Can You Fund Really Big Purchases With a Personal Loan?

Personal loans are a versatile way to borrow because you can use the money for pretty much anything. But what if you want to borrow a lot of money for a very large purchase? Will you be able to find a personal loan that allows you to make that move or will you need to look into other options?

Just how much can you borrow when you get a personal loan?

The good news is, it is entirely possible to fund large purchases using a personal loan. In fact, there are several personal loan lenders out there that will allow you to borrow as much as $100,000.

Now, you will of course need to qualify for the large loan based on your income and your credit score. Lenders are going to want proof that you'll be able to make the monthly payments, so you'll often have to provide documentation such as tax returns or pay stubs.

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And not all lenders have such high loan limits, so if you're borrowing and need a big sum, you'll want to research your options carefully to find a loan provider that can give you the money you're looking for.

But if you have solid financial credentials and take the time to get a few quotes, you should be able to get the cash you need deposited into your checking account so you can move forward with your purchase.

Should you fund really big purchases with a personal loan?

While you can fund a big purchase with a personal loan, this doesn't necessarily mean you always should. There are a few key considerations to make before moving forward.

• Could you fund the purchase in cash? While personal loans tend to have lower interest rates than credit cards do, you still do have to pay financing charges. In fact, the average interest rate on a personal loan as of August 2023 was 12.17%. If you can avoid that interest cost by paying from your savings account, you're often better off since paying interest makes your purchase more expensive.
• Is the purchase necessary? Committing to pay a substantial monthly payment for a large loan can reduce your future spending power and make it more difficult to accomplish other financial goals. So be sure the purchase is actually worth making before moving forward.
• Can you afford the monthly payments? You don't want to struggle for years to make your loan payments, so be sure that the monthly amount due based on the amount you borrow is going to be comfortably affordable for you. If it won't fit into your budget, don't move forward.
• What are your alternatives? You may have other options, such as a home equity loan, home equity line of credit, or car loan, depending on exactly what you're purchasing. Since these are secured loans, the interest rate may be lower than for a personal loan. Be sure to consider all of the different borrowing solutions to see which makes the most sense for your current needs.

By taking the time to consider these issues, you can make an informed choice about whether taking out a large personal loan is the right financial move.