How much will you pay for a $40,000 personal loan?

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If you’re looking for a $40,000 personal loan, be sure to compare rates and terms from as many lenders as possible. Learn more here. (iStock)

Whether you need to consolidate credit card debt, pay for a medical procedure, or cover another major personal expense, a personal loan might be a good option. 

If you decide to take out a large personal loan — such as a $40,000 personal loan — it’s important to carefully consider your lender options to find a loan that best suits your needs. 

Here’s what you should know before getting a $40,000 personal loan. 

How much will you pay monthly for a $40,000 personal loan?

How much you’ll pay for a $40,000 personal loan mostly depends on your credit and the repayment term you choose, as both of these will factor into the interest rate you’ll get. Generally, the higher your credit score, the lower the interest rate you might qualify for — which means you’ll pay less in interest over the life of your loan.

For example, here’s how credit scores affected average personal loan interest rates offered to borrowers applying for three-year personal loans through the Credible marketplace in February 2021:

  • 720 to 779: Borrowers with credit scores in this range were offered an average 12.47% APR. If you took out a $40,000 loan at that rate with a three-year term, you’d pay $8,153 in interest over the life of the loan.
  • 640 to 679: Borrowers with scores in this range received an average APR of 24.61% APR. On a $40,000 personal loan with a three-year term, these borrowers would pay $16,958 in total interest charges.
  • 600 to 639: Borrowers with these credit scores were offered 29.59% APR. On a $40,000 personal loan with a three-year term, they would pay $20,807 in total interest charges.

As you can see, your credit score can make a huge difference in how much a personal loan will cost you overall. If you decide to take out a personal loan, it’s a good idea to consider how much that loan will cost you — this way, you can prepare for any added expenses. You can use Credible’s personal loan calculator to see how different interest rates and loan terms will affect your monthly payment and overall cost. 

Where to get a $40,000 personal loan

Here are a few lender options for taking out a $40,000 personal loan:

Online lenders

Online lenders can be one of the most convenient options for getting a loan — you can often apply in just a few minutes and will likely get a quick approval decision. If you’re approved for an online personal loan, you can generally expect to get your funds within five business days — though some lenders will fund approved loans as soon as the same or next business day. 

If you decide to take out a personal loan, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from our online partner lenders below in just two minutes.

Banks and credit unions

Banks and credit unions can be another option for getting a $40,000 personal loan. Some banks and credit unions also offer online loan applications — though in some cases, you might need to apply in person at a local branch.

If you already have an account with a bank, you might be able to qualify for a rate discount if you also take out a personal loan with them. However, keep in mind that you might get a better rate and more favorable terms on a credit union loan since credit unions are nonprofit organizations. You’ll need to meet certain criteria in order to join a credit union.

How to apply for a $40,000 personal loan 

If you’re ready to apply for a $40,000 personal loan, follow these three steps:

  1. Check your credit. Lenders will review your credit to determine your creditworthiness as well as your interest rate. Because of this, it can be a good idea to check your credit before you apply to make sure it’s in as good of shape as possible. You can use a site like to review your credit reports for free. If you find any errors, dispute them with the appropriate credit bureaus to potentially boost your credit score.
  2. Compare lenders and pick a loan option. Be sure to compare as many lenders as you can to find a loan that’s right for you. Consider not only rates but also repayment terms and any fees charged by the lender. After you’ve compared lenders, choose the loan option that works best for you.
  3. Complete the application. Once you’ve chosen a lender, you’ll need to fill out a full application and submit any required documents, such as tax returns or pay stubs.
  4. Get your funds. If you’re approved, the lender will have you sign for the loan so the funds can be sent to you. The time to fund for personal loans is usually about one week — though some lenders will fund approved loans as soon as the same or next business day.

Before you apply for a personal loan, remember to shop around and compare as many lenders as possible. This way, you can find a loan that suits your needs. Credible makes this easy — you can compare your prequalified rates from our partner lenders after filling out just a single form.

What credit score do you need for a $40,000 personal loan?

To qualify for a personal loan, you’ll generally need at least a fair credit score — usually 620 or higher. However, keep in mind that lenders might have more stringent credit requirements if you’re looking to borrow as much as $40,000 through an unsecured personal loan.

Besides affecting your ability to get approved, also remember that your credit score will impact your interest rate — the higher your score, the better interest rate you’ll land. You’ll typically need good to excellent credit to qualify for the lowest rates available. 

Frequently asked questions about personal loans

Here are the answers to a few commonly asked questions regarding personal loans:

Can you get a personal loan with bad credit?

Yes, there are several lenders that are willing to work with borrowers who have bad credit. However, it might be difficult to qualify for a personal loan as large as $40,000. 

If you’re struggling to get approved, consider applying with a cosigner to improve your chances. Not all lenders allow cosigners on personal loans, but some do. Even if you don’t need a cosigner to qualify, having one could get you a better interest rate than you’d get on your own.

What are the requirements for a personal loan?

Requirements to qualify for a personal loan will vary between lenders. However, there are some common eligibility criteria that you’ll likely come across, including:

  • Good credit: To qualify for a personal loan as large as $40,000, you’ll typically need good to excellent credit.
  • Verifiable income: Lenders want to see that you can afford to repay the loan, which means you’ll need to provide information about your income as well as documentation to verify it. For example, you might need to submit pay stubs or tax documents.
  • Low debt-to-income ratio: Your debt-to-income (DTI) ratio is a percentage that shows how much of your monthly income goes toward debt payments. Lenders will check your DTI ratio to make sure you have enough income to cover the new loan payments on top of your other commitments — in general, lenders like to see that your DTI ratio is below 40%. You can calculate your debt-to-income ratio by dividing your total monthly debt payments by your monthly income.

Keep in mind that lenders might also have other requirements to qualify for a personal loan. Be sure to double-check with the lender before you apply, so there aren’t any surprises. 

How do personal loans compare to credit cards?

A personal loan might be a better option than a credit card if you need to borrow $40,000. This is because the interest rates on personal loans tend to be lower compared to credit card rates. 

The average interest rate on three-year personal loans of all sizes that were offered through the Credible marketplace was 11.34% in February 2021 while the average rate for a new credit card was 16.12% APR as of March 31, 2021. 

If you took out a three-year personal loan with the average rate of 11.34%, you’d pay $7,376 in interest over time. In comparison, a $40,000 credit card balance paid over three years with a 16.12% APR would cost $10,711 in interest — assuming you charge nothing else to the card. 

Also, keep in mind that personal loan rates are fixed, which means you’ll have a set monthly payment and future payoff date. This can help keep you from falling into the long-term debt cycle that sometimes happens with credit cards.

What can a personal loan be used for?

You can generally use personal loans for almost any personal expense, such as a home improvement project, medical costs, or debt consolidation. Some lenders might impose certain restrictions, however, so be sure to read the fine print before borrowing. For example, you often can’t use personal loan funds for education or business expenses.

If you’re ready to find your $40,000 loan, remember to do your research and compare as many lenders as possible. This way, you can find a personal loan with terms that work for you. This is easy with Credible — you can see your prequalified rates from multiple lenders in just two minutes.