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How to get a £25,000 personal loan with a great rate
Funding your next big financial step might be easier than you think. Here's how to compare loans, maximise your chances of loan application approval and secure a competitive interest rate.
When knuckling down and saving simply isn’t an option, perhaps due to limited time, an unsecured, fixed-rate personal loan can get you quickly and easily to where you need to be financially. The flip-side inevitably, is that this comes at the cost of a potentially lengthy commitment to monthly repayments.
This guide will help you learn how to compare loans to get the best rates and terms you qualify for.
Compare top £25,000 personal loans
Use the table below to estimate the monthly and overall cost of your loan from a range of popular lenders.
What are my options?
Realistically, borrowing £25,000 without security is highly-likely to require a good credit score. While personal loans are available from both traditional and more specialised lenders, and come in a variety of forms: secured, unsecured, short-term, long-term etc., £25,000 is definitely at the upper end of the unsecured lending spectrum. The first step to taking out the right loan for your needs is to understand your options.
If you have good credit
You’ll most probably have more options available to you if you’re looking at borrowing £25,000 and you have a good credit rating. You’re likely to be able to apply to the majority of lenders, but to get approved and enjoy the most competitive rates you’ll need to prove that the loan is affordable. Your current bank may offer larger sums and faster funding to existing customers, though it usually pays to shop around if you can.
Compare personal loans
If you have bad credit
There are plenty of specialist lenders who offer loans to people whose credit history isn’t perfect, but unfortunately most won’t stretch to £25,000. Applying for a guarantor loan, with a friend or relative who has a good credit score can help. Don’t forget that interest rates are usually tailored to individual circumstances, and can vary greatly according to the lender’s assessment – so finding a lender that’ll stretch to £25,000 is one thing, but securing an affordable loan is another.
Compare bad credit personal loans
If you’re self-employed
Good news – 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 £25,000 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, say, 25 years, however, then obviously the overall cost of borrowing will be much, much higher! If you remortgage and you’re allowed to overpay (and it’s easy enough to do so), then this could be a cheaper option. It’s a major commitment, so take a moment to read through these guides:
How to compare £25,000 loans
These are some of the key factors to consider when comparing £25,000 personal loans:
- Total amount payable. If you only compare one factor, it should probably be this one! Aim to keep the total cost of the loan as low as possible while ensuring your monthly repayments are affordable.
- Loan durations. If you’re consolidating debt or spreading the cost of a hefty financial outlay, longer loan terms can keep monthly repayments affordable, but will increase the overall cost of your loan. Loans of 1 year up to 7 years are the norm.
- Eligibility. Never apply for a loan before looking at the eligibility criteria, and never apply for multiple loans in a short space of time. Rejections aren’t visible on your credit report, but the applications for credit are. If lenders see an application for credit, and then see that this wasn’t followed by a loan, they might put two and two together. Seeing multiple applications for credit in a short space of time on your credit report will more than likely dissuade a would-be lender.
- Rates. There is a huge range of interest rates in the current personal loans market. What’s more, rates for a loan product also vary 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 in the world of personal loans, you should double-check the loans that you’re considering for fees, and factor any in to the costs.
- Turnaround time. Let’s face it: British banks are pretty slow! The time it takes to get funds to your account will vary between lenders (typically it takes 1-3 days). If you need the money fast, then you’ll want to compare each loan’s turnaround time as well as other factors listed here.
- Early repayment. While lenders will not normally penalise you for paying back some or all of the loan early, that doesn’t always mean that doing so will save you money in interest. Many lenders charge one or even two months’ additional interest on any funds paid 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 prospective lender looking for?
- Your reason for borrowing. What you’re using the loan for is important to lenders, despite the fact that they simply take your word for it. If you’re appear less of a risk because of borrowing for an understandable and responsible purpose, you’re likely to 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 £25,000.
- Your income and expenditure. If you’re struggling to afford your existing obligations, or you’re spending like a footballer’s wife, lenders are likely to be put off. Ask yourself honestly if there’s enough room between your income and your outgoings to cover the repayments, because that’s exactly what a lender will do.
- Your employment status. How long have you been with your current employer? How stable a role is it? How established is the company? How stable is the industry even? Lenders are naturally risk-averse, so they’re looking to lend to the safest prospects first.
The three C'sSome lenders summarise eligibility using the 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.
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