Use our online calculator below to compare the representative APRs that mainstream lenders offer on £20k loans. However, keep in mind that lenders may only be willing to offer unsecured loans over £20,000 to people with excellent credit history, and you may instead want to consider a secured loan.
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.
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 – in other words, a strong credit record.
While there is specialist lenders who offer loans to people whose credit history isn’t perfect, it’s tougher to find a lender willing to offer as much as £20,000 to a borrower with bad credit.
Guarantor loans allow people with bad credit to leverage the good credit of a friend or relative, but are typically capped at £10,000, or £15,000 if your guarantor is a homeowner.
However, if you’re a homeowner with a mortgage, you could use the equity in your property as security. Having security means that a loan represents lower risk to a lender, which normally in turn means lower rates and a greater likelihood of approval for the borrower. If you’re spreading repayment over 15 years, however, then obviously the overall cost of borrowing is likely to be 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 ratesThink 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.
If you’re looking at borrowing £20,000 and you already know 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 any loan that you apply for. You could have the best credit record going, but if you’re unrealistic about what you can comfortably repay each month, 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.
If you’re looking for a loan to start a new business, your first though might be a personal loan to help get you kickstarted. In many cases, a condition for taking out a personal loan is that it cannot be used for business purposes. However, there are a huge range of loan products available specifically for use by businesses, and some are even government-backed, which can mean lower rates for borrowers and a less strict borrowing criteria.
Compare £20,000 business loans
Your monthly payments will vary based on your interest rate and the length of your loan term. For example, a £20k loan with a fixed rate of 12% p.a. and a 4-year term would have monthly repayments of around £527. In comparison, a £20,000 loan with a fixed 4% annual rate and 7-year loan term would cost around £273 each month. You can calculate the cost of your loan here.
| Interest rate of 5% fixed p.a. | Interest rate of 10% fixed p.a. | Interest rate of 15% fixed p.a. | |
|---|---|---|---|
| 1-year loan | £1,712 | £1,758 | £1,805 |
| 2-year loan | £877 | £923 | £970 |
| 3-year loan | £599 | £645 | £693 |
| 4-year loan | £461 | £507 | £557 |
| 5-year loan | £377 | £425 | £476 |
| 6-year loan | £322 | £371 | £423 |
| 7-year loan | £283 | £332 | £386 |
Again, this will vary based on your interest rate and the length of your loan term. For example, a £20k loan with a fixed rate of 4% p.a. and a 4-year term would cost around £21,676 overall. In comparison, a £20,000 loan with a fixed 12% annual rate and 7-year loan term would cost around £29,657 overall. You can calculate the cost of your loan here.
| 3% p.a. interest | 5% p.a. interest | 10% p.a. interest | |
|---|---|---|---|
| 1-year loan | £20,326 | £20,546 | £21,100 |
| 3-year loan | £20,938 | £21,579 | £23,232 |
| 4-year loan | £21,249 | £22,108 | £24,348 |
| 5-year loan | £21,562 | £22,645 | £25,496 |
| 6-year loan | £21,879 | £23,191 | £26,677 |
| 7-year loan | £22,198 | £23,745 | £27,890 |
| 8-year loan | £22,521 | £24,307 | £29,134 |
The above loan illustrations are based on a flat rate and are only approximations of what you may pay. Your specific loan payments may differ depending on things like fees, your repayment schedule, and whether your rate is fixed or variable.
In most cases, you’ll simply pay a fixed sum each month by direct debit. But behind the scenes, your monthly payment will be split into paying off all the interest you’ve accrued so far and then paying off a chunk of the original sum borrowed. Your first repayment will contain a relatively large amount of interest, while your final repayment will hardly contain any.
Typically your loan agreement will contain all the information you’ll need about your specific loan repayments, including the interest you’ll owe, your monthly repayments, account fees and any additional costs you might incur e.g. early repayment fees.
Here’s an illustration of the repayments on a £20,000 loan over five years at an APR of 7%. Each bar represents a monthly £394 payment, and you can click/hover to see how that month’s payment is broken down.
With the rise in remote working and digital nomads, mainstream lenders know self employment is a growing market and are more willing to consider self employed applicants. That said, you still have to know your stuff to prove yourself an eligible candidate, so make sure you read up on the loan requirement and how to go about applying.
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