Where to get a $5,000 personal loan — and what to consider first

If you need $5,000 to pay for medical bills, home improvements, an emergency or to consolidate high-interest debt, a personal loan may be one option. A variety of banks, credit unions and online lenders offer $5,000 personal loans, and most are able to fund loans quickly — in some cases, as soon as the same business day.

Because they are so common, it is critical to understand what you may need to qualify and how to shop for the best personal loan rates. With a little extra research, you can find a lender that meets your needs without breaking the bank.

Where to get a $5,000 personal loan

You can get a $5,000 personal loan by applying for financing with a bank, credit union or online lender — nearly every lender that offers personal loans provides this amount. Each lender has its own eligibility requirements you must meet to demonstrate that you have the ability to manage and repay the loan effectively.

In general, the average personal loan interest rate is a little over 12 percent — but borrowers with poor credit may see an annual percentage rate (APR) over 30 percent. If you have a minimal credit history, comparing bad credit personal loan rates is essential to finding a competitive offer.

No matter your credit score, shopping around and comparing lenders is important. Look at the interest rate offered, repayment term lengths and fees, including origination and early repayment fees. Getting prequalified with different types of lenders can help you better assess your borrowing options.

U.S. Bank

Rating: 4.8 stars out of 5

4.8

Learn more in our Bankrate review

• Bankrate’s view

  U.S. Bank specializes in smaller personal loans with competitive rates for existing customers. Its minimum credit score of 660 makes it a good option for those in the higher end of the fair credit range, and it has one of the largest range of loan terms on the market, ranging from 12 to 84 months. Depending on when you apply, your loan can be funded as soon as the next business day.

  

  Pros

  • Shorter terms available
  • Non-customers can apply
  • Joint borrowers allowed

  

  Cons

  • Limited availability
  • Excellent credit required for best rates
  • No direct creditor payments

PenFed

Rating: 4.8 stars out of 5

4.8

Learn more in our Bankrate review

• Bankrate’s view

  If you are interested in borrowing from a credit union, PenFed is well regarded for its competitive rates, starting at 8.99 percent, and its expansive customer support. You can also apply for a joint loan with a co-borrower, which can increase approval odds for those with minimal credit. Plus, interest rates at federal credit unions are capped at just 18 percent.

  

  Pros

  • Fast funding timeline
  • Minimal fees
  • Joint applications available

  

  Cons

  • Membership required
  • Undisclosed eligibility criteria
  • Frequent app outages and crashes reported

LightStream

Rating: 4.5 stars out of 5

4.5

Learn more in our Bankrate review

Bankrate's view

Part of Truist Bank, LightStream is a fully online lender with few loan use restrictions. It has a minimum loan amount of $5,000and a low starting rate. In addition, there are no fees — not even late fees — and LightStream offers a Rate Beat program to help you secure the most competitive APR. Like with any lender, the lowest rates will be given to those with excellent credit, and it may be difficult to qualify if you don’t have a strong credit score.

Pros

• No origination or late fees
• Rate Beat program
• Funding as soon as the same business day

Cons

• Prequalification not available
• Long credit history required
• High maximum APR

Upstart

Rating: 4.7 stars out of 5

4.7

Learn more in our Bankrate review

• Bankrate’s view

  Upstart loans are accessible to most borrowers, including those with minimal credit history. Its lending decisions consider more than just credit score, such as an applicant’s education and career background. Upstart offers funding in as little as one business day. It also offers especially competitive starting APRs of just 6.70 percent.

  

  Pros

  • Low minimum APR
  • Approval based on factors beyond credit score
  • Fast funding

  

  Cons

  • Origination fee of up to 12 percent
  • High maximum APR
  • Only two different repayment term options

How to get a $5,000 personal loan

Lenders review your credit score and credit history to assess how likely you are to repay the loan. You will need good to excellent credit to qualify for the lowest rates. If you have bad credit, a lender may charge you a high interest rate or reject your application. These steps can help you obtain a loan:

1. Review your credit. Before applying, review your credit to find out what your score is. This will help you identify the lenders you’re most likely to be successful with.
2. Prequalify with multiple lenders. If you’re considering taking out a loan it’s a good idea to get prequalified with at least three lenders. This can help you compare loan offers side-by-side to identify the most competitive offer.
3. Crunch the numbers. Make sure to review your monthly budget and determine which loan works best for your financial picture.

Select a lender. Submit your full application and wait to receive approval and your funds.

What you need to qualify for a $5,000 personal loan

To qualify for a $5,000 personal loan, you need to demonstrate that you are financially stable enough to repay the debt along with your other expenses. Lenders consider your credit score, income and debt-to-income ratio (DTI) when you submit an application.

• Credit score: Most lenders will want you to have good to excellent credit to qualify, although there are some bad credit personal loans that are available to those with lower scores and a shorter credit history.
• Income: You will need to provide proof of income to qualify for almost every lender — and your income needs to be high enough to handle your monthly payment.
• Debt-to-income ratio: In addition, lenders want to see that you have a higher income than your total debt. A good debt-to-income ratio is considered under 36 percent for the best approval odds.

Before making a decision, compare the rates and terms for at least three lenders so you can be sure that you find the best terms for your needs.

Long-term costs of a $5,000 personal loan

How much you pay for a $5,000 loan depends mostly on your interest rate and repayment term. You can use a personal loan calculator to estimate the total cost. For example, this is what your borrowing costs could look like for a $5,000 loan with a 36-month term:

If you choose a longer loan term, it could lower your monthly payments but increase the amount of interest you pay over the life of the loan. For instance, here’s what your costs might look like for a loan with a 60-month term:

Alternatives to $5,000 personal loans

Getting a personal loan to cover a $5,000 expense isn’t the only route. For some, it might be better to consider a credit card or home equity loan. Consider some alternatives to a personal loan and whether each option best fits your needs.

• Credit cards: While this option becomes riskier as spending increases, credit cards can be a sound choice if you are looking for payment flexibility. To keep your credit score in check, ensure you aren’t over-extending your credit utilization ratio and work to pay it in full each month.
• Peer-to-peer lending: With a peer-to-peer loan, sometimes called a P2P loan, you will apply directly to a group of investors instead of a financial institution. You will have increased approval odds than with a traditional lender.
• Personal line of credit: If you do not want to use a home as collateral, you could instead apply for a personal line of credit. These allow you to make withdrawals during the draw period, which you then repay with interest. It is similar to a credit card, but you can typically benefit from lower interest rates with a personal line of credit.
• Buy now, pay later apps: Buy now, play later (BNPL) apps, such as Klarna and Affirm, allow you to upfront access to funds that you repay in installments. This short-term financing can be ideal for borrowers with bad credit, but it can also be subject to short repayment periods and high fees.

How to determine if you need a $5,000 loan

First and foremost, you must determine if you need to take on debt or if you could save up for the expense. If you decide you do need to borrow, review your budget to see if you can afford the monthly loan payments. Borrowing only what you need can keep the total cost down. Plus, ensuring you can make your payments will help you avoid potential late fees and damage to your credit score.

Learn more: How does a personal loan affect your credit score?

That said, there are times when it might be beneficial to borrow more than you need. For instance, taking out a larger amount could make sense if you’re borrowing money for a home improvement project and don’t know the exact costs. If this is the case for you, find a lender with no prepayment fees so you can pay back any extra.

Bottom line

There are many lending options if you need a $5,000 loan, but it’s important to identify the offer that best matches your goals and budget. When you’re ready to seek funding, apply for prequalification with a handful of lenders. Review all of the terms and conditions ensuring that you understand the full cost of the loan.