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Whether you’re consolidating debt, improving your home, funding a wedding or making a large purchase, £20,000 can be a life-changing sum. But it’s close to the £25,000 threshold at which many lenders stop issuing loans without security, and so if you’re after an unsecured loan, lenders will want to see a solid track record of responsible borrowing.
If you’re looking at borrowing £20,000 and you have a good credit rating, then you may be able to go after the very best rates on the market.
Crucially, you’ll still need to be able to afford the loan that you apply for. You could have the best credit record going, but if you’re unrealistic in the loan that you apply for, your application will be rejected. Spreading your loan over a longer term brings down the monthly repayment figure, making it more affordable, but also pushes up the overall cost of the loan. Aim to find a balance – keeping the overall cost as low as you can, while ensuring the repayment schedule is manageable. If you’ve done your sums and feel that you’d be able to afford the loan you’re applying for, then there’s a strong chance a lender will reach the same conclusion.
Provided you can do this, you’re likely to be able to apply to the majority of lenders and enjoy their most competitive rates. Your current bank may even offer same-day funding to existing customers, although it almost always pays to shop around. With such a sizeable loan, even a small difference in the interest rate can mean big savings – especially if you’re borrowing over a number of years.
While there are specialist lenders who offer loans to people whose credit history isn’t perfect, it’s tough to find a lender willing to offer £20,000 to a borrower with bad credit.
However, if you’re a homeowner with a mortgage, you could use the equity in you property as security. Having security means that a loan represents lower risk to a lender, which normally in turn means lower rates for the borrower. If you’re spreading the repayment over 15 years, however, then obviously the overall cost of borrowing is likely to higher despite the annual rate being lower. It’s a major commitment (take a moment to read through our secured loans guide) but it could let you access rates below 15%.Compare secured loan rates
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it.
This is an expanding market which needs to be served by lenders, and as a result, more and more mainstream lenders are offering loans to self-employed applicants. Whatever stage you’re at, if you know your options and how best to go about applying, you’ll have a better chance of having your loan approved.
A £20,000 loan taken out for business purposes is different to one taken out for personal use. Lenders often state that their personal loans are not to be used for business purposes. There are a variety of business loans available, and some are even government-backed – which can mean better rates for borrowers.
Here are some of the key factors to consider when comparing £20,000 personal loans:
When applying for finance, you inevitably open yourself up to a degree of financial scrutiny. So what is a would-be lender looking for? Here are some of the main things they’re likely to be interested in:
|Interest rate of 5.0% fixed p.a.||Interest rate of 10.0% fixed p.a.||Interest rate of 15.0% fixed p.a.|
|5 year term||£377.42 monthly|
|7 year term||£282.68 monthly|
|10 year term||£212.13 monthly|
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