The Practical Guide to Taking Out a Personal Loan in Your 40s

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Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

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Even if you have life figured out by the time you’re in your 40s, you might find yourself in need of some extra cash. Taking out a personal loan, then, could be an option for you.

But before you borrow, consider the pros and cons of taking on debt as you enter this next phase of your life.

5 pros and cons of taking out a personal loan in your 40s

Everyone’s financial situation is unique, especially if you have a family to support. But you should be able to relate to at least a few of these pros and cons of taking out a personal loan in your 40s.

1. Pro: Consolidating and paying off debt

If you’re behind on your credit cards, you’re not alone. In fact, the average person age 40 and older has between $8,200 and $9,100 in credit card debt, according to ValuePenguin.

No matter your debt type, paying it off with a personal loan could be a solution if you secure a lower interest rate on the loan than what you’re paying now. But you’ll also need to break bad money habits that put you in the red in the first place.

Say you racked up a ton of credit card debt for unnecessary purchases. Unless you stop buying things you can’t afford, consolidating your debt is only a temporary solution. You’re better off using the card to pay routine bills and nothing else — or cutting it up altogether.

Other benefits of consolidating your debt via a personal loan include:

  • Choosing your new lender
  • Making one monthly payment
  • Agreeing to a repayment term with a specific end date

2. Con: Trying to catch up on investments

You might be tempted to borrow money so that you can invest in stocks, bonds, and the like. After all, you might see retirement on the horizon.

But beware of this strategy; it’s one of the worst reasons to take out personal loans.

Look at it this way: Any amount you borrow via a personal loan and invest in the stock market could lose value or, worse, disappear altogether. Imagine having to pay back the original amount — plus interest — without any investment earnings at your disposal.

Instead of borrowing money, consider other options for making investments, including:

  • Maxing out your 401(k) contribution at work
  • Learning how to invest with $100 or less of capital
  • Meeting with a financial planner to discuss your long-term goals

3. Pro: Tackling necessary home improvements

There are many ways to pay for emergency repairs on your house.

A personal loan could be an attractive option if you score a low fixed rate without having to put up collateral. But you’d need to have an excellent credit history to snatch these perks.

An unsecured personal loan for home improvements is only wise if the project is necessary in the moment. Home repairs involving electricity, sewage, or fumes qualify.

For less-urgent home projects, such as refinishing your hardwood floors, avoid borrowing if you can. Instead, use our simple savings calculator to gauge how long it’ll take you to budget for the funds you need.

4. Con: Covering big (but negotiable) bills

The blessing and curse of personal loans are that you could borrow money quickly and easily for an expense you didn’t see coming. But borrowing should never be taken lightly; it should be treated more as a last resort.

Take medical bills as an example. Let’s say you or your dependents experience a health scare with unforeseen costs. Talk with your health care provider and see if you could negotiate your bill, or at least enroll in a payment plan that makes repayment easier.

The same goes for an unexpected tax bill. Instead of taking out a personal loan, consider alternatives to covering your tax bill, such as requesting an extension on your payment deadline or applying for a stalled repayment plan.

5. Con: Making midlife-crisis purchases

The ease of signing up for personal loans might inspire you to pursue a big purchase. Maybe that big-screen TV, small coupe, or speedboat caught your fancy but is outside of your budget.

In the case of wants versus needs, it’s always better to save up cash than rack up debt for a purchase that can wait.

After all, you don’t want to spend the next decade worrying about money as you’re nearing retirement thanks to splurges you made to satisfy a midlife crisis.

Your 40s are a time to set yourself up for the future and, perhaps, prepare your children for theirs. It’s natural to pine after a big purchase along the way. Just ensure you don’t ruin your finances to make it.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal LoansFixed rates from 6.58% APR to 14.87% APR (with AutoPay). Variable rates from 6.275% APR to 12.575% APR (with AutoPay). SoFi rate ranges are current as of July 16, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.275% APR assumes current 1-month LIBOR rate of 2.10% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  1. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  1. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.73% – 29.99%$1,000 - $50,000
Check rate nowon SLH's secure site
6.28% – 14.87%1$5,000 - $100,000
Check rate nowon SLH's secure site
6.87% – 35.97%*$1,000 - $50,000Visit Upgrade
8.00% – 25.00%$5,000 - $35,000
Check rate nowon SLH's secure site
4.99% – 29.99%$10,000 - $35,000Visit FreedomPlus
5.99% – 18.99%2$5,000 - $50,000Visit Citizens
15.49% – 34.49%$2,000 - $25,000Visit LendingPoint
5.99% – 35.89%$1,000 - $40,000Visit LendingClub
5.49% – 18.24%$5,000 - $75,000Visit Earnest
9.95% – 35.99%$2,000 - $35,000Visit Avant
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.