How Hard is it to Get Unsecured Personal Loans for $25,000?

The question of whether or not you can get an unsecured personal loan for $25,000 is a bit loaded. If the question is, “Are there lenders willing to offer that much, even if it’s not to buy a house or a car?” Absolutely there are. Are they willing to lend it to you? That can be much trickier.

While still considered a “small” personal loan, $25,000 is still a good chunk of money. It’s a lot for a lender to have to commit at one time, and if the borrower defaults on the loan, that’s a lot of money to lose. With that much money on the line, lenders want to ensure that they only lend an amount like that to someone they can trust to repay every cent, plus interest.

So the question isn’t, “Can I get a loan for $25,000?”; the question is, “How hard is it to get one?”

In this post, we’ll discuss what lenders will use to determine whether or not they feel you’re a qualified borrower, give you some pointers to help you ensure that you’ll qualify to receive an unsecured personal loan for $25K, and give you some tips to find the best lender to work with.

How do Lenders Determine if They’ll Loan $25K?personal loan

Lenders determine whether or not they are willing to work with you the same way, whether you want as much as $25,000 or as little as $5,000 – they look at your financial profile.

Your financial profile is a snapshot of how well equipped you are to repay a loan, and how responsible you’ll be about doing so. Your profile is comprised of two primary attributes: credit score and capacity.

Let’s take a look at each more in-depth.

Your Credit Score

Your credit score is a number between 300 and 800. It is used as a reference to determine how responsible you are with your finances. Scores between 300 and 500 are considered poor, while scores between 720 and 800 indicate excellent credit. Your credit score is compiled based on five factors:

  1. Your financial history (including late/missed payments)
  2. Your credit utilization – how much credit you spend versus how much you have available
  3. Your credit history (how long you’ve had access to different accounts)
  4. Your mix of credit (between loans, credit cards, mortgages, etc.)
  5. Recently opened credit accounts.

These are ranked in the order that they impact your score, with financial history weighing the most. If you need to address your score, as we’ll discuss later, tackle them in sequence.

Your credit score only assesses your risk, not your ability to pay. Even if you make a six-figure salary per year, if you never pay back your debts, that’s not going to do the lender any good. Your ability to actually afford your loan is called your capacity.

Your Capacity

Your capacity is your projected ability to afford loan repayments. Given enough time, almost anyone could potentially afford anything. However, since it’s not practical to expect that you’ll have 20 years to pay back most loans, even a personal loan under $5,000, your capacity will be taken into account.

Capacity is primarily rooted in your debt-to-income ratio or DTI. This is a calculation that measures how much you make versus how much you’re obligated to spend. For example: if you make $60,000 a year, but have $30,000 you have to spend between your house, car, and student loans, your DTI is 50%. That’s a very high ratio.

Generally, lenders tend to shy away from anyone with a DTI higher than 43%. This is especially true when it comes to unsecured personal loans for $30,000 or greater.

How Can I Improve my Chances to Qualify for a $25K loan?

Since we’ve determined that your credit score and capacity are the two primary factors that lenders will use to determine your eligibility, you can take steps to improve both.

For your credit score, the biggest thing you can do is always pay your bills on time, and in full. Don’t just make minimum payments – try to pay off more if you can. Whatever you do, do not miss a payment.

Besides that, you should also look at reducing the amount of credit you’re spending each month if it’s over 30%. If you can’t afford to spend less, at least spread it out between different credit cards. That way you don’t risk hitting your credit limit for any one card.

Even if you can’t get your score to a good range prior to needing a loan, don’t worry. There are plenty of great options for bad credit personal loans you can take advantage of.

For your capacity, the obvious answer would be to make more money. However, if you could automatically do that, you wouldn’t need a loan. What’s more feasible is to reduce your other financial obligations before you seek your loan.

If you have another outstanding loan, pay it off first. Alternately, look at refinancing your loan to a lower monthly payment.

How Can I Find a Lender Who is Willing to Loan Me $25K?

While finding a great lender normally takes hours of research, and days spent on the phone trying to determine what the terms are for different lenders, Loans Now works specifically with people searching for unsecured personal loans.

With just a few pieces of information, we will do all the heavy lifting to find lenders willing to work with you, based on the amount you want and the amount of time you need to pay off your loan. Once we have some great options, we compile all of them for you so you can review each, while we offer you some advice about which option we think works best for you.

Our team has years of experience working with lenders, and since we don’t lend any money ourselves, our focus is completely on you and finding a loan that fits your needs the best. Best of all – our service is completely free!

So, to answer the question we started with: yes. It’s completely possible to get a loan for $25K, and with Loans Now, you’ll find a great selection of lending options that are sure to meet all of your needs!