If you need to borrow a large amount of money, you may be considering a personal loan. Some personal loan lenders allow you to borrow as much as $50,000, or even $100,000 so you can finance very large purchases that it generally wouldn't make sense to put on a credit card.
Before you move forward with taking out a large personal loan, though, you'll want to get a clear idea of what it will cost you. Specifically, you should look at both monthly payment and total repayment costs.
Here's what a $50,000 loan would cost you each month
The costs of a $50,000 loan are shown in the table below. Both your monthly payment and total interest costs change depending on how long you take to repay your loan and what interest rate you are offered, since rates do vary from one lender to another.
The table shows the payments with three different interest rates, including 12.35% (the average rate on a personal loan as of November 2023).
| 8.00% | 12.35% | 15.00% | |
|---|---|---|---|
| Two-Year Repayment | $2,261.36/month, $4,272.75 in interest over time | $2,361.85/month, $6,684.50 in interest over time | $2,424.33/month, $8,183.98 in interest over time |
| Seven-Year Repayment | $779.31/month, $15,462.10 in interest over time | $892.02/month, $24,929.90 in interest over time | $964.84/month, $31,046.37 in interest over time |
| 10-Year Repayment | $606.64/month, $22,796.56 in interest over time | $727.51/month, $37,300.90 in interest over time | $806.67/month, $46,800.97 in interest over time |
Data source: Author's calculations.
Should you take out a $50,000 loan?
As you can see, the monthly payments on a $50,000 personal loan are very substantial. Even if you take 10 years to repay your debt, you'll be sending hundreds of dollars a month to a lender. You can't use it to invest for retirement or do anything else (like covering your living expenses). So you don't want to make the decision lightly.
It's not surprising the payments and interest costs are so high, since $50,000 is a lot of money. If you are considering borrowing that much, the first big question to ask yourself is whether you really need such a large sum. Could you save a little bit longer to cover more of the costs in cash, or scale down the scope of whatever you are borrowing for?
You'll also want to consider whether a personal loan is the right type of loan. If you're borrowing for a car, for example, it's worth comparing the rate on personal loans to the rate on car loans. Car loans may have a lower interest rate because they are secured (the car acts as collateral to guarantee repayment). If you're doing home improvements, a home equity loan could be a better option. The interest may be deductible if you itemize on your taxes and are improving the home that is securing the loan.
Finally, ask yourself if you are absolutely sure of the following:
- You can afford the loan now and in the future without putting off retirement savings or anything else.
- You are comfortable with the total costs, including interest -- especially since you could end up paying almost double for whatever you are buying if you get a high interest rate and take a long time to repay your loan.
- Whatever you are borrowing for is going to improve your situation substantially for a long time. For example, a home improvement project may be worth it since it will increase your home's value and make your property more livable -- but what about a wedding, which will be over in a day?
If you can't afford the loan, aren't comfortable with total costs, and feel as if the loan will be worth it over the long haul, do not even consider borrowing $50,000. Save up for whatever you're buying -- or scale down your expectations -- instead.
Our picks for the best personal loans
Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.
