one business day. You can also get prequalified and view potential loan offers and rates without impacting your credit score.

Pros

• No prepayment penalties
• Quick online application process
• Joint borrowers accepted

Cons

• High maximum interest rate
• Origination fee up to 9.99 percent
• No autopay discount

LightStream

Rating: 4.7 stars out of 5

4.7

Learn more in our Bankrate review

Bankrate's view

LightStream aims to give the best rates to those with an outstanding credit history and solid finances. If you don’t need the loan proceeds right away, you get up to 30 days — or 90 days for home improvement loans — to defer the disbursement date and prevent interest from accruing.

For people shopping for the best rate, LightStream offers a Rate Beat program. In addition, it has one of the better rate discounts at a 0.50 percent when you use autopay.

Pros

• Rate Beat program
• Autopay discount available
• No fees

Cons

• No option to prequalify
• Must have an established credit history
• High minimum credit score requirement

Happy Money

Rating: 4.7 stars out of 5

4.7

Learn more in our Bankrate review

Bankrate's view

Happy Money offers loans specifically for credit card debt consolidation. Though this may seem limited, if your main goal is to pay off credit card debt, then it’s an excellent option to consider.

Unlike the many lenders that cap rates at 35.99 percent, Happy Money’s rates top out at 17.48 percent. This is lower than the average credit card APR of nearly 21 percent. The lender also offers direct payment to creditors, which streamlines the consolidation process.

Pros

• Ideal for credit card debt consolidation
• Partners with credit unions
• Limited fees

Cons

• No joint borrowers
• Does not accept bad credit
• Slow funding process

SoFi

Rating: 4.7 stars out of 5

4.7

Learn more in our Bankrate review

Bankrate's view

SoFi is best known for its student loan refinancing products, but its personal loans are also among the best excellent credit borrowers will find. There are no mandatory fees of any kind — not even late fees. Interest rates are competitive and funds can be sent your way as soon as the same day.

It is also one of the few that accepts co-borrowers. Adding a joint borrower with a healthier credit history than yours can increase your chances of approval. Or it may help you qualify for the full $40,000 rather than a smaller amount.

Pros

• Accepts joint borrowers
• Optional origination fees
• Autopay discount

Cons

• Must have good to excellent credit
• No cosigners accepted
• Limited customer support hours

Best Egg

Rating: 4.6 stars out of 5

4.6

Learn more in our Bankrate review

Bankrate's view

If your credit score isn’t in mint condition, Best Egg is one of the few lenders that accepts applicants with a fair credit score. It also offers both unsecured and secured loans, which may help you qualify for a lower rate if you secure it with a high value asset like your car or a savings account.

Pros

• Secured and unsecured loans available
• Low rates for qualified borrowers
• Flexible home equity loan product

Cons

• Term restrictions
• Uses home and fixtures as collateral
• High origination fee

LendingClub

Rating: 4.5 stars out of 5

4.5

Learn more in our Bankrate review

Bankrate's view

Another lender catering to fair-credit borrowers, LendingClub‘s personal loan offer is highly versatile. You can opt for joint or individual loans, and you will have the ability to change your repayment date to suit your needs.

Pros

• Prequalification available
• Joint borrowers permitted
• Payment due date flexibility

Cons

• APR on the higher side
• Origination fees
• Limited eligibility information

How to qualify for a $40,000 loan

There are certain requirements you must meet to qualify for a personal loan. Before you can receive approval for your loan, you need to verify your identity and income to confirm the loan. This lets the lender know that you are capable of repaying the $40,000 loan you are taking out.

Most lenders evaluate the following before making a lending decision:

• Credit score: Your credit score shows how well you have handled past borrowed money. To qualify for a $40,000 loan, you’ll typically need a credit score upwards of 670 or a cosigner with excellent credit. That’s because these loans involve a higher risk for the lender, so most will limit high amounts to those with good credit scores.
• Sufficient income: You will need to show that you have sufficient income in order to repay the loan. Most lenders will request proof of income, whether it is a paystub, W-2 or tax return.
• Documentation: In addition to proof of income, you’ll also need to verify your identity. You will need to provide proof of ID and address, among other required loan documents, to get approved.
• Debt-to-income (DTI) ratio: Your debt-to-income ratio is your total monthly debt divided by your total monthly income. Typically, the lower your DTI, the better. Most lenders prefer a DTI under 36 percent, especially for larger loan amounts.

Some lenders may have more flexible qualification requirements. Check each lenders’ requirements before applying to save yourself time.

What will a $40,000 personal loan cost?

When you take out a personal loan, you’ll repay the amount you borrow plus interest and any applicable fees in equal monthly installments. Interest rates, which are expressed as an APR (annual percentage rate) on loans, include both interest and fees, vary by credit rating, loan type and the lender you select.

To illustrate how borrowing costs work, assume you take out a $40,000 loan with an average interest rate of 12.31 percent APR. This is how your payments and total interest paid over a few loan terms:

Opting for a six-year repayment term means paying more than $8,000 extra in interest compared to a three-year term. Before taking out a loan, use a personal loan calculator to estimate both your monthly payment and your overall borrowing expenses.

How to determine if you need a $40,000 loan

Taking out a $40,000 loan means assuming a hefty monthly payment for years and risking credit score damage if you can’t keep up. Before applying, assess why you need the funds and determine if it’s an urgent need or if you can hold off and save up.

Here are some instances where a $40,000 loan could make sense:

• You have a real need and want to build your credit score: Payment history is the most significant component of your credit score. By making timely loan payments, you can improve your credit health.
• You’ll earn a return on the money: Completing home improvement projects is often expensive, but kitchen remodels, basement conversions and energy-efficient enhancements can increase your property’s value.
• You can save money on interest: If you’re battling high-interest credit card debt, taking out a debt consolidation loan could save you hundreds — if not thousands — of dollars in interest, depending on your rate. This can make it easier to pay off your debt faster, plus decrease your credit utilization ratio, which can improve your score.

If you decide to take out a personal loan, make sure you know how much you will owe each month and have a plan to pay it back. You should also have the means to comfortably afford the monthly payments.

Bottom line

When considering a $40,000 personal loan, think about the overall cost of the loan and whether the reason behind it is worth it. Though each lender has its own requirements, it’s likely that you’ll need a strong credit and income to qualify for a loan that size.

Crunch the numbers with the help of a calculator to ensure you don’t borrow more than you can comfortably afford. Research your options carefully and compare offers from multiple lenders to find the best loan for your needs.