£20,000 Loan Guide: How to borrow 20,000 pounds today

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Are you looking for a £20,000 loan?

Whether you’re looking to consolidate some existing debts, or make some home improvements, borrowing a large sum can be an intimidating prospect.

It doesn’t need to be, however.

With our guide to £20,000 loans, we’ll cover the options available to you and everything you need to consider, so that you can borrow with confidence.

Where can I get a £20,000 loan?

There are a number of borrowing options available to you, each with specific benefits and use cases.

While it might seem like a minefield at first, you can categorise the majority of loan products into three simple categories:

Personal loans

Personal loans are unsecured, meaning that they aren’t tied to any owned assets, like your home. Because of this, they will generally rely on your credit report as a sign of your borrowing ability. If you have a good credit score, you might be offered a more favourable interest rate or borrowing limit than you otherwise would.

  • Borrow amounts from £500 to £35,000
  • Terms of 1-7 years
  • Available to both non-homeowners and homeowners

Homeowner loans

Homeowner loans are a form of secured loan, meaning that the debt is tied to an asset—in this case, your home. By securing the debt to your property, lenders will be more willing to lend higher amounts over longer periods of time. This can be an option worth considering if a long repayment period, with lower monthly repayments, is preferable for your needs.

  • Borrow amounts from £5,000 to £500,000+
  • Terms of 1-30 years
  • Available to homeowners only
  • Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Execution-only homeowner loans

If you’re a homeowner and don’t feel you need any advice on your borrowing options, then an execution-only homeowner loan might be ideal for you. The term “execution-only” simply means that you are not receiving any advice on whether it’s right for you. This means it’s a secured loan that puts the control in your hands from start to finish, with no additional fees and no need for professional advice calls.

  • Borrow amounts from £10,000 to £50,000
  • Terms of 4-10 years
  • Available to homeowners only
  • Must be used for something other than debt consolidation
  • Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Unsecured vs Secured Loans: Which is best for borrowing £20,000?

With both unsecured and secured options for borrowing £20,000 available, it’s important to consider which makes the most sense for your financial circumstances.

Unsecured loan

Unsecured loans are debts that are not tied to any other assets that you own. Instead, the lender will make you an offer based on their evaluation of your borrowing history. They do this by looking at your credit report.

If you have a poor credit score, they might be less willing to offer you the full amount, or may charge a higher interest rate.

If you do not own a home, then unsecured loans will be your most realistic option. They also make a great choice for anyone with a strong credit score.

Secured loan

A secured loan is a debt that is tied to an owned asset, most commonly your home.

With a secured loan, lenders may be more willing to offer you a more favourable interest rate, a longer repayment term and a higher credit limit. This means you are more likely to be able to borrow the full £20,000.

The catch to these benefits is that you are responsible for making the repayments and your home could be repossessed if you do not keep up with the agreed repayment schedule.

Secured loans are typically a good option to consider for homeowners that would prefer a longer repayment term with more favourable rates, providing you are certain that you can comfortably afford the repayments for the full term of the agreement.

Am I eligible for a £20,000 loan?

Your eligibility to borrow £20,000 will come down to your individual circumstances and your application to the lender.

While lenders will have their own models for assessing your eligibility for a loan, they will generally include the following as criteria:

  • Your credit history or credit score
  • Your income
  • Your debt to income ratio (the amount that you already pay towards debts)
  • Loan purpose (such as debt consolidation, or making home improvements)

The quickest and easiest way to check whether you are eligible, without impacting your credit score, is to use our free eligibility checker tool to review your details and browse suitable loan products from our lenders.

Can I get a £20,000 loan with a bad credit score?

Your credit score is a figure that indicates how favourable your credit history is. It is based on your credit report, a record of your past borrowing and debt repayment.

While you don’t want your credit report to show that you have been unreliable when repaying loans, you also don’t want it to show that you haven’t really borrowed before. Either of these scenarios will often result in a lower credit score.

For larger amounts like £20,000, consistency matters. Lenders will want to see convincing proof that you have regularly borrowed and repaid money in the past. If you can demonstrate this in your credit report, then you will be viewed more favourably by the lenders.

If you have a lower credit score, it doesn’t necessarily mean that you can’t borrow £20,000, but you might need to expect to be offered a higher interest rate. This will particularly be the case with unsecured loans.

Borrowing as a homeowner with a low credit score

If you are a homeowner with a lower credit score, then a secured loan may help to improve your chances of approval and earn you a more manageable repayment plan over a longer period of time. However, this will mean that the loan will be tied to your property, which could then be repossessed if repayments aren’t being made on-time.

Our personal loan eligibility checker uses a “soft search”, meaning you can browse suitable loan options based on your credit history, without impacting your credit score.

Can I apply to borrow £20,000 online?

Yes, you can—our tools make it easy to browse options from multiple lenders and instantly apply to borrow money online.

Simply enter some basic details about yourself on our eligibility checker and we will run a soft search. We will then present you with a variety of suitable options, both unsecured personal loans and secured homeowner loans, if applicable.

If you find a product that you like the look of, you can make a formal application to the lender, who will then run a hard credit check, which will appear on your credit report.

If you pass their criteria, they will present you with a proposed loan agreement. This will include details like:

  • The loan amount
  • The repayment term
  • Any additional fees or charges that you will need to be aware of
  • The total amount expected  to be paid at the end of the repayment term

It’s important to review this closely, particularly if it’s a secured loan, to be certain that you can afford the suggested repayment schedule. If you are happy with terms, you can accept the agreement and you will receive the agreed amount.

Will I receive my loan on the same day?

If you are applying for an unsecured personal loan, it is typical for the funds to arrive in your account fairly quickly, often on the same day. This is because the lender will have already approved the loan before making you an offer, so the funds are ready to transfer as soon as you accept the agreement.

For secured loans, it can take around 10 days for the loan to be processed and for funds to be transferred. This will partially depend on how quickly you are able to provide any requested documents relating to your home ownership.

Can I afford to borrow £20,000?

As mentioned earlier in this guide, your loan agreement will outline a repayment schedule.

It’s up to you to decide whether you can afford this, but a good way to start is to look at your monthly income and determine how much you have left over after any recurring payments or bills. You should have enough left over to cover your living costs and the monthly repayment required on the loan.

Be sure that you can afford to repay every month for the full duration, as missed repayments might impact your credit score or—in the case of secured loans—lead to the repossession of your home.

If the monthly repayments look unaffordable, you might want to consider a longer loan term. This would mean that your monthly repayments are more manageable, but it comes at the cost of a higher total amount repaid at the end of the agreement.

What can I use my £20,000 loan for?

Some of the most common reasons for borrowing £20,000 include debt consolidation, home improvements and car finance.

For any borrowing need you might have, we’ve compiled specific considerations that you might want to keep in-mind, to help you decide if a loan is right for you:

How do I repay the money I’ve borrowed?

Once you have received the £20,000 loan, you will be required to make repayments according to the agreement.

You might prefer to set-up an automated bank transfer or standing order shortly after your payday, to ensure that you make the repayments on-time. This can help to avoid missing a repayment by accident, giving you one less thing to think about.

Once you have repaid the amount borrowed in full, along with any interest and other fees, you should receive confirmation from your lender that your loan has been repaid. If not, you should contact the lender to confirm that your account has been closed.

Check your eligibility and start comparing £20,000 loans

Are you ready to borrow £20,000? Head over to our eligibility checker to see how much you’re able to borrow and find the right loan for your needs.

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