How to get a £20,000 personal loan with a great rate

A £20,000 loan can unlock a world of possibilities. Whether you're consolidating debt, improving your home, funding a wedding, making a large purchase or some combination these, this guide will help you learn how to compare rates and terms to get the best loan you qualify for.

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Comparison of best £20,000 loans

Table: sorted by representative APR, promoted deals first
Name Product Total Payable Monthly Repayment Representative APR
Representative example: Borrow £10,000.00 over 3 years at a rate of 5.5% p.a. (fixed). Representative APR 5.5% and total payable £10,848.60 in monthly repayments of £301.35.
Representative example: Borrow £10,000.00 over 3 years at a rate of 3.4% p.a. (fixed). Representative APR 3.4% and total payable £10,524.24 in monthly repayments of £292.34.
Representative example: Borrow £15,001.00 over 3 years at a rate of 3.1% p.a. (fixed). Representative APR 3.1% and total payable £15,718.32 in monthly repayments of £436.62.
Representative example: Borrow £10,000.00 over 3 years at a rate of 3.4% p.a. (fixed). Representative APR 3.4% and total payable £10,524.24 in monthly repayments of £292.34.
Representative example: Borrow £10,000.00 over 3 years at a rate of 3.9% p.a. (fixed). Representative APR 3.9% and total payable £10,601.64 in monthly repayments of £294.49.
Representative example: Borrow £10,000.00 over 3 years at a rate of 2.9% p.a. (fixed). Representative APR 2.9% and total payable £10,447.20 in monthly repayments of £290.20.

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Please note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.

Warning: late repayments can cause you serious money problems. See our debt help guides.

What are my options?

Bad credit or good credit, there are options available to you if you need to borrow a large amount of money. Loans of £20,000 are available from both traditional and more specialised lenders, and come in a variety of forms: secured, unsecured, short-term, long-term etc. The first step to taking out the right loan is understanding your options.

If you have good credit

You’ll most probably have more options available to you if you’re looking at borrowing £20,000 and you have a good credit rating. You’re likely to be able to apply to the majority of lenders and enjoy the most competitive rates. Your current bank may even offer same-day funding to existing customers, but it usually pays to shop around.

Compare personal loans

If you have bad credit

There are specialist lenders who offer loans to people whose credit history isn’t perfect. There are usually certain requirements you’ll need to meet, and you may be required to use security or a guarantor. Interest rates are usually more tailored to the individual circumstances, and can vary greatly according to the lender’s assessment.

Compare bad credit personal loans

If you’re self-employed

This is an expanding market which needs to be served by lenders, and as a result, more and more lenders are offer 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.

Compare loans for the self-employed

If it’s for a business

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.

Compare business loans

If you’re willing/able to secure your loan

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 25 years, however, then obviously the overall cost of borrowing will be much, much higher. It’s a major commitment so take a moment to read through our full guide to secured loans.

Want to see which lenders can offer you a secured loan?

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Warning: your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it.

How to compare £20,000 loans

Here are some of the key factors to consider when comparing £20,000 personal loans:

  • Total amount payable. This is the big one – aim to keep this figure as low as possible while ensuring monthly repayments are within your means.
  • Loan durations. Usually the loan term will be dictated by how much you’re willing/able to pay back each month. By spreading repayment over 3 or 4 years, for example, you may be able to borrow more than if you were to spread repayment over 2 years. Loans of 17 years are the norm, but it’s not unusual for banks to cap their loan terms at either 5 or 6 years.
  • Eligibility. Don’t apply for a loan until you’ve checked the eligibility criteria!
  • Rates. Rates vary from borrower to borrower, and also within the same loan product – from applicant to applicant. Lenders will normally give you a more accurate quote, plus your likelihood of approval, when you give them a few more details about yourself.
  • Fees. Although set-up/product fees are increasingly rare, it’s worth checking this for the loans that you’re considering.
  • Turnaround time. The time it takes to get funds to your account will vary between lenders. Typically it takes 1-3 days.
  • Early repayment. While lenders will not normally penalise you for paying back some or all of the loan early, that doesn’t necessarily mean that doing so will save you money in interest. Some lenders will charge one or even two months extra interest on any funds you pay early.

Aspects of your application that lenders consider

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:

  • Your reason for borrowing. What you’re using the loan for is without doubt of interest to the lender. Perhaps you’re looking to consolidate your debt or purchase a car, how wise a decision that is will vary based on other financial factors. If you’re considered less of a risk because of responsible borrowing, you’ll be seen as a stronger applicant.
  • Your credit record. Potential APR offers are affected by your credit rating, and you’ll need to be in the “good” range or higher for most lenders. There’s also the possibility of getting a loan for less, however, if your score doesn’t qualify you for the full £20,000.
  • Your income and expenditure. If you’re struggling to afford your existing obligations, or you’re spending like a footballer’s wife, lenders could be put off. Lenders tend to look at your debt-to-income ratio to determine if you’ll be able to make timely repayments.
  • Your employment status. How long have you been with your current employer? How stable a role is it? Lenders are risk-averse, so they’re looking to lend to the safest prospects first.

Some lenders summarise eligibility in three C's

  • Character is about creditworthiness and how you’ve handled your debt payments in the past.
  • Capital is perhaps better-described as collateral. You may be able to rely on capital by getting a secured loan, using an asset the lender can take possession of if you don’t repay the loan as you’ve agreed to.
  • Capacity refers to your ability to repay the loan. The lender will evaluate the length and type of your employment as well as your income and debt-to-income ratio. If you’ve been in your current employment for a short time, your previous job history may be important. The lender will analyze your ability to handle the new monthly payment.

Remember, there’s no one direct path to financial wellness. Each of us has our own experiences that define what we have, what we need and what our goals are. Personal loans can be a way to reach some of the goals faster or easier when you don’t have all the cash on hand.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

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