How To Get a $5,000 Personal Loan (February 2024 Guide) (2024)

If you’re shopping for a $5,000 personal loan, it’s best to shop around to find the best loan terms and features for your needs. Here are the top recommendations from the MarketWatch Guides team.

• LightStream: Our top pick
• SoFi: Best customer service
• PenFed: Best for small loans
• Discover: Best for low rates
• Upstart: Best for bad credit
• U.S. Bank: Best for bank switchers
• Upgrade: Best discounts
• Wells Fargo: Best for in-person service

LightStream offers personal loans for different purposes, including debt consolidation, home improvement and auto financing. This lender also has a fast turnaround time with funds available the same day if approved before 2:30 p.m. EST. LightStream also doesn’t charge any prepayment or origination fees. Prepayment fees are charged if you pay off your loan early, while origination fees refer to money deducted from the amount you receive on the loan.

Pros and Cons of LightStream

Pros

• No fees
• Same-day funding possible
• Interest rate discount for autopay

Cons

• No option to prequalify on the website
• Lower credit scores may not qualify
• No co-signer option, but co-applicants are allowed

LightStream Eligibility Requirements

LightStream specializes in providing loans for borrowers with good to excellent credit. However, having good credit doesn’t guarantee you’ll be approved for a loan. LightStream also looks at other factors like your income, debt-to-income (DTI) ratio and payment history to determine if you qualify. Your DTI measures your monthly income against your existing loan payments, like an auto loan or student loan.

SoFi is an online lender that offers personal loans that start at a low interest rate. SoFi also offers same-day loan funding and doesn’t charge origination fees, application fees or prepayment penalties. Customer support is available seven days a week by phone or online chat support.

Pros and Cons of SoFi

Pros

• Lower starting interest rate than some lenders
• Can get prequalified online
• Same-day funding available
  

Cons

• Lower credit scores may not qualify
• No co-signer option but co-applicants are allowed
• Won’t qualify for unemployment protection program if your loan is not in good standing

SoFi Eligibility Requirements

To qualify for a personal loan, you must be a U.S. citizen, a permanent or non-permanent resident and at least 18 years old. SoFi doesn’t disclose specific credit score requirements on its website, but it does typically require you to have good to excellent credit and demonstrate a history of financial responsibility, including paying your bills on time. SoFi also looks at your monthly income and professional experience when considering your loan application.

PenFed is a credit union that offers personal loans with a competitive interest rate and flexible terms of up to 60 months. You can get prequalified online and check your personal loan rate without impacting your credit score. If approved, you can receive your loan funds in one to two business days for an ACH transfer or direct deposit and within five to seven days by check. PenFed doesn’t charge origination fees or prepayment penalties and doesn’t have any hidden fees.

Pros and Cons of PenFed

Pros

• No hidden fees
• Get preapproved online
• Lower interest rates than many competitors

Cons

• Must be a current member or become a member to accept your loan
• No same-day funding
• Late fee for payments made more than five days after due date

PenFed Eligibility Requirements

While you don’t need to become a PenFed member to apply for a loan, you will need to become a member if you get approved and want to accept your loan terms. You will also need a form of ID and proof of income, such as recent pay stubs, tax returns or bank statements.

While well-known for its credit cards, Discover also offers personal loans. Discover’s personal loans do not have any upfront fees and come with low interest rates and flexible repayment terms of up to seven years. You can receive your funds as early as the next business day. Discover also allows you to prequalify for a loan and estimate your monthly payment online.

Pros and Cons of Discover

Pros

• Low fees and flexible repayment terms
• Can receive funds quickly
• Able to prequalify online

Cons

• No co-borrowing option
• Late fee of $35 may apply
• No same-day funding option

Discover Eligibility Requirements

Discover doesn’t disclose any specific credit score requirements on its website. In order to be eligible for a personal loan, you must be at least 18 years old and a U.S. citizen or permanent resident. You’ll also need a physical address and a minimum household income of $25,000.

Upstart is an online loan marketplace that considers alternative credit data, such as education* and employment history, to help determine your creditworthiness. Upstart offers personal loans with terms of up to five years** and no prepayment penalties. You can check your rate online in minutes, and if approved, Upstart can send the funds as early as one business day.

Pros and Cons of Upstart

Pros

• Considers lower credit scores
• No prepayment penalties
• Check your rate and get preapproved online

Cons

• Higher maximum interest rates than many lenders, as high as 35.99% APR**
• Interest rates vary by state
• Shorter maximum loan terms than some lenders

Upstart Eligibility Requirements

Upstart does not have any minimum credit score requirements. However, it will consider your current credit in addition to your income, education and employment.

U.S. Bank offers personal loans of up to $50,000 for account holders and up to $25,000 for non-customers. If you only need a $5,000 loan, U.S. Bank is a solid option that has low interest rates to help you consolidate debt and pay for unexpected expenses. U.S. Bank doesn’t have any loan origination fees, but there are strict credit score requirements, and some loan products are not available in all states.

Pros and Cons of U.S. Bank

Pros

• Funds can be disbursed within hours for current customers.
• No origination fees
• Repayment terms range from 60 to 84 months

Cons

• Limited loan options if you’re not a customer
• May need to visit a local branch to close your loan (if not a customer)
• Higher credit score requirements for non-customers

U.S. Bank Eligibility Requirements

To qualify for a personal loan, U.S. Bank requires that applicants have a minimum credit score of 660 if they are a customer of the bank. Non-customers must have a credit score of at least 720 to qualify.

Upgrade offers fixed-rate personal loans of up to $50,000. You can prequalify online and receive your loan funds within one business day in most cases. Upgrade doesn’t have prepayment penalties, but it does have an origination fee ranging from 1.85% to 9.99%. You can receive a slight interest rate reduction when you set up automatic payments. Upgrade also offers secured loan options where you can use your car as collateral and potentially secure further discounts.

Pros and Cons of Upgrade

Pros

• Get prequalified online
• Fast funding
• Accepts co-borrowers

Cons

• Origination fee applies
• Lowest interest rates reserved for debt consolidation loans
• High maximum interest rate compared to competitors

Upgrade Eligibility Requirements

To be eligible for a personal loan with Upgrade, you must be at least 18 years old (or 19 in select states), have a verifiable bank account and have a valid email address. Upgrade will also consider your credit score and payment history.

Wells Fargo offers personal loans for major expenses and doesn’t charge any origination fees, closing fees or prepayment penalties. Only current bank customers can submit a form online to prequalify and get a quote on a loan. Once you’re approved, Wells Fargo can send your loan funds as early as the next business day.

Pros and Cons of Wells Fargo

Pros

• No fees or prepayment penalty
• Same-day credit decisions available
• Flexible repayment terms of up to seven years

Cons

• Must be a current customer to get prequalified
• Late fees may apply
• Interest rate reduction only available to Wells Fargo customers

Wells Fargo Eligibility Requirements

While Wells Fargo doesn’t disclose a specific minimum credit score requirement on its website, personal loan eligibility is based on your credit score and loan details, such as the amount financed and the loan term. To apply, you’ll need your Social Security number, proof of income and proof of your monthly mortgage or rent payment.

You can apply for a $5,000 personal loan with just a few steps. Depending on your lender, you may be able to complete the entire application process online and upload your supporting loan documents.

Applying for a $5,000 Personal Loan

To get a $5,000 personal loan, you’ll generally take the following steps:

1. Check your credit score: Lenders may require a minimum credit score for approval, so it’s important to check your credit report. A good credit score can help you secure a lower interest rate and better loan terms. A good to very good credit score ranges from 670 to 799,according to FICO.
2. Compare lenders: Once you have an idea of what your credit score range is, you can start considering which lenders you want to use. Shopping around and comparing quotes from a few lenders can help you narrow down the best loan option for your situation. Many lenders allow you to get prequalified online with no impact to your credit score.
3. Choose a lender and apply:Once you’ve narrowed down the lender you’d like to use, you will need to submit an official application. The application will be more detailed than the prequalification process, and, at this time, you could get a hard inquiry on your credit report since the lender needs to check your credit score.
4. Submit supporting documents: Once you submit your application, it will be processed, and the lender may require supporting documents, such as recent pay stubs, previous tax returns, proof of address and your employer’s information.
5. Review loan terms and receive funding:If your loan is approved, you’ll receive the final loan terms to review before receiving your funds. It’s important to make sure you carefully review your loan agreement and understand all the terms before accepting your loan. Each lender has its own timeline for approving your loan and providing the funds, and how you choose to receive the money can further alter the timeline. However, some lenders provide same-day approval and can send your funds as soon as the same day or next business day.

Requirements for a $5,000 Personal Loan

Each lender has its own eligibility standards, so the requirements for a personal loan can vary. In general, lenders will typically check your income, credit score, payment history and DTI ratio.

Some lenders may have a strict minimum credit score requirement, while others may be willing to approve you with a lower credit score. You will also need to have a source of income and a history of paying bills and past debts on time. Your DTI ratio is a percentage that represents your total monthly debt payments divided by your gross monthly income.

A higher DTI ratio means that more of your income is already going toward existing debt payments and that a loan may be risky. A lower DTI ratio indicates that you can manage to take on another debt and afford to repay it along with your other existing expenses.

A personal loan isn’t always the best way to obtain the funds you need. If you don’t qualify for a personal loan or just want to weigh your options, here are some alternatives to consider.

Home Equity Line of Credit

A home equity line of credit (HELOC) is a revolving line of creditthat you can get by borrowing against the equity in your home. This is a secured loan that uses your home as collateral. HELOCs usually have a variable interest rate, and you can draw from your line of credit for a specific time frame, known as the draw period. After the draw period is over, you will need to start repaying the amount you borrowed.

Due to the variable interest rate, your payments may vary and be unpredictable. HELOCs also require upfront fees, like an appraisal fee, an application fee and closing costs. If you need to borrow a lump sum of money, you may prefer a home equity loan to a HELOC.

Home Equity Loans

A home equity loan is similar to a HELOC since it’s a secured loan that lets you borrow from the equity in your home. With a home equity loan, however, you receive your loan as a lump sum and must pay monthly installments to repay the loan amount plus interest. Home equity loans usually have a fixed interest rate, so your loan payments will be the same each month.

Home equity loans may also have upfront fees, such as an appraisal fee for your home and closing costs. Repayment terms are longer than a personal loan and generally range from five to 20 years or longer. Like a HELOC, if you fail to repay your loan, the bank can seize your home.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending platforms cut out the middleman and allow you to borrow money directly from investors. P2P lending companies present opportunities for you to borrow amounts similar to what you could borrow with a personal loan, and you can use the money for home improvements, debt consolidation or unexpected costs.

Some peer lending platforms have more lenient requirements for credit scores and allow you to check your rate or get prequalified online without impacting your credit score. While P2P loans may be easier to qualify for with fair or bad credit, they can also have fees and high interest rates.

There are myriad options for a $5,000 loan among various banks, credit unions and online lenders. While approval for a personal loan isn’t guaranteed, it’s best to shop around and compare rates and loan offers for such a loan before narrowing down your decision. This can help ensure a lower interest rate, fewer fees and better loan terms overall.

While $5,000 may be a relatively small amount to borrow, it’s still important that you calculate or estimate your monthly payment to make sure you can comfortably afford to repay your loan each month. You may consider speaking with a financial adviser to weigh your options more closely and discuss whether a personal loan is best for your unique situation.

Our team put together a comprehensive100-point rating systemto evaluate personal loan companies. We gathered data points from 28 of the most prominent lenders in the U.S. and analyzed disclosures, licensing documents, sample loan agreements, marketing materials and websites. Our rating system takes into account four broad categories.

• Affordability(35%): How expensive each company’s loans are to pay back
• Loan features(35%): The breadth of loan terms and features available to prospective customers
• Customer experience(20%): Ease of application, prequalification and customer service interactions
• Company reputation(10%): An exploration of lenders’ Better Business Bureau files, customer reviews and outstanding regulatory actions

Our top-rated lenders may not be the best fit for all borrowers. To learn more,read our full personal loans methodology.

Editor’s Note: Before making significant financial decisions, consider reviewing your options with someoneyou trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.

*Although educational information is collected as part of Upstart’s rate check process, neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan

**The full range of available rates varies by state. A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 18.44% and a 8.64% origination fee of $864, for an APR of 22.88%. In this example, the borrower will receive $9136 and will make 60 monthly payments of $257. APR is calculated based on 5-year rates offered in March2023. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.