No, personal loans do not require down payments. Unsecured personal loans offer you a lump sum of money that you will need to repay, plus interest, in 12 - 84 months, and they do not require you to put up anything as collateral to get the money. If the lender you’re working with requires a down payment or any fees that need to be paid upfront, you should not work with them because no reputable lenders require a payment to be made out of pocket before you receive the loan.
Secured personal loans do require you to put up something as collateral to get the loan, such as a vehicle or money in a savings account. However, this collateral is not a down payment. If you don't repay the loan, the lender will take the collateral as compensation. Otherwise, you’ll get it back.
If you think a personal loan is right for you, check out WalletHub’s picks for the best personal loans. Then, you can estimate your potential rates with our free pre-qualification tool.
This answer was first published on 09/01/22. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
No, personal loans do not require down payments. Personal loans are a form of unsecured debt, meaning they are not backed by a specific asset such as a house or a car. Therefore, unlike with mortgage and auto lenders, there's no requirement to put a down payment on any specific purchase.
Do you have to pay upfront for a personal loan? ›
An origination fee is an upfront fee lenders charge borrowers to cover the administrative costs of processing a loan. The fees on a personal loan can be a flat rate or a percentage of the total loan amount, typically ranging from 1% – 10%.
Do you have to put anything down for a loan? ›
The two main types of loans that don't usually require a down payment are VA loans and USDA loans. Some alternatives to no-down payment mortgages include low-down payment loans, such as a conventional or FHA loan, down payment assistance and gift funds.
What type of loan does not require a down payment? ›
Two types of government-sponsored loans – VA loans and USDA loans – allow you to buy a home without a down payment.
Do most loans require a down payment? ›
You don't need to put 20 percent down to get a mortgage — some mortgages don't even require a down payment. You can get a conventional mortgage with 3 percent down, but with anything less than 20 percent, you'll have to pay mortgage insurance. Making a larger down payment can get you a lower interest rate.
Do you have to put a down payment on a personal loan? ›
No, personal loans do not require down payments. Personal loans are a form of unsecured debt, meaning they are not backed by a specific asset such as a house or a car. Therefore, unlike with mortgage and auto lenders, there's no requirement to put a down payment on any specific purchase.
Is a personal loan risky? ›
Before deciding to get a personal loan, you must consider potential downsides, such as high interest rates, steep fees and a hit to your credit score if used incorrectly.
What not to say when getting a loan? ›
10 Things Not To Say To Your Mortgage Broker | Loan Approval
- 1) Anything untruthful.
- 2) What's the most I can borrow?
- 3) I forgot to pay that bill again.
- 4) Check out my new credit cards.
- 5) Which credit card ISN'T maxed out?
- 6) Changing jobs annually is my specialty.
It's a percentage of the home's sales price and is cash you put down in addition to the money borrowed as a mortgage. The down payment takes some of the risk off of lenders because you have your own money invested, which means you have more at stake and are more likely to make your payments.
What are the disadvantages of putting a down payment on a loan? ›
However, the downsides include tying up a significant amount of your money in one asset, potentially missing out on higher returns elsewhere, the risk of your home depreciating in value, and difficulty accessing your funds in case of a financial emergency.
Today, no-down-payment home loans are only available to select individuals with high credit scores who can document adequate income needed to repay the loan. Such homebuyers must also exhibit good credit, usually with minimum scores in the mid-600 range.
Do all banks require a down payment? ›
Some conventional mortgages require far less than a 20% down payment. There are also loan programs from the government — including FHA loans, VA loans, and USDA loans, that require low or no down payments if you qualify.
Which type of loan is most likely to be made with no down payment required? ›
USDA loans
The primary aim of the USDA is to assist low-to-moderate-income home buyers, with about 97% of the U.S. land area falling under the USDA's eligibility criteria. Key requirements of a USDA loan include: Zero down payment. A minimum credit score of 640.
How much do you need to put down for a loan? ›
Some lenders may require a 5% down payment. Other lenders may require a 3% down payment. If your credit score is 620 or above, your lender may provide lower down payment loan options.
What happens if you don t have enough money for a down payment? ›
If you're a buyer who is well qualified to make monthly payments but feeling shut out from the housing market by a lack of upfront cash, ask your lender about low- or no-down payment loans, and also look into government grants and loans that can help make your dream of homeownership a reality.
Does loan amount include down payment? ›
Your down payment is not included in the loan amount. Both parts of the down payment are deducted from the purchase price — what remains is the loan amount. When making a home purchase, the down payment is the total you'll be required to pay to satisfy the requirements of the loan.
Is it normal to pay an upfront fee for a loan? ›
But then they say you have to pay them before you can get the money. That's a scam. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you're told it's for “insurance,” “processing,” or just “paperwork.” Scammers call, offering loans or other credit.
Do you pay upfront for a loan? ›
Unlike fraudulent firms, reputable lenders won't ever put pressure on you to quickly pay upfront. If this happens, it's likely to be a loan scam.
Do you have to pay back personal loans immediately? ›
Whether you choose to pay off your personal loan early or put any extra cash toward something else is up to you. By understanding the pros and cons of an early payment, you can make informed decisions with your money.
Do you pay monthly for a personal loan? ›
A personal loan is a type of installment loan with a fixed rate and monthly payment.
