Compare loans for £20,000 
If you need a large cash injection to get an extension on your home or buy a new car, you may think about taking out a personal loan, but is it the right option for you?
Here’s everything you need to know…
There’s no set cost for a loan, the overall amount to be paid will depend on the interest rate and the length of the loan term.
Your interest rate will be calculated using information from your application, including your annual income and credit score. It also will depend on whether you’ve chosen a fixed or variable rate loan. A fixed rate will result in your repayments staying the same over the term, whereas a variable rate can go up or down usually in line with the Bank of England base rate.
If you’re viewed to be at a higher risk of falling behind on your payments, you’ll likely be offered a higher interest rate. This could be because you have a history of defaulting on payments or you don’t have a steady income.
A longer loan term may result in lower monthly payments, but the total amount you repay will be more.
Generally, it’s a good idea to borrow the smallest amount (that still covers your requirements) over the shortest time possible. This will help to keep the costs down.
An unsecured loan is when the lender doesn’t require collateral, like your house, as security.
This usually means that they’re stricter with the eligibility criteria, especially on larger amounts. You’ll need to demonstrate that you can comfortably afford the monthly repayments and that you have a history of being able to borrow and pay off debt responsibly.
The loan agreement will detail the terms and conditions, like the term, monthly repayment amount and interest.
Your options will be limited for borrowing such a large amount.
If a personal loan isn’t available to you, investigate whether a secured loan or remortgaging could be the right choice for your circumstances.
Typically your home is used as security for the loan, which means that if you fail to repay the amount borrowed, it could be repossessed and sold to pay back the lender. You may also be able to find loans that use your car or jewellery as collateral.
A secured loan may offer lower interest rates and longer loan terms than unsecured options, but you will end up paying a lot more overall.
Always consider whether using your home as collateral is the right option for you before committing to the loan.
It’s possible to remortgage your home to release equity, and therefore money. This is an option often used if you want to fund home improvements but don’t have enough disposable income to cover it.
It will usually require you to have a significant amount of equity in the property before you’ll be considered. As a mortgage is essentially a secured loan, your home is at risk if you fail to make your repayments.
Before taking out a loan, whether it’s secured or unsecured, think about all the options available.
Perhaps you could raise a significant amount of cash by creating a budget and sticking to it over a few years. You may also be able to couple this with a 0% purchase credit card and a loan from your family.
This won’t provide you with a quick cash injection, but it’s a safer option where your home isn’t at risk. Always remember to draw up a loan agreement even if it’s from your family, though. Detail the monthly repayments, loan term and interest rate to avoid arguments in the future.
Finding a large loan if you have a bad credit will be difficult, but it may not be impossible.
There are specialist lenders that could be willing to help, but consider whether it’s a good idea to borrow that amount in the first place. You could find yourself in a dire situation if you’re unable to make the repayments and bad credit loans tend to have high interest rates.
If you’ve decided that you definitely need a loan, think about applying for a smaller amount, paying it off on time to improve your credit score and applying for a larger loan in the future, if needed.
Again, this will depend on factors like your employment status, income and credit score.
For a loan this big, the lender will need enough evidence that you’ll be reliable with making repayments and they’ll receive their money back (plus interest), within the agreed timeframe.
The eligibility criteria will differ slightly between lenders, but you can expect to need a steady income over a certain threshold and a good credit score to be considered.
Always use our smart search tool to compare loans. It will show you which ones you’re more likely to be accepted for without affecting your credit score. This can help prevent failed applications from credit impacting your credit report.
All you need to do is:
Let us know what type of loan you require, how much you want to borrow and for how long
Tell us some details about yourself, including your employment status and annual income
We’ll use our smart search to tell you which loans you have a higher chance of being accepted for
Compare the loans available to find the right one for you, then click ‘Apply’
Before taking out a loan, especially a large one, it’s vital that you think through the decision carefully.
Consider what would happen if you lost your job, or expensive bills ate up a huge chunk of your monthly income. As the cost of living is skyrocketing, and household expenses are on the increase, it can be tempting to start borrowing to uphold your current lifestyle, but debt can force you into a vicious cycle.
APR stands for annual percentage rate. This shows you the cost of the loan over a year expressed as a percentage. It includes the interest rate, as well as any charges or fees.
It can be a useful way of comparing loans.
A soft search is a type of credit check which doesn’t leave a mark on your credit report, like our smart search.
Unlike a hard credit check which lenders perform when you apply for a loan, a soft search can be performed multiple times without negatively affecting your credit score.
It can be used to check which products you’re likely to be eligible for.
You’ll usually need a ‘good’ or ‘excellent’ credit score to access the loans with better interest rates.
Credit scores below this rating may be referred to as ‘bad credit’ and require more specialist loans where you can expect high interest rates and more expensive fees.
A repayment holiday is a break from making your loan payments for a set number of months, as agreed with the lender (very important that your lender agrees, otherwise you’re just failing to make your repayments).
This can be useful if you’re struggling to repay due to unforeseen circumstances, but it will make your loan term longer and you’ll still be charged interest during the repayment holiday, meaning that it will cost more overall.
You may qualify for a £20,000 loan if you’re self-employed, but you’ll be required to supply the lender with enough evidence to show that you’d be able to take on the financial commitment of making the repayments.
Your lender will contact you to request that the repayment be made immediately.
If you fail to make multiple payments, you could be served with a default notice. This can result in your debt being passed to a collection agency, a request to pay off the outstanding balance in full, or legal action being taken against you.
Before you start to miss your repayments, contact your lender who may be able to give you options to ease the financial pressure.
As guarantor loans are typically for those with poor or no credit who wouldn’t be able to take on the debt by themselves, they’re usually for up to a maximum of £15,000.