A five-figure personal loan may not require the best or even good or credit. Subprime borrowers who have fair credit scores of between 580 and 669 are eligible for personal loans up to $5,000 in some instances. Lenders evaluate credit risks based on several key aspects, such as a borrower’s credit history and debt-to income ratio even with bad credit. However, lenders can be able to approve any amount of $5,000 personal loan request if the borrower is able to pay the monthly installments for the loan. The process of getting a loan for $5,000 could be more straightforward than obtaining the larger size of loan.
The lenders may see loans of $5,000 to be less risky than bigger loans that can cause greater risk to lenders in the event of default. Below, we give more information regarding the criteria to qualify for the $5,000 personal loan and list certain lenders that provide these loans to people who have weak credit scores.
What Are Some Reasons to Get a $5,000 Loan?
Here are some good reasons to get the $5,000 loan:
- The borrower receives the money as a lump-sum. They could use the funds to make important purchases
- The loan may assist borrowers with unexpected expenses
- The money can be used to pay off debts
- The $5,000 installment loans may feature lower interest rates than credit cards.
Typical $5,000 Loan Terms
A $5,000 loan could come with the following conditions:
- principal loan amount: The $5,500 you receive in a single lump sum is what is the principal. The borrower is expected to pay their principal in entirety at the expiration of the loan.
- The interest rate is: The interest rate for a loan of $5,000 is the amount the lender is charging the borrower for taking off the credit. The lender can provide an interest rate fixed that is never changed or variable rates which may fluctuate throughout the term of the loan. Interest rates are usually calculated as a percentage of the balance of the loan.
- The term “repayment: The repayment term for a loan of $5,000 refers to the time period during which the borrower is required to pay the principal amount and interest in total. Some lenders will offer personal loans for $5,000, with terms for repayment ranging from 12 months to 7 years.
- Collateral A few lenders will require subprime loan borrowers to provide collateral in exchange for an amount of $5,000 personal loan. Collateral can be described as an asset (or personal possession) like an account in a savings or vehicle that is used to be used to secure the loan. Secured loan and unsecured loans distinctions are starkly different in that the unsecured loans don’t require collateral, while secured loans do.
- Fees for origination: There are lenders who may require an origination fee when processing your loan of $5,000. The fee for origination could range from 1to 10 percent on the loan amount, or $50 to $500 in this scenario.
- Fees for application: Some lenders may charge an application fee in order to examine your loan application for $5,000. The cost could be anywhere between $25 and $50.
- A prepayment penalty Certain lenders might charge prepayment penalty charges in the event that you repay your loan early. This is the case when you pay back the loan in full prior to when the term of repayment expires. These fees can range from 2 to 5percent from amount of the loan amount.
- Fees for late payments: The lender could charge late charges when it receives a monthly installment late than the due date. The amount could be anywhere from anywhere from $25 to $50.
- The grace period for loans is A loan of $5,000 personal loan may include a grace period which could allow customers additional time to pay their loan without having to pay with a late charge. Some lenders will offer an extra grace period of 10 days from the due date prior to charging the late fee.
- The fee for not having funds is known as a nonsufficient fund. Certain lenders might charge you a nonsufficient fund fee or the return check fee in the event that the checking account had insufficient funds to pay for a monthly bill. The fees can range between $20 and $50, and can also be referred to in the form of NSF fees.
$5,000 Personal Loan Monthly Payments
Monthly payments for the $5,000 personal loan are based on the interest rate as well as the repayment term and all required fees.A longer repayment term could reduce your monthly payments but will expose you to higher fees for interest over the course of the loan, while the shorter term of repayment could increase the amount you pay each month but could expose you to lower charges for interest throughout the term of the loan.
For instance an example, the five-figure personal loan with a 10 percent interest rate, a 7-year repayment time and no additional charges will result in 84 monthly payments in the amount of $83.01 in addition to $1,972.50 in interest total. Similar loans with a 12-month repayment term would have 12 monthly payments totaling $439.58 as well as $274.95 in interest total.