How to get a $100,000 personal loan with the best rate and terms

So you need a $100,000 loan — but how can you get one with a low interest rate and favourable repayment terms?

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You may have multiple five-figure debts that you want to consolidate into one monthly payment. Or, maybe you just bought a fixer-upper home and want to take out a loan to make all the necessary renovations. When you’re looking to borrow $100,000, you’ll need a lender that offers large personal loan amounts.

Fortunately, there are other trustworthy options beyond your bank for large personal loans. Read our guide to learn more.

6 steps to getting a $100,000 loan

  1. Research your options. It’s important to look at what different lenders have to offer to make sure you get the best loan for you. You will have less options since many lenders won’t offer more than $35,000 to $50,000. However, if you meet the eligibility criteria of the lender, you could get a low interest rate loan for $100,000.
  2. Know your credit score. Your credit score significantly affects the interest rate you’re offered. Knowing where you stand before you apply will help you narrow down your options to loans you’re likely to be approved for. If you have less than good credit, you will likely struggle to find a $100,000 loan you qualify for.
  3. Keep your budget in mind. Take time to go over your income and expenses to learn just how much you can afford in monthly repayments. From there, you can find the most favourable repayment terms for the amount you need to borrow.
  4. Ask questions. Before you apply or even after you’ve received a loan offer, don’t hesitate to ask questions. You can usually contact a lender over the phone or online via email or live chat. Some lenders have physical branches which you can visit it person if you have any issues.
  5. Assemble your paperwork. Learn what’s required by the lender beforehand, if possible. At a minimum, you’ll need your personal information, income information, government-issued ID, such as a driver’s license or passport, and your banking information.
  6. Apply online. Once you’ve done your research and found a lender you’d like to apply with, head to their secure online website to fill out your loan application. Your full name and contact information, the amount you want and the purpose of the loan are typically required. You could get pre-approved soon after applying or you may have to wait a few days to a week for a final approval decision.

What will I need to apply for a $100,000 loan?

There’s always a level of financial scrutiny that you open yourself up to when applying for financing. The lender will probably look at:

  • Reason for borrowing. What you’re using the loan for is a good indicator of risk for the lender. You could be considered less of a risk, and therefore have a stronger application, if the lender believes the reason is responsible. For example, a $100,000 personal loan to start a business may be viewed as more risky than a loan to make home renovations.
  • Credit score. The APR you’re offered is affected by your credit score as well as your credit history in general. A $100,000 loan will likely require an even higher credit score than what the lender lists as its minimum requirement because it’s a large loan.
  • Income and employment. It’s important to lenders that you’re able to afford all of your debt obligations, including your new loan if approved. You can demonstrate this ability with stable employment history and a high salary. The lender will ask for your annual income and recent employment on the loan application. In addition, the lender could evaluate your repayment ability by looking at your debt-to-income ratio, which is your monthly debt payments divided by your monthly income.
  • Home owner. For many loans as large as $100,000, you may have to be a homeowner. Although you may not be required to put up your home equity as collateral, you may still have to take out a secured loan for an amount this large. You will likely need to own something of great value, such as a home or property.
Some lenders summarize eligibility in three C’s:
  • Character (aka creditworthiness). This encompasses your credit score and the information on your credit report, such as payment history and open accounts.
  • Capital (aka collateral). If you’re considering a secured personal loan, your collateral will be evaluated for value to be sure that the lender can recoup its losses in the event that you default.
  • Capacity (aka ability to repay). The lender will look at factors such as your current job, your salary and your debt-to-income ratio to determine your ability to repay the new loan and handle all your other financial obligations.

How much does a $100,000 loan cost?

The total cost of your loan will depend on the APR and loan term you’re offered. As previously mentioned, you could get a lower APR if you have an excellent credit score and established credit history.

Costs example: $100,000 loan with a 5-year term at 5.7% APR

Monthly payment Total amount repaid Total interest charges
$1,919.36 $115,161.68 $15,161.68

How to get a lower interest rate and favourable terms

You have more control over the rate and terms on a loan than you might think. Start by being prepared and knowing what to expect. Here are three main points to understand:

  • Fixed vs. variable interest rate. Is the interest rate fixed for the course of the loan or could it change? Fixed rates have the benefit of predictable monthly payments, while variable rates often come with lower starting APRs but could increase later in the loan term. Learn more about the difference between fixed and variable rate personal loans.
  • Your credit score. Is your credit score higher than the lender’s minimum requirement? Is your credit score in the good-to-excellent range needed to get the best rate?
  • Your ability to repay the loan. Be sure to include all income and assets on your application to fully demonstrate you can afford the large monthly repayments that’ll come with a $100,000 loan.
  • Loan amount. You may want to evaluate if you really need to borrow $100,000. If the debts you’re looking to consolidate amount to $86,000, for example, not borrowing that extra $14,000 could save you a lot of money on interest and possibly qualify you for a shorter loan term. A shorter repayment period means larger monthly repayments but a lower overall cost due to less interest being charged over the loan term.

What can I do with a $100,000 loan?

When comparing loans of this amount, you likely have your borrowing reason in mind already. Here are some of the most common reasons to borrow a loan of $100,000.

  • Consolidate large amounts of debt. Have you racked up a lot of high-interest debt that’s taking you longer than you’d like to pay back? A $100,000 loan could help you pay off that debt faster and save money on interest with one simple monthly payment.
  • Grow or start a business. A personal loan for business use allows you to use the money for both business and personal expenses and deduct interest on your taxes as applicable, while a business loan can only be used for eligible business expenses.
  • Home improvements. Whether you’re improving your home because of a necessary repair or simply updating it, you could use a home improvement personal loan to pay for the expenses upfront. You could also consider a HELOC (home equity line of credit) or home equity loan if you have enough equity in your home.

What to watch out for

  • The fine print. Be sure to read the terms and conditions of the loan agreement. Ask questions if you don’t understand something. You’ll want to know about early repayment fees, penalties, privacy policies and your rights as a borrower.
  • Additional costs. Consider any fees or charges beyond the interest rate. Upfront fees for things like loan administration costs are usually included in the APR (annual percentage rate). Keep a look out for extra charges for things like early repayment or late payments — these penalty fees aren’t usually included in the APR but could be costly.
  • Other borrowing options. If you don’t find a personal loan offer that suits your needs, you have other borrowing options. Compare alternatives such as a home equity loan or line of credit.

What do I need to know about my credit report and score?

Your credit score is a number that represents your creditworthiness based on a variety of factors including: payment history, amounts owed, length of credit history, new credit inquiries, types of credit used, number of accounts and your balance-to-limit ratio.

Your credit score is the first thing most lenders will look at. Especially since you’re applying for a large personal loan, it’s important to have good to excellent credit to increase your chances of approval. A score of 650 or higher will likely be essential.

Your credit report is different from your credit score. Your report is a detailed record of your credit history, including open accounts, credit inquiries and how often you make on-time payments.

Can I get a $100,000 loan with bad credit?

Large personal loans typically require good to excellent credit. Your chances of qualifying for a $100,000 without a strong credit history and high credit score are fairly low. In addition, you will likely need to be a home owner or own some kind of collateral that is costly.

If you think your score should be higher than it is, you can check the account listings and payment history in your credit report. There may be errors on your credit report that are hurting your score. Contact the credit bureaus – Equifax and TransUnion – to have any errors fixed. If all the information in your report is accurate, you could take steps to improve your credit score.

Bottom line

For large personal loans, comparing your options is key to getting the lowest rate and best terms you’re eligible for. Even a slight increase in the APR you’re offered could mean a significant jump in the overall cost of your loan.

When you’re ready to consolidate your debt, renovate your home or fund some other large expense, you’ll want to be fully prepared. That includes budgeting for the monthly loan repayments to avoid any additional costs if you fail to make your repayments on time.

Remember that you’re in control of the loan process. Up until you’ve signed the loan documents, you’re under no obligation to accept an offer. If you’re unsure about the terms and conditions, you can ask questions and even consider consulting with a professional or a trusted friend. With a loan as big as $100,000, you will need to be as careful and responsible as possible throughout the entire process.

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