Looking to borrow £20k? Make sure you get the best deal for you with Experian. Read our guide to understand your options and improve your chances of getting the lowest interest rates.
Looking to borrow £20k? Make sure you get the best deal for you with Experian. Read our guide to understand your options and improve your chances of getting the lowest interest rates.
A loan is one way to borrow a lump sum and pay it back over time. You’ll make monthly payments to repay the £20k plus interest. Interest is the lender’s charge for letting you borrow — it’s calculated as a percentage of the amount you owe, called the interest rate. Your monthly payment amount will be the same each month if you have a fixed rate. It may go up or down if you have a variable rate.
Each has its pros and cons. With a secured loan, you’ll take on more risk but may find it easier to borrow £20,000. Secured loans are tied to something of value that you own, usually property, which the lender can sell as a last resort to get their money back if you don’t repay them. This means more risk for you but less for the lender, so they may be more likely to approve you for a bigger amount and longer term.
Unsecured loans (also called personal loans) aren’t tied to anything. This means less risk for you but more for the lender, so you may find it harder to get approved. If you do take out a £20,000 personal loan, you may have to pay a higher interest rate and repay the loan quicker.
A £20,000 loan can typically be used for just about anything. Your lender may have a few rules such as not using the loan to gamble. Common reasons for borrowing £20k include spreading the cost of a wedding, car or home improvements. If you’re already borrowing, you could consider a £20,000 debt consolidation loan as a way to potentially simplify payments and lower interest costs.
It’s best to only get a £20,000 loan for something that’s necessary or leaves you better off in the long run.
The monthly payments on a £20k loan can vary depending on things like the annual percentage rate (APR) and loan term.
The APR reflects the yearly cost of a loan. It takes interest and certain fees into account. It’s expressed as a percentage of the amount you owe, meaning a higher APR is more expensive.
The loan term is how long you have to pay off the loan. Choosing a longer term will lower your monthly payments but increase the cost of the loan overall as you’ll pay interest for longer.
Here are some examples of monthly payments on a £20,000 loan.
| Example A | Example B | Example C | |
|---|---|---|---|
| Amount | £20,000 | £20,000 | £20,000 |
| APR | 10% | 20% | 10% |
| Loan term | 5 years | 5 years | 15 years |
| Monthly payment | £420.71 | £511.92 | £209.68 |
In this example, loan A has smaller monthly payments than loan B because it has a lower APR. Loan A and C have the same APR, but loan C has smaller monthly payments because it has a longer term which means you’ll pay interest for longer. Remember, this is only an example and your loan offers may be different.
Smaller monthly payments may be easier on your budget, but they don’t necessarily mean your loan is cheaper overall. Choosing a longer loan term will lower your monthly repayments but increase the overall cost. Let’s look at the same loan examples from above to see how the overall costs compare.
| Example A | Example B | Example C | |
|---|---|---|---|
| Amount | £20,000 | £20,000 | £20,000 |
| APR | 10% | 20% | 10% |
| Loan term | 5 years | 5 years | 15 years |
| Monthly payment | £420.71 | £511.92 | £209.68 |
| Total to repay | £25,242.70 | £30,715.06 | £37,742.05 |
| Overall cost | £5,242.70 | £10,715.06 | £17,742.05 |
Notice how loan C has the highest overall costs despite having the smallest monthly payments. This is because you’d be paying interest for 10 years longer than with the other two loans. Again, these are just examples and you should do your own calculations before applying for a loan.
Getting a low-interest loan and choosing a shorter term may help you borrow for less. You may find it easier to get approved for lower rates with a secured loan. It can also help to improve your credit score.
See what offers you’re likely to get when you compare £20,000 loans with Experian. We use your unique data to show you loans where you can calculate your chances of approval. Look out for the pre-approval label — this means you should get approved at the rate shown if you apply. Comparing loans doesn’t cost a penny or affect your score, and it only takes two minutes.
A higher credit score will increase your chances of approval, but there’s no magic number that guarantees you a £20,000 loan. Each lender has their own criteria, meaning some may refuse you credit and others may accept you. Unfortunately, lenders won’t tell you what they’re looking for. But checking your eligibility with Experian can help take the guesswork out of loan applications.
Yes, it’s possible to borrow £20,000 even if you have bad credit, although you’ll have fewer options. Consider a bad credit loan — these are designed for people with low scores so they’re typically easier to get approved for. You’ll probably have to accept a higher rate though. Another option is a guarantor loan where someone (like a parent or partner) agrees to make the payments if you don’t. This may lower risk for the lender making them more likely to approve you. Your guarantor will take on risk and they’ll need to pass the lender’s credit and affordability checks.
Payday loans are often advertised to people who have poor credit. They’re usually small loans and very expensive, making them unsuitable for borrowing £20,000. If you’re looking for a smaller loan, consider alternatives such as credit union loans which may be cheaper.
It depends on things like the interest rate, loan term and lender’s criteria. As a general rule the monthly payments should easily fit into your budget with plenty of room to spare. This should help convince lenders that you can meet the payments even if your financial situation changes a bit.
Want to see £20,000 loans you’re eligible for? Search loans now without affecting your credit score.
It’s possible, although lenders may see you as more of a risk. They’ll typically ask for proof of several years of consistent earnings. You may be able to improve your chances of approval by offering your property as security or using a guarantor.
If you’re a homeowner, you could consider borrowing against your home with a further advance mortgage. This means borrowing more money from your existing lender and using your home as security. Another option is remortgaging to free up equity as cash (equity is the value you own in your home).
Credit cards are another way to borrow although they’re less likely to offer amounts as big as £20,000. You need a good credit score to get a high credit limit. A credit card may suit you more than a loan if you want more flexibility with your payments. You may be able to get a 0% promotional period with purchase cards and balance transfer cards. Once this period ends, you’ll be put on the lender’s standard variable rate which is much higher. These cards typically come with fees for things like set up and transfers.
Yes. When you apply for a loan, a hard credit search is recorded on your credit report. Your score will dip to reflect this but should recover over time if you take care of it. Borrowing £20,000 may also lower your score as other lenders may think you can’t afford to borrow more. But you should see your score improve as you pay back your loan, as long as you make the payments on time and in full each month.
Yes, you can compare loans with Experian. You can see what loans are available from different lenders and what your chances of approval are.
Searching is free, takes less than two minutes and won’t affect your score. Look out for the pre-approved label — this means you should get accepted at the rate you see if you apply.
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