Looking for the best way to borrow £10k? Read our guide to understand your options and how to improve your chances of getting a loan.
Looking for the best way to borrow £10k? Read our guide to understand your options and how to improve your chances of getting a loan.
You can use a £10k loan for most things — ideally something you really need and that leaves you better off in the long run. It’s common to use a £10,000 loan to:
Secured loans and unsecured loans (also called personal loans) each have their own pros and cons. For example, a £10k unsecured loan may suit you if you have a good credit score or don’t own property. A £10k secured loan comes with more risk but can be easier to get and may give you more time to pay it back.
Here’s a closer look at some important things to consider:
Homeownership. A £10k secured loan is typically a homeowner loan meaning you need to own property to get one. While it’s possible to get a logbook loan that’s tied to your vehicle, these are very expensive and best avoided if possible. Unsecured loans aren’t tied to anything.
Risk. If you miss payments on a secured homeowner loan, your lender can sell your home as a last resort to get its money back. Unsecured loans don’t have the same risk, although late payments can still lead to fines and legal action.
Your score and income. You may need a good credit score and consistent income to get an unsecured loan — especially if you’re after a low-interest loan. If you have poor credit or you’re self-employed you may find better rates with a secured loan.
Loan term. This means the length of time you have to pay back the loan such as three, five or 10 years. Secured loans typically have longer terms. This can make your monthly payments more affordable but increase the cost of the loan overall. See examples in the tables below.
Loan amount. It’s usually easier to get approved for larger amounts with a secured loan. £10,000 personal loans are available, but you may need a good credit score to get an affordable rate.
Rate type. Secured loans are more likely to have a variable interest rate which can go up and down, meaning your monthly payments can also go up or down.
It depends on a few things including the annual percentage rate (APR) and how long you have the loan for. Lower rates and longer terms mean smaller payments. Here are some examples of monthly repayments on a £10k loan.
| Example A | Example B | Example C | |
|---|---|---|---|
| Loan amount | £10,000 | £10,000 | £10,000 |
| APR | 7% | 20% | 20% |
| Loan term | 5 years | 5 years | 10 years |
| Monthly payment | £197 | £255.96 | £182.58 |
Compare examples A and B and you’ll see that increasing the APR makes the payment bigger. Compare examples B and C and you’ll see that lengthening the loan term makes the payment smaller.
In fact, example C has the smallest monthly payments of all three examples despite its high APR. But while smaller payments are kinder on your monthly budget, it doesn’t mean the loan is cheaper overall. We’ve explained this below.
Again, it depends on the rate, fees and loan term. Let’s use the same examples from above to see what affects the overall cost of the loan.
| Example A | Example B | Example C | |
|---|---|---|---|
| Loan amount | £10,000 | £10,000 | £10,000 |
| APR | 7% | 20% | 20% |
| Loan term | 5 years | 5 years | 10 years |
| Monthly payment | £197 | £255.96 | £182.58 |
| Total to repay | £11,819.94 | £15,357.53 | £21,909.94 |
| Overall cost | £1,819.94 | £5,357.53 | £11,909.94 |
As you can see, the cost of the loan increases with the APR and the loan term. The third example has the lowest monthly payments, but it’s by far the most expensive. This is because you’re paying interest for longer. Of the examples above, the cheapest option is example A — the £10k loan over 5 years with a 7% APR.
Remember there may be some additional charges on top of the APR, such as fees for late or early repayments.
It’s possible to get a £10,000 loan with poor credit, although you’ll have fewer options. It’s always worth trying to improve your credit score to get better offers. If you need to borrow £10k sooner rather than later, consider a bad credit loan or guarantor loan.
Bad credit loans are designed for people with low scores so you may find it easier to get approved. They usually have higher interest rates as this helps lenders reduce their risk of lending to you.
Guarantor loans can also be easier to get approved for. You need someone (like a parent or partner) to agree to pay the loan if you can’t. They usually need to have a good credit score. Make sure you both understand the risks before taking out the loan.
If you’re struggling to get accepted, it may be tempting to get a payday loan. These are a very expensive option for short-term borrowing and are best avoided if possible. You’re unlikely to find a £10,000 payday loan as they typically offer smaller amounts.
Yes. Lenders do a hard credit check when you apply for a loan. This leaves a mark on your credit report. Your score will dip but should recover if you take care of it. It’s best to spread loan applications over time and avoid them if you’re planning to apply for a mortgage soon.
Experian helps you apply for loans you’re more likely to get. We calculate your chances of approval when you search loans with us. Searching doesn’t affect your score.
Credit cards are one alternative to a £10,000 loan. You typically need a good credit score to get a high credit limit. Consider using a balance transfer card to move existing card balances or a purchase card to spread a large expense. These cards may offer a 0% introductory period, after which you’ll be put on the lender’s higher standard rate. There are fees for things like setup and balance transfers.
If you’re a homeowner, remortgaging your property may be a way to free up cash. This option isn’t right for everyone, so consider the costs and risks carefully. There’s usually an early repayment fee if you switch your mortgage during its fixed-rate term.
If you’re thinking of buying a car, car finance is one alternative to a £10k loan. Car leasing might suit you if you don’t want to own the car. Personal contract purchase (PCP) gives you the option to buy the car or give it back. Hire purchase is another option if you’re committed to owning the vehicle.
Want to apply for a loan? Find your best rates for a £10,000 loan with Experian. Searching offers is free, takes less than two minutes and won’t affect your score. We also calculate your chances of approval so you can apply with confidence.
We're a credit broker not a lender†