How to get a £40,000 loan with the best rate

To borrow £40,000 you'll need excellent credit or a property to secure the loan against.

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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.

Unsecured personal loans are commonly capped at £25,000. However, in most cases, high-street banks are willing to offer unsecured personal loans of £40,000, but will have very strict approval criteria. You may need to be an existing customer, for example. You’ll need to have excellent credit and, most important of all, you’ll need to be able to afford the loan.

If you’re a homeowner (with a mortgage), then another option that could be available to you is a secured “homeowner” loan. These loans allow you to use the equity you’ve built up in your property as security for a lender. By reducing the risk to the lender, you’ll usually be able to borrow more and/or get a lower interest rate than your might otherwise.

Borrowing against your home is obviously a big step though. If you don’t repay the loan, the lender can sell your home to recoup its losses, so it’s important to weigh up your options first, and to be sure you understand what you’re getting into.

Comparison of loans

Table: sorted by representative APR, promoted deals first
Name Product Total Payable Monthly Repayment Representative APR Link
Check eligibility
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Representative example: Borrow £10,000.00 over 3 years at a rate of 3.2% p.a. (fixed). Representative APR 3.2% and total payable £10,493.64 in monthly repayments of £291.49.
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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.
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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.
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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.
Check eligibility
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 3.0% p.a. (fixed). Representative APR 3.0% and total payable £10,462.68 in monthly repayments of £290.63.
Check eligibility
View details
Representative example: Borrow £10,000.00 over 5 years at a rate of 8.8% p.a. (fixed) with an application fee of £240.00. Representative APR 9.9% and total payable £12,602.87 in monthly repayments of £210.05.
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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.
Check eligibility
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 5.8% p.a. (fixed) with an application fee of £0.00. Representative APR 10.0% and total payable £11,543.40 in monthly repayments of £320.65.
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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.

Compare up to 4 providers

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

Late repayments can cause you serious money problems. See our debt help guides.

Table: sorted by overall cost for comparison (representative APRC)
Updated December 7th, 2019
Name Product Maximum LTV Loan amounts Loan terms Overall cost for comparison
65%
£10,000 to £500,000
3 to 35 years
3.9% APRC
65%
£10,000 to £2,500,000
3 to 25 years
4% APRC
65%
£10,000 to £500,000
3 to 25 years
4.1% APRC
65%
£10,000 to £500,000
3 to 25 years
4.1% APRC
70%
£10,000 to £500,000
3 to 35 years
4.2% APRC
70%
£10,000 to £2,500,000
3 to 25 years
4.3% APRC
65%
£10,000 to £500,000
3 to 35 years
4.4% APRC
75%
£10,000 to £350,000
3 to 35 years
4.6% APRC
70%
£10,000 to £500,000
3 to 35 years
4.7% APRC
70%
£10,000 to £200,000
3 to 25 years
4.7% APRC
70%
£10,000 to £200,000
3 to 25 years
4.7% APRC
60%
£10,000 to £125,000
3 to 30 years
4.8% APRC

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Overall representative example
If you borrowed £40,000 over a 14-year term at 8.8% p.a. (variable), you would make 168 monthly payments of £461.49 and pay £77,530.32 overall, which includes interest of £33,040.32, a broker fee of £3,995 and a lender fee of £495.00. The overall cost for comparison is 11.3% APRC representative.

Should I just remortgage?

Homeowners can get hold of a large lump sum, by remortgaging and borrowing against the equity of their house. This might prove more cost-effective than a personal loan at a time when mortgage rates are low. Ultimately, you need to compare the total payable of both options.

Full guide to remortgaging

By exploring all of your options for a £40,000 loan in depth, you’ll be likely to find the most suitable lender for your needs and potentially save thousands of pounds compared to the next best deal.

How to get a £40,000 loan

  • Calculate how much money you actually need. The less money you borrow, the less interest costs you’ll face over the term of the loan. You might even be able to access a better rate too, so it’s worth exploring whether you have to borrow 100% of the capital needed for your purchase, or if there are other ways to raise a percentage of the funds.
  • Use a credit-checking service. Credit-checking services, such as those provided by the likes of TransUnion (formerly Callcredit), Experian and Equifax, will give you a score based on your credit rating. You’ll need a good credit score to be accepted for an unsecured £40,000 loan. If you don’t have this, then it’s a good idea to either build your score before applying or approach a specialist lender for borrowers with bad credit. After all, each credit application will harm your credit score (albeit only slightly) even further.
  • Compare lenders online. Make sure you shop around and look for the best price for the amount you need.
  • Apply. Applying for a £40,000 loan online only takes a few minutes and the money could be in your bank account within hours if you’re deemed eligible for it. You’ll need your personal and financial details to hand, and to be willing to go through an online credit check.

£40,000 loans for specific circumstances

  • £40,000 loans for bad credit. There are lenders out there who specialise in offering personal loans to people with bad credit. However, even these specialists will be cautious handing out sums as large as £40,000. Even if you are deemed eligible by these lenders, it’s important to check that you’ll be able to afford the monthly repayments. Fall behind on them and the lender could take legal action against you or repossess your assets.
  • £40,000 loans for businesses. The process and eligibility criteria are different for business loans. You’ll almost definitely have to apply through a specialist business lender, as most personal loan companies won’t allow you to spend their money on funding a business.
  • £40,000 loans for the self-employed. It’s tougher for self-employed people to get their hands on a £40,000 loan than it is for someone in a stable job. Nevertheless, there are lenders who specialise in personal loans for self-employed people. As with ‘bad credit loans’ these companies usually offer higher rates to compensate for the higher risk that self-employed borrowers are seen as.

How to compare £40,000 loans

  • Eligibility. Most lenders will have basic criteria that borrowers have to meet to even be considered for a £40,000 loans. It’s important to check this before applying, so not to waste your time and unnecessarily harm your credit score.
  • Rate. This is initially expressed as a ‘representative APR’, which has to be offered to at least 51% of customers. If you’re deemed less creditworthy than the average customer, you may well be offered a higher rate than this after you’ve shared your detailers with the lender.
  • Total payable. This is the amount of money you’ll pay to the lender over the term of the loan. Ultimately, it’s the most important factor to consider.
  • Term length. The amount of months that your loans repayment will be spread across. The longer your term, the lower your repayments will be, although you’ll pay more overall in interest charges.
  • Fees. Look out for one-off ‘set-up’ fees charged by personal loan companies. They’re exceptionally rare nowadays, but some are still knocking about.

Loan illustrations

Interest rate of 5% fixed p.a.Interest rate of 10% fixed p.a.Interest rate of 25% fixed p.a.
1 year loanMonthly: £3,424.30
Overall: £41,091.59
Monthly: £3,516.64
Overall: £42,199.63
Monthly: £3,801.77
Overall: £45,621.22
3 year loanMonthly: £1,198.34
Overall: £43,158.09
Monthly: £1,290.69
Overall: £46,464.75
Monthly: £1,590.39
Overall: £57,254.15
5 year loanMonthly: £754.85
Overall: £45,290.96
Monthly: £849.88
Overall: £50,992.91
Monthly: £1,174.05
Overall: £70,443.18

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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