How to Get a $40,000 Personal Loan in 2026

How to get a $40,000 loan

Once you decide to apply for a $40,000 personal loan, do a little homework first.

1. Determine your budget. Calculate how much you can afford each month for a loan payment. This number will help you determine the length of loan that works best for you.
2. Find lenders. Do a little research to find lenders that offer $40,000 loans. Next, hone in on lenders that offer loans within your credit range or specialize in loans that align with your loan purpose.
3. Compare lenders. Once you’ve narrowed your search a bit, you can start comparing interest rates and loan terms from multiple lenders to find the best deal. A marketplace can be a good place to see several quotes at once.
4. Prequalify. Most lenders allow you to prequalify for a loan without a commitment. Prequalifying can give you an idea of the interest rate you may qualify for.
5. Apply for the loan. Once you’ve found the right lender, fill out your loan application in person, online or over the phone. Make sure you have all the required documentation handy and ready to submit.

Eligibility requirements for a $40,000 personal loan

Specific loan requirements vary by lender, but there are several commonalities.

• Credit score. Most lenders conduct a credit check to look at your score and credit history. For a relatively high loan amount, many lenders want a minimum score of 670 or higher, but some lenders consider borrowers with lower scores.
• Debt-to-income ratio (DTI). A DTI of 35% or less is best for a loan of this size, but some lenders may approve borrowers with a DTI of up to 43% or more. Calculate your DTI by dividing your total monthly debt payments by your gross monthly income.
• Proof of income. Some lenders have minimum income requirements, but this can vary depending on credit scores and DTI ratios. Be prepared to produce W-2s, paystubs, 1099s, bank statements or tax returns depending on your source of income.
• Adult US citizen. In most cases, you’ll need to be at least 18 years old and a citizen or permanent US resident to qualify for a $40,000 loan.

How to increase your chances of approval

Improving your credit score before you apply for a $40K loan greatly improves your odds of obtaining loan approval. You can start by getting a free copy of your credit report and disputing any inaccuracies you find. It’s also a smart move to pay down your existing debts, which can also boost your score.

Another option to improve your chances of qualifying for a $40,000 personal loan is to ask a friend with good credit to cosign a personal loan with you.

Can I get a $40,000 loan with bad credit?

It can be difficult to qualify for a $40K personal loan with poor credit of roughly 600 or less.
However, some lenders, such as Credible and Upstart, may offer loans to borrowers with lower scores if you meet other criteria. For example, if your credit score isn’t very high but you bring home a healthy income and have a low DTI, you may still qualify for a $40,000 loan.

Keep in mind that credit scores impact the interest rate you qualify for. If you have a lower score, lenders consider you a bigger risk, which results in higher interest rates.

How much does a $40,000 loan cost

The biggest cost of a personal loan is the interest, which can range from about 6% to 36%. The lowest interest rates are awarded to borrowers with the best credit scores, sufficient income and low DTIs.

Another common cost with a personal loan is an origination fee, also known as an administrative or processing fee. Origination fees are usually between 1% and 10% of the loan.
Not all lenders charge origination fees, but those that do typically deduct the fee from the principal and deposit the remainder in your checking account.

It’s also a good idea to be aware of any other fees associated with the loan. For example, if you think you can pay off your loan early — always a wise move — make sure the lender doesn’t charge any prepayment penalties. Most lenders also charge a fee if you make a late payment or don’t have enough money in your account to cover the minimum payment.

Calculate your $40,000 personal loan payment

Use our loan calculator to see what your monthly payment will be based on different interest rates and loan terms.

5 tips to get a better interest rate

There are a few things you can do to try and get a lower rate.

1. Request a shorter term. If you can manage the larger monthly payments, shorter-term loans are more likely to have better interest rates.
2. Raise your credit score. Borrowers with better credit scores typically get lower rates.
3. Compare lenders. Rates, loan terms and fees can vary widely between lenders, so be sure to look around to find the best deal.
4. Consider a secured loan. Loans secured with collateral typically come with more competitive interest rates.
5. Get a cosigner. If you can get a friend with excellent credit to cosign the loan, you should get a better rate than you would by yourself.

How to pay off a $40,000 personal loan

Consider a few ways to save money on interest and shorten your loan term.

• Add to your payment. Any time you have extra cash to add to your minimum payment, it will save you money on interest and shorten your loan term.
• Split payments. Making weekly or biweekly payments is a strategy that will save you money on interest charges without having to spend anymore each month.
• Refinance. If interest rates go down during your loan term, you may be able to refinance at a better rate.

Alternatives to personal loans

Any time you want to borrow a large sum, it’s important to explore all your options.

• Leverage your home equity. If you’re a homeowner with some equity built up, you may want to consider applying for a home equity loan or home equity line of credit. Because your house is used as collateral, you could qualify for a better interest rate.
• Peer-to-peer (P2) lending. Borrowers who don’t qualify for a $40K loan might have better luck consulting a P2P lending platform.
• Borrow from retirement. If you have a 401(k), you might be able to get a lower rate if you borrow against your savings.
• Consider a business loan. If your loan purpose is to grow your company, consider some business loan options. Or if you meet the criteria set by the Small Business Administration (SBA), you might want to apply for an SBA loan.

To make sure you get accurate and helpful information, this guide has been edited by Megan B. Shepherd as part of our fact-checking process.

Written by

Lacey Stark

Writer

Lacey Stark is a freelance personal finance writer for Finder, specializing in banking, loans, investing, estate planning, and more. She has 20 years of experience writing and editing for magazines, newspapers, and online publications. A word nerd from childhood, Lacey officially got her start reporting on live sporting events and moved on to cover topics such as construction, technology, and travel before finding her niche in personal finance. Originally from New England, she received her bachelor’s degree from the University of Denver and completed a postgraduate journalism program at Metropolitan State University also in Denver. She currently lives in Chicagoland with her dog Chunk and likes to read and play golf. See full bio