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 need to put a down payment on a loan? ›
You generally need to put 20% down to avoid paying private mortgage insurance (PMI) on a conventional loan. PMI istypically a monthly fee that gets added to your monthly mortgage payment or is paid upfront by the lender in exchange for a slightly higher interest rate.
Do you have to pay upfront for a personal loan? ›
A personal loan origination fee is an upfront fee a lender may charge to cover the cost of processing your personal loan. It might be called an underwriting, administrative or processing fee. Origination fees are also common on mortgages and federal student loans.
Is a down payment usually required to get a loan? ›
If you're taking out a mortgage, chances are you still need to make a down payment — an upfront deposit that is typically a percentage of the total cost of the house. The size of your down payment depends on the type of home loan you have, your financial situation and your lender.
How can I avoid a down payment? ›
The easiest way to avoid a down payment is to qualify for one of the two no-down payment mortgage programs backed by the government: a USDA or a VA loan.
Do personal loans require a down payment? ›
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.
What type of loan does not require a down payment? ›
Government-backed USDA and VA loans can allow you to buy a home with $0 down. The fact that these loans are backed by the federal government allows lenders to be more lenient with down payment requirements.
How much do most lenders require for down payment? ›
FHA loans require as little as 3.5 percent, and VA loans and USDA loans have no down payment requirement at all. Most homeowners don't put 20 percent down. In 2023, the median down payment among homebuyers was 14 percent, according to the National Association of Realtors (NAR).
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.
What Cannot be used for a down payment? ›
If you're trying to figure out how to come up with your down payment, it's important to know what you can and can't use. For example, it's possible to use a second mortgage, a piggyback loan or even a loan from a friend or family member, but you can't use a personal loan or a credit card cash advance.
You'll probably pay a higher interest rate with a lower down payment since lenders assume more risk. You will also be required to pay mortgage insurance. Known as MI, this offers the lender some protection against loss in the event you default on the loan.
Is $2000 a good down payment on a car? ›
If you're considering a car that costs $25,000, putting down between $2,000 and $4,000 would be wise. However, the true answer to this question depends on your negotiation strategy. If you can negotiate a lower price or better terms, putting more money down may not save you much interest.
Why do some lenders require a down payment? ›
Mortgage lenders require a down payment because it offsets their risk. With a down payment, the borrower has some skin in the game and an investment to protect.
Do all banks require a down payment? ›
Almost all mortgage options require a down payment — the money you pay up front to make up the difference between the price of the home and the amount of the mortgage. The amount of your down payment can influence what financing options and interest rates are available to you.
Is it okay to not put a down payment on a car? ›
You generally don't need a down payment to get a car loan, but it's in your best interest to make one. A down payment of any size reduces the amount you need to borrow, so your loan will cost less. Compared with a bigger loan with the same terms, you'll have lower monthly payments and pay less interest over time.
Does down payment affect loan approval? ›
If you're investing in a home, you'll own long-term, investing a large down payment may make sense. But if it's a shorter-term investment or you don't have much 'extra money' set aside, a smaller down payment may be in order and won't risk your loan approval.
