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How to get a £40,000 loan with the best rate
To get a £40k loan in the UK, you'll need excellent credit or a property to secure the loan against.
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.
Overall representative example
If you borrowed £35,000 over a 14-year term at 8.95% p.a. (variable), you would make 168 monthly payments of £418.88 and pay £70,371.84 overall, which includes interest of £30,326.84, a broker fee of £3,550.00 and a lender fee of £995.00. The overall cost for comparison is 11.8% APRC representative.
If you borrowed £35,000 over a 14-year term at 8.95% p.a. (variable), you would make 168 monthly payments of £418.88 and pay £70,371.84 overall, which includes interest of £30,326.84, a broker fee of £3,550.00 and a lender fee of £995.00. The overall cost for comparison is 11.8% APRC representative.
Compare £40,000 unsecured loans
Table: sorted by representative APR, promoted deals first
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.
What's in this guide?
Can I get a £40,000 loan?
Unsecured personal loans are commonly capped at £25,000. However, in many cases, high-street banks are willing to offer unsecured personal loans of up to £40,000, but will have very strict approval criteria.
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.
Can I get an unsecured loan for £40,000?
Yes, it may be possible to get an unsecured loan for up to £40,000, but your choice of lenders may be limited, and you’ll almost certainly have to meet specific requirements. You’ll usually need to be an existing customer with a few years’ history with your bank, for example. You’ll also need to have excellent credit and, most important of all, you’ll need to be able to afford the loan.
How much are monthly payments on a £40,000 loan?
| Interest rate of 5% fixed p.a. | Interest rate of 10% fixed p.a. | Interest rate of 20% fixed p.a. | |
|---|---|---|---|
| 1 year loan | £3,424.30 | £3,516.64 | £3,801.77 |
| 3 year loan | £1,198.34 | £1,290.69 | £1,486.54 |
| 4 year loan | £919.16 | £1,006.24 | £1,182.78 |
| 5 year loan | £754.85 | £849.88 | £1,059.76 |
| 7 year loan | £565.36 | £664.05 | £888.25 |
| 10 year loan | £424.26 | £528.60 | £773.02 |
| 15 year loan | £314.01 | £419.36 | £654.88 |
| 25 year loan | £231.26 | £351.40 | £618.87 |
You can use our loan calculator to directly compare a range of £40,000 loans.
How much is a £40,000 loan over…
| 5% p.a. interest | 10% p.a. interest | 15% p.a. interest | |
|---|---|---|---|
| 4 years | £44,120 | £48,300 | £56,773 |
| 5 years | £45,291 | £50,993 | £57,096 |
| 7 years | £47,490 | £55,780 | £64,837 |
| 10 years | £50,911 | £63,432 | £77,441 |
| 15 years | £56,937 | £77,372 | £100,770 |
| 20 years | £63,356 | £92,642 | £126,412 |
| 25 years | £69,377 | £105,419 | £185,660 |
The loan estimates above use approximate, rounded figures, that are calculated using a flat interest rate. Many secured loans offer variable interest rates, which means your rate can change during the course of your loan, and you may end up paying more, or less, in interest.
How to use our £40,000 loan calculator
You can use our loan calculator to compare £40,000 loans from a range of popular brokers and lenders, based on monthly payment size and APR. Just enter how much you want to borrow, the length of the loan, the value of your property and mortgage, and we’ll help find you the loan that could best suit your situation.
Are there any fees on a £40,000 loan?
This will depend on the type of loan you take out, as well as your specific lender or broker. If you’re applying for a secured £40,000 loan, you may need to pay some fees as part of your application, such as a lender’s fee or application fee, as well as a valuation fee to determine the value of your property.
What can I use a £40,000 loan for?
You can get a £40,000 loan for any legitimate purpose, and loans are often used for the following purposes:
- £40,000 loan for home improvements
- £40,000 loan to buy a car
- £40,000 loan for small business
- £40,000 loan for land purchase
- £40,000 loan for students
What do I need to apply for a £40,000 homeowner loan?
To qualify for a £40,000 homeowner loan, you’ll first need to own some or all of the equity in your house, which can then be used as security against the cost of the loan. Like any other loan, you’ll also need to provide personal information and documents including:
- Your name and address
- Proof of income
- Proof of homeownership
Some lenders may also require you to meet certain other criteria to be eligible for a loan, such as a minimum income or credit rating. While you might not need an excellent credit score to qualify for a secured homeowner loan, the better your credit rating, the more likely you are to be approved, and the better loan terms you’re likely to get.
How long does it take to get a £40,000 loan?
An unsecured loan can – in theory – be in your account the same day, but when you’re asking for £40,000, it’s likely to get a little more scrutiny from underwriters and as such will usually take a couple of working days.
A secured loan realistically takes a little longer, as there are a few extra steps involved. A valuation of the property is required, although this is unlikely to involve a valuer actually entering the property. The bank that’s currently providing your mortgage (the “first charge” on the property) will also need to be asked to give its consent.
Factors such as these mean that arranging a secured loan can take weeks rather than days, but for many, access to lower rates and/or larger sums make this a worthwhile trade-off.
What credit score do I need for a £40,000 loan?
If you’re applying for an unsecured personal loan of £40,000, it’s very likely you’ll need to have an excellent credit score. Different credit reference agencies use different scoring systems, but for Experian an Excellent score is 961 or higher.
However your credit score is just one factor on which your application will be assessed – the affordability of repayments is just as (if not more) important.
If your credit rating isn’t excellent and you’re leveraging the equity in your home as security, your credit score can become a less crucial factor (however it does remain a factor). The importance given to your credit score will vary from lender to lender and some lenders specifically aim to help borrowers who don’t have great credit.
How long does it take to pay off a £40,000 loan?
The loan term can be adjusted to make the monthly repayments more affordable – a longer loan normally means lower monthly repayments (but a higher overall cost). So it really depends on what you can afford to repay each month.
At a fixed annual rate of 6%, a £40,000 loan would take around eight and a half years to repay if your monthly repayment was £500. If you wanted to keep the monthly cost down however, and paid £400 each month, it would take around 11 and a half years.
Can I pay off a £40,000 loan early?
Yes, most lenders will let you pay off your £40,000 loan early, but many will charge you an early settlement fee to do so. This amount will vary based on both the size of your loan, and how much you still need to pay off, but will normally be an amount equal to up to 58 days of interest.
How to get a £40,000 loan
- Calculate how much you can realistically afford to pay each month. This will help you get an idea of how long a term you’ll need to spread repayment over. As a general rule of thumb, the longer the loan the greater the overall cost but the lower the monthly repayments. Our £40,000 loan calculator can help you to understand what might be manageable.
- Use a credit report checking service to get to know your credit file. 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.
It could also be 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. 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.
£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, and you’re likely to need a guarantor and be willing to use your house as security against the loan.
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.
You’ll also likely need to provide additional documentation that demonstrates your self-employed status and income. This can include things like your bank statements and personal or business tax returns.
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 “arrangement”, “product” or “set-up’ fees charged by personal loan companies. When it comes to unsecured loans, they’re exceptionally rare nowadays, but for secured loans, fees are the norm (you’ll also typically incur a broker fee). The good news is that it’s generally possible to bundle this in with the loan (although that does mean paying interest on it).
The coronavirus pandemic led to a lot of uncertainty in the lending market and many lenders battened down the hatches. Most banks drastically reduced the number of loans being issued and tightened-up criteria for eligible applicants. Thankfully this has eased but it’s important to be realistic about what would be affordable for you. If you’ve done your homework an are confident a loan would be affordable for you, then there’s a better chance that the lender will agree with you.
What are the alternatives to a £40,000 secured loan?
Unfortunately, you’re unlikely to be able to get a regular unsecured loan for amounts as large as £40,000, and secured loans will probably be your best option. If you’re a homeowner, you may want to consider 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.
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.
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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