MoneyLion helps you find personal loan offers based on your background and info you provide. You can get matched with offers for up to $50,000 from top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

Can I get a personal loan to pay taxes?

If you have a decent credit score, you may be able to take out a personal loan to pay your taxes. You use the money for any purpose.  

Pros and cons of taking out a personal loan to pay taxes

Consider the benefits and drawbacks of taking out a personal loan to pay taxes.  

Pros

• Interest rate: If you have a decent credit rating, you may get a lower interest rate than with an IRS payment plan.  
• Satisfy tax debt: Once you pay off your tax debt, you don’t have the stress of dealing with the IRS.  
• No collateral: Personal loans are unsecured. You don’t need collateral, so you won’t risk losing assets like your home or bank account.  

Cons

• Cost: The interest rate with a personal loan may be higher than what you get with the IRS if you have bad credit.  
• Must qualify: Most lenders require you to meet eligibility, credit score, and income requirements to qualify.    
• May affect your credit: Your debt-to-income ratio changes when you take out a personal loan. Your credit score could drop by taking out a personal loan.  

Using a personal loan to pay taxes means that you’re switching out one type of liability for another. Although you’ll solve your tax bill, you’ll still need a clear plan to pay off the personal loan. Budgeting for loan payments is key to your long-term financial health.

How to use a personal loan to pay taxes

Follow the steps below when taking out a personal installment loan to pay taxes.  

1. Shop around and compare offers

Start by shopping around for personal loan offers. Narrow down your choices by comparing interest rates, terms, and eligibility requirements.  

2. Gather documents

Lenders often ask for documents that prove who you are, where you live, and how much money you make each year. Speed up the application process by having documents like your driver’s license, Social Security number, and W-2s readily available.  

3. Submit your application

Some lenders let you complete and submit your loan application online. You may have to complete a loan application in person at a brick-and-mortar bank.  

4. Pay your taxes

The fastest way to settle your tax debt is to make an electronic payment through IRS DirectPay or by setting up an online account with the IRS. You may also mail a check or money order. If you owe $500 or less, you can pay in cash at an authorized IRS retail partner.  

What happens if you can’t pay your taxes?

When you can’t get a personal loan, you can work out a payment plan with the IRS to pay your taxes. The IRS could garnish your wages or levy your bank account if you don’t pay your tax bill.  

Alternatives to using a personal loan to pay taxes

You can find alternative ways to pay taxes if you can’t get a personal loan.  

1. Credit card

If you have enough available credit, you could pay off what you owe on your credit card. The IRS may charge a processing fee for a credit card payment, ranging from 1.82% to 1.98%.  

However, using a credit card to pay tax debt can be costly if you have a high interest rate.  

MoneyLion can help you explore a wide variety of credit card options tailored to different needs and preferences.

2. IRS payment plan

The IRS offers short-term and long-term repayment plans. You apply for a payment plan online. If you can pay back what you owe in 180 days or less, you pay no setup fees and have greater flexibility with your payments. 

You must complete an installment agreement for a longer repayment term. Setup fees range from $31 to $225, depending on how you apply and whether you plan to make payments electronically, by check, money order, or credit card.  

3. 401(k) loan

You could borrow money from your 401(k) retirement account to pay your taxes. The upside of a 401(k) loan is that you are paying yourself back for the loan. However, if you leave your job, you have a brief time to repay the loan. You could be taxed and charged a 10% penalty for any money you don’t pay back by the deadline. 

4. Home equity loan

You can borrow against the equity built up in your home to pay your taxes. A home equity loan may get you a lower interest rate and better repayment terms than a personal loan. Since your home is collateral, you could lose your house if you don’t repay your loan.  

Liquid asset-secured financing loan

With liquid asset-secured financing, you can borrow money against the value of your investment portfolio. The value of your portfolio determines the amount you can borrow. If the market declines and your portfolio’s value falls, you may have to repay part of your loan to cover this shortfall.  

Keep the IRS off your back: Pay taxes with a personal loan

Owing money to the IRS can be scary, especially if you don’t have the money to pay your debt. By taking out a personal loan, you can pay your tax bill quickly and potentially on better terms than what you might get with the IRS.  

FAQ 

Taking on debt comes with risk, and you’ll want a clear plan for how to pay it back. However, in case of an emergency, they can be a way to spread out a big expense without straining your budget. If you choose to use a personal loan for a home renovation or business expansion, personal loans can be a way to add value to your home or company. 

In general, avoid using personal loans for non-urgent purchases. If you can wait and save funds for the purchase, you can save more in the long term. But when you need cash and cannot wait, these financial products offer the flexibility to get money when needed and use it as you choose. 

Are personal loans fixed or variable? Most personal loans are fixed-rate loans, but there are exceptions. Read on to learn about the types of personal loans you could get and how interest rates may change due to factors other than your credit score. 

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $50,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

Understanding personal loan interest rates

While a home equity loan, a mortgage, or a small business loan will have stipulations about what you can use the loan for, a personal loan can be used for what you need.

You could use a personal loan to increase the value of your home before selling it or to infuse extra cash into your business. In some cases, investing in improvements in your home or business can increase its overall value beyond what you invest. While you could get a HELOC or a small business loan to make improvements, sometimes a personal loan gives you more flexibility. 

In most cases, you’ll apply for a personal loan if you need cash fast. You could also need a personal loan to cover emergency medical expenses, an unexpected vehicle repair, or major home repairs beyond your emergency fund or insurance coverage. 

Like other types of loans, personal loans charge interest rates related to rates set by the Federal Reserve or “Fed.” The federal interest rate directly affects prime interest rates available to new borrowers. In the case of variable-rate loans, the federal interest rates will continue to influence interest rates at each adjustment period. For example, your loan could be “Fed plus 6%”. In the case of a fixed-rate loan, current Fed rates when you take out the loan will affect the interest rates the lender offers.

What are fixed-rate personal loans?

While you can find a variable-rate personal loan, most personal loans are fixed-rate loans. For a fixed-rate loan, once you receive an interest rate from a lender and agree to the loan terms, your interest rate will remain the same for the duration of the loan. If you have locked in a fixed-rate personal loan and the Fed subsequently raises rates, or rates go up in the market, you will not see changes to your interest rate for your locked-in loan, and the monthly payments don’t change. Of course, this isn’t always a good thing, as you could be stuck with a higher interest rate if you take out a personal loan during high-interest periods and then rates go down.

How it works

Suppose you need $20,000 to cover unexpected medical expenses. You’ve put about $10,000 on credit cards over the past year, and have an outstanding debt of $10,000. You could take out a personal loan to pay off the remaining bills and consolidate interest rates that are lower than standard credit card interest rates. 

Average personal loan interest rates are currently around 12.10%. While that’s higher than you’ll typically see on a mortgage or auto loan, it is also significantly lower than average credit card interest rates, currently 27.94%. Interest rates depend on your credit history, income, debt, and other financial factors. 

For example, if you take out a $20,000 personal loan with a fixed 12.10% interest rate and plan to repay it in 60 months (five years), your monthly payments will be approximately $445.90. You’ll pay $6,754.02 in interest over the five-year loan. Of course, this is a simplified example that excludes origination fees and other costs with taking the loans. You’ll lock in a significantly lower APR than putting the charge on a credit card and paying it off over time, potentially saving thousands over the five year repayment period. 

When to get a fixed-rate personal loan

A fixed-rate personal loan might make sense when you need funds quickly or you want to consolidate credit card debt while locking in an interest rate. Here are the pros of this type of loan:

Pros

• You know exactly how much you’ll pay each month. 
• It’s easier to budget and plan for other expenses. 
• You can lock in a lower interest rate without worrying about changing Fed rates. 

Cons

While fixed-rate personal loans offer a lot of advantages, there are a few disadvantages to be aware of. 

• If interest rates drop, you may be locked in with a higher interest rate.
• In most cases, interest rates are above 10%, this may be a significant amount of interest. \ Taking on additional debt is a financial responsibility that extends into the future. If you are concerned you won’t be able to handle the financial responsibility in the future, maybe a personal loan isn’t a good idea at this time. 

What are variable-rate personal loans?

A variable rate loan is a loan with an interest rate that changes over time, usually after a set period of two to five years. Variable-rate personal loans are more common in mortgages or auto loans, but you can find variable-rate personal loans from a few major lenders. 

With a variable-rate personal loan, your interest rate will change after a set lock period based on an underlying benchmark or index. For example, it might change based on the federal funds rate. Your interest rate could be stated as Fed plus 5%, for example. 

How it works

Suppose you have $20,000 in medical debt and credit card debt that you want to consolidate with a variable-rate personal loan. You may choose a lender offering a five-year personal loan with six-month readjustment periods after the first year. The interest rate is Fed plus 6%. The current fed rate is 5.33%. 

All other fees and factors excluded from this example, for the first year, your interest rate is 11.33%.This may look better than a fixed loan option at first, but after the first year, your interest rate will readjust at predetermined times. With each readjustment, your monthly repayment amount will also readjust and you might owe more. There is uncertainty with how much the repayment account changes, as it often depends on market conditions. 

When to get a variable rate personal loan

You should consider a variable-rate personal loan when you want to consolidate debt, and fixed-rate loan interest rates are high. You can get a lower interest rate in the future as long as you have the financial flexibility to pay both more or less in interest over time. You can also choose a variable-rate personal loan if you expect a higher income or more flexibility in your budget in the future and don’t mind the risk of adjusting interest rates. 

Pros

The main advantage of a variable-rate personal loan is the possibility of lower interest rates. Here is an overview of the pros. 

• Secure lower interest rates in the future (potentially). 
• Peace of mind with lower interest rates than credit cards or other high-interest debt. 
• Even with a variable interest rate, you can budget and plan to pay off debt.  

Cons

There are a few disadvantages of variable-rate loans you should be aware of. These include:

• With changing interest rates, your required monthly payment amount may go up over time, making the overall cost of the loan higher than that of a fixed-rate 
• It’s difficult to plan your budget long-term because your loan amount could go up or down. 
• In most cases, interest rates are above 10%, so you’ll still pay a lot in interest. 

Should You Get a Personal Loan?

Deciding whether you need a personal loan involves considering your total financial picture, including both short-term cash needs and long-term financial goals. If the personal loan replaces high-interest debt, it may be a smart choice. But taking on debt comes with risk, and you’ll want a clear plan for how to pay it back. 

Assuming you’re using the debt for growth—and not to make purchases you can’t afford and should wait to purchase—these financial products offer the flexibility to get money when you need it. With a clear strategy and careful planning, a personal loan could be the first step to raising your credit score, paying off debt, and building your financial future, and possibly most importantly, achieving your life goals today.

FAQ

Meanwhile, you should know that building a good credit score takes time and effort, but it’s definitely achievable. MoneyLion can help you achieve this! Our app offers tools and resources to help you manage your credit and help build a brighter financial future. You can also check the various debit and credit cards below that meet your requirements.

MoneyLion can help you explore a wide variety of credit card options tailored to different needs and preferences.

Understanding how many credit cards you can apply for at once

You are allowed to apply for numerous credit cards. There’s no strict rule stopping you from submitting several applications. However, each application could temporarily lower your credit score because of the hard inquiries lenders make to check your credit history.

Typically, a hard inquiry might lower your credit score by a few points, but the impact is temporary, usually affecting your score for up to a year, even though the inquiry remains on your credit report for two years.

When should you apply for multiple credit cards?

Applying for multiple cards might be a good idea in certain scenarios. For instance, if you’re looking to increase your available credit or you’re interested in diversifying the rewards and benefits you receive, such as cashback, travel miles, or hotel points. Just make sure you’re also considering the impact on your credit score and managing your new credit responsibly.

How often should you apply for credit cards?

In the world of credit cards, experts generally recommend waiting six months between applications, according to CNBC. This might seem like a wait, but there are two smart reasons behind it.

First, applying for too many cards in a short period can make you appear credit-hungry to lenders. Think of it like applying for every job opening you see – it might raise some eyebrows. Spreading out your applications shows you’re a responsible borrower, not someone desperately seeking credit.

Second, each application triggers a hard inquiry on your credit report. Although a single inquiry usually has a small impact, several clustered together can add up and result in a noticeable drop. While a few might not be a big deal, a bunch clustered together can bring your score down. Waiting between applications allows these inquiries to “age” on your report, just like those school marks eventually fade. This means they have less impact on your overall credit score.

Building good credit can help unlock a world of financial benefits, like qualifying for better interest rates on loans and mortgages. If you’re looking for a way to build or improve your credit, join MoneyLion WOW membership and apply for up to a $1,000 Credit Builder Loan with a competitive rate and no hard credit check*.

Pros and cons of multiple credit card applications

There’s a lot to consider when it comes to building your credit with credit cards. Applying for new cards can offer some great advantages, but there are also potential drawbacks to be aware of. 

Advantages of applying for multiple credit cards:

• Unlock rewards and benefits: Many cards offer enticing rewards programs, like cashback on purchases, travel rewards points you can redeem for flights or hotels, or even extended warranties on your purchases. Having a variety of cards allows you to maximize rewards based on your spending habits.
• Improve your credit utilization: This refers to the percentage of your available credit limit that you’re actually using. Keeping your balances low across all your cards contributes to a healthy credit utilization ratio, a major factor in your credit score.
• Increased access to credit: With more cards comes a higher total credit limit. This can be helpful in emergencies or for making larger purchases you’ve been planning for.

Disadvantages of applying for multiple credit cards:

• Hard inquiries can hurt your score: Each time you apply for a card, a hard inquiry is placed on your credit report. While a single inquiry might not cause a significant dip, multiple inquiries in a short period can lower your score.
• The temptation to overspend: Having easy access to credit can be tempting, especially if you’re not disciplined with your budget. Juggling multiple cards and payments can lead to overspending and potential debt.
• Annual fees: Some cards have annual fees, which can outweigh the benefits if you’re not strategic about your choices. Consider if the rewards and perks justify the annual cost.

Alternatives to applying for multiple credit cards

Before hitting the apply button on multiple credit cards, you’ll want to explore some alternative strategies that can also give your financial health a boost.

Prioritize paying off existing debt before considering new credit

One powerful strategy is to focus on paying off any current debts before applying for new credit. This isn’t just good for your peace of mind, it also has a double benefit for your credit score. First, it improves your credit utilization ratio (the amount of credit you’re using compared to your limit), which is a major factor. Second, it reduces the interest you pay over time, freeing up more cash.

There are two popular methods for tackling debt:

• The Avalanche Approach: Focus on paying off the debt with the highest interest rate first. This saves you the most money in interest charges overall.
• The Snowball Method: Pay off the smallest debts first, regardless of interest rate. This can provide a motivational boost as you see debts disappear quickly.

Consolidate existing debts with a personal loan

If you’re juggling multiple debts, consolidating them into a single personal loan can simplify your finances. This could potentially snag you a lower interest rate than your current credit cards, saving you money and making payments easier to manage. Instead of juggling multiple bills, you’ll have one monthly payment, thus reducing the chance of missed payments that hurt your credit score.

Use a balance transfer credit card 

If you’re drowning in high-interest credit card debt, transferring the balance to a card with a lower interest rate, or even a 0% introductory rate, can be a smart move. This lets you pay down the debt without the interest burden growing, especially during the promotional period. 

Just be sure to factor in any balance transfer fees and the standard interest rate that kicks in after the intro period is over. This strategy works best if you’re confident you can pay off the transferred balance before the promo period ends.

Smart steps to save your credit score

There’s no magic number for how many credit cards are “too many.” The key is to be strategic and consider your needs. Think about your financial goals, spending habits, and creditworthiness before applying. Spreading out your applications allows you to reap the rewards and benefits while minimizing the impact on your credit score.

FAQ 

Whether you’re a first-time homebuyer or a seasoned property owner, this comprehensive guide walks you through the essential steps to make your dream of homeownership a reality. Read on for tips on how to buy a house, from scouting out locations to closing on the purchase. Keep reading to see how you can get personalized offers from our trusted partners through MoneyLion!

17 steps to buy your dream house

Embarking on the journey to buy a house might seem daunting, but breaking it down into a series of manageable steps can make the process smoother and less overwhelming. It can also help to prepare ahead of time for all necessary requirements. 

1. Ask yourself why you need a house

Before you begin the house-hunting process, take a moment to reflect on your priorities. It’s essential to determine why you need a house and what your ideal house is. Consider your income, total budget, property location, and neighborhood.

Are you seeking more space for a growing family? Do you want the stability of owning your own home? Or are you looking for an investment opportunity? These questions don’t have to be mutually exclusive, but clearly defining your goals helps you focus your search. It’s possible to find a property that meets your needs, whether it’s a spacious suburban home, a cozy urban condo, or a fixer-upper with the potential to become your dream home.

2. Consider the location

Location and neighborhoods are also very important. Consider the schools, parks, and commercial centers like shopping malls and office complexes. If you’re buying a home in an area you’ve been living in or are familiar with, you probably have an idea of this already. If not, an experienced real estate agent can help guide you to specific agents. 

3. Make sure you meet the requirements

Lenders have specific criteria that prospective homebuyers must meet to qualify for a mortgage. Understanding these requirements from the outset can help you better prepare and increase your chances of approval. Here’s what you’ll need to consider. 

Credit score

Your credit score is a crucial factor that lenders consider when evaluating your mortgage application. Generally, a credit score of 620 or higher is required for conventional loans, although some lenders may accept lower scores, as low as 580 or 500 for government-backed loans like FHA or VA loans.

Debt-to-income (DTI) ratio

Lenders need to ensure you have sufficient income to comfortably make your monthly mortgage payments. You can calculate your debt-to-income (DTI) ratio by dividing your total monthly debt payments by your gross monthly income. The total debt includes the proposed mortgage payment. Most lenders prefer a DTI ratio below 43%, although some look for a DTI of 36% or less, with no more than 35% going towards the mortgage.  

Income and employment status

Lenders typically require stable and verifiable income, often requesting pay stubs, tax returns, and employment verification. If you’re self-employed or have irregular income, be prepared to provide additional documentation such as bank statements and two years’ tax returns. 

Down payment

While some loan programs allow for low or no down payment, most conventional mortgages require a down payment of at least 20% of the home’s purchase price. Putting down less than 20% may require you to pay for private mortgage insurance (PMI), which can add to the total cost. The average monthly cost of PMI is 0.46%  to 1.5% of the loan amount.

Closing costs

In addition to the down payment and potential PMI, you’ll need to budget for closing costs, which can range from 3% to 6% of the home’s purchase price. These costs cover items like lender fees, title insurance, and transfer taxes. Some lenders allow you to roll these costs into the total mortgage amount. 

4. Organize your finances and set a budget

Before you start house hunting, assess your financial situation. Review your credit reports, pay down debt, and create a detailed budget that accounts for your income, expenses, and potential mortgage payments. This process helps you determine how much you can realistically afford to spend on a home. Learn how to improve your credit score in three months. 

5. Save for the down payment and closing costs

Saving for a down payment and closing costs can be a significant hurdle for many homebuyers. Consider opening a high-yield savings account to help your money grow faster. Many states also offer down payment assistance or grants to help first-time homebuyers. Explore down payment assistance programs and grants in your area and be prepared to save more to help reach your savings goals or try these savings challenges. 

MoneyLion offers a convenient marketplace to compare high-yield savings accounts from our trusted partners that could help grow your money.

6. Select the best mortgage for you

Different mortgage options cater to borrowers’ needs and financial situations. For example, government-backed loans can help homebuyers in certain areas secure a home with a lower down payment or interest rate. Here are some of the most common types of mortgages you can consider.

Conventional loans

Conventional loans are the most common type of loan, and their market share has ranged from about 55% to 80% in recent years. These loans are not insured by the government but can be available through or guaranteed by a private lender or by the two government-sponsored enterprises (GSEs): Fannie Mae and Freddie Mac. To qualify for a conventional loan, you typically need a credit score of at least 620 and a down payment of 20% of the home’s value. 

FHA loans

FHA loans, insured by the Federal Housing Administration, allow for lower credit scores. In some cases, you could qualify for an FHA loan with a credit score as low as 500 and down payments as low as 3.5%. In that case, you need to pay private mortgage insurance (PMI) premiums.

USDA loans

The U.S. Department of Agriculture offers loans with no down payment requirements for eligible borrowers in rural areas. To qualify, you’ll need to meet local income requirements and purchase a property in an eligible area. You can check the USDA loan eligibility map to check the area you’re interested in and see if you qualify. 

VA loans

Veterans, active-duty military personnel, and eligible spouses may qualify for VA loans. These loans require no down payment and no private mortgage insurance. Additionally, VA loans offer competitively low interest rates and limited closing costs, making them an excellent choice if you qualify. 

To be eligible, you must meet certain service requirements, including at least one of the following:

• An active duty member who has served at least 90 consecutive days during wartime, or 181 days during peacetime.
• A veteran who has served at least 181 days of active duty peacetime service.
• A National Guard or Reserve member with at least 6 years of service.
• The surviving spouse of a service member who died while on active duty or from a service-related disability.
• You can learn more about VA loan qualifications to see if you qualify.  

Jumbo loans

For higher-priced properties that exceed the conforming loan limits set by government-sponsored enterprises like Fannie Mae and Freddie Mac, jumbo loans are an option. 

The conforming loan limits set by the Federal Housing Finance Agency (FHFA) change each year. For 2024, the upper limit is $766,550 in most areas and up to $1,149,825 in certain high-cost areas.

Renovation loans

If you’re planning to purchase a fixer-upper, renovation loans like the FHA 203(k) loan or the Fannie Mae HomeStyle Renovation loan can provide funds for the purchase and necessary renovations. With these loans, you’ll access the funds for a wide range of renovation projects, from repairs and energy updates to landscaping or luxury upgrades.

7. Get pre-approved for a mortgage 

Getting pre-approved for a mortgage is a crucial step that gives you an advantage in the homebuying process. It demonstrates to sellers that you’re a serious buyer with the financial means to follow through on a purchase. 

The pre-approval process involves submitting your financial information and credit history to a lender, who then provides you with a pre-approval letter that outlines the maximum loan amount you qualify for and the interest rate you’re likely to receive. During the preapproval process, the lender looks at your credit score, income, and total debt. It may ask for additional documentation like paystubs or bank statements. 

8. Find a real estate agent 

While it’s possible to buy a house without a real estate agent, working with a knowledgeable and experienced professional can be invaluable. A real estate agent can help you navigate the purchase process, provide insights into different neighborhoods, research average rental and sales prices on comparable properties, and negotiate on your behalf. Ask for referrals from friends and family, or research agents with a proven track record in your desired area. 

9. Shop around for houses

Once you have your pre-approval letter and a real estate agent, it’s time to start shopping for houses. Attend open houses, scour online listings, and drive through neighborhoods that interest you. Make a list of your must-haves and deal-breakers to help narrow down your search. Consider factors like commute times, school districts, and neighborhood amenities.

You can also search on Zillow, Trulia, or Realtor.com. If you have specific criteria in mind, your real estate agent can use those search criteria on the multiple listing service or MLS. An MLS is a database used by real estate brokers to share information about properties for sale, allowing them to cooperate in finding buyers.

10. Make an offer 

When you find a house that meets your criteria and you are ready to make an offer, your real estate agent can help you prepare and submit an offer. This typically includes an earnest money deposit, which demonstrates your good faith in the transaction. If your offer is accepted, you’ll enter into a contract with the seller, and the process of securing your mortgage and completing the necessary inspections and appraisals begins. The offer and contract process can differ slightly depending on your location.

11. Get a mortgage 

With a signed contract in hand, you’ll need to complete the mortgage application process with your chosen lender. Remember to compare lenders and rates before choosing which lender offers the best APR and terms.  

Then, you need to provide additional documentation, such as tax returns, pay stubs, and bank statements. Your lender pulls your credit report and an appraisal of the property to finalize the mortgage approval. 

12. Buy homeowners insurance 

Most lenders require homeowners insurance before closing on your new home. Homeowners insurance protects your investment and covers you in case of damage, theft, or liability claims. Shop around and compare policies from different providers to find the best coverage and rates for your area and any specific risks, such as flooding or earthquakes. 

13. Schedule a home inspection

A professional home inspection, although not required, is very helpful to identify potential issues or defects with the property. Problems with major home systems, such as the roof, foundation, or HVAC systems, can be costly to repair. A professional inspection can help you negotiate repairs or credits with the seller or back out of the deal if significant problems are discovered. 

Depending on the property, you might need a chimney inspection, pool inspection, asbestos inspection, mold inspection, or lead inspection. These inspections are often to be requested at your discretion. Your real estate agent can recommend reputable home inspectors in your area.

14. Get a home appraisal

Your lender will order a home appraisal to assess the property’s value and ensure that it’s worth the agreed-upon purchase price. If the appraisal comes in lower than the purchase price, you may need to renegotiate with the seller or increase your down payment to make up the difference. 

Lenders use the loan-to-value (LTV) ratio or the ratio of a loan to the value of an asset purchased. As a rule of thumb, a good LTV ratio should be no greater than 80%. If you have an LTV of 80% or more, you may face higher borrowing costs, require private mortgage insurance, or be denied a loan.

15. Negotiate possible repairs or credits 

If the home inspection uncovers issues that need to be addressed, your real estate agent can help you negotiate with the seller to have the repairs completed or to receive credits at closing to cover the cost of future repairs. For example, if the inspection shows that the roof needs to be replaced, you could negotiate for lower closing costs or for the sellers to replace the roof. 

16. Do a final walk-through

Once inspections are complete, the appraisal is done, and you’ve finalized the mortgage approval, you’re ready to close. Before closing on your new home, schedule a final walk-through to ensure that any agreed-upon repairs, if any, have been completed and that the property is in the same condition as when you made your offer. This is typically a quick step that can be completed the day of or the day before closing. 

17. Close on your new home

By the time you’ve made it to the closing table, you’re nearly done. On closing day, you’ll need to sign the relevant paperwork and transfer funds to complete the purchase. Your lender will provide you with a closing disclosure that outlines all the costs and fees associated with the transaction. Once everything is signed and the funds have been transferred, closing is complete. You’ll receive the keys to your new home!

Unlock Your Dream Home

Buying a house is a significant financial and emotional investment, but with careful planning and preparation, you can make the process smoother and easier. By following the steps above, you’ll be better equipped to navigate the complexities of home buying and find the perfect property that meets your needs and fits your budget.

FAQ 

Cash flow issues can be scary. With the solutions below, you should be able to manage this $500 need and prepare for future requirements. 

Why you may need a $500 loan

A $500 loan can go a long way to help make ends meet. It can help with sudden car repairs, last-minute gifts, or higher-than-expected utility bills and other surprise expenses. Consumers have several choices to get an additional $500 in their pocket. 

Personal loans, lines of credit, cash advances, title loans and payday loans are some of your choices, but some are better than others. Searching for competitive loans can help you save on fees and interest, while a cash advance could give you access to cash a few days early without additional interest or fees. It all starts with knowing how to obtain a $500 loan. The guide below can help you get the money you need. 

Where to get a $500 loan: 5 options and alternatives

There are several options to obtain a $500 loan. Depending on your specific needs and financial situation, some may make more sense than others. 

1. Cash advances

A cash advance is a short-term financing solution different from a personal loan. You can also get a credit card cash advance (more on that below). If you want a cash advance without high interest or fees, consider Instacash^SM from MoneyLion. 

Instacash is not a loan. Instead, you can access up to $500 of your hard-earned cash when needed. There’s no interest, no credit checks, and no mandatory fees. You’ll get the cash within one to five business days or up to $500 cash advances today for a fee. 

2. Personal loans

Not all lenders will approve personal loans for $500, as some require higher loan amounts. However, it’s worth exploring, as personal loans allow you to plan repayment terms with fixed interest rates over time. Personal loans typically have lower interest rates than high-interest options like payday loans or credit card cash advances. 

MoneyLion’s personal loan marketplace is a great place to research personal loan options that fit your needs. You may be able to get a quick $500 loan or even find $500 instant loan options. 

3. Credit card cash advance

Credit card cash advances aren’t the best option on this list because they come with high interest rates and fees. However, if the other options don’t work for you, many credit card issuers do allow you to take a cash advance. The maximum allowed depends on your credit limit and card issuer limits. 

Cash advance fees on credit cards are usually 3% or 5% of the total amount of each cash advance. In addition, the average APR on a credit card cash advance is around 25%. With high interest rates and fees, it’s essential to understand the terms and consider the costs involved.

MoneyLion can help you explore a wide variety of credit card options tailored to different needs and preferences.

4. Credit builder loans

If you cannot get a personal loan, a credit builder loan could be the solution. A credit builder loan is a smaller loan option that allows you to take on a small amount of debt and demonstrate responsible repayment to build your credit history. Regular repayments can help you build a positive credit history. 

However, sometimes credit builder loans require a deposit of the full amount of the loan ahead of time, making it an impractical solution if you need $500 fast, so you’ll need to research options. These loans also may come with higher interest rates compared to traditional financing, so make sure to understand the terms and conditions thoroughly. You can find small loan options to build credit or a personal hybrid loan to build credit. 

5. Payday loans

Payday loans are short-term loans that typically must be repaid on your next payday. They are quick to obtain but often come with high interest rates and fees. You’ll want to be careful about payday loans, as people have been known to fall into a cycle of debt after borrowing them. You can find online payday loans with same-day deposits here. 

How to qualify for a $500 loan

How to qualify for a $500 loan depends on the lender and application process or cash advance app. Each financing institution has its own requirements. Some apps allow you to apply for a cash advance without a credit check or additional requirements. 

Some lenders have more flexible requirements than others. Online lenders and credit unions tend to have easier qualification standards than big banks for small personal loans. You may have to provide government-issued ID plus documentation like pay stubs and bank statements, to help your approval odds. 

Here are some typical requirements to qualify for a $500 personal loan:

Credit score

Most lenders will want to see a credit score in the fair to good range, usually 600-620 or higher. While some lenders specialize in loans for bad credit, they typically have high interest rates. In general, the higher your score, the better interest rate you’ll qualify for.

Income

You must show you have enough steady income from employment, self-employment, benefits, or other income to repay the loan. Many lenders want to see a debt-to-income ratio of below 40-50%.

Active bank account

You’ll need an active checking or savings account into which you can deposit loan funds and withdraw future payments. 

Identification

You must provide a valid government-issued photo ID, such as a driver’s license, passport, or state-issued ID.

No recent delinquencies

While recent late payments, delinquencies, or defaults on other credit accounts can hurt your chances of approval, some lenders may still approve a $500 loan or cash advance with other strong factors. 

Considering a way to build your credit? Join MoneyLion WOW membership and apply for up to a $1,000 Credit Builder Loan with a competitive rate and no hard credit check*.

What to know before taking out a $500 loan

Before taking a $500 loan, you’ll want to consider other options, from dipping into savings to borrowing from family and friends. If you are ready to take out a loan, consider these tips and best practices:

• Don’t borrow more than you need. If you only need $200, take that instead of $500. 
• Have a repayment plan in place to make sure you’ll be able to make on-time payments.
• Don’t borrow $500 if you can wait and save up for it and plan for the expense.
• If you take a $500 loan or cash advance, compare interest rates and fees to find the best available options. 

Consider alternative options for cash

Alternative options for obtaining $500 without taking out a loan include dipping into savings, getting a side hustle or saving up over time. If you need $500 fast and have the savings, you could use the savings and pay yourself back over time. 

If you have time to save up, you could set a budget and save extra or get a side hustle to earn more. The right alternative will depend on your financial situation and cash needs.

Understand the various wait times

Some lenders can give you access to cash within 24 to 48 hours, while others have a four to five-day wait time. Whether you can afford to wait will depend on your specific financial needs. 

Understand the associated costs

Costs can add up and aren’t always expressed with the same words among lenders. For example, some may state interest rates, while others will show the annual percentage yield (APR). Loan repayment terms also vary. Carefully compare total fees plus APR to find the most cost-effective solution that meets your needs. 

Have a repayment strategy

Loans, cash advances, and other financing options can give you money when needed for essential expenses, but you have to pay it back. Loans and cash advances have varying repayment plans, and knowing what you’re walking into can make repayment more manageable. 

Be sure to review the loan’s schedule before accepting the terms to ensure you can pay it back. If you are nervous about the monthly payments, you can ask the lender about extending the loan’s term to make repayment more manageable. 

Many lenders charge extra fees if you make late payments. Setting up automatic payments can be a solution to help ensure that you do not miss any payments and avoid any late payment fees.

Always spend borrowed funds responsibly

A loan is a financial obligation that you have to pay back over time. The extra funds can help you cover emergency or unexpected expenses and save you from short-term financial obstacles. 

A loan is a useful financial product for emergencies, but turning loans into a habit can weaken your finances. Too many loans can pull you into debt and increase your costs as you shell out more on interest rates. 

Get the extra cash you need for an unexpected expense

A $500 loan can help you out of a jam and give you time to repay the debt. When used responsibly, loans can aid your finances and offer stability. As long as you repay the loan according to the terms, they could even help you build a positive credit history. 

Whether you need to get a 500 loan instantly or need a backup plan while you build emergency savings, the options above can help. You never know when a surprise expense will show up, but having access to short-term loans, cash advances, and other financing solutions can make those costs more manageable to plan your budget.

FAQ

In the meantime, MoneyLion offers a service to help you find personal loan offers based on the info you provide, you can get matched with offers for up to $50,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you. You can also use the loan funds to pay off other existing debts.

Understanding the personal loan application process

The time to get a personal loan varies based on the lender. So, it’s essential to understand the steps you will go through to get a personal loan.

Many lenders let you prequalify for personal loans so you can get an idea of how much you can borrow and the rates you’ll pay. If you meet the basic qualifications, you can move on to the formal application process. While some lenders may offer same-day approval based on your applications, others may ask for additional documentation of your employment status, income and eligibility.

When you apply for a personal loan, you undergo a hard credit check so the lender can evaluate your creditworthiness. If the lender approves your application, it can take up to one week for the funds to be deposited into your account. However, some lenders could take over a week to send money to your bank account. 

Personal loan funding timeframes

Lenders have different timelines when funding personal loans.   

Online lenders

Online lenders may be the quickest way to get money when needed. Since you apply online, you don’t waste time visiting the lender in person. Plus, they may have less stringent credit score requirements than banks or credit unions. 

Online lenders usually process applications and disburse funds within a few days. Some lenders may fund your personal loan the day you are approved. 

Banks

Some banks let you apply for a personal loan online. However, the application process can be longer if the bank requires an in-person visit to apply. 

Banks can take up to a week to process your loan application and remit funds to your account. However, if you are an existing customer, the bank could process your application and disburse funds faster. 

Credit unions

You must be a credit union member to apply for a personal loan. Like banks, some credit unions accept personal loan applications online. If not, you need to apply in person. Since credit unions usually consider the borrower’s membership history, they may be more willing to approve applicants with lower credit scores. Credit unions can take up to a week to approve your application and disburse your money. 

Other alternatives: Payday loans, pawn shop loans, and car title loans

Consider other personal loan alternatives if your credit score is low or you need cash immediately. While other options offer a quick way to get money when you’re in a bind, they come with risks.

Payday loans promise fast funds with no credit check. You typically pay back what you used from your next paycheck. However, payday loans typically charge steep fees, especially if you can’t pay back the money when it’s due.

For a pawnshop loan, you bring something of value to use as collateral. Like payday loans, there’s no credit check and you can get your money immediately. However, if you don’t repay the loan when it’s due, the pawnshop sells your collateral to recover their loss.

When you own your vehicle, you can take out a loan using your car’s title as collateral. You avoid credit checks and get your money typically within a day. A car title loan can be a quick and easy way to borrow money, but you could lose your vehicle if you don’t pay it back when due. 

Factors that influence the processing time of a personal loan

Many factors affect the processing time of a personal loan application. 

1. Loan type and amount

The amount of money you want to borrow can affect how quickly your application is processed. Lenders take on risk when loaning money. Borrowing a smaller amount of money could push your application through faster. With a larger sum, the lender may take extra time to review your application, verify your income, and evaluate whether you can afford the monthly payment.

2. Credit score and history

Lenders look to your credit score and history to ensure you will repay what you owe. As such, lenders routinely look at your record of managing past credit and on-time payments. The approval process may slow down if the lender requests additional documentation to support your loan application if you have delinquent payments or derogatory marks on your credit report. 

3. Income and employment verifications

If your income isn’t high enough or you can’t prove consistent employment, the lender may request more information to process your application. You might be asked for paycheck stubs or tax returns, or the lender could expand their employment verification. 

4. Internal process of the lending company

Each lender follows their own internal process when making personal loans. Some lenders take more time to review personal loan applications and supporting documents. Online lenders usually need less time to process and approve applications than banks and credit unions. 

How to get a personal loan faster

If you plan to take out a personal loan, there are steps you can take to speed up the process. 

Make sure your credit score is in good standing 

Lenders consider your credit history when evaluating your personal loan application. The lender may charge you a higher interest rate when your credit score isn’t high enough. Or the lender may deny your application. So, before you apply, check your score to determine the likelihood of approval. 

PRO TIP!  A good credit score can lead to lower interest rates and increased borrowing power on loans and credit cards. MoneyLion offers a free and convenient way to find offers from our trusted partners to help you improve your credit.

Get prequalified

You can find out if you can get approved for a personal loan through pre-qualification. You can find out your potential interest rate and monthly payment. Since there is no hard credit check for you to prequalify, your score doesn’t take a hit. 

Gather all necessary documents and information beforehand

Gather the necessary documents before you apply. Lenders usually ask for documents such as a driver’s license or government-issued identification, proof of income, Social Security number, and proof of where you live. Having key documents readily available helps you complete the application faster. Plus, it’s easier to supply copies to your lender if you know where these documents are. 

Apply online

Applying online, if the lender allows it, can speed up the process. Avoiding the in-person visit will also save time. 

Avoid applying for multiple loans at once

When reviewing your loan application, your credit score could drop when the lender does a hard credit pull. Submitting multiple loan applications could adversely affect your score. 

Be honest and accurate in your loan application

The more time the lender needs to review your application, the longer it takes to get your money. Submitting inaccurate information slows down the process. 

Ease Financial Stress with a Personal Loan

A personal loan can help you get the money you need to pay for an emergency expense, consolidate debt or make repairs around your home. Getting a personal loan can take time, but with a little planning, you can boost your chances of securing one quickly. 

FAQ 

Understand how credit card debt refinancing works

Refinancing credit card debt is the process of taking out a new loan to pay off existing debt. This can be a great way to reduce your monthly payments, lower your interest rate, or consolidate multiple loans into one. Depending on your current credit card debt situation, there are a few options to explore when considering refinancing.

If you’re trying to reduce your monthly payments, you may want to look into taking out a new loan with a longer repayment period. Doing so may reduce your monthly payments while also possibly making it easier to manage your payments. The longer repayment period will likely mean you pay more in total interest over the life of the loan.

If you have multiple credit cards, you may also want to look into consolidating them into one new loan. This can make it easier to track and manage all your payments and will also reduce the number of payments you have to make each month. Just make sure the interest rate of the new loan is lower than the combined interest rates of all the loans or credit cards you’re consolidating. 

And if you’re looking to reduce your interest rate, you may want to consider getting a new credit card with a lower rate. This may require you to apply for a new loan with a different lender, as your current lender may not offer lower rates. It can be helpful to compare credit card rates to help you pick the best deal. By far an easy way to accomplish this is through MoneyLion. 

You’ll gain a snapshot into the top personalized credit card offers from our trusted partners for your credentials. Learn more here. 

Consider the pros and cons of refinancing

Refinancing your credit card debt can be a great way to reduce your interest rate and save money. But consider the pros and cons of refinancing before making a decision. 

On the plus side, refinancing can help you reduce your monthly payments and overall debt amount. It could also allow you to pay off your debt faster, freeing up more of your income for other financial goals. Refinancing also can help you improve your credit score, as paying off your debt will help to reduce your debt-to-income ratio.

But refinancing can come with some drawbacks. For example, depending on the type of loan you are refinancing with, you may have to pay certain fees, such as closing costs or origination fees. Refinancing also may require you to take on a higher interest rate than what you have now, so it is important to carefully research different lenders and compare their rates. 

If you are unable to make your monthly payments, refinancing could cause further damage to your credit score.

5 Steps to refinance credit card debt

Refinancing credit card debt can help you save money and simplify your finances. When you refinance your credit card debt, you are essentially taking out a new loan to pay off the old one. This allows you to negotiate a lower interest rate and get out of debt faster. Take a look at what to expect for how to refinance credit card debt. 

1. Check your credit score

The first step is to check your credit score. Your credit score is a three-digit number that indicates your creditworthiness, and it’s used by lenders to determine the interest rate you will be offered when refinancing your credit card debt. Knowing your credit score can help you determine which lenders are likely to offer you the best rate.

Don’t know where your credit score stands? Learn how to get a free copy of your credit report here. 

Considering a way to build your credit? Join MoneyLion WOW membership and apply for up to a $1,000 Credit Builder Loan with a competitive rate and no hard credit check*.

2. Research credit card debt refinancing lenders

Look for lenders that offer no application fees, no prepayment penalties, and flexible repayment terms. You can also look for lenders that offer special programs such as debt consolidation plans or balance transfer cards. These types of programs can help you combine multiple credit card debts into one monthly payment and lower your interest rate. 

Ideally, choose the lender that offers the lowest costs for refinancing. When applying for refinancing, look for a card that offers the lowest possible interest rate. Also consider balance transfer fees, annual fees, and other charges that may apply. 

3. Compare refinancing options

One option is to take out a personal loan. With this type of loan, you can receive a lump sum to pay off all your credit card debts, and you may be able to get a lower interest rate and repayment period. 

Another option is to transfer your credit card balance to a new card with a lower interest rate. This is often a great way to save money, as most credit card companies offer introductory rates for new customers. If you can pay off the balance during the introductory period, you can save a lot of money in interest. Read the fine print, as there are often balance transfer fees and other costs associated with this type of transfer.

4. Apply for refinancing

Each lender will have its own application for refinancing credit card debt. Follow the instructions carefully because mistakes can delay your application and hurt your chances of approval. It’s also at this point that you should assemble your required documents. Ask your provider to specify exactly what you’ll need, and follow up with any questions if you’re unsure about something. Make sure all your personal documents are up to date. 

5. Finalize your credit card refinancing plan

It is essential to ensure that the refinancing plan is affordable and that the loan terms are manageable. It is also important to make sure the refinancing plan does not result in additional fees or other costs that could make repayment more difficult.

Once you have finalized your refinancing plan, be sure you understand all of the credit card terms and conditions associated with the loan. This includes the interest rate, repayment terms, and any fees that may be associated with the loan. Read the fine print and make sure that you understand the credit card terms and conditions before signing any documents. 

Consider refinancing credit card debt carefully

Refinancing credit card debt can be a great way to save money and reduce monthly payments. But it’s important to weigh the decision and any new loans carefully. By taking the time to explore all of your options and carefully review the terms of the refinancing plan, you can ensure that you are getting the best deal on your credit card debt.

FAQ

Read on to understand the answer to “Is home improvement loan interest tax deductible?” for your situation. 

If you need funds for your home improvement, MoneyLion offers a service to help you find personal loan offers based on the info you provide. You can get matched with offers for up to $50,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you. You can also use the loan funds to pay off other existing debts. MoneyLion is here to help.

Understanding home improvement loans 

Home improvement loans are any type of loan used for home renovations. While home equity loans, or home equity lines of credit, require equity in your home for backing, other home improvement loans are unsecured and don’t require equity. 

You can get home improvement loans from online lenders, banks, and credit unions. These are usually a form of unsecured personal loan marketed specifically to borrowers interested in home improvements. You will need to meet individual lender requirements. Once approved, you’ll receive a lump sum to use for renovations or anything else you need. 

While home improvement loans are most commonly available to borrowers with good to excellent credit, some lenders will give these loans to borrowers with poor credit or no credit. 

The fact that unsecured loans or debts like home improvement loans aren’t secured by a house or property means they’re not eligible for the tax credits, even if the loans are used for home improvement projects.

Home loans eligible for tax deductions

The following home loans may be partially eligible for a tax deduction, such as deducting interest payments. You can also learn more about personal loan taxes.  

1. Home equity loans

Home equity loans are a type of secured loan backed by the equity you’ve built up in the home. They are a type of second mortgage and have strict usage restrictions and come with higher risk for lenders. 

As a borrower, if you fail to make the payments, you risk losing your home. However, securing a home equity loan can be easier if you’ve built up home equity. You can also usually deduct interest payments on home equity loans as they’re considered a type of second mortgage. As long as you use the funds to improve your home substantially, you may be able to deduct interest from your loan.

Home equity loans usually have fixed interest rates and repayment terms of 15 to 30 years. You can choose a repayment plan that fits your needs and may be able to repay the loan sooner. The maximum you can borrow with a home equity loan depends on how much equity you’ve built up in the property and individual lender policies. Lenders typically will offer up to 85% of the equity you’ve built in the home, but individual policies vary.

2. Home Equity Lines of Credit (HELOCs)

Home equity lines of credit, or HELOCs are different from home equity loans. HELOCs allow you to borrow against the equity you’ve built up in the home. However, unlike a home equity loan that gives you a lump sum, you can withdraw funds over time with a HELOC. You can take out as much as you need, with no obligation to take more. This makes HELOCs a good choice for ongoing or long-term home improvement projects. 

Usually, HELOCs include checks or a credit card that you can use to spend as needed within a specified time, known as the “draw period”. During the draw period, you only need to make minimum payments. Then, during the repayment period, you’ll need to pay back the borrowed funds plus interest, usually on a set repayment schedule. 

HELOCs usually come with variable interest rates, but you might be able to secure a fixed interest rate on your outstanding balance. Interest on HELOCs is usually eligible for a tax credit when used for eligible projects. 

Home improvement (renovations) vs. home repairs

The difference between home improvements or renovations and home repairs comes down to the purpose. A home improvement is an upgrade or change to the property that improves its intrinsic value or comfort. In contrast, repair is the maintenance of existing structures to keep them in working order.

For example, home repairs might include fixing a leaky roof or repairing an HVAC system with issues. Renovations include major improvements such as replacing a bathroom, re-doing a kitchen, adding an extension, or installing a pool or solar panels. A renovation may include repairs, but the purpose is more than repairs; instead, it focuses on refreshing or renewing the property with updates.

Tax-deductible home improvements

Certain home improvements may be eligible for tax benefits regardless of the type of loan you take out. Even if you use a home equity loan for financing, not all home improvement projects qualify for a tax deduction. It’s important to check the IRS website for current guidelines on home improvement deductions. 

While it’s essential to speak with a CPA or tax professional to confirm your eligibility, the following may be tax-deductible or qualify for tax credits. 

1. Home office deductions

If you work from home and have a dedicated workspace, you may be able to deduct the proportionate costs. This only applies to self-employed individuals or business owners. You cannot take this deduction if you’re an employee of another company working from home. 

Interestingly, the term “home office” is broad. A boat, RV, mobile home, unattached garage, studio, or even barn might qualify if it’s strictly used for business. To qualify for this deduction, you must meet other IRS criteria.

2. Energy-efficient installations

Energy-efficient equipment like heat pumps, solar panels, energy-efficient windows, biomass equipment or small wind turbines may qualify for a tax break. You can even get a possible credit for energy-efficient air conditioning or water heaters. 

The Residential Clean Energy Property Credit applies to qualifying eco-friendly renovations made between Dec. 31, 2021, and Jan. 1, 2033. You could be eligible for a tax credit of up to 30% of the total equipment costs. Specific criteria vary by the type of equipment installed, and you may have to spread deductions over several years. 

3. Medical-related home renovations

Medical-related home renovations include installations necessary for medical care for you, your spouse or dependents. These renovations typically don’t increase the property value but are medically necessary. Common medically-related renovations include:

• Adding ramps or wheelchair lifts 
• Modifying stairwells.
• Widening hallways and doorways.
• Installing wheelchair or differently-abled access for bathrooms, kitchen cabinets, appliances, electrical outlets, or specialized plumbing systems for a person with a disability.

If you’ve made these types of upgrades, you may qualify for a tax break as long as the additions fall within certain parameters. Of course, architectural or aesthetic changes and medically necessary renovations won’t be considered deductible. Before making renovations, speak with a CPA to understand what is deductible. 

Tax-deductible home repairs

Capital improvements add value to your home, prolong its life or adapt it to new uses. These improvements include major renovations like

• Swimming pool
• A new deck
• Storm windows
• An intercom system
• A home security system
• New roof
• New central air-conditioning system
• An extra water heater
• Upgrades to heating or cooling systems. 

Capital improvements aren’t deductible in the year you make them and instead are only deductible from your cost basis when you sell the property. Keep clear records and speak with a tax advisor about the cost basis and any possible deductions when you plan to sell.  

Should You Take a Loan for Home Renovations?

A home equity loan, HELOC, or home improvement loan offers access to funds when you need it. You can also consider online personal loans or personal loans for bad credit. With a clear strategy, quotes from reliable contractors for your budget, and estimates about the added value of your renovations, home renovations can add more than comfort to your home. They can be a smart financial choice while adding comfort to your family’s unique needs.  

FAQ

Have $20K+ in Credit Card Debt? Consider Accredited Debt Relief! 

• Reduce your monthly payment by 40% or more
• Get out of debt in 24-48 months 
• 100% free, no risk consultation
• A+ Better Business Bureau Rating

Understand how credit card debt refinancing works

Refinancing credit card debt is the process of taking out a new loan to pay off existing debt. This can be a great way to reduce your monthly payments, lower your interest rate, or consolidate multiple loans into one. Depending on your current credit card debt situation, there are a few options to explore when considering refinancing.

If you’re trying to reduce your monthly payments, you may want to look into taking out a new loan with a longer repayment period. Doing so may reduce your monthly payments while also possibly making it easier to manage your payments. The longer repayment period will likely mean you pay more in total interest over the life of the loan.

If you have multiple credit cards, you may also want to look into consolidating them into one new loan. This can make it easier to track and manage all your payments and will also reduce the number of payments you have to make each month. Just make sure the interest rate of the new loan is lower than the combined interest rates of all the loans or credit cards you’re consolidating. 

One of the best ways to do this is by comparing personal loan offers in the MoneyLion app. Learn more here.

And if you’re looking to reduce your interest rate, you may want to consider getting a new credit card with a lower rate. This may require you to apply for a new loan with a different lender, as your current lender may not offer lower rates. It can be helpful to compare credit card rates to help you pick the best deal. By far an easy way to accomplish this is through MoneyLion. 

You’ll gain a snapshot into the top personalized credit card offers from our trusted partners for your credentials. Learn more here. 

Consider the pros and cons of refinancing

Refinancing your credit card debt can be a great way to reduce your interest rate and save money. But consider the pros and cons of refinancing before making a decision. 

On the plus side, refinancing can help you reduce your monthly payments and overall debt amount. It could also allow you to pay off your debt faster, freeing up more of your income for other financial goals. Refinancing also can help you improve your credit score, as paying off your debt will help to reduce your debt-to-income ratio.

But refinancing can come with some drawbacks. For example, depending on the type of loan you are refinancing with, you may have to pay certain fees, such as closing costs or origination fees. Refinancing also may require you to take on a higher interest rate than what you have now, so it is important to carefully research different lenders and compare their rates. 

If you are unable to make your monthly payments, refinancing could cause further damage to your credit score.

5 Steps to refinance credit card debt

Refinancing credit card debt can help you save money and simplify your finances. When you refinance your credit card debt, you are essentially taking out a new loan to pay off the old one. This allows you to negotiate a lower interest rate and get out of debt faster. Take a look at what to expect for how to refinance credit card debt. 

1. Check your credit score

The first step is to check your credit score. Your credit score is a three-digit number that indicates your creditworthiness, and it’s used by lenders to determine the interest rate you will be offered when refinancing your credit card debt. Knowing your credit score can help you determine which lenders are likely to offer you the best rate.

Don’t know where your credit score stands? Learn how to get a free copy of your credit report here. 

Considering a way to build your credit? Join MoneyLion WOW membership and apply for up to a $1,000 Credit Builder Loan with a competitive rate and no hard credit check*.

2. Research credit card debt refinancing lenders

Look for lenders that offer no application fees, no prepayment penalties, and flexible repayment terms. You can also look for lenders that offer special programs such as debt consolidation plans or balance transfer cards. These types of programs can help you combine multiple credit card debts into one monthly payment and lower your interest rate. 

Ideally, choose the lender that offers the lowest costs for refinancing. When applying for refinancing, look for a card that offers the lowest possible interest rate. Also consider balance transfer fees, annual fees, and other charges that may apply. 

3. Compare refinancing options

One option is to take out a personal loan. With this type of loan, you can receive a lump sum to pay off all your credit card debts, and you may be able to get a lower interest rate and repayment period. 

Another option is to transfer your credit card balance to a new card with a lower interest rate. This is often a great way to save money, as most credit card companies offer introductory rates for new customers. If you can pay off the balance during the introductory period, you can save a lot of money in interest. Read the fine print, as there are often balance transfer fees and other costs associated with this type of transfer.

4. Apply for refinancing

Each lender will have its own application for refinancing credit card debt. Follow the instructions carefully because mistakes can delay your application and hurt your chances of approval. It’s also at this point that you should assemble your required documents. Ask your provider to specify exactly what you’ll need, and follow up with any questions if you’re unsure about something. Make sure all your personal documents are up to date. 

5. Finalize your credit card refinancing plan

It is essential to ensure that the refinancing plan is affordable and that the loan terms are manageable. It is also important to make sure the refinancing plan does not result in additional fees or other costs that could make repayment more difficult.

Once you have finalized your refinancing plan, be sure you understand all of the credit card terms and conditions associated with the loan. This includes the interest rate, repayment terms, and any fees that may be associated with the loan. Read the fine print and make sure that you understand the credit card terms and conditions before signing any documents. 

Consider refinancing credit card debt carefully

Refinancing credit card debt can be a great way to save money and reduce monthly payments. But it’s important to weigh the decision and any new loans carefully. By taking the time to explore all of your options and carefully review the terms of the refinancing plan, you can ensure that you are getting the best deal on your credit card debt.

FAQ

Read on to learn how to get a small personal loan, qualification requirements, and alternatives you can consider. 

One option to consolidate debt is through Accredited Debt Relief.

Have $20K+ in Credit Card Debt? 

• Reduce your monthly payment by 40% or more
• Get out of debt in 24-48 months
• 100% free, no risk consultation
• A+ Better Business Bureau rating

What is a small personal loan?

Small personal loans are usually defined as less than $5,000. These loans are typically offered with fixed interest rates in lump sums to borrowers. Usually, you’ll pay back a small personal loan over a shorter time. Online lenders, banks, and credit unions can all be resources for small personal loans. 

How to qualify for a small personal loan

If you’re wondering whether you’ll be able to qualify for a small personal loan, you may be able to get a prequalification. Here are the main factors lenders look at: 

1. Credit score

Lenders consider credit score and credit history for loans. Generally, a credit score of 700 or above is considered good, but you may qualify for a small personal loan with a lower credit score. Some personal loans are specifically designed for borrowers with low credit scores.

Not sure what your credit score currently is? You are entitled to a free credit report from all three credit bureaus at annualcreditreport.com. On your credit report, you’ll see your credit score, but you should also look for any inaccuracies and dispute them. If you want to raise your credit score before applying for a small personal loan, here are some tips to:

• Pay all debts on time every month. You can set up automatic payments to avoid missing a deadline.
• Reduce total debt to less than 30% of current credit available.
• Don’t apply for too many new credit cards, mortgages, or loans within a short period, as each hard credit pull will appear on your credit score, and too many credit checks can reduce your credit score.
• Dispute inaccurate information on your credit report.
• Dispute inaccurate charges on your credit cards. 

2. Income 

Lenders typically consider your total income to qualify you to get a small personal loan to ensure you can repay the loan. They may also look at your debt-to-income ratio or require proof of income like a W-2, tax forms, or bank statements. 

3. Employment history

Lenders may also ask for employment history when you apply for a small personal loan. While you can get a small personal loan while working as a freelancer or being self-employed, you might need to show bank statements of assets or provide collateral.  

4. Debt-to-income ratio

Lenders usually look at your debt-to-income ratio in qualification for getting a small personal loan or any other loan. The debt-to-income ratio is the relationship between monthly debt obligations and monthly income. For example, if you earn $8,000 per month and your total monthly debt is $2,000, your debt-to-income ratio is 25%, which is great.

Considering a way to build your credit? Join MoneyLion WOW membership and apply for up to a $1,000 Credit Builder Loan with a competitive rate and no hard credit check*.

Where to find small personal loans

There are several options to get small personal loans, from online lenders to traditional banks or credit unions.

1. Online lenders

Online lenders offer some of the most competitive interest rates for small personal loans. These lenders allow you to apply online, and in many cases, you’ll be approved the same day or within one to two weeks.

Pros of online lenders:

• Quick and easy application process
• Competitive interest rates and fees
• More flexible terms in some cases
• Possible to secure smaller loans 

Cons of online lenders:

• Possibly higher interest and fees — double-check terms and compare rates with multiple lenders
• You’ll need to do everything online without the convenience of going to a bank

2. Banks

Banks offer fewer smaller personal loans than online lenders or credit unions, but don’t dismiss your local branch! While banks may have different limits and guidelines for loans, many will offer personal loans of $1,000 or more. 

Pros of banks:

• Easy for borrowers with good or excellent credit to secure
• Easy to go into a local bank and get a loan
• Quick and easy application process
• Straightforward interest rates and origination fees

Cons of banks:

• Possibly higher interest and fees than other options
• Borrowers with low or no credit score might be denied the loan

3. Credit unions

Credit unions usually offer low interest rates and can help borrowers secure small personal loans. You generally need to be a credit union member to apply for the loan.

Pros of credit unions:

• Easy approval for borrowers with good or excellent credit
• Easy to go into a local credit union to apply
• Straightforward interest rates and fees
• Some of the lowest interest rates available

Cons of credit unions:

• May need to be a member of a specific credit union
• Borrowers with low or no credit score might be denied the loan

How to get a small personal loan in 4 easy steps

There are just four simple steps to apply for a personal loan. Here’s how you could apply for a small personal loan.

Step 1: Determine the loan amount and purpose

Determine how much money you need and the specific purpose for which you’re seeking the loan. This will help you find the right lender and loan terms. 

If the expense was already made or the purpose is debt consolidation, focus on what you need. For example, if you’re planning a renovation or need emergency funds, it’s important to take a realistic loan amount to save on interest. 

Step 2: Research and compare lenders

Research different lenders such as banks, credit unions, and online lenders to find the best interest rates and loan terms. Many lenders will give you an initial quote. Compare at least four to five lenders as interest rates, fees, and terms can vary widely.  

Step 3: Gather the necessary documents

When applying for loans, you may need proof of income such as W-2s or tax returns, employment details, government-issued identification documents, and bank statements. Having these ready in advance can expedite the loan application and approval process.

Step 4: Apply for the small loan

When you apply online or in person, you must submit the loan application with your chosen lender. After you apply for a small personal loan, the lender will review the information you’ve shared. It will check your credit reports and score and may give you instant approval. Sometimes, your lender may contact you with requests for additional information or with your results within one to two weeks.

Factors to consider when applying for a small personal loan

Remember that all loans come with specific requirements, interest rates, loan terms, and annual percentage rates (APRs), which can vary by lender, individual credit score, and financial profile. It’s essential to consider and weigh the following to choose the best small loans and avoid scams.

1. Requirements

Online lenders, banks, and credit unions all have set requirements for borrowers. Check these criteria and other standards to see whether you meet the general criteria. In addition, it’s important to double-check the lender’s reputation to prevent falling for scams. 

2. Interest rates

Interest rates vary widely by lenders. Be sure to carefully compare interest rates and total fees to choose the most favorable options. 

3. Loan terms

Loan repayment terms also vary. Usually, small personal loans have repayment periods of two to five years. Some lenders will allow you to repay the loan early, but others will not. Look at loan payment terms and options for repayment terms, additional fees, or penalties to ensure the loan will fit your needs. 

4. Annual Percentage Rate (APR)

APR is the total interest rate for a year rather than monthly fees or rates. This is the most accurate comparison of interest rates to consider loans and offerings from various lenders. 

5. Funding time

Funding time can be a significant factor if you’re in a hurry. Some lenders will approve your loan and offer funding the same day, while others take one to two weeks to process.  Note that faster funding time does not necessarily signify a more reliable lender. Be sure to check total interest and fees, loan terms, and compare average funding times to choose the option that best balances various considerations. 

Alternatives to small personal loans

If you need cash fast, there are alternatives to small personal loans, from online lenders or cash apps to side hustles. Here’s what you can consider:

1. Use cash apps

Cash apps offer a fast and easy way to get small personal loans through simple online applications. 

Pros of cash apps:

• Easier approval and more lenient credit requirements
• Great for borrowers looking for smaller amounts
• Straightforward interest rates and fees
• Possible lower interest rates 

Con of cash apps:

• Smaller loan amounts 

2. Borrow from family and friends

Borrowing from friends or family can be a way to get the cash you need quickly. But unless you’re careful, it could strain the relationship. To protect your relationship, write out a loan agreement and stick to it.

Pros of loans from family and friends:

• No specific approval process necessary
• Could get cash the same day
• May get lower interest rates or pay less in interest overall. 

Con from family and friends:

• If not done carefully, it could stain the relationship

3. Look for side hustles

Side hustles are a great way to bring in extra cash. Sometimes, side hustles can help you earn a few hundred dollars or grow into a full-time career. From driving an Uber or grocery deliveries to tutoring, lawn mowing or repair, or selling extra items you no longer need, there are many side hustles you could start quickly. Find ways to get cash fast or side hustles to make extra cash. 

Pros of side hustles:

• No approval needed for most
• Could start earning cash this week
• No burden of taking on a loan
• Use skills you have to build an additional income stream

Con of side hustles:

• You’ll need to build the business or side hustle, which might not be fast enough if you need cash ASAP

Getting funds when you need them

Whether you need debt consolidation and tips to pay off debt or need $1,000 quickly, like an instant payday loan, you have loan options. Remember to carefully compare loan rates, fees, and terms to choose the best choice for your needs. Need money for tuition? Learn more about private student loans here. 

FAQ